<PAGE> 1
As filed with the Securities and Exchange Commission on October 1, 1996
Registration No. 33-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANKUNITED FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
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Florida 6035 65-0377773
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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255 Alhambra Circle
Coral Gables, Florida 33134
(305) 569-2000
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(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)
Alfred R. Camner
Chairman of the Board
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
(305) 569-2000
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(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
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Copies to:
Marsha D. Bilzin, Esq. Wendy M. Mitchler, Esq. Richard E. Streeter, Esq.
Stuzin and Camner, Senior Vice President and Thompson Hine & Flory P.L.L.
Professional Association General Counsel 3900 Key Center
1221 Brickell Avenue, 25th Floor Suncoast Savings and Loan 127 Public Square
Miami, Florida 33131 Association, FSA Cleveland, Ohio 44114
(305) 577-0600 4000 Hollywood Boulevard (216) 566-5500
Hollywood, Florida 33021
(954) 981-6400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this
Registration Statement and all other conditions precedent to the merger of
Suncoast Savings and Loan Association, FSA ("Suncoast") into BankUnited, FSB, a
wholly-owned subsidiary of the Registrant have been satisfied or waived as
described in the enclosed Joint Proxy Statement-Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box [ ].
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
maximum maximum Amount of
Title of each class Amount to be offering price aggregate registration
of securities to be registered registered (1) per share offering price fee
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Class A Common Stock, $.01 par value 2,453,554 (2) (3) $3,664.62
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8% Noncumulative Convertible Preferred Stock, 1,000,000 (2) (4) $2,687.41
Series 1996, $.01 par value
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Total. . . . . . . . . . . . . . . . . . . $6,352.03(5)
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(1) This Registration Statement covers the maximum number of the Registrant's
securities that would be issued, or reserved for issuance, in the
transaction described herein, or upon exercise of the options or warrants
assumed in, the transaction described herein.
(2) Not applicable.
(3) Computed pursuant to Rule 457(f)(1), based upon the market value of the
securities to be cancelled in the merger (2,453,554 shares of Common
Stock, $1.10 per share of Suncoast).
(4) Computed pursuant to Rule 457(f)(1), based upon the market value of the
securities to be cancelled in the merger (1,000,000 shares of the 8%
Noncumulative Preferred Stock Series A, par value $5.00 per share of
Suncoast).
(5) The total amount of the Registration Fee was previously paid in connection
with the Registrant's Preliminary Proxy Statement filed with the
Commission on Schedule 14A on September 4, 1996.
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 said Section 8(a),
may determine.
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BANKUNITED FINANCIAL CORPORATION
CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4
AND
JOINT PROXY STATEMENT-PROSPECTUS
Cross-reference sheet showing the location in the Joint Proxy
Statement-Prospectus required by Part I of Form S-4.
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S-4 Item Location in Joint Proxy Statement-Prospectus
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INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus . . . . . . . . . . . . . . . . . Facing page of Registration Statement; Cross-Reference Sheet;
Cover Page.
2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . Available Information; Information Incorporated by Reference;
Table of Contents.
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information . . . . . . . Summary of Joint Proxy Statement-Prospectus; Selected
Consolidated Financial Data; Pro Forma Selected Financial
Data.
4. Terms of the Transaction . . . . . . . . . Summary of Joint Proxy Statement-Prospectus; The Merger;
BankUnited's Articles of Incorporation; Board of Directors,
Management and Operations Following the Merger; Description
of BankUnited Capital Stock; Description of New BankUnited
Preferred Stock; Comparison of Stockholders' Rights.
5. Pro Forma Financial Information . . . . . . . Unaudited Pro Forma Condensed Combined Financial Statements
(including the notes thereto).
6. Material Contracts with the Company being
Acquired . . . . . . . . . . . . . . . . . . The Merger; Interest of Certain Persons in the Merger.
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters . . . . . . . . . Not Applicable.
8. Interest of Named Experts and Counsel . . . Experts; Legal Matters.
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . Not Applicable.
INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants Not Applicable
11. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . Information Incorporated by Reference.
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12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . . . Documents Delivered with this Joint Proxy Statement-
Prospectus; Unaudited Pro Forma Condensed Combined Financial
Statements (including the Notes thereto); BankUnited
Financial Corporation.
13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . . . Information Incorporated by Reference.
14. Information with Respect to Registrants
Other than S-2 or S-3 Registrants . . . . . Not Applicable.
INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies . Not Applicable.
16. Information with Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . . . Documents Delivered with this Joint Proxy Statement-
Prospectus; Suncoast Savings and Loan Association, FSA
17. Information with Respect to Companies Other
Than S-2 or S-3 Companies . . . . . . . . . Not Applicable.
VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited . . . . . Cover Page; Summary of Joint Proxy Statement-Prospectus;
Meeting of BankUnited Stockholders; Meeting of Suncoast
Stockholders; Solicitation of Proxies; Interest of Certain
Persons in the Merger; Board of Directors; Management and
Operations Following the Merger; The Merger.
19. Information if Proxies, Consents or
Authorizations are not to be Solicited,
or in an Exchange Offer . . . . . . . . . . Not Applicable
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This Registration Statement contains two forms of the Joint Proxy
Statement-Prospectus to be delivered separately to stockholders of BankUnited
Financial Corporation ("BankUnited") and Suncoast Savings and Loan Association,
FSA ("Suncoast") in connection with their respective Special Meetings. The
Joint Proxy Statement-Prospectus to be delivered to BankUnited stockholders in
connection with the BankUnited-Suncoast merger described herein will contain a
letter to BankUnited stockholders and a Notice of the Special Meeting.
Similarly, the Joint Proxy-Statement-Prospectus to be delivered to Suncoast
stockholders in connection with the BankUnited-Suncoast merger will contain a
letter to Suncoast stockholders and a Notice of the Suncoast Special Meeting.
The Joint Proxy Statement-Prospectus to be delivered to Suncoast stockholders
is otherwise identical in all respects to the Joint Proxy Statement-Prospectus
to be delivered to BankUnited Stockholders.
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BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Tel. (305) 569-2000
October 3, 1996
To the Stockholders of BankUnited Financial Corporation:
You are cordially invited to a Special Meeting of the Stockholders
(the "BankUnited Special Meeting") of BankUnited Financial Corporation
("BankUnited") to be held on October 29, 1996 at 10:00 a.m. at the Omni
Colonnade Hotel, 180 Aragon Avenue, Coral Gables, Florida.
At the BankUnited Special Meeting, you will be asked to consider and
vote upon a proposal to approve an Agreement and Plan of Merger dated as of
July 15, 1996 (the "Merger Agreement"), by and between BankUnited and Suncoast
Savings and Loan Association, FSA ("Suncoast"), pursuant to which Suncoast will
merge (the "Merger") into BankUnited, FSB, a wholly-owned subsidiary of
BankUnited, with BankUnited, FSB being the survivor of the Merger. A copy of
the Merger Agreement is attached to the accompanying Joint Proxy
Statement-Prospectus.
At the effective time of the Merger, the separate existence of
Suncoast shall cease and each outstanding share of Suncoast's Common Stock, par
value $1.10 per share, will be converted into one share of Series I Class A
Common Stock, par value $.01 per share (the "BankUnited Class A Common Stock),
of BankUnited and each outstanding share of 8% Noncumulative Convertible
Preferred Stock, Series A, par value $5.00 per share, of Suncoast will be
converted into one share of 8% Noncumulative Convertible Preferred Stock,
Series 1996, par value $.01 per share, of BankUnited. Each share of BankUnited
stock outstanding at the effective time of the Merger will remain outstanding.
The Merger of BankUnited and Suncoast will result in BankUnited being
the fourth largest publicly held financial institution headquartered in South
Florida with over $1.2 billion in assets. The Merger will increase
BankUnited's market share, particularly in Broward County, allow BankUnited to
achieve economies associated with an in- market merger, and enable BankUnited
to compete more effectively with larger financial institutions in South
Florida.
Enclosed are a Notice of Special Meeting of Stockholders and a Joint
Proxy Statement-Prospectus which describes the Merger and the background to the
transaction. In addition at the BankUnited Special Meeting BankUnited
stockholders will consider and vote upon a proposed amendment to BankUnited's
Articles of Incorporation to increase the authorized shares of the Class A
Common Stock, $.01 par value, of BankUnited to 30,000,000 shares. You are
urged to read all of these materials carefully. The Board of Directors has set
the close of business on October 1, 1996 as the record date for the BankUnited
Special Meeting. Accordingly, only stockholders of record on that date will be
entitled to notice of, and to vote at, the BankUnited Special Meeting or any
adjournments or postponements thereof. The affirmative vote of a majority of
the votes of the BankUnited Class A Common Stock, BankUnited's Class B Common
Stock, par value $.01 per share ("BankUnited Class B Common Stock"), and
BankUnited's Noncumulative Convertible Preferred Stock, Series B, par value
$.01 per share, cast at the BankUnited Special Meeting is necessary to approve
the Merger Agreement and the proposed amendment to BankUnited's Articles of
Incorporation. In addition the BankUnited Class A Common Stock and the
BankUnited Class B Common Stock, each voting as a separate class, must approve
the proposed amendment to BankUnited's Articles of Incorporation by the
affirmative vote of a majority of the votes cast.
THE BOARD OF DIRECTORS OF BANKUNITED HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT AND "FOR" THE PROPOSED AMENDMENT TO
BANKUNITED'S ARTICLES OF INCORPORATION.
Thank you, and we look forward to seeing you at the BankUnited Special Meeting.
Sincerely,
/s/ Alfred R. Camner
Alfred R. Camner
Chairman, Chief Executive Officer,
and President
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BANKUNITED FINANCIAL CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 29, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"BankUnited Special Meeting") of BankUnited Financial Corporation
("BankUnited"), will be held on October 29, 1996 at 10:00 a.m. at the Omni
Colonnade Hotel, 180 Aragon Avenue, Coral Gables, Florida for the following
purposes:
(1) To vote on a proposal to approve the Agreement and Plan of
Merger dated as of July 15, 1996, (the "Merger Agreement"), by and between
BankUnited and Suncoast Savings and Loan Association, FSA ("Suncoast") and the
consummation of the transactions contemplated thereby, pursuant to which
Suncoast will merge (the "Merger") into BankUnited, FSB, a wholly-owned
subsidiary of BankUnited, with BankUnited, FSB being the survivor of the
Merger, upon the terms and subject to the conditions set forth in the Merger
Agreement, as are more fully described in the accompanying Joint Proxy
Statement-Prospectus. A copy of the Merger Agreement is attached as Exhibit A
to the accompanying Joint Proxy Statement-Prospectus.
(2) To approve an amendment to Article VI of the Articles of
Incorporation of BankUnited to increase BankUnited's authorized shares of its
Class A Common Stock, $.01 par value per share, from 15,000,000 to 30,000,000
shares.
(3) To transact such other business as may properly come before
the meeting and any postponements or adjournments thereof.
The BankUnited Board has set the close of business on October 1, 1996
as the record date for determining stockholders entitled to notice of, and to
vote at, the BankUnited Special Meeting and any adjournments or postponements
thereof.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE OTHER MATTERS BEING CONSIDERED AT THE BANKUNITED SPECIAL MEETING AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT AND "FOR" THE PROPOSED AMENDMENT TO BANKUNITED'S ARTICLES OF
INCORPORATION.
By Order of the Board of Directors,
Marc D. Jacobson
Secretary
Coral Gables, Florida
October 3, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE BANKUNITED SPECIAL MEETING IN
PERSON, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE BANKUNITED SPECIAL MEETING, YOU MAY VOTE IN PERSON
IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
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Suncoast Savings and Loan Association, FSA
4000 Hollywood Boulevard
Hollywood, Florida 33021
Tel. (954) 981-6400
October 3, 1996
To the Stockholders of Suncoast Savings and Loan Association, FSA:
You are cordially invited to a Special Meeting of the Stockholders
(the "Suncoast Special Meeting") of Suncoast Savings and Loan Association, FSA
("Suncoast") to be held on November 12, 1996 at 11:00 a.m. at 4000 Hollywood
Boulevard, Suite 500, North Tower, Hollywood, Florida.
At the Suncoast Special Meeting, you will be asked to consider and
vote upon a proposal to approve an Agreement and Plan of Merger dated as of
July 15, 1996 (the "Merger Agreement"), by and between Suncoast and BankUnited
Financial Corporation ("BankUnited"), pursuant to which Suncoast will merge
(the "Merger") into BankUnited, FSB, a wholly-owned subsidiary of BankUnited,
with BankUnited, FSB being the survivor of the Merger. A copy of the Merger
Agreement is attached to the accompanying Joint Proxy Statement-Prospectus.
At the effective time of the Merger, the separate existence of
Suncoast shall cease and each outstanding share of Suncoast's Common Stock, par
value $1.10 per share (the "Suncoast Common Stock"), will be converted into one
share of Class A Common Stock, par value $.01 per share, of BankUnited and
each share of Suncoast's 8% Noncumulative Convertible Preferred Stock Series A,
par value $5.00 per share (the "Suncoast Preferred Stock"), will be converted
into one share of BankUnited's 8% Noncumulative Convertible Preferred Stock,
Series 1996, par value $.01 per share.
The Merger of BankUnited and Suncoast will result in BankUnited being
the fourth largest publicly held financial institution headquartered in South
Florida with over $1.2 billion in assets. The Merger will increase
BankUnited's market share, particularly in Broward County, allow BankUnited to
achieve economies associated with an in- market merger, and enable BankUnited
to compete more effectively with larger financial institutions in South
Florida.
Enclosed are a Notice of Special Meeting of Stockholders and a Joint
Proxy Statement-Prospectus which describes the Merger and the background to the
transaction. You are urged to read all of these materials carefully. The
Board of Directors has set the close of business on September 30, 1996 as the
record date for the Suncoast Special Meeting. Accordingly, only stockholders
of record on that date will be entitled to notice of, and to vote at, the
Suncoast Special Meeting or any adjournments or postponements thereof. Holders
of the Suncoast Common Stock and the Suncoast Preferred Stock are entitled to
vote together on approval of the Merger, with each share of the Suncoast Common
Stock entitled to one vote and each share of the Suncoast Preferred Stock
entitled to 1.67 votes (the number of shares of the Suncoast Common Stock into
which each share of the Suncoast Preferred Stock is presently convertible).
The affirmative vote of two-thirds of the votes of the Suncoast Common Stock
and the Suncoast Preferred Stock outstanding as of the record date is necessary
to approve the Merger.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE TAKE A FEW MINUTES TO REVIEW THIS MATERIAL, CAST YOUR VOTE ON THE
ENCLOSED PROXY CARD AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOUR PROMPT RESPONSE IS NEEDED TO AVOID FOLLOW-UP MAILINGS WHICH
WOULD INCREASE COSTS PAID BY ALL SHAREHOLDERS.
Suncoast is using Shareholder Communications Corporation, a
professional proxy solicitation firm, to assist shareholders in the voting
process. As the date of the meeting approaches, if we have not already heard
from you, you may receive a telephone call from Shareholder Communications
reminding you to exercise your right to vote.
THE BOARD OF DIRECTORS OF SUNCOAST HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE MERGER AGREEMENT.
Thank you, and we look forward to seeing you at the Suncoast Special Meeting.
Sincerely,
/s/ Albert J. Finch
Albert J. Finch
Chairman, Chief Executive Officer,
and President
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SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 12, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Suncoast Special Meeting") of Suncoast Savings and Loan Association, FSB
("Suncoast"), will be held on November 12, 1996 at 11:00 a.m. at 4000 Hollywood
Boulevard, Suite 500, North Tower, Hollywood, Florida. The purpose of the
Suncoast Special Meeting is to consider and vote on a proposal to approve the
Agreement and Plan of Merger, dated as of July 15, 1996 (the "Merger
Agreement"), by and between Suncoast and BankUnited Financial Corporation
("BankUnited") and the consummation of the transactions contemplated thereby,
pursuant to which Suncoast will be merged (the "Merger") into BankUnited, FSB,
a wholly-owned subsidiary of BankUnited, with BankUnited, FSB being the
survivor of the Merger, upon the terms and subject to the conditions set forth
in the Merger Agreement, as are more fully described in the enclosed Joint
Proxy Statement- Prospectus. A copy of the Merger Agreement is attached as
Exhibit A to the accompanying Joint Proxy Statement- Prospectus.
The Board of Directors has set the close of business on September 30,
1996 as the record date for determining stockholders entitled to notice of, and
to vote at, the Suncoast Special Meeting and any adjournments or postponements
thereof. The holders of record of Suncoast's Common Stock, par value $1.10 per
share (the "Suncoast Common Stock"), and Suncoast's 8% Noncumulative Preferred
Stock, Series A, par value $5.00 per share (the "Suncoast Preferred Stock"), at
the record date are entitled to notice of and to vote at the Suncoast Special
Meeting and any adjournments or postponements thereof.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT.
By Order of the Board of Directors,
Wendy M. Mitchler
Secretary
Hollywood, Florida
October 3, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE SUNCOAST SPECIAL MEETING IN
PERSON, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE SUNCOAST SPECIAL MEETING, YOU MAY VOTE IN PERSON IF
YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
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BANKUNITED FINANCIAL CORPORATION SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
255 ALHAMBRA CIRCLE 4000 HOLLYWOOD BOULEVARD
CORAL GABLES, FLORIDA 33134 HOLLYWOOD, FLORIDA 33021
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JOINT PROXY STATEMENT-PROSPECTUS
SPECIAL MEETING OF STOCKHOLDERS
BANKUNITED FINANCIAL CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
This Joint Proxy Statement-Prospectus is being furnished in connection
with the solicitation of proxies by the Board of Directors (the "BankUnited
Board") of BankUnited Financial Corporation ("BankUnited") to be used at the
Special Meeting of Stockholders of BankUnited to be held on October 29, 1996
(including any adjournments or postponements thereof, the "BankUnited Special
Meeting"). At the BankUnited Special Meeting, holders of the Series I Class A
Common Stock, par value $.01 per share (the "BankUnited Class A Common
Stock"), the Class B Common Stock, par value $.01 per share (the "BankUnited
Class B Common Stock"), and the Noncumulative Convertible Preferred Stock,
Series B, par value $.01 per share (the "BankUnited Series B Preferred Stock"),
of BankUnited will consider and vote upon a proposal to approve an Agreement
and Plan of Merger, dated as of July 15, 1996 (the "Merger Agreement"), by and
between BankUnited and Suncoast Savings and Loan Association, FSA ("Suncoast"),
providing for the merger (the "Merger") of Suncoast into BankUnited, FSB, a
wholly-owned subsidiary of BankUnited, with BankUnited, FSB being the survivor
of the Merger. The Merger Agreement is attached hereto as Exhibit A and is
incorporated herein by reference.
At the BankUnited Special Meeting BankUnited stockholders will also
consider and vote upon a proposed amendment to BankUnited's Articles of
Incorporation to increase the number of authorized shares of the Class A Common
Stock, $.01 par value, of BankUnited (of which the BankUnited Series I Class A
Common Stock is the only series outstanding) to 30,000,000 shares.
This Joint Proxy Statement-Prospectus is also furnished in connection
with the solicitation of proxies by the Board of Directors of Suncoast (the
"Suncoast Board") to be used at the Special Meeting of Stockholders of Suncoast
to be held on November 12, 1996 (including any adjournments or postponements
thereof, the "Suncoast Special Meeting"). At the Suncoast Special Meeting,
holders of Suncoast's Common Stock, par value $1.10 per share (the "Suncoast
Common Stock"), and 8% Noncumulative Preferred Stock, Series A, par value $5.00
per share (the "Suncoast Preferred Stock"), voting together, will consider and
vote upon a proposal to approve the Merger Agreement.
This Joint Proxy Statement-Prospectus and the respective forms of
proxy are first being mailed on or about October 3, 1996.
This Joint Proxy Statement-Prospectus also constitutes a prospectus of
BankUnited in respect of up to 2,453,554 shares of the BankUnited Class A
Common Stock and of up to 1,000,000 shares of BankUnited's 8% Noncumulative
Convertible Preferred Stock, Series 1996, par value $.01 per share (the "New
BankUnited Preferred Stock"), to be issued or reserved for issuance in
connection with the Merger. Upon consummation of the Merger (as described
herein), each share of the Suncoast Common Stock will be converted into the
right to receive one share of the BankUnited Class A Common Stock. Each share
of the BankUnited Class A Common Stock is entitled to one-tenth vote per share
on each matter submitted to a vote of BankUnited stockholders, in contrast to
the one vote per share to which the BankUnited Class B Common Stock is entitled
and the two and one-half votes per share to which the BankUnited Series B
Preferred Stock is entitled. In addition, the holders of the BankUnited Class
A Common Stock are entitled to dividends as declared by the BankUnited Board,
which may be declared solely on the BankUnited Class A Common Stock or not less
than 110% of the amount per share of any dividend declared on the BankUnited
Class B Common Stock. BankUnited has not paid dividends on its common stock
since 1994. It is BankUnited's present intention not to pay dividends on its
common stock for the foreseeable future. Information as to dividends paid on
the BankUnited Class A Common Stock and the BankUnited Class B Common Stock is
set forth in "Summary of Joint Proxy Statement- Prospectus--Comparative Stock
Prices and Dividends."
<PAGE> 9
Upon consummation of the Merger, each share of the Suncoast Preferred
Stock will be converted into the right to receive one share of the New
BankUnited Preferred Stock. The terms of the New BankUnited Preferred Stock to
be issued in the Merger will be substantially similar to the existing terms of
the Suncoast Preferred Stock. The differences between the two classes of
preferred stock are immaterial and are described below at "Comparison of
Stockholders' Rights - Preferred Stock." Holders of the New BankUnited
Preferred Stock will be entitled to receive, when, as and if declared by the
BankUnited Board, noncumulative cash dividends at an annual rate of 8% or $1.20
per share per annum, payable quarterly in arrears at the end of each calendar
quarter. Each share of the New BankUnited Preferred Stock will be convertible
at a conversion price of $9.00 per share divided into $15.00 per share
(equivalent to approximately 1.67 shares of the BankUnited Class A Common
Stock) and will be redeemable at the option of BankUnited prior at $15.00 per
share, provided that the BankUnited Class A Common Stock has a closing price
that is at least 120% of the conversion price for 20 out of 30 consecutive
trading days ending within five days of the date of the redemption notice, and
additionally after June 30, 1998 at redemption prices beginning at $16.20 per
share until June 30, 1999 and at declining redemption prices thereafter.
Holders of the New BankUnited Preferred Stock will have the same limited rights
to vote as the holders of the Suncoast Preferred Stock currently have. That
is, on the limited matters on which they are entitled to vote, they will be
entitled to the number of votes that they would have had if they had converted
their shares of the New BankUnited Preferred Stock into shares of BankUnited
Class A Common Stock as of the record date for the meeting of stockholders.
Each share of the BankUnited Class A Common Stock is entitled to one-tenth vote
per share on each matter submitted to a vote of BankUnited stockholders. Upon
any liquidation, dissolution, or winding up of BankUnited, the holders of the
New BankUnited Preferred Stock will be entitled to receive $15.00 per share out
of assets of BankUnited legally available for distribution to stockholders,
prior to any distributions being made with respect to the BankUnited Class A
Common Stock, the BankUnited Class B Common Stock, or any other BankUnited
capital stock that is junior to the New BankUnited Preferred Stock with respect
to payments on liquidation, plus an amount equal to any dividends declared and
unpaid, without interest. Unlike Suncoast, BankUnited has other series of
preferred stock outstanding. The New BankUnited Preferred Stock will rank on a
parity with BankUnited's 8% Noncumulative Convertible Preferred Stock, Series
1993, par value $.01 per share (the "BankUnited 8% Preferred Stock"), and
BankUnited's 9% Noncumulative Perpetual Preferred Stock, par value $.01 per
share (the "BankUnited 9% Preferred Stock"), and senior to three other
outstanding series of preferred stock issued by BankUnited.
Shares of the BankUnited Class A Common Stock, the Suncoast Common
Stock and the Suncoast Preferred Stock are traded on the Nasdaq National
Market ("Nasdaq"). The reported last sale prices of the BankUnited Class A
Common Stock, the Suncoast Common Stock and the Suncoast Preferred Stock were
$7.25, $6.25 and $13.125, respectively, on July 12, 1996 (the last trading day
prior to the public announcement of the Merger), and were $7.75, $7.25 and
$14.50, respectively, on September 27, 1996.
BankUnited has filed a Registration Statement (the "Registration
Statement") on Form S-4 under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") covering a maximum of 2,453,554 shares of the BankUnited Class A
Common Stock and 1,000,000 shares of the New BankUnited Preferred Stock to be
issued or reserved for issuance in connection with the Merger and for the other
purposes described herein. This Joint Proxy Statement-Prospectus does not
cover any resales of the BankUnited Class A Common Stock or the New BankUnited
Preferred Stock to be received by stockholders of Suncoast upon consummation of
the Merger, and no person is authorized to make use of this Joint Proxy
Statement-Prospectus in connection with any such resale.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS JOINT PROXY
STATEMENT-PROSPECTUS. THE PROPOSED MERGER IS A COMPLEX TRANSACTION.
STOCKHOLDERS ARE STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS JOINT PROXY
STATEMENT-PROSPECTUS IN ITS ENTIRETY.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS ASSOCIATION INSURANCE FUND
OR ANY OTHER FEDERAL OR STATE GOVERNMENT AGENCY.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
<PAGE> 10
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS JOINT PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
All information contained in this Joint Proxy Statement-Prospectus
with respect to BankUnited has been supplied by BankUnited and all information
with respect to Suncoast has been supplied by Suncoast.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE HEREIN
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY BANKUNITED OR SUNCOAST. THIS DOCUMENT DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
JOINT PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SHARES OF THE
BANKUNITED CLASS A COMMON STOCK OR THE NEW BANKUNITED PREFERRED STOCK HEREUNDER
WILL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE AFFAIRS OF BANKUNITED OR SUNCOAST SINCE THE DATE HEREOF.
The date of this Joint Proxy Statement-Prospectus is October 3, 1996.
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Information Incorporated by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Documents Delivered with this Proxy Statement-prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary of Joint Proxy Statement-prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Date, Time and Place of Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Purposes of Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Shares Entitled to Vote; Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Vote Required to Approve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recommendations of the Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Fairness Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Conditions to the Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Board of Directors, Management and Operations Following the Merger . . . . . . . . . . . . . . . . . . . . . . 7
Regulatory Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Certain Differences in the Rights of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
No Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Comparative Stock Prices and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selected Historical and Pro Forma per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
BankUnited Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Suncoast Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Pro Forma Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Suncoast Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . 16
Factors Affecting Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Impact of Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
New Accounting Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Contingency Relating to Recapitalization of the Savings Association Insurance Fund . . . . . . . . . . . . . 28
Bankunited Financial Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Suncoast Savings and Loan Association, FSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Special Meeting of Bankunited Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Date, Time, Place, Purpose of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Proxies; Voting and Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Votes Required; Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Special Meeting of Suncoast Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Date, Time and Place; Purpose of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Proxies; Voting and Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Votes Required; Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
i
<PAGE> 12
<TABLE>
<S> <C>
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
BankUnited's Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Suncoast's Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Pro Forma Merger Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Merger Premiums in Precedent Thrift Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Market Trading Multiples in Comparable Public Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Structure of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Conversion of Suncoast Capital Stock; Treatment of Suncoast Stock Options and Warrants . . . . . . . . . . . 40
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Conduct of Business Pending the Merger and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . 42
Conditions to the Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Regulatory Approval Required for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Termination of the Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Modification and Waiver of the Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Board of Directors, Management and Operations Following the Merger . . . . . . . . . . . . . . . . . . . . . 49
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Resales of BankUnited Class a Common Stock and New BankUnited Preferred Stock in the Merger . . . . . . . . 49
No Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Unaudited Pro Forma Condensed Combined Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Description of Bankunited Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Outstanding Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Description of New Bankunited Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
New Bankunited Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Comparison of Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Required Shareholder Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Amendment to Charter or Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 63
Provisions Relating to Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Certain Anti-takeover Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Amendment to Bankunited Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Bankunited Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . 69
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
ii
<PAGE> 13
<TABLE>
<S> <C>
SUNCOAST SAVINGS AND LOAN ASSOCIATION - INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBITS
Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Form of Statement of Designation of BankUnited's 8% Noncumulative
Convertible Preferred Stock, Series 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit B
Fairness Opinion of Raymond James & Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit C
Tax Opinion of Kronish, Lieb, Weiner & Hellman LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit D
Amendment to Article IV of BankUnited's Articles of Incorporation to
Increase Authorized BankUnited Class A Common Stock to
30,000,000 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit E
</TABLE>
iii
<PAGE> 14
AVAILABLE INFORMATION
BankUnited has filed the Registration Statement with the Commission
covering the shares of the BankUnited Class A Common Stock and the New
BankUnited Preferred Stock to be issued or reserved for issuance in connection
with the Merger. As permitted by the rules and regulations of the Commission,
this Joint Proxy Statement-Prospectus omits certain information, exhibits and
undertakings contained in the Registration Statement. For further information
pertaining to the securities offered hereby, reference is made to the
Registration Statement, including the exhibits filed as a part thereof. Such
additional information may be inspected and copied as set forth below.
BankUnited and Suncoast are subject to the information reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, file reports, proxy statements and other
information with the Commission and the Office of Thrift Supervision (the
"OTS"), respectively. The Registration Statement discussed below, as well as
reports, proxy statements and other information filed by BankUnited pursuant to
the informational requirements of the Exchange Act, can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: the Northeast Regional Office, 7 World Trade Center, Suite
1300, New York, New York 10048; and the Midwest Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Additional information may also be obtained at no cost from the Commission
internet site at http://www.sec.gov. In addition, equity securities of
BankUnited are traded on Nasdaq and reports, proxy statements, and other
information concerning BankUnited are available for inspection and copying at
the offices of the Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington,
D.C. 20006. Reports (including annual reports to shareholders, Form 10-K
reports, Form 8-K reports, and Form 10-Q reports), proxy statements and other
information filed by Suncoast pursuant to the informational requirements of the
Exchange Act can be inspected and copied at the public reference facilities
maintained by the OTS at 1700 G Street, N.W., Washington, D.C. 20552 or at the
OTS Southeast Regional Office, 1475 Peachtree Street, N.E., Atlanta, Georgia
30309. The Suncoast Common Stock and the Suncoast Preferred Stock are listed
for trading on Nasdaq and such reports, proxy statements and other information
concerning Suncoast should also be available for inspection and copying at the
offices of the Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
INFORMATION INCORPORATED BY REFERENCE
THIS JOINT PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY
SUCH DOCUMENTS, OTHER THAN EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE TO
ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY
STATEMENT-PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL REQUEST TO THE
FOLLOWING:
<TABLE>
<S> <C>
BANKUNITED DOCUMENTS SUNCOAST DOCUMENTS
BankUnited Financial Corporation Suncoast Savings and Loan Association, FSA
255 Alhambra Circle 4000 Hollywood Boulevard
Coral Gables, Florida 33134 Hollywood, Florida 33021
Attention: Nancy L. Ashton Attention: Wendy M. Mitchler
(305) 569-2000 (954) 981-6400
</TABLE>
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, A REQUEST MUST
BE RECEIVED NO LATER THAN OCTOBER 23, 1996.
BankUnited. The following BankUnited documents are incorporated by
reference herein (Commission File No. 5- 43936):
(1) BankUnited's Annual Report on Form 10-K\A for the year ended
September 30, 1995, filed with the Commission on February 5, 1996.
<PAGE> 15
(2) BankUnited's Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1995, March 31, 1996 and June 30, 1996, filed with the
Commission on February 13, 1996, May 10, 1996, and August 13, 1996,
respectively.
(3) BankUnited's Current Reports on Form 8-K dated November 30,
1995, March 1, 1996, and July 17, 1996 filed with the Commission on December 1,
1996, March 4, 1996 and July 17, 1996, respectively.
Suncoast. Suncoast's Annual Report on Form 10-K for the year ended
June 30, 1996, filed with the OTS on September 27, 1996, is incorporated by
reference herein.
All documents filed with the Commission by BankUnited and with the OTS
by Suncoast pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of effectiveness of the Registration Statement of which
this Joint Proxy Statement-Prospectus forms a part and prior to the date of the
BankUnited Special Meeting and the Suncoast Special Meeting are incorporated
herein by reference and such documents will be deemed to be a part hereof from
the date of filing of such documents. Any statement contained in this Joint
Proxy Statement-Prospectus or in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded
for purposes of this Joint Proxy Statement-Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this Joint
Proxy Statement-Prospectus.
DOCUMENTS DELIVERED WITH THIS JOINT PROXY STATEMENT-PROSPECTUS
This Joint Proxy Statement-Prospectus is delivered together with (i)
BankUnited's annual report on Form 10-K\A for the fiscal year ended September
30, 1995; and (ii) BankUnited's quarterly report on Form 10-Q for the quarter
ended June 30, 1996.
2
<PAGE> 16
SUMMARY OF JOINT PROXY STATEMENT-PROSPECTUS
The following is a summary, which is necessarily incomplete, of
certain information contained elsewhere in this Joint Proxy
Statement-Prospectus or in documents incorporated herein by reference.
Reference is made to, and this Summary is qualified in its entirety by, the
more detailed information contained herein, the Exhibits hereto and the
documents incorporated by reference herein. Each stockholder is urged to read
this Joint Proxy Statement-Prospectus and the Exhibits hereto, including the
Merger Agreement which is attached hereto as Exhibit A, in their entirety and
with care.
THE PARTIES
BankUnited is a Florida corporation which is the savings and loan
holding company for BankUnited, FSB. BankUnited through BankUnited, FSB
provides banking and financial services to its customers through nine branch
offices in Dade, Broward and Palm Beach counties in Florida. Suncoast is a
federally chartered stock savings association. Suncoast provides banking and
financial services to its customers through six branch offices in Broward and
Palm Beach counties in Florida. BankUnited is headquartered at 255 Alhambra
Circle, Coral Gables, Florida 33134 and its telephone number is (305)
569-2000. Suncoast is headquartered at 4000 Hollywood Boulevard, Hollywood,
Florida 33021 and its telephone number is (954) 981-6400. See "BankUnited
Financial Corporation" and "Suncoast Savings and Loan Association, FSA."
DATE, TIME AND PLACE OF SPECIAL MEETINGS
The BankUnited Special Meeting will be held at the Omni Colonnade
Hotel, 180 Aragon Avenue, Coral Gables, Florida at 10:00 a.m. on October 29,
1996. The Suncoast Special Meeting will be held at 4000 Hollywood Boulevard,
Suite 500, North Tower, Hollywood, Florida at 11:00 a.m. on November 12, 1996.
PURPOSES OF SPECIAL MEETINGS
BankUnited. The BankUnited Special Meeting will be held for the
purpose of considering and voting upon a proposal to approve the Merger
Agreement and the consummation of the transactions contemplated thereby,
including the Merger, and for the purpose of considering and voting upon a
proposed amendment to BankUnited's Articles of Incorporation to increase the
number of the authorized shares of the Class A Common Stock, $.01 par value per
share, of BankUnited to 30,000,000 shares. See "Meeting of BankUnited
Stockholders--Date, Time and Place; Purpose of Meeting."
Suncoast. The Suncoast Special Meeting will be held for the purpose
of considering and voting upon a proposal to approve the Merger Agreement and
the consummation of the transactions contemplated thereby, including the
Merger. See "Meeting of Suncoast Stockholders--Date, Time and Place; Purpose
of Meeting."
SHARES ENTITLED TO VOTE; QUORUM
BankUnited. The BankUnited Board has set the close of business on
October 1, 1996 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the BankUnited Special Meeting. Holders
of the BankUnited Class A Common Stock, the BankUnited Class B Common Stock,
and the BankUnited Series B Preferred Stock are entitled to vote together on
the proposal to approve the Merger Agreement and the proposal to approve the
amendment to BankUnited's Articles of Incorporation, with each share of the
BankUnited Class A Common stock entitled to one-tenth vote; each share of the
BankUnited Class B Common Stock entitled to one vote; and each share of the
BankUnited Series B Preferred Stock entitled to two and one-half votes. In
addition the BankUnited Class A Common Stock and the BankUnited Class B Common
Stock, each voting as a separate class, must approve the proposed amendment to
BankUnited's Articles of Incorporation by the affirmative vote of a majority of
the votes cast. The presence, in person or by proxy, of shares as of the
record date representing at least a majority of the votes entitled to be cast
as to a matter is necessary to constitute a quorum at the BankUnited Special
Meeting for action on such matter.
3
<PAGE> 17
As of the record date, 5,454,201 shares of the BankUnited Class A
Common Stock, 251,515 shares of the BankUnited Class B Common Stock, and
183,818 shares of the BankUnited Series B Preferred Stock were issued,
outstanding and entitled to cast 545,420, 251,515 and 459,545 votes,
respectively. Of these shares, approximately 385,491 shares (7%) of the
BankUnited Class A Common Stock, 162,690 shares (65%) of the BankUnited Class B
Common Stock, and 133,138 shares (72%) of the BankUnited Series B Preferred
Stock, representing 534,076 (42.5%) of the votes entitled to be cast, were held
by directors and executive officers of BankUnited and their respective
affiliates. Each director and executive officer of BankUnited has indicated an
intention to vote the BankUnited Class A Common Stock, the BankUnited Class B
Common Stock, and the BankUnited Series B Preferred Stock, beneficially owned
by him or her for approval of the Merger Agreement and the consummation of the
transactions contemplated thereby and for approval of the amendment to
BankUnited's Articles of Incorporation. See "Meeting of BankUnited
Stockholders--Votes Required; Principal Stockholders."
Suncoast. The Suncoast Board has set the close of business on
September 30, 1996 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Suncoast Special Meeting. The
presence, in person or by proxy, of shares representing at least a majority of
the votes entitled to be cast by the holders of the Suncoast Common Stock and
the Suncoast Preferred Stock outstanding on the record date is necessary to
constitute a quorum at the Suncoast Special Meeting. Holders of the Suncoast
Common Stock and the Suncoast Preferred Stock are entitled to vote together on
approval of the Merger, with each share of Suncoast Common Stock entitled to
one vote and each share of the Suncoast Preferred Stock entitled to 1.67 votes
(the number of shares of the Suncoast Common Stock into which each share of the
Suncoast Preferred Stock is presently convertible).
As of the record date, 2,195,230 shares of the Suncoast Common Stock
and 920,000 shares of the Suncoast Preferred Stock were issued, outstanding and
entitled to vote 2,195,230 and 1,536,400 votes, respectively. Approximately
539,505 shares of the Suncoast Common Stock entitled to cast 539,505 votes
(25%) and 26,399 shares of the Suncoast Preferred Stock entitled to cast 44,086
votes (3%) were held by directors and executive officers of Suncoast and their
affiliates. Each such director and executive officer of Suncoast has indicated
his or her intention to vote the Suncoast Common Stock and the Suncoast
Preferred Stock beneficially owned by him or her for approval of the Merger
Agreement and the consummation of the transactions contemplated thereby. See
"Meeting of Suncoast Stockholders--Votes Required; Principal Stockholders."
VOTE REQUIRED TO APPROVE
BankUnited. The affirmative vote of a majority of the votes of the
BankUnited Class A Common Stock, the BankUnited Class B Common Stock, and the
BankUnited Series B Preferred Stock, cast at the BankUnited Special Meeting,
is necessary to approve the Merger Agreement and the amendment to the
BankUnited Articles of Incorporation. In addition the BankUnited Class A
Common Stock and the BankUnited Class B Common Stock, each voting as a separate
class, must approve the proposed amendment to BankUnited's Articles of
Incorporation by the affirmative vote of a majority of the votes cast.
Approval of the Merger Agreement by the requisite vote of the holders of the
BankUnited Class A Common Stock, BankUnited Class B Common Stock, and the
BankUnited Series B Preferred Stock is a condition to, and is required for,
consummation of the Merger.
Suncoast. The affirmative vote of at least two-thirds of the votes of
the Suncoast Common Stock and the Suncoast Preferred Stock outstanding as of
the record date is necessary to approve the Merger. Approval of the Merger
Agreement by the requisite vote of the holders of the Suncoast Common Stock and
the Suncoast Preferred Stock, voting together, is a condition to, and required
for, consummation of the Merger.
TERMS OF THE MERGER
At the Effective Time, Suncoast will be merged with and into
BankUnited, FSB, a wholly-owned subsidiary of BankUnited, and BankUnited, FSB
will be the surviving corporation in the Merger. In connection with the
4
<PAGE> 18
Merger (i) each then outstanding share of the Suncoast Common Stock will be
converted into the right to receive one share of the BankUnited Class A Common
Stock; and (ii) each share of the Suncoast Preferred Stock will be converted
into the right to receive one share of the New BankUnited Preferred Stock ((i)
and (ii) preceding are subsequently collectively referred to herein as the
"Exchange Ratio"). Suncoast's obligation to consummate the Merger is not
conditioned upon the BankUnited Class A Common Stock continuing to trade at any
specified minimum price during any period prior to the time at which the Merger
is effective (the "Effective Time"). Because the Exchange Ratio is fixed and
because the market price of the BankUnited Class A Common Stock is subject to
fluctuation, the value of the BankUnited Class A Common Stock that holders of
the Suncoast Common Stock will receive in the Merger may increase or decrease
prior to the Merger. The terms of the New BankUnited Preferred Stock, which
are set forth in Exhibit B hereto, will be substantially similar to the terms
of the Suncoast Preferred Stock. See "The Merger--Conversion of Suncoast
Capital Stock; Treatment of Suncoast Stock Options and Warrants," "Description
of BankUnited Capital Stock," "Description of New BankUnited Preferred Stock"
and "The Merger--No Appraisal Rights." The Merger Agreement provides for
BankUnited to use its best efforts to list, prior to the Effective Time, on the
Nasdaq, the shares of the BankUnited Class A Common Stock and the New
BankUnited Preferred Stock to be issued to holders of the Suncoast Common Stock
and the Suncoast Preferred Stock, as the case may be, in the Merger. See "The
Merger-Nasdaq Listing." It is a condition to the consummation of the Merger
that such shares of BankUnited capital stock be authorized for listing on the
Nasdaq effective upon official notice of issuance.
Each stock option granted pursuant to the Suncoast Stock Option Plan
which is outstanding and unexercised immediately prior to the Effective Time
whether or not then exercisable will be assumed by BankUnited. From and after
the Effective Time each outstanding option to purchase Suncoast Common Stock (a
"Suncoast Option") will be immediately exercisable for the number of shares of
the BankUnited Class A Common Stock equal to the number of shares of the
Suncoast Common Stock subject to the Suncoast Option immediately prior to the
Effective Time and the per share exercise price set forth in the Suncoast
Option shall remain the same. As of the record date, 122,800 shares of the
Suncoast Common Stock were subject to such options.
Suncoast is a party to that certain Underwriters' Warrant Agreement
dated as of July 9, 1993 between Suncoast and Josephthal Lyon & Ross
Incorporated, Southeast Research Partners, Inc. and Rodman & Renshaw, Inc. (the
"Suncoast Warrants."). In the Merger, holders of the Suncoast Warrants will
have their Suncoast Warrants converted into warrants to acquire the BankUnited
Class A Common Stock and/or the New BankUnited Preferred Stock on a one share
for one share basis and on substantially the same terms as those set forth in
such Underwiters' Warrant Agreement. BankUnited has agreed to enter into a
supplemental warrant agreement with respect to the Suncoast Warrants.
Currently, holders of the Suncoast Warrants, which expire on July 9, 1998,
have the right to purchase (a) up to 80,000 shares of Suncoast Preferred Stock
at an exercise price of $18.00 per share, (b) up to 134,457 shares of Suncoast
Common Stock at an exercise price of $10.80 per share, or (c) any combination
of Suncoast Preferred Stock or Suncoast Common Stock at the exercise prices set
forth above which results in an aggregate exercise price of up to $1,440,000.
The Merger will become effective at the Effective Time as set forth in
the Articles of Consolidation of Suncoast and BankUnited, FSB which will be
filed with the OTS.
See "The Merger--Structure of the Merger," "--Conversion of Suncoast
Capital Stock; Treatment of Suncoast Stock Options and Warrants," "--Exchange
of Certificates," and "--Effective Time."
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The proxies are being solicited by each of the boards of directors of
BankUnited and Suncoast. Each of the boards of directors of BankUnited and
Suncoast has unanimously approved the Merger Agreement. EACH BOARD UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS OF BANKUNITED AND SUNCOAST, RESPECTIVELY, VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT. BANKUNITED'S
5
<PAGE> 19
BOARD ALSO UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF BANKUNITED VOTE "FOR"
THE PROPOSAL TO AMEND BANKUNITED'S ARTICLES OF INCORPORATION.
Each of the BankUnited Board and the Suncoast Board believes that the
terms of the Merger Agreement are fair and in the best interests of BankUnited
and its stockholders and Suncoast and its stockholders, respectively. The
terms of the Merger Agreement were reached on the basis of arm's-length
negotiations between BankUnited and Suncoast. In the course of reaching their
respective decisions to approve the Merger Agreement, the BankUnited Board and
the Suncoast Board consulted with their respective legal advisors regarding the
legal terms of the Merger Agreement and their respective obligations in
consideration thereof. In addition, the Suncoast Board consulted with its
financial advisor, Raymond James & Associates, Inc. ("Raymond James"), as to
the fairness, from a financial point of view, of the Exchange Ratio to the
holders of Suncoast Common Stock and to the holders of Suncoast Preferred
Stock.
See "The Merger--Background of the Merger," "--BankUnited's Reasons
for the Merger," "--Suncoast's Reasons for the Merger" and "--Opinion of
Financial Advisor."
FAIRNESS OPINION OF FINANCIAL ADVISOR
Raymond James, Suncoast's financial advisor, has rendered its written
opinion, as of July 15, 1996 and its written opinion as of the date of this
Joint Proxy Statement-Prospectus, to the Suncoast Board that the Exchange Ratio
is fair, from a financial point of view, to the holders of the Suncoast Common
Stock and to the holders of the Suncoast Preferred Stock.
The opinion of Raymond James, which is attached hereto as Exhibit C,
should be read in its entirety with respect to the assumptions made, matters
considered and limits of the review undertaken by Raymond James in rendering
its opinion. Suncoast has agreed to pay fees to Raymond James, a portion of
which is contingent upon consummation of the Merger. See "The Merger--Opinion
of Financial Advisor" for a further description of the opinion of Raymond James
and of the fees payable to Raymond James by Suncoast.
See "The Merger--Background of the Merger," "--Suncoast's Reasons for
the Merger," "--Opinion of Financial Advisor" and Exhibit C to this Joint Proxy
Statement-Prospectus.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to certain conditions, including
the approval of the Merger Agreement by the votes of stockholders of BankUnited
and Suncoast described in "Summary of Joint Proxy Statement-Prospectus--Vote
Required to Approve;" the effectiveness of the Registration Statement of which
this Joint Proxy Statement-Prospectus forms a part; approval of the Merger by
certain Federal regulatory authorities; receipt by Suncoast of an opinion of
counsel dated as of the Effective Time as to the tax-free nature of the Merger
for Federal income tax purposes; the absence of any event, occurrence, or
circumstance that would constitute a Material Adverse Effect (as defined in the
Merger Agreement) as to BankUnited or Suncoast; BankUnited and Suncoast each
maintaining a Net Worth (as defined in the Merger Agreement) of not less than
$64,700,000 and $22,000,000, respectively; the authorization for trading on the
Nasdaq upon official notice of issuance of the shares of the BankUnited Class A
Common Stock and New BankUnited Preferred Stock issuable pursuant to the
Merger; and the absence of any injunction or legal restraint prohibiting
consummation of the Merger and certain other customary closing conditions.
Each of BankUnited and Suncoast has received an opinion from Kronish, Lieb,
Weiner & Hellman LLP, dated as of the date hereof, a copy of which appears as
Exhibit D hereto, as to the tax-free nature of the Merger for Federal income
tax purposes. There can be no assurance as to when and if the remaining
conditions will be satisfied (or, where permissible, waived) or that the Merger
will be consummated.
See "The Merger--Conditions to the Consummation of the Merger" and
"--Regulatory Approval Required for the Merger."
6
<PAGE> 20
NASDAQ LISTING
The Merger Agreement provides for BankUnited to use its best efforts
to list, prior to the Effective Time, on the Nasdaq, upon official notice of
issuance, the shares of the BankUnited Class A Common Stock and the New
BankUnited Preferred Stock to be issued to holders of the Suncoast Common Stock
and the Suncoast Preferred Stock, as the case may be, in the Merger.
BankUnited has reserved the Nasdaq symbol "BKUNN" for the New BankUnited
Preferred Stock and plans to apply for listing on Nasdaq shortly. It is a
condition to the consummation of the Merger that such shares of BankUnited
capital stock be authorized for listing on the Nasdaq effective upon official
notice of issuance.
BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
From and after the Effective Time, the Board of Directors of
BankUnited will consist of 17 persons, including Albert J. Finch, the Chairman
of the Board, Chief Executive Officer and President of Suncoast, and Norman
Mains, Irving Cohen, and E.J. Guisti, each a director of Suncoast. At the
Effective Time, each of the foregoing persons will also be appointed to the
Board of Directors of BankUnited, FSB. The Merger Agreement also provides that
Albert J. Finch will be appointed as a Vice Chairman of the boards of both
BankUnited and BankUnited, FSB.
The executive officers of BankUnited after the Merger will be
comprised of members of BankUnited's current senior management and certain
members of Suncoast's current senior management. It has not yet been
determined which members of Suncoast's management will become officers of
BankUnited following the Merger. Additional information about the above
mentioned Suncoast directors is contained in Suncoast's Annual Report on Form
10-K for the year ended June 30, 1996, which is incorporated by reference in
this Joint Proxy Statement-Prospectus.
See "Available Information," "Information Incorporated by Reference,"
"Interests of Certain Persons in the Merger" and "Unaudited Pro Forma Condensed
Combined Financial Statements."
REGULATORY APPROVAL
The Merger is subject to approval by the OTS. BankUnited has filed
prior to the date hereof certain applications with the OTS with respect to the
Merger. The Merger will not proceed until the Requisite Regulatory Approvals
(as defined herein) have been obtained and such approvals are in full force and
effect. There can be no assurance that the Merger will be approved by the OTS.
If such approval is received, there can be no assurance as to the date of such
approval or the absence of any litigation challenging such approval. See "The
Merger--Regulatory Approval Required for the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a tax free reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"). Kronish, Lieb, Weiner & Hellman LLP, tax counsel to BankUnited, has
delivered an opinion to BankUnited and Suncoast to the effect that no gain or
loss will be recognized by the holders of the Suncoast Common Stock and the
holders of the Suncoast Preferred Stock as a result of the Merger. A copy of
such opinion appears as Exhibit D to this Joint Proxy Statement-Prospectus.
For a more complete description of the Federal income tax consequences, see
"The Merger--Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase under generally
accepted accounting principles ("GAAP"). See "The Merger--Accounting
Treatment."
7
<PAGE> 21
TERMINATION
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the Effective Time under certain circumstances,
including (i) by mutual consent of BankUnited and Suncoast; (ii) by BankUnited
or Suncoast if the OTS has denied approval of the Merger or if the Effective
Time has not occurred by February 28, 1997; (iii) by BankUnited or Suncoast if
the stockholders of BankUnited or Suncoast fail to approve the Merger Agreement
at the BankUnited Special Meeting or the Suncoast Special Meeting,
respectively, or (iv) by Suncoast if, prior to the Effective Time, it receives
another acquisition proposal that the Suncoast Board determines in its good
faith judgment and in the exercise of its fiduciary duties, based as to legal
matters on the written opinion of legal counsel and as to financial matters on
the written opinion of an investment banking firm familiar with savings
institutions, is more favorable to the Suncoast stockholders than the Merger
and that the failure to terminate the Merger Agreement and accept such
alternative acquisition proposal would be inconsistent with the proper exercise
of such fiduciary duties. If the Merger Agreement is terminated under certain
circumstances, the Merger Agreement provides for payment by BankUnited or
Suncoast of termination fees. See "The Merger--Termination of the Merger
Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Suncoast's management and the Suncoast Board may be
deemed to have interests in the Merger in addition to their interests, if any,
as stockholders of Suncoast generally. These include, among other things,
certain employment continuation agreements and/or change-of-control agreements
providing for severance pay and Albert J. Finch's consulting agreement and the
directorships on the BankUnited Board of former Suncoast directors. See
"Merger-- Board of Directors, Management and Operations following the Merger."
CERTAIN DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS
The rights of stockholders and other corporate matters relating to the
BankUnited Class A Common Stock and the New BankUnited Preferred Stock are
controlled by BankUnited's Articles of Incorporation and Bylaws and by the
Florida Business Corporation Act (the "FBCA"). The rights of Suncoast
stockholders and other corporate matters relating to the Suncoast Common Stock
and the Suncoast Preferred Stock are controlled by the Suncoast Charter and
Bylaws and by the regulations of the OTS. Upon consummation of the Merger,
stockholders of Suncoast will become stockholders of BankUnited, whose rights
will be governed by BankUnited's Articles of Incorporation, its Bylaws and the
provisions of the FBCA. See "Comparison of Stockholders' Rights."
NO APPRAISAL RIGHTS
Under applicable law, holders of the Suncoast Common Stock and the
Suncoast Preferred Stock will have no appraisal rights in connection with the
Merger Agreement and the consummation of the transactions contemplated thereby.
See "The Merger--No Appraisal Rights."
8
<PAGE> 22
COMPARATIVE STOCK PRICES AND DIVIDENDS
The shares of the BankUnited Class A Common Stock, the Suncoast Common
Stock, and the Suncoast Preferred Stock are listed for trading on the Nasdaq
under the symbols "BKUNA," "SCSL," and "SCSLP," respectively. The table below
sets forth the range of high and low bid prices for the BankUnited Class A
Common Stock, the Suncoast Common Stock, and the Suncoast Preferred Stock
quoted on the Nasdaq and the cash dividends declared thereon for the periods
indicated.
<TABLE>
<CAPTION>
BANKUNITED CLASS A COMMON STOCK(1) SUNCOAST COMMON STOCK SUNCOAST PREFERRED STOCK
---------- ----- - ------ -------- --------------- ------ --------- --------------------------------
PRICE PRICES PRICES
------------- CASH DIVIDENDS ------------ CASH DIVIDENDS --------------- CASH DIVIDENDS
HIGH LOW PER SHARE(2) HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- ------------ ---- --- ------------- ---- --- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 $ 7.183 $ 2.400 $ .069 $5.75 $1.625 -- $ -- $ -- $ --
1993 12.609 7.000 .094 9.375 5.00 -- 18.50 15.00 --
1994 8.250 6.000 .075 9.375 5.00 -- 19.125 11.75 1.15
1995 8.750 4.500 -- 9.063 5.50 -- 15.547 12.25 1.20
1996 (through 8.750 6.000 -- 7.00 5.75 -- 15.375 13.00 1.20
September 27)
- ---------------------
</TABLE>
(1) Adjusted to reflect a 15% stock dividend paid in April of 1993 on the
BankUnited Class A Common Stock.
(2) Cash dividends per share paid on the BankUnited Class B Common Stock
were as follows: 1992 - none; 1993 - $.038; 1994 - $.03; 1995 - none;
1996 through September 27 - none.
The following table sets forth the closing bid price of the BankUnited
Class A Common Stock, the Suncoast Common Stock, and the Suncoast Preferred
Stock on July 12, 1996 (the last trading day prior to the public announcement
of the proposed Merger) and September 27, 1996 (the latest practicable trading
day before the printing of this Joint Proxy Statement-Prospectus.)
<TABLE>
<CAPTION>
BANKUNITED CLASS A SUNCOAST SUNCOAST
COMMON STOCK COMMON STOCK PREFERRED STOCK
------------------ ------------ ---------------
<S> <C> <C> <C>
July 12, 1996 . . . . . . . . $7.25 $6.25 $13.125
September 27, 1996 . . . . . 7.75 7.25 14.50
</TABLE>
No assurance can be given as to the market price of the BankUnited
Class A Common Stock, the Suncoast Common Stock, or the Suncoast Preferred
Stock at the Effective Time. Because the Exchange Ratio is fixed and because
the market price of the BankUnited Class A Common Stock is subject to
fluctuation, the value of the shares of BankUnited Class A Common Stock that
holders of the Suncoast Common Stock will receive in the Merger may increase or
decrease prior to and following the Merger. Furthermore, the actual market
value of the New BankUnited Preferred Stock may not be determined with accuracy
until the New BankUnited Preferred Stock begins trading on the Nasdaq.
Stockholders are advised to obtain current market quotations for the BankUnited
Class A Common Stock, the Suncoast Common Stock, and the Suncoast Preferred
Stock.
9
<PAGE> 23
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA
The unaudited information set forth in the following tables reflects
certain comparative per common share data related to income per share, cash
dividends declared per share, and book value per share (i) on an historical
basis for BankUnited and Suncoast; (ii) on a pro forma combined basis per share
of the BankUnited Class A Common Stock assuming consummation of the Merger; and
(iii) on an equivalent pro forma combined basis per share of the Suncoast
Common Stock assuming consummation of the Merger.
The information shown below should be read in conjunction with the
consolidated historical financial statements of BankUnited and Suncoast,
including the respective notes thereto, which are included or incorporated by
reference in this Joint Proxy Statement-Prospectus and the unaudited pro forma
condensed combined financial information, including the notes thereto, which
appears elsewhere in this Joint Proxy Statement-Prospectus. The pro forma data
is presented for comparative purposes only and is not necessarily indicative of
the combined financial position or results of operations which would have been
realized had the acquisitions been consummated during the period or as of the
dates for which the pro forma data is presented.
See "Information Incorporated by Reference," "Unaudited Pro Forma
Condensed Combined Financial Statements," and "Suncoast Savings and Loan
Association--Consolidated Financial Statements."
<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
NINE MONTHS YEAR ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------- ------------
1996 1995
---- ----
<S> <C> <C>
BANKUNITED CLASS A COMMON STOCK
Earnings per share-primary (a):
Historical . . . . . . . . . . . . . . . . . . . . . $ .28 $ 1.77
Pro forma (b) . . . . . . . . . . . . . . . . . . . .39 1.02
Earnings per share-fully diluted(a):
Historical . . . . . . . . . . . . . . . . . . . . . .28 1.26
Pro forma (b) . . . . . . . . . . . . . . . . . . . .38 .87
Cash dividends declared per share:
Historical . . . . . . . . . . . . . . . . . . . . . -- --
Pro forma . . . . . . . . . . . . . . . . . . . . . -- --
Book value per share-end of period:
Historical . . . . . . . . . . . . . . . . . . . . . 7.95 --
Pro forma (c) . . . . . . . . . . . . . . . . . . . 7.65 --
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
NINE MONTHS YEAR ENDED
ENDED JUNE 30, SEPTEMBER 30,
------------- ------------
1996 1995
---- ----
<S> <C> <C>
SUNCOAST COMMON STOCK
Earnings (loss) per share-primary (a):
Historical . . . . . . . . . . . . . . . . . . . . . $ .41 $ (.07)
Equivalent pro forma (d) . . . . . . . . . . . . . . .39 1.02
Earnings (loss) per share-fully diluted(a):
Historical . . . . . . . . . . . . . . . . . . . . . .40 (e)
Equivalent pro forma (d) . . . . . . . . . . . . . . .38 .87
Cash dividends declared per share:
Historical . . . . . . . . . . . . . . . . . . . . . -- --
Equivalent pro forma (d) . . . . . . . . . . . . . . -- --
Book value per share-end of period:
Historical . . . . . . . . . . . . . . . . . . . . . 5.88(f) --
Equivalent pro forma (d) . . . . . . . . . . . . . . 7.65 --
</TABLE>
<TABLE>
<S> <C>
(a) Earnings per share were calculated using income (loss) from continuing operations. In calculating pro forma
earnings per share, no adjustments to the pro forma amounts have been made to reflect potential expense
reductions or revenue enhancements which may result from the Merger.
(b) Gives effect to the Merger as if it had occurred at the beginning of each of the periods presented.
(c) Gives effect to the Merger as if it had occurred at the end of the period.
(d) The equivalent pro forma computations assume that for each share of the Suncoast Common Stock outstanding,
Suncoast stockholders would receive one share of the BankUnited Class A Common Stock.
(e) Omitted due to anti-dilution.
(f) Assumes $15.00 redemption value for Preferred Stock.
</TABLE>
10
<PAGE> 24
BANKUNITED SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain selected historical
consolidated financial data for BankUnited. This data is based on, and
qualified in its entirety by, the consolidated financial statements of
BankUnited, including the notes thereto, which are incorporated by reference in
this Joint Proxy Statement-Prospectus and should be read in conjunction
therewith. However, all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary for a fair
presentation of the financial statements of BankUnited and its subsidiaries
have been included. Operating results for the nine month period ended June 30,
1996 are not necessarily indicative of the results which may be expected for
the year ended September 30, 1996. See "Information Incorporated by
Reference."
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS
ENDED JUNE 30, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------- -------------------------------------------------------
1996 1995 1995(1) 1994 1993 1992 1991
-------- ---- ------- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA: ---------- ---------- ---------- ---------- ---------- ---------- ----------
Interest income . . . . . . . . . . . $ 36,953 $ 28,706 $ 39,419 $ 30,421 $ 25,722 $ 24,243 $ 23,018
Interest expense . . . . . . . . . . 24,934 18,577 26,305 16,295 12,210 14,022 16,307
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income . . . . . . . . . 12,019 10,129 13,114 14,126 13,512 10,221 6,711
Provision (credit) for loan losses (225) 340 1,221 1,187 1,052 70 42
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
(credit) for loan losses 12,244 9,789 11,893 12,939 12,460 10,151 6,669
---------- ---------- ---------- ---------- ---------- ---------- ----------
Non-interest income:
Service fees . . . . . . . . . . . 432 306 423 358 221 142 83
Gain on sales of loans and mortgage-
backed securities, net 8 240 239 150 1,496 94 147
Gain (loss) on sales of other assets,
net . . . . . . . . . . . . . . . (6) 264 9,569 -- -- 2 (51)
Other . . . . . . . . . . . . . . . 51 6 6 46 2 25 22
---------- ---------- ---------- ---------- ---------- ---------- ----------
485 816 10,237 554 1,719 263 201
---------- ---------- ---------- ---------- ---------- ---------- ----------
Non-interest expense:
Employee compensation and benefits 3,161 2,829 3,997 3,372 2,721 1,986 1,444
Occupancy and equipment . . . . . . 1,232 1,367 1,727 1,258 978 940 841
Insurance . . . . . . . . . . . . . 748 783 1,027 844 835 697 582
Professional fees . . . . . . . . . 687 751 1,269 833 543 542 389
Other . . . . . . . . . . . . . . . 2,470 2,867 4,129 3,579 2,746 2,002 1,568
---------- ---------- ---------- ---------- ---------- ---------- ----------
8,298 8,597 12,149 9,886 7,823 6,167 4,824
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes(1) . . . . 4,431 2,008 9,981 3,607 6,356 4,247 2,046
Provision for income taxes(2) . . . . 1,693 731 3,741 1,328 2,318 1,538 754
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income before Preferred Stock
dividends(3) . . . . . . . . . . . 2,738 1,277 6,240 2,279 4,038 2,709 1,242
Preferred stock dividends:
BankUnited, FSB . . . . . . . . . . -- -- -- 198 787 515 88
BankUnited . . . . . . . . . . . . 1,609 1,507 2,210 1,871 726 360 364
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) after preferred
stock dividends . . . . . . . . . . $ 1,129 $ (230) $ 4,030 210 $ 2,525 1,834 $ 790
========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE DATA:
Primary earnings (loss) per common
share and common equivalent share $ .28 $ (.11) $ 1.77 $ .10 $ 1.42 $ 1.27 $ .61
========== ========== ========== ========== ========== ========== ==========
Earnings (loss) per common share
assuming full dilution . . . . . . $ .28 $ (.11) $ 1.26 $ .10 $ 1.00 $ .92 $ .53
========== ========== ========== ========== ========== ========== ==========
Weighted average number of common
shares and common equivalent shares
assumed outstanding during the period:
Primary . . . . . . . . . . . . . . 3,997,331 2,016,752 2,296,021 2,175,210 1,773,264 1,448,449 1,306,176
Fully diluted . . . . . . . . . . . 3,997,331 2,016,752 $4,158,564 $2,175,210 3,248,618 2,376,848 2,101,408
Equity per common share . . . . . . . $ 7.95 $ 8.18 $ 10.20 $ 8.33 $ 8.86 $ 8.51 $ 7.52
Tangible equity per common share $ 7.51 $ 8.18 $ 10.20 $ 8.33 $ 8.86 $ 8.51 $ 7.52
Fully converted tangible equity per
common share . . . . . . . . . . . $ 7.20 $ 7.29 $ 8.15 $ 7.39 $ 7.57 $ 6.45 $ 5.98
</TABLE>
11
<PAGE> 25
<TABLE>
<CAPTION>
AT OR FOR THE NINE MONTHS
ENDED JUNE 30, AT OR FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------- ---------------------------------------------------------
1996 1995 1995(1) 1994 1993 1992 1991
-------- ---- ------- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH DIVIDENDS PER COMMON SHARE:
Class A . . . . . . . . . . . . . . . $ -- $ -- $ -- $ .075 $ .094 $ .10 $ --
Class B . . . . . . . . . . . . . . . $ -- $ -- $ -- $ .03 $ .038 $ -- $ --
FINANCIAL CONDITION DATA:
Total assets . . . . . . . . . . . . . $801,531 $ 584,443 $608,415 $ 551,075 $ 435,378 $345,931 $262,120
Loans receivable, net and mortgage-
backed securities(4) . . . . . . . . 702,528 485,187 506,132 470,154 313,899 250,606 203,901
Investments, overnight deposits, tax
certificates, certificates of deposit
and other earning assets . . . . 79,992 84,440 88,768 64,783 100,118 83,445 49,924
Total liabilities . . . . . . . . . . . 731,871 543,195 562,670 509,807 397,859 322,907 245,869
Deposits . . . . . . . . . . . . . . . 470,237 416,224 310,074 347,795 295,108 275,026 202,907
Borrowings . . . . . . . . . . . . . . 244,775 113,775 241,775 158,175 97,775 42,241 39,241
Total stockholders' equity. . . . . . . 69,660 41,248 45,745 41,268 30,273 16,797 13,214
Common stockholders' equity . . . . . . 45,347 16,649 21,096 16,667 17,162 11,134 9,540
SELECTED FINANCIAL RATIOS:
Performance Ratios:
Return on average assets(5) . . . . . . .54% .31% 1.10% .46% 1.12% .92% .53%
Return on average common equity . . . . 4.84 (1.80) 22.60 1.21 18.55 17.68 8.35
Return on average total equity . . . . 6.43 4.09 14.70 5.84 14.07 14.72 9.04
Interest rate spread . . . . . . . . . 2.01 2.18 2.12 2.78 3.59 3.34 2.60
Net interest margin . . . . . . . . . . 2.43 2.53 2.39 3.01 3.87 3.63 2.93
Dividend payout ratio(6) . . . . . . . 58.77 118.01 35.42 96.79 40.66 34.97 36.40
Ratio of earnings to combined fixed
charges and preferred stock dividends(7):
Excluding interest on deposits. . . . 1.14 .98 1.52 1.07 1.87 1.83 1.49
Including interest on deposits. . . . 1.07 .99 1.21 1.03 1.27 1.18 1.08
Total loans, net and mortgage-backed
securities to total deposits 149.40 116.66 163.30 135.26 109.65 91.12 100.49
Non-interest expenses to average assets 1.63 2.07 2.14 2.04 2.18 2.09 2.05
Efficiency ratio(8) . . . . . . . . . . 65.00 76.81 14.58 66.06 45.17 57.76 68.89
Asset Quality Ratios:
Ratio of non-performing assets to total
loans, real estate owned and tax
certificates . . . . . . . . . . . . 1.08% 1.11% 1.35% 1.41% 1.78% .66% .93%
Ratio of non-performing assets to total
assets . . . . . . . . . . . . . . . .92 .91 1.10 1.17 1.46 .50 .75
Ratio of charge-offs to total loans .05 .11 .13 .39 .07 ---
Ratio of loan loss allowance to loans
receivable . . . . . . . . . . . . . .34 .17 .32 .20 .38 .11 .10
Ratio of loan loss allowance to
non-performing loans . . . . . . . . 40.21 17.69 31.54 18.89 24.70 25.41 10.68
Ratio of non-performing loans to total
loans . . . . . . . . . . . . . . . . .84 .94 1.02 1.07 1.54 .45 .96
Capital Ratios:
Ratio of average common equity to average
total assets . . . . . . . . . . . . 4.58% 3.07% 3.14% 3.58% 3.79% 3.51% 4.01%
Ratio of average total equity to average
total assets . . . . . . . . . . . . 8.36 7.50 7.47 8.05 7.99 6.24 5.82
Tangible capital-to-assets ratio(9) . . 6.92 6.50 7.09 6.65 7.56 6.66 6.20
Core capital-to-assets ratio(9) . . . . 6.92 6.50 7.09 6.65 7.56 6.66 6.20
Risk-based capital-to-assets ratio(9) . 13.90 13.80 15.79 14.13 15.85 14.42 13.70
- -----------------------
</TABLE>
(Notes begin on the next page.)
12
<PAGE> 26
<TABLE>
<S> <C>
(1) In 1995, BankUnited recorded a $9.3 million gain ($5.8 million after tax) from the sale of its branches on the
west coast of Florida.
(2) Amount reflects expense from change in accounting principle of $194,843 for fiscal 1994. See Note 15 to the
Consolidated Financial Statements incorporated by reference herein.
(3) Amount in 1991 reflects extraordinary loss of $50,390 from early extinguishment of debt.
(4) Does not include mortgage loans held for sale.
(5) Return on average assets is calculated before payment of preferred stock dividends.
(6) The ratio of total dividends declared during the period (including dividends on preferred stock, the BankUnited
Class A Common Stock, and the BankUnited Class B Common Stock) to total earnings for the period before
dividends.
(7) The ratio of earnings to combined fixed charges and preferred stock dividends excluding interest on deposits is
calculated by dividing income before taxes, fixed charges and extraordinary items by interest on borrowings
plus 33% of rental expense plus preferred stock dividends on a pretax basis. The ratio of earnings to combined
fixed charges and preferred stock dividends including interest on deposits is calculated by dividing income
before taxes, fixed charges and extraordinary items by interest on deposits plus interest on borrowings plus
33% of rental expense plus preferred stock dividends on a pretax basis.
(8) Efficiency ratio is calculated by dividing non-interest expenses less non-interest income by net interest
income.
(9) Regulatory capital ratio of BankUnited, FSB.
</TABLE>
SUNCOAST SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain selected historical
consolidated financial data for Suncoast. This data is based on, and qualified
in its entirety by, the consolidated financial statements of Suncoast,
including the notes thereto, which are included in this Joint Proxy
Statement-Prospectus and should be read in conjunction therewith. See
"Suncoast Savings and Loan Association--Consolidated Financial Statements."
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED JUNE 30,
---------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income . . . . . . . . . . . . . . . . . . $ 27,958 $ 27,855 $ 18,611 $12,892 $15,979
Interest expense . . . . . . . . . . . . . . . . . 17,937 19,018 10,910 7,799 11,688
Net interest income . . . . . . . . . . . . . . . . 10,021 8,837 7,701 5,093 4,291
Provision for loan losses . . . . . . . . . . . . . 153 95 -- 537 55
Net interest income after provision
for loan losses . . . . . . . . . . . . . . . . . 9,868 8,742 7,701 4,556 4,236
Non-interest income:
Loan servicing income, net . . . . . . . . . . . 4,399 6,275 4,580 (2,253) (2,004)
Gain on sales of loans, loan servicing assets
and mortgage-backed securities, net . . . . . . 3,875 1,948 14,963 22,458 15,131
Other . . . . . . . . . . . . . . . . . . . . . . 1,252 1,707 7,630 9,619 4,573
Non-interest expense:
Employee compensation and benefits . . . . . . . 7,240 8,005 18,362 17,345 10,423
Occupancy and equipment . . . . . . . . . . . . . 2,866 4,057 4,209 3,472 2,581
Insurance . . . . . . . . . . . . . . . . . . . . 421 463 640 505 412
Professional fees . . . . . . . . . . . . . . . . 356 381 294 432 471
Other . . . . . . . . . . . . . . . . . . . . . . 4,698 4,835 8,261 7,230 5,521
Income before income taxes . . . . . . . . . . . . 3,813 931 3,108 3,213 1,372
Provision for income taxes . . . . . . . . . . . . 1,411 330 1,005 928 141
Net income before preferred stock dividends 2,402 601 2,103 2,285 1,231
Preferred stock dividends . . . . . . . . . . . . . 1,104 1,104 780 -- --
Net income (loss) after preferred stock dividends 1,298 (503) 1,323 2,285 1,231
PER COMMON SHARE DATA:
Primary earnings (loss) per common share
and common equivalent share . . . . . . . . . . . .61 (.26) .63 1.11 .66
Earnings per common share assuming
full dilution (1) . . . . . . . . . . . . . . . . .61 -- .59 1.10 .66
Weighted average number of common
shares and common equivalent shares
assumed outstanding during the period:
Primary . . . . . . . . . . . . . . . . . . . . . 2,137 1,940 2,105 2,048 1,853
Fully diluted . . . . . . . . . . . . . . . . . . 3,675 3,652 3,589 2,079 1,853
Equity per common share . . . . . . . . . . . . . . 6.66 6.33 6.43 5.76 4.57
Equity per common share assuming $15.00
redemption value for Preferred Stock . . . . . . 5.88 5.54 5.61 5.76 4.57
Fully converted equity per common share . . . . . . 7.23 7.04 7.11 5.76 4.57
Cash dividends per common share . . . . . . . . . . -- -- -- -- --
</TABLE>
13
<PAGE> 27
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED JUNE 30,
---------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FINANCIAL CONDITION DATA:
Total assets . . . . . . . . . . . . . . . . . . $ 402,569 $462,353 $359,090 $226,931 $187,529
Loans receivable, net and mortgage-
backed securities(2) . . . . . . . . . . . . . 345,949 269,620 287,413 152,649 79,227
Investments, overnight deposits, tax certificates,
certificates of deposit and other earning assets 351,019 436,344 320,565 173,008 134,053
Total liabilities . . . . . . . . . . . . . . . . 377,031 437,569 334,524 216,020 179,056
Deposits . . . . . . . . . . . . . . . . . . . . 301,201 337,854 260,435 211,085 173,296
Borrowings . . . . . . . . . . . . . . . . . . . 68,500 88,623 69,000 -- --
Total stockholders' equity . . . . . . . . . . . 25,538 24,784 24,566 10,911 8,473
Common stockholders' equity (3) . . . . . . . . . 13,310 12,556 12,338 10,911 8,473
SELECTED FINANCIAL RATIOS:
Performance Ratios:
Return on average assets(4) . . . . . . . . . . . 0.56% 0.15% 0.72% 1.10% .58%
Return on average common equity . . . . . . . . . 18.57% 4.83% 18.09% 23.58% 15.67%
Return on average total equity . . . . . . . . . 9.55% 2.44% 11.85% 23.58% 15.67%
Interest rate spread . . . . . . . . . . . . . . 2.66% 2.13% 2.69% 3.25% 2.77%
Net interest margin . . . . . . . . . . . . . . . 2.74% 2.17% 2.59% 2.83% 2.25%
Dividend payout ratio . . . . . . . . . . . . . . -- -- -- -- --
Ratio of earnings to combined fixed charges
and preferred stock dividends(5):
Excluding interest on deposits . . . . . . . . 1.40 .89 1.58 4.72 2.98
Including interest on deposits . . . . . . . . 1.10 .96 1.15 1.39 1.11
Total loans, net and mortgage-backed
securities to total deposits . . . . . . . . . 114.86% 79.80% 110.36% 72.32% 45.72%
Non-interest expenses to average assets . 3.60% 4.32% 10.84% 13.99% 9.21%
Efficiency ratio(6) . . . . . . . . . . . . . . . 61.36 89.35 59.64 29.98 7.61
Asset Quality Ratios:
Ratio of non-performing assets to total loans,
real estate owned and tax certificates 0.36% 0.51% 1.54% 1.30% 3.88%
Ratio of non-performing assets to total assets 0.29% 0.15% 0.54% 0.88% 1.68%
Ratio of charge-offs to total loans . . . . . . . -- .07% .01% .12% --
Ratio of loan loss allowance to loans receivable .20% .38% .40% .34% .21%
Ratio of loan loss allowance to
non-performing loans . . . . . . . . . . . . . 71.34% 333.77% 33.38% 35.68% 12.69%
Ratio of non-performing loans to total loans .28% .11% 1.21% .96% 1.63%
Capital Ratios:
Ratio of average common equity to average
total assets . . . . . . . . . . . . . . . . . 2.99% 3.03% 3.97% 4.68% 3.73%
Ratio of average total equity to average
total assets . . . . . . . . . . . . . . . . . 5.82% 6.01% 6.05% 4.68% 3.73%
Tangible capital-to-assets ratio . . . . . . . . 6.22% 5.12% 6.57% 4.81% 4.04%
Core capital-to-assets ratio . . . . . . . . . . 6.22% 5.12% 6.57% 4.81% 4.04%
Risk-based capital-to-assets ratio . . . . . . . 11.09% 13.43% 16.06% 11.01% 8.68%
- --------------------------
</TABLE>
<TABLE>
<S> <C>
(1) 1995 calculation omitted due to anti-dilution.
(2) Includes mortgage loans held for sale.
(3) Represents total stockholders' equity less $12.228 resulting from issuance of preferred stock in year ended
June 30, 1994.
(4) Return on average assets is calculated before payment of preferred stock dividends.
(5) The ratio of earnings to combined fixed charges and preferred stock dividends excluding interest on deposits is
expressed as a multiple of one and is calculated by dividing income before taxes, fixed charges and
extraordinary items by interest on borrowings plus 33% of rental expense plus preferred stock dividends on a
pretax basis. The ratio of earnings to combined fixed charges and preferred stock dividends including interest
on deposits is calculated by dividing income before taxes, fixed charges and extraordinary items by interest on
deposits plus interest on borrowings plus 33% of rental expense plus preferred stock dividends on a pretax
basis.
(6) Efficiency ratio is calculated by dividing non-interest expenses less non-interest income by net interest
income.
</TABLE>
14
<PAGE> 28
PRO FORMA SELECTED FINANCIAL DATA
The following table presents selected unaudited financial data for
BankUnited prepared on a pro forma basis. The pro forma income statement items
have been prepared assuming that the Merger had occurred at the beginning of
each period presented. The pro forma income statement items and related per
share amounts do not include anticipated revenue enhancements or expense
reductions as a result of the Merger. The pro forma balance sheet items give
effect to the Merger as if it occurred at June 30, 1996. The pro forma
selected financial data should be read in conjunction with the Unaudited Pro
Forma Condensed Combined Statement of Financial Condition and Statement of
Operations and the related notes thereto.
<TABLE>
<CAPTION>
AT OR FOR THE
---------------------------------
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
JUNE 30, 1996 1995
------------- -------------
(IN THOUSANDS
EXCEPT PER SHARE DATA)
<S> <C> <C>
Consolidated Summary of Income:
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,782 $ 69,160
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . 38,291 46,735
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . 20,491 22,425
Provision (credit) for losses on loans . . . . . . . . . . . . . . (72) 1,321
Income before income taxes and preferred stock dividends . . . . . 7,702 12,313
Net income before preferred stock dividends . . . . . . . . . . . . 4,750 7,666
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . 2,437 3,314
Net income after preferred stock dividends . . . . . . . . . . . . 2,313 4,552
Per Common Share:
Primary earnings per common share and
common equivalent shares . . . . . . . . . . . . . . . . . . . . $ .39 $ 1.02
Earnings per common share assuming full dilution . . . . . . . . . .38 .87
Weighted average number of common shares and
common equivalent shares assumed outstanding
during the period:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,994,261 4,292,951
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . 6,797,259 7,688,827
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------
(IN THOUSANDS
EXCEPT FOR PER SHARE DATA)
<S> <C>
Consolidated Balance Sheet:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,207,784
Loans receivable, net (including loans held for sale) . . . . . . . 956,595
Allowance for loan losses . . . . . . . . . . . . . . . . . . . . . 2,791
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 771,438
Common stockholders' equity . . . . . . . . . . . . . . . . . . . . 58,865
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 96,980
Book value per common share . . . . . . . . . . . . . . . . . . . . 7.65
Fully converted tangible book value per common share . . . . . . . 7.12
</TABLE>
15
<PAGE> 29
SUNCOAST MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Suncoast Consolidated Financial Statements and related notes included elsewhere
in this Joint Proxy Statement-Prospectus. For purposes of the "Suncoast
Management's Discussion and Analysis of Financial Condition and Results of
Operations," the term "Fiscal" preceeding a year denotes the Suncoast fiscal
year ending on June 30 of that year. In addition, "FHLB" refers to the Federal
Home Loan Bank of Atlanta.
Suncoast is engaged primarily in community banking and loan servicing
activities. Suncoast provides community banking services primarily in Dade,
Broward, and Palm Beach counties in Florida. Community banking consists
primarily of attracting checking and savings deposits from the public in a
localized market area and investing such deposits, together with borrowings and
other funds, in various types of loans and other permitted investments. In
connection with its community banking activities, Suncoast originates and
purchases, for its own portfolio, both residential and commercial real estate
loans. From its offices in Hollywood, Florida Suncoast services loans secured
by real property located throughout the United States. Suncoast's results of
operations and financial condition over the past three fiscal years reflect a
fundamental shift in Suncoast's business from a mortgage banking enterprise to
a community bank. Prior to 1994, Suncoast was engaged primarily in the
mortgage banking business, which involves the origination or purchase of single
family residential loans for resale in the secondary mortgage market.
Historically low interest rates in 1992 and 1993 generated record volumes of
loan origination and resale activity, primarily refinancings, leading Suncoast
to expand its lending operations nationally to 15 loan production offices.
Beginning in January 1994, however, rising interest rates halted refinancings,
making it unprofitable for Suncoast to continue its mortgage banking operation.
Suncoast downsized its mortgage banking operations by closing all but one of
its loan production offices, and by reducing related staff and overhead
expenses.
During Fiscal 1994 and 1995, Suncoast changed its operating strategy
to that of a community bank and focused on enhancing its net interest income
and servicing revenues. As a result of this change in strategy, Suncoast's net
interest income and loan servicing income have grown in relation to mortgage
banking income in the years ended June 30, 1995 and 1996. Suncoast initially
replaced its mortgage banking assets, primarily its inventory of loans
available for sale, with investments in mortgage-backed securities, repurchase
agreements, and loans originated for portfolio. Suncoast's strategy was to
restructure its assets initially into interest bearing assets with minimal
credit risk until Suncoast could reinvest funds previously used to finance its
mortgage banking activities into portfolio loans. In addition, this strategy
allowed Suncoast to shift its assets to those with lower risk weights under the
risk based capital regulations enabling Suncoast to increase both its assets
and deposits and, accordingly, its net interest income, while remaining well
capitalized under such regulations.
During Fiscal 1995 and Fiscal 1996, Suncoast sold portions of its
mortgage-backed securities portfolio due to favorable market conditions and its
ability to apply the proceeds to the purchase and origination of high quality
residential and commercial real estate loans for investment. At June 30, 1996,
$18.4 million of mortgage-backed securities remained available for sale. In
completing this restructuring, Suncoast not only reduced its interest rate
risk, but increased its net interest income by shifting from longer term fixed
rate mortgage-backed securities to higher yielding adjustable rate loans
receivable. As its assets were shifted into portfolio loans, Suncoast was
required to reduce the overall volume of both its interest-earning assets and
its interest-bearing liabilities in order to remain well capitalized under the
applicable regulations, since its asset mix shifted from mortgage-backed
securities and short term liquid investments, generally bearing 0 to 20% risk
weights, to residential and commercial loans bearing 50% and 100% risk weights,
respectively, for purposes of its risk-based capital ratio.
16
<PAGE> 30
The following table sets forth for the periods indicated the amounts
and percentages of Suncoast's total income represented by each source:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------
1996 1995 1994
---- ---- ----
AMOUNT % AMOUNT % AMOUNT %
------ - ------ - ------ --
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net interest income before
provision for loan losses . $ 10,021 51.3% $ 8,837 47.1% $ 7,701 22.1%
Loan servicing income . . . . 4,399 22.5 6,275 33.4 4,580 13.1
Gains on the sale of loans and
loan servicing assets, net 925 4.7 560 3.0 14,963 42.9
Gains on the sale of mortgage-
backed securities . . . . 2,950 15.1 1,388 7.4 -- --
Loan origination income . . . 435 2.2 391 2.1 6,075 17.4
Other . . . . . . . . . . . . 817 4.2 1,316 7.0 1,555 4.5
-------- --- ------- --- ------- ---
Total . . . . . . . . . . . . $ 19,547 100.0% $18,767 100.0% $34,874 100.0%
======== ===== ======= ===== ======= =====
</TABLE>
Net interest income is the difference between interest income received
on Suncoast's interest-earning assets (principally loans, investments,
mortgage-backed securities, and premiums on the sale of loans) and interest
expense paid on its interest-bearing liabilities (principally deposits, FHLB
advances, and other borrowings). Loan servicing income includes fees received
for servicing loans, less amortization or valuation adjustments of loan
servicing assets. Mortgage banking income includes gains on the sale of loans
and loan servicing assets, interest on loans held in inventory for sale, and
loan origination income. Loan origination income includes fees collected for
document preparation and the processing of loans originated for sale in the
secondary market. Suncoast has also periodically realized other income from
its other mortgage-related and real estate activities, which is included in the
"Other" category in the table above.
FACTORS AFFECTING EARNINGS
Asset/liability Management. The assets and liabilities of Suncoast
are managed to provide an optimum and stable net interest margin, after-tax
return on assets and return on equity capital. Management, in implementing
Suncoast's asset/liability management policy, attempts to minimize the interest
rate risk, credit risk, solvency risk and liquidity risk to Suncoast.
Suncoast's Asset/Liability Committee, which meets on a weekly basis and
conducts scheduled reviews of various indicators and other risk criteria, has
the responsibility to monitor interest rate risk, devise strategies to adjust
interest rate risk and enhance capital and operational effectiveness, monitor
and set targets for loan originations, purchases and sales and securities
purchases, and establish pricing on all deposit products. Suncoast's asset and
liability strategy seeks to achieve an optimum return on assets while assuming
acceptable amounts of credit and interest rate risk with the goal of reasonable
returns on investments relative to the risks assumed. Management balances
these goals by minimizing credit risk through strict underwriting standards and
policies while accepting moderate interest rate risk. While Suncoast accepts
moderate levels of interest rate risk in its loan and investment portfolio, it
generally seeks to limit interest rate risk by maintaining adjustable-rate
assets and, in its mortgage banking operation, through the ongoing sale into
the secondary mortgage market of all loans originated or purchased for sale.
17
<PAGE> 31
The Suncoast Board has established an interest rate risk policy to
monitor the effect of interest rate risk in accordance with rules issued by the
OTS. Management has implemented this policy with quarterly measurements.
Management considers these measurements in its strategies to enhance capital
and operational effectiveness. See Note B of the Notes to Suncoast's
Consolidated Financial Statements for additional discussion of OTS rules
regarding interest rate risk.
Gap Table. The interest rate sensitivity of Suncoast can also be
measured by matching its assets and liabilities, analyzing the extent to which
such assets and liabilities are interest rate sensitive and by monitoring the
resulting "gap" position. An asset or liability is rate sensitive within a
specific time period if it will mature or reprice within that period. The
interest sensitivity gap is defined as the difference between the amount of
interest- earning assets anticipated, based upon certain assumptions, to mature
or reprice within a specific time period and the amount of interest-bearing
liabilities anticipated to mature within that time period. A gap is considered
positive when the amount of interest rate sensitive assets maturing within a
specific time frame exceeds the amount of interest rate sensitive liabilities
maturing within that same time frame. Accordingly, in a rising interest rate
environment, an institution with a positive gap would generally be expected,
absent the effects of other factors, to experience a greater increase in the
yield of its assets relative to the cost of its liabilities. Conversely, the
cost of funds for an institution with a positive gap would generally be
expected to decline less quickly than the yield on its assets in a falling
interest rate environment. Changes in interest rates generally have the
opposite effect on an institution with a "negative" gap. As of June 30, 1996,
Suncoast had a negative cumulative one-year gap of $21.5 million or 5.3% of
total assets. During a rising interest rate environment, Suncoast's negative
gap position would generally be expected, absent the effect of other factors,
to result in decreased net interest income as the increase in the cost of its
liabilities would exceed the increase in the yield on its assets.
The following table sets forth the amounts of interest-earning assets
and interest-bearing liabilities outstanding at June 30, 1996, which are
anticipated, based upon certain assumptions described in the following
paragraph, to reprice or mature in each of the future time periods shown.
Certain weaknesses are inherent in this method of analysis. As an example,
certain assets and liabilities may have similar maturity and repricing periods,
but may react in different degrees to changes in market interest rates.
Prepayment and early withdrawal penalties would likely deviate significantly
from those assumed in calculating the table in the event of a change in
interest rates.
18
<PAGE> 32
<TABLE>
<CAPTION>
OVER OVER OVER OVER
ONE THREE FIVE SEVEN
WITHIN YEAR TO YEARS TO YEARS TO YEARS TO NON-
ONE THREE FIVE SEVEN THIRTY SUB- INTEREST
YEAR(1) YEARS YEARS YEARS YEARS TOTAL SENSITIVE TOTAL
------ ----- ----- ----- ----- ----- --------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
First mortgage loans:
Adjustable-rate . . . . . . . . . . . . $ 211,992 $63,990 $ 9,522 $ -- $ -- $ 285,504 $ -- $ 285,504
Fixed-rate and balloon . . . . . . . . . 12,239 3,995 6,044 4,052 13,189 39,519 -- 39,519
Second mortgage loans . . . . . . . . . . 48 33 67 34 22 204 -- 204
Consumer loans . . . . . . . . . . . . . 1,545 -- -- -- -- 1,545 -- 1,545
Non-performing loans . . . . . . . . . . 786 786
--------- ------- ------- ------- ------- --------- ------ -------
Loans receivable . . . . . . . . . . . . 225,824 68,018 15,633 4,086 13,211 326,772 786 327,558
--------- ------- ------- ------- ------- --------- ------ -------
Mortgage-backed securities:
Adjustable . . . . . . . . . . . . . . . 18,391 -- -- -- -- 18,391 -- 18,391
Unrealized gain on assets
available for sale . . . . . . . . . . -- -- -- -- -- -- -- --
--------- ------- ------- ------- ------- --------- ------ -------
Total mortgage-backed securities: . . . . 18,391 -- -- -- -- 18,391 -- 18,391
--------- ------- ------- ------- ------- --------- ------ ------
Amounts due from purchasers of loans,
MBS, and loan servicing assets:
Loans . . . . . . . . . . . . . . . . -- -- -- -- -- -- -- --
Mortgage-backed securities and REMICS . -- -- -- -- -- -- -- --
Loan servicing assets . . . . . . . . . -- -- -- -- -- -- -- --
--------- ------- ------- ------- ------- --------- ------ ------
-- -- -- -- -- -- -- --
--------- ------- ------- ------- ------- --------- ------ ------
PMSRs . . . . . . . . . . . . . . . . -- -- -- -- -- -- 9,525 9,525
Originated Servicing Rights - FAS 122 . . -- -- -- -- -- -- 834 834
Premiums on the sale of loans . . . . . . 1,359 -- -- -- -- 1,359 -- 1,359
FHLB stock and
interest-earning deposits . . . . . . . 4,497 -- -- -- -- 4,497 -- 4,497
--------- ------- ------- ------- ------- --------- ------ -------
5,856 -- -- -- -- 5,856 10,359 16,215
--------- ------- ------- -------- ------- --------- ------ -------
Total interest-earning assets . . . . . . 250,071 68,018 15,633 4,086 13,211 351,019 11,145 362,164
Non-interest earning assets . . . . . . . -- -- -- -- -- -- 40,405 40,405
--------- ------- ------- ------- ------- --------- ------- -------
Total assets . . . . . . . . . . . . . . 250,071 68,018 15,633 4,086 13,211 351,019 51,550 402,569
========= ======= ======= ======= ======= ========= ====== =======
INTEREST-BEARING LIABILITIES
Fixed-maturity deposit accounts . . . . 176,991 22,653 5,970 -- -- 205,614 -- 205,614
NOW accounts . . . . . . . . . . . . . . 6,568 6,012 1,609 1,108 2,454 17,751 -- 17,751
Money market accounts . . . . . . . . . 4,723 4,533 1,632 587 330 11,805 -- 11,805
Passbook accounts . . . . . . . . . . . 6,963 10,576 6,895 4,303 12,222 40,959 -- 40,959
Custodial and business accounts . . . . 9,277 8,492 2,272 1,565 3,466 25,072 -- 25,072
--------- ------- ------- ------- ------- --------- ------ -------
Deposits . . . . . . . . . . . . . . . . 204,522 52,266 18,378 7,563 18,472 301,201 -- 301,201
--------- ------- ------- ------- ------- --------- ------ -------
FHLB advances . . . . . . . . . . . . . . 67,000 -- -- -- 1,500 68,500 -- 68,500
Other borrowings
-- -- -- -- -- -- -- --
--------- ------- ------- ------- ------- --------- ------- -------
Total interest-bearing liabilities . . . 271,522 52,266 18,378 7,563 19,972 369,701 -- 369,701
Non-interest bearing liabilities . . . . -- -- -- -- -- -- 7,330 7,330
stockholders' equity . . . . . . . . . . -- -- -- -- -- -- 25,538 25,538
--------- ------- ------- ------- ------- ---------- ------- -------
Stockholders' equity . . . . . . . . . . 271,522 52,266 18,378 7,563 19,972 369,701 32,868 402,569
========= ======= ======= ======= ======= ========= ====== =======
Excess (deficit) of interest-earning
assets over interest-bearing
liabilities . . . . . . . . . . . . . . (21,451) 15,752 (2,745) (3,477) (6,761) (18,682)
========= ======= ======= ------- ======= =========
Cumulative excess (deficit) . . . . . . . (21,451) (5,699) (8,444) (11,921) (18,682) (18,682)
======== ====== ======= ======= ======= =========
Cumulative excess (deficit) as a
percent of total assets . . . . . . . . -5.32% -1.41% -2.09% -2.96% -4.64% -4.64%
</TABLE>
- -------------------------
(1) Loans held for sale are included in this category because they are
held by Suncoast for less than six months. The maturity dates of the
loans range from seven to 30 years.
19
<PAGE> 33
On June 30, 1996 and 1995, respectively, approximately 68.9% and
59.3%, respectively, of Suncoast's total loans receivable were loans which
mature or reprice within one year.
Within the preceding table, interest-earning assets and
interest-bearing liabilities with no contractual maturities are included in the
"within one year" category. Premiums on the sales of loans are recorded as an
interest earning asset in the gap table, but do not have a stated contractual
yield. The investment in purchased mortgage servicing rights ("PMSRs") and
originated mortgage servicing rights ("OMSRs") which yield servicing fee
income, and escrow and custodial accounts deposited with Suncoast, are included
in the non-interest sensitive column.
In preparing the preceding table, certain assumptions have been made
with regard to prepayments on first mortgage loans and mortgage-backed
securities. The prepayment assumptions used were obtained from publicly
available mortgage prepayment rate tables. These sources provide assumptions
which correlate to recent actual repricings experienced in the marketplace.
These assumptions are that fixed-rate, single-family residential loans will
reprice according to their scheduled amortization and that Suncoast will
experience average annual prepayments of approximately the following
percentages on fixed-rate loans according to the original term to maturity:
30-year maturity, 8%; 15-year maturity, 10%; and seven and five year balloon,
15%. The assumptions provided by the mortgage prepayment rate tables should
not be regarded as indicative of the actual repricings that may be experienced
by Suncoast. Decay rates are assumed to indicate the annual rate at which an
interest-bearing liability will be withdrawn in favor of an account with a more
favorable interest rate. Decay rates have been assumed by Suncoast for NOW
accounts, passbook and money market deposits and are the most recent national
assumptions published by the OTS. The assumptions used at the dates indicated,
although standardized, may not be indicative of actual withdrawals and
repricing experienced by Suncoast. Annual percentage decay rate assumptions
used in the table are as follows:
<TABLE>
<CAPTION>
MORE
WITHIN 1-3 3-5 5-7 THAN
1 YEAR YEARS YEARS YEARS 7 YEARS
------ ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Passbook . . . . . . . . . . . 17% 17% 16% 16% 14%
NOW . . . . . . . . . . . . . . 37 32 17 17 17
Money market . . . . . . . . . 40 40 40 40 40
</TABLE>
All other assets and liabilities have been repriced based on the
earlier of repricing or contractual maturity.
Yields Earned and Rates Paid. The following table provides
information relating to the categories of Suncoast's interest-earning assets
and interest-bearing liabilities for the periods indicated. All yield and rate
information is calculated on an annualized basis. Yield and rate information
for a period is average information for the period calculated by dividing the
income or expense item for the period by the average balances during the period
of the appropriate balance sheet item. Net interest margin is net interest
income divided by average interest-earning assets. Nonaccrual loans are
included in asset balances for the appropriate periods, whereas recognition of
interest on such loans is discontinued and any remaining accrued interest
receivable is reversed in conformity with federal regulations. The yields and
net interest margins appearing in the following table have been calculated on a
pre-tax basis.
20
<PAGE> 34
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------- --------------------------- ---------------------------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ---- ------- -------- ---- ------- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
FHLB stock and interest-earning deposits $ 25,426 $ 1,488 5.85% $ 8,892 $ 558 6.28% $ 25,061 $ 839 3.35%
Overnight investments and repurchase
agreements . . . . . . . . . . . . . . 20,366 1,165 5.72% 18,361 1,062 5.78% 22,621 822 3.63%
-------- ------- -------- ------- -------- -------
Sub-total . . . . . . . . . . . . . . . . 45,792 2,653 5.79% 27,253 1,620 5.94% 47,682 1,661 3.47%
-------- ------- -------- ------- -------- -------
Loans receivable . . . . . . . . . . . . 242,063 19,902 8.22% 117,401 9,359 7.97% 223,764 15,220 6.80%
Mortgage-backed securities. . . . . . . . 77,096 5,276 6.84% 260,924 16,731 6.41% 23,894 1,575 6.59%
Other interest-earning assets . . . . . . 1,405 127 9.00% 1,611 145 9.00% 1,727 155 8.98%
--------- ------- -------- ------- -------- -------
Total interest-earning assets . . . . . . $ 366,356 $27,958 7.63% $407,189 $27,855 6.84% $297,067 $18,611 6.26%
========= ======= ======== ======= ======== =======
INTEREST-BEARING LIABILITIES:
Deposits . . . . . . . . . . . . . . . . $ 308,768 $14,891 4.82% $316,979 $14,087 4.44% $277,185 $ 9,406 3.39%
-------- ------- -------- ------- -------- -------
Advances from FHLB . . . . . . . . . . . 47,330 2,772 5.86% 57,065 3,155 5.53% 8,898 349 3.92%
Other borrowings . . . . . . . . . . . . 4,611 274 5.95% 29,672 1,776 5.99% 19,158 1,155 6.03%
-------- ------- ------- ------- -------- -------
Sub-total . . . . . . . . . . . . . . . . 51,941 3,046 5.86% 86,737 4,931 5.69% 28,056 1,504 5.36%
-------- ------- ------- ------- -------- -------
Total interest-bearing liabilities. . . . $ 360,709 $17,937 4.97% $403,716 $19,018 4.71% $305,241 $ 10,910 3.57%
========= ======= ======== ======= ======== ========
Net interest income/interest rate spread. $10,021 2.66% $ 8,837 2.13% $ 7,701 2.69%
======= ======== ========
Net interest-earning assets/net
interest margin . . . . . . . . . . . . . $ 366,356 $10,021 2.74% $407,189 $ 8,837 2.17% $297,067 $ 7,701 2.59%
========= ======= ======== ======= ======== =======
</TABLE>
The increase in the interest rate spread for Fiscal 1996 from that of
Fiscal 1995 is primarily attributable to a change in Suncoast's asset mix as
funds previously invested in mortgage-backed securities were reinvested in
higher yielding primarily adjustable rate residential and commercial mortgages.
Suncoast's yields and costs, however, have generally followed the financial
markets.
21
<PAGE> 35
Rate/Volume Analysis. The following table describes the extent to
which changes in interest rates and changes in volume of interest-related
assets and liabilities have affected Suncoast's interest income and expense
during Fiscal 1996, 1995 and 1994. For each category of interest-earning asset
and interest-bearing liability, information is provided on changes attributable
to changes in volume (changes in volume multiplied by prior year rates) and
changes in rate (changes in rate multiplied by prior year volume). Rate-volume
variances (change in rate multiplied by the change in volume) have been
allocated to the change in volume. All amounts are in thousands.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1996 YEAR ENDED JUNE 30, 1995
VS. YEAR ENDED JUNE 30, 1995 VS YEAR ENDED JUNE 30, 1994
INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO
---------------------------- ---------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL
------ ---- ----- ------ ---- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans . . . . . . . . . . . . . . . . . $ 10,249 $ 294 $ 10,543 $(8,479) $2,618 $(5,861)
Mortgage-backed securities . . . . . . . . (12,580) 1,125 (11,455) 15,199 ( 43) 15,156
Premiums on the sale of loans . . . . . . . ( 18) -- ( 18) ( 10) -- ( 10)
FHLB stock and interest-earning deposits. . 1,074 ( 41) 1,033 (1,214) 1,173 ( 41)
-------- ------- -------- ------- ------ -------
Net increase (decrease) in interest on
interest-earning assets . . . . . . . . . (1,275) 1,378 103 5,496 3,748 9,244
-------- ------- -------- ------- ------ -------
INTEREST-BEARING LIABILITIES:
Deposits . . . . . . . . . . . . . . . . . ( 396) 1,200 804 1,769 2,912 4,681
Borrowings and FHLB advances . . . . . . . (2,041) 156 (1,885) 3,336 91 3,427
-------- ------- -------- ------- ------ -------
Net increase(decrease) in interest
on interest-bearing liabilities . . . . . (2,437) 1,356 (1,081) 5,105 3,003 8,108
-------- ------- -------- ------- ------ -------
Net increase (decrease) in net
interest income before provision
for loan losses . . . . . . . . . . . . . $ 1,162 $ 22 $ 1,184 $ 391 $ 745 $ 1,136
======== ======= ======== ======= ====== =======
</TABLE>
Loan Servicing Income. Loan servicing income includes fees received
for servicing loans less amortization and valuation adjustments of loan
servicing assets. Loan servicing assets consist of PMSRs, OMSRs and premiums
on the sale of loans. Premiums on the sales of loans represent the present
value of the future cash flows to be received in excess of the normal servicing
fee, which are recorded as gains on the sale of loans at the time the sales
occur.
The value of loan servicing assets can be materially affected by
economic forces not within the control of Suncoast. For example, Suncoast is
subject to the risk that declines in the interest rates for mortgage loans will
diminish its servicing portfolio as borrowers refinance or otherwise prepay
higher rate loans. Management, however, seeks to reduce the risk of declining
interest rates on its loan servicing portfolio by implementing various
asset/liability management techniques and amortizing the assets. See "Asset
and Liability Management," above.
For the period from January 1990 through June 1995, Suncoast did not
purchase or accumulate any servicing assets due in part to regulatory changes
which placed restrictions on the value and amount of PMSRs that could be
included in the calculation of regulatory capital. PMSRs and premiums on the
sale of loans remaining from prior years, however, have continued to be
amortized over the remaining anticipated life of the loans. In amortizing its
loan servicing assets, and determining the carrying value of these assets,
Suncoast uses certain assumptions, including the estimated prepayment rate on
the mortgage loans being serviced. These estimates are reviewed in connection
with the preparation of quarterly and year-end financial statements, and, if
the estimated prepayment rates are too low, the values of the assets are
adjusted downward and the adjustments are recorded as an expense. On an annual
basis, PMSRs and OMSRs are also valued by an independent firm with the
necessary expertise to perform such valuation
22
<PAGE> 36
and, if required by the valuation, the carrying value of the PMSRs and OMSRs is
reduced to fair market value. No adjustments of PMSRs, OMSRs or premiums on
the sale of loans were required in Fiscal 1996, 1995 or 1994.
On July 1, 1995, Suncoast adopted Statement of Financial Accounting
Standards No. 122, "Accounting for Mortgage Servicing Rights" ("FAS 122"), as
discussed in the Notes to Suncoast's Consolidated Financial Statements. With
its adoption of FAS 122, Suncoast has reinitiated its prior practice of
retaining the servicing rights on most of the loans that it originates and
sells, and capitalizes as OMSRs the normal servicing fee to be received over
the life of each loan at its fair value. The adoption of FAS 122 resulted in
aggregate additional realized net gains of approximately $600,000 ($380,000,
net of tax) on the sale of loans during the year ended June 30, 1996.
Suncoast's loan servicing portfolio (including subservicing, but
excluding loans owned by Suncoast) at June 30, 1996 decreased to $1.2 billion
as compared to $1.5 billion at June 30, 1995, primarily due to a decrease in
the amount of loans subserviced for the Federal Deposit Insurance Corporation
(the "FDIC") and other entities. Unlike servicing generally, subservicing
contracts are not considered an investment in loan servicing rights for
financial reporting purposes. Subservicing contracts allow Suncoast to utilize
existing operational capabilities without incurring additional capital
investment in servicing rights or the interest rate risk associated with these
rights.
The amount of subservicing fees generated by Suncoast from the FDIC is
dependent upon the amount of assets which come under its control, the length of
time such assets are owned by the FDIC and other factors generally beyond the
control of Suncoast. The amount of subservicing fees from the FDIC declined
due to the sale by the Resolution Trust Corporation (the "RTC"), the FDIC's
predecessor, of the majority of the loans under its control prior to the phase
out of the RTC's operations in December 1995. At June 30, 1996, the
subservicing portfolio declined to approximately $462.7 million from $881.0
million at June 30, 1995, with FDIC loans serviced declining from $511.8
million to $208.2 million. Included in the subservicing portfolio at June 30,
1996 is approximately $55.2 million of loans serviced under a sales agreement
the servicing rights of which will be transferred to the purchaser in the first
quarter of Fiscal 1997.
The portfolio of Suncoast owned servicing rights increased from $467.7
million at June 30, 1995 to $698.9 million at June 30, 1996 primarily as a
result of servicing purchases. During the year ended June 30, 1996, Suncoast
purchased approximately $2.3 million of loan servicing rights, representing
approximately $286.8 million in principal loan balances, and capitalized
approximately $860,000 in OMSRs, representing $62.0 million in principal loan
balances. During Fiscal 1996, Suncoast also recorded $107,000 in premiums on
the sales of loans in connection with the sale of participation interests in
certain commercial real estate loans.
Repayments of loans underlying the servicing assets increased from
$72.7 million in Fiscal 1995 to $95.5 million in Fiscal 1996 due to declining
interest rates between the two periods. Suncoast intends to continue to
generate loan servicing fees in connection with its existing portfolio of loan
servicing rights and subservicing contracts, but loan servicing income may
continue to decrease as loans in the existing portfolio are repaid and
subservicing contracts are not renewed.
RESULTS OF OPERATIONS
Year Ended June 30, 1996 Compared To Year Ended June 30, 1995
Net Income. Suncoast's net income for Fiscal 1996 was $2.4 million,
representing earnings per common share of $0.61, as compared to net income of
$601,000, representing a loss per common share of $0.26, for Fiscal 1995. The
increase in net income and earnings per share available to common stockholders
during Fiscal 1996 is primarily attributable to the $1.1 million increase in
Suncoast's net interest income after provision for loan losses, combined with
the $2.2 million decrease in non-interest expenses primarily from downsizing of
Suncoast's mortgage banking operations and offices. The Fiscal 1995 financial
results were materially impacted by the costs of closing these unprofitable
offices. These non-recurring costs, including employee separation and office
lease termination
23
<PAGE> 37
expenses, totalled $1.6 million before income tax during Fiscal 1995. Results
of operations in Fiscal 1996 and 1995 were favorably impacted by gains on the
sale of mortgage-backed securities of $3.0 and $1.4 million, respectively.
Net Interest Income. Net interest income before provision for loan
losses increased to $10.0 million in Fiscal 1996, as compared to $8.8 million
in Fiscal 1995, an increase of 13.4%. Although average interest earning assets
were reduced by 10.0% from Fiscal 1995 to Fiscal 1996, interest income
remained unchanged due to the shift in the asset mix from mortgage backed
securities into higher yielding loans. During Fiscal 1996, Suncoast originated
or purchased for portfolio approximately $232.8 million of primarily
adjustable rate single family residential loans, and $48.0 million of
commercial and multi-family real estate loans. Interest expense decreased 5.7%
in Fiscal 1996, as compared to the prior fiscal years, primarily as a result of
a decrease in the average balances of other borrowings and deposits. The
average balance of such items decreased during Fiscal 1996 as Suncoast repaid
higher cost borrowings and reduced higher cost deposits. Both assets and
liabilities were reduced during Fiscal 1996 in order for Suncoast to remain in
the well capitalized category.
Provision for Loan Losses. A provision for loan losses is recorded
when available information indicates that it is probable that an asset has been
impaired and the amount of the loss can be reasonably estimated. The adequacy
of the allowance for loan losses is evaluated monthly by application of a
formula developed by Suncoast that applies to outstanding loan balances
percentages that vary based on the expected risk of loss for each type of loan
and the designation of specific loans as classified assets, as well as
management's further consideration of the inherent risk in the portfolio. The
allowance is further based upon management's systematic and detailed evaluation
of the potential loss exposure in Suncoast's loan portfolio considering such
factors as historical loss experience, the borrower's ability to repay,
repayment performance, estimated collateral value and mortgage insurance
coverage. The evaluation process resulted in a provision for loan losses of
$153,000 during Fiscal 1996 as compared to $95,000 for Fiscal 1995, due to the
247.2% increase in portfolio loan balances from June 30, 1995 to June 30, 1996.
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 114 ("FAS 114") "Accounting by Creditors for
Impairment of a Loan," subsequently amended by FAS 118, as discussed in the
Notes to Suncoast's Consolidated Financial Statements. FAS 114 did not have
any significant effect on Suncoast's financial condition or results of
operations.
Loan Servicing Income. Loan servicing fees decreased from $7.5
million for Fiscal 1995 to $6.0 million for Fiscal 1996 primarily as a result
of a decline in the number of loans subserviced and the reduction of loan
balances in Suncoast's servicing portfolio due to loan repayments and pay offs.
The amount of subservicing fees generated by Suncoast from the FDIC
depends upon the amount of assets which come under its control, the length of
time such assets are owned by the FDIC and other factors generally beyond the
control of Suncoast.
Amortization of loan servicing assets increased $440,000 from Fiscal
1995 to Fiscal 1996 primarily as a result of lower interest rates which
increased loan prepayment activity during Fiscal 1996. As a result, Suncoast's
loan servicing income during Fiscal 1996 was $4.4 million, compared to $6.3
million in the prior fiscal year.
Gains on the Sale of Loans and Loan Servicing Assets, Net. Gains on
sale of loans and loan servicing assets for Fiscal 1996 amounted to $925,000
compared to $560,000 in the prior year. During Fiscal 1996 and Fiscal 1995,
Suncoast sold the servicing rights to $54.9 million and $14.0 million of
conventional loans, respectively, and recorded gains of $591,000 and $150,000,
respectively. These servicing rights, which had no carrying value for
Suncoast, were sold to take advantage of favorable market conditions. Also
included in other income in Fiscal 1996 is $151,000 of gains on the sale of
participation interests in certain commercial loans. Suncoast's loan sales
amounted to $117.6 million and $79.3 million during Fiscal 1996 and 1995,
respectively.
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Gains on the Sale of Mortgage-Backed Securities. During the years
ended June 30, 1996 and 1995, Suncoast sold mortgage-backed securities with a
book value of $355.7 million and $265.2 million, respectively, and realized
gains of $3.0 million and $1.4 million, respectively. Suncoast sold these
securities in order to restructure its assets, reduce its interest rate
sensitivity and take advantage of market opportunities. Due to the dependence
of such gains on changes in interest rates, there is no assurance that market
conditions will continue to be favorable for such sales or that Suncoast will
be able to continue generating such revenue in the future. As of June 30,
1996, Suncoast had $18.4 million in available for sale securities.
Loan Origination Income. In Fiscal 1996, loan origination income was
$435,000 as compared to $391,000 in Fiscal 1995 due to an increase in the
number of loans originated in Fiscal 1996 as compared to Fiscal 1995. Total
loan originations were $127.5 million and $118.5 million during Fiscal 1996 and
1995, respectively.
Other Income. Suncoast earned other income of $817 thousand and $1.3
million in Fiscal 1996 and Fiscal 1995, respectively. During Fiscal 1995, the
principal component of other income was fees earned from contracts with the RTC
to underwrite, process and close certain loans that the RTC made in connection
with the resale of properties acquired by the RTC. These fees declined and
ultimately stopped as the RTC liquidated its inventory of acquired properties
and phased out its operations. No further revenue is expected from this
source. During Fiscal 1996, other income was principally comprised of $306,000
in rental income from branch office properties owned by Suncoast.
Non-Interest Expenses. Non-interest expenses for Fiscal 1996 were
$15.6 million as compared to $17.7 million for Fiscal 1995, a 12.2% decrease.
This overall decrease was principally due to the reduction in compensation,
benefit, overhead and occupancy expenses resulting from the closing of loan
production offices. In Fiscal 1995, $1.6 million of these expenses were a
one-time expense incurred in connection with office closings, including
employee separation and office lease termination expenses.
Employee compensation and benefits is the largest component of
non-interest expenses and decreased from $8.0 million in Fiscal 1995 to $7.2
million in Fiscal 1996, a 9.6% decrease. Occupancy and equipment expenses
decreased 29.4% in Fiscal 1996 as compared to Fiscal 1995.
Year Ended June 30, 1995 Compared To Year Ended June 30, 1994
Net Income. Suncoast's net income for Fiscal 1995 was $601,000,
representing a loss per common share of $0.26, as compared to net income of
$2.1 million, or earnings of $0.59 per share, for Fiscal 1994. The decrease in
net income and earnings per share available to common stockholders was
primarily attributable to $1.6 million in non-recurring costs of closing
unprofitable loan origination offices during Fiscal 1995. Loan sales amounted
to $79.3 million and $2.2 billion during Fiscal 1995 and 1994, respectively.
Net Interest Income. Net interest income before provision for loan
losses increased to $8.8 million in Fiscal 1995, as compared to $7.7 million in
Fiscal 1994, an increase of 14.8%. Interest income increased 49.7% primarily
due to the increase in the outstanding balances of mortgage-backed securities
and other interest earning assets. The average balance of total interest
earning assets increased as a part of Suncoast's strategy to shift its focus
from the generation of mortgage banking income to the enhancement of net
interest income. Interest expense increased 74.3% in Fiscal 1995, as compared
to the prior fiscal year primarily as a result of higher deposits and
borrowings which were used to finance the increase in assets discussed above.
Provision for Loan Losses. During Fiscal 1995, Suncoast recorded a
provision for loan losses of $95,000 compared to no such provision during
Fiscal 1994. The increased provision during Fiscal 1995 was a result of
management's systematic and detailed evaluation of the potential loss exposure
in Suncoast's loan portfolio.
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Loan Servicing Income. Loan servicing fees decreased from $8.1
million for Fiscal 1994 to $7.5 million for Fiscal 1995. Fees earned on the
servicing portfolio owned by Suncoast decreased due to the repayment and pay
off of the underlying loans. Fees earned on originated servicing rights
pending delivery under servicing sale agreements declined due to significantly
reduced loan origination activity in Fiscal 1995 as compared to Fiscal 1994.
Amortization of loan servicing assets decreased $2.3 million between Fiscal
1995 and 1994 primarily as a result of higher interest rates which reduced loan
prepayment activity during Fiscal 1995. As a result, Suncoast's loan servicing
income during Fiscal 1995 was $6.3 million, compared to income of $4.6 million
in the prior fiscal year.
Gains on the Sale of Loans and Loan Servicing Assets, Net. Gains on
sale of loans and loan servicing assets for Fiscal 1995 amounted to $560,000
compared to $15.0 million in the prior year. This decrease was attributable to
the significant decline in mortgage banking activity.
Gains on the Sale of Mortgage-backed Securities. During the year
ended June 30, 1995, Suncoast sold mortgage- backed securities with a book
value of $265.2 million and realized gains of $1.4 million. No similar
transactions were recorded in Fiscal 1994. Included in these sales was the
sale of the $138.7 million portfolio of fixed-rate mortgage backed securities
consisting of $56.6 million of seven-year balloon, $59.0 million of five-year
balloon, $13.3 million of fifteen-year and $9.8 million of thirty-year
securities. Suncoast sold these securities in order to restructure its assets,
reduce its interest rate sensitivity and take advantage of market conditions.
Loan Origination Income. In Fiscal 1995, loan origination income
declined to $391,000 as compared to $6.1 million in Fiscal 1994, due to the
significant decrease in the number of originated loans. Total loan
originations were $118.5 million and $2.2 billion during Fiscal 1995 and 1994,
respectively.
Other Income. Suncoast derived other income of $1.3 million and $1.6
million in Fiscal 1995 and Fiscal 1994, respectively, principally consisting of
fees earned from contracts previously made with the RTC to underwrite, process
and close certain loans that the RTC made in connection with the resale of
properties acquired by the RTC. These fees stopped as a result of the phase
out of the RTC's operations in December 1995.
Non-Interest Expenses. Non-interest expenses for Fiscal 1995 and 1994
were $17.7 million and $31.8 million, respectively, a 44.2% decrease. The
overall decrease was principally due to closing of the loan production offices
and the scale back of the mortgage banking operation. Employee compensation and
benefits, the largest component of non- interest expenses, decreased from $18.4
million in Fiscal 1994 to $8.0 million in Fiscal 1995, a 56.4% decrease.
Occupancy and equipment expenses decreased 3.6% in Fiscal 1995 as compared to
Fiscal 1994.
Other expenses decreased from $9.0 million in Fiscal 1994 to $5.6
million in Fiscal 1995. This decrease was primarily attributable to operating
efficiencies, including decreased foreclosure losses experienced in the loan
servicing operations and lower real estate owned maintenance expenses, as well
as the loan production office closings.
FINANCIAL CONDITION
Suncoast's total assets decreased by $59.8 million to $402.6 million
at June 30, 1996 from $462.4 million at June 30, 1995, or 12.9%, primarily due
to changes in asset mix. The decrease in assets was part of Suncoast's
strategy to shift its assets from lower yielding assets with lower risk weights
under the capital regulations to higher yielding assets with higher risk
weights and still remain well capitalized. Interest earning deposits,
mortgage-backed securities and amounts due from purchasers of loans, loan
servicing rights and mortgage-backed securities decreased in the aggregate
$185.5 million from June 30, 1995 to June 30, 1996 as funds previously invested
in these assets were used to originate or acquire loans receivable, reduce
deposits and repay borrowings. Loans receivable increased $194.8 million as
Suncoast continued to implement its strategy of replacing lower yielding
mortgage-backed securities with higher yielding loans receivable. Deposits and
advances from the FHLB and other borrowings decreased $36.7 and $20.1 million,
respectively, between June 30, 1995 and June 30, 1996 as Suncoast reduced
deposits and repaid borrowings with higher costs and reduced its total assets.
Other assets increased by $2.1 million
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primarily as a result of increased foreclosure advances related to loans
serviced for others, primarily the Government National Mortgage Association
("GNMA").
LIQUIDITY AND CAPITAL RESOURCES
Liquidity management requires that funds be available to meet the
daily financial commitments of Suncoast. These commitments consist primarily
of loan originations, savings deposit withdrawals, and repayments of borrowed
funds. Suncoast is required by federal regulations to maintain a minimum
average daily balance of cash and qualifying liquid assets equal to 5.0% of the
aggregate of the prior month's daily average savings deposits and short-term
borrowings. Suncoast's average liquidity ratio decreased from 22.9% at June
30, 1995 to 5.42% at June 30, 1996, as liquid assets were redeployed into
residential loan investments. Suncoast must also maintain an average daily
balance of short-term liquid assets equal to at least 1% of its prior month's
average daily balance of net withdrawable accounts plus short- term debt. At
June 30, 1996 and June 30, 1995, Suncoast's short-term liquidity percentage was
5.42% and 22.9%, respectively. Suncoast maintains minimum levels of liquid
assets in order to maximize net interest income.
Suncoast's primary sources of funds consist of retail savings deposits
bearing market rates of interest. Suncoast also obtains funds through interest
and principal repayments on loans and from FHLB advances and other borrowings,
including reverse repurchase and dollar reverse repurchase agreements with
brokerage firms.
Under the regulatory capital regulations of the OTS, Suncoast is
required to maintain minimum levels of capital as measured by three ratios.
Savings institutions are currently required to maintain tangible capital of at
least 1.5% of tangible assets, core capital of at least 3.0% of adjusted
tangible assets, and risk based capital of at least 8.0% of risk-weighted
assets (at least half of which must be comprised of core capital). Each of the
capital requirements of the OTS that are applicable to Suncoast were exceeded
at June 30, 1996. The tangible and core capital ratios were 6.22% and the
risk-based capital ratio was 11.09%. Suncoast's minimum capital requirements
were $6.0 million for tangible capital, $12.1 million for core capital and
$18.6 million for risk-based capital. At June 30, 1996, Suncoast's regulatory
capital exceeded minimum requirements by $18.9 million for tangible capital,
$12.9 million for core capital, and $7.1 million for risk-based capital.
Details of the computation of regulatory capital are provided in Note B of the
Notes to Suncoast's Consolidated Financial Statements.
IMPACT OF INFLATION
The Consolidated Statements of Financial Condition and related
consolidated financial data presented herein have been prepared in accordance
with generally accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money over time due to
inflation. The primary impact of inflation and changing prices on the
operations of Suncoast is reflected in increased operating costs. Unlike most
industrial companies, virtually all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have
a more significant impact on a financial institution's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or change in the same magnitude as the price of goods and
services, although periods of increased inflation may accompany a rising
interest rate environment.
NEW ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 123 ("FAS 123"),
"Accounting for Stock-Based Compensation." This statement requires certain
disclosures about stock-based employee compensation arrangements, regardless of
the method used to account for them, and defines a fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for stock based compensation plans using
the intrinsic value method of accounting prescribed by existing principles.
Suncoast has
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elected to remain with the existing principles and will make pro forma
disclosures of net income and earnings per share, as if the fair value method
of accounting defined in FAS 123 had been applied. Under the fair value
method, compensation cost is measured at the grant date based on the value of
the award and is recognized over the service period, which is usually the
vesting period. Under the intrinsic value based method, compensation cost is
the excess, if any, of the quoted market price of the stock at grant date or
other measurement date over the amount an employee must pay to acquire the
stock. The disclosure requirements of FAS 123 are effective for financial
statements for Suncoast's fiscal years beginning after June 30, 1996.
In June 1996, the FASB issued Statement of Financial Accounting
Standards No. 125 ("FAS 125"), "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." FAS 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial-components
approach that focuses on control. FAS 125 is effective for transfers and
servicing of financial assets and extinguishment of liabilities occurring after
December 31, 1996 and is to be prospectively applied. Management is currently
evaluating the impact of adoption of FAS 125 on its financial position and
results of operations.
CONTINGENCY RELATING TO RECAPITALIZATION OF THE SAVINGS ASSOCIATION INSURANCE
FUND
Suncoast pays deposit insurance premiums to the Savings Association
Insurance Fund ("SAIF"). SAIF and its counterpart for commercial banks, the
Bank Insurance Fund ("BIF"), were previously assessed deposit insurance
premiums at the same rate. However, in 1995, the FDIC has twice reduced
deposit insurance premiums for most BIF-insured banks so the minimum annual
assessment applicable to BIF deposits effective January 1, 1996 is $2,000 as
compared to a 23 basis point assessment rate for SAIF deposits. This disparity
between BIF and SAIF in assessment rates may place Suncoast at a competitive
disadvantage to institutions whose deposits are exclusively or primarily
BIF-insured (such as most commercial banks).
Several alternatives to mitigate the effect of the BIF/SAIF premium
disparity have been proposed by the U.S. Congress, federal regulators,
industry lobbyists and the Clinton Administration. One plan to recapitalize
the SAIF that has gained support of several sponsors would require all SAIF
member institutions, including Suncoast, to pay a one-time fee of approximately
85 basis points on the amount of deposits held by the member institution at
March 31, 1995. This fee would amount to approximately $1.9 million on an
after tax basis to Suncoast and, if this proposal is enacted into law, the
effect would be to immediately reduce the capital of the SAIF-member
institutions by the amount of the fee, and such amount would be an immediate
charge to earnings.
BANKUNITED FINANCIAL CORPORATION
BankUnited is a Florida corporation which is the savings and loan
holding company for BankUnited, FSB. BankUnited became the holding company for
BankUnited, FSB, which was originally chartered in 1984 as a Florida savings
association, in a reorganization which occurred in 1993, when BankUnited, FSB
converted to a federally chartered stock savings bank.
BankUnited currently has nine branch offices in South Florida.
BankUnited's business has traditionally consisted of attracting deposits from
the general public and using those deposits, together with borrowings and other
funds, to purchase and originate single-family residential mortgage loans and
to a lesser extent commercial real estate, commercial business, and consumer
loans. BankUnited also invests in tax certificates and other permitted
investments.
BankUnited's current strategy emphasizes strategic product niches
which BankUnited believes are being underserved as South Florida's banking
market consolidates. These products include commercial business and commercial
real estate lending and deposit services for small to mid-sized businesses.
BankUnited also focuses on attracting depositors that are seeking convenience,
competitive rates and personalized service.
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The Merger between BankUnited and Suncoast will result in BankUnited
being the fourth largest publicly held financial institution headquartered in
South Florida with over $1.2 billion in assets. The Merger will increase
BankUnited's market share, particularly in Broward County, Florida, allow
BankUnited to achieve economies associated with an in-market merger, and enable
BankUnited to compete more effectively with larger financial institutions in
South Florida.
BankUnited's executive offices are located at 255 Alhambra Circle,
Coral Gables, Florida 33134, telephone (305) 569-2000.
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
Suncoast is a federally chartered stock savings association
headquartered in Hollywood, Florida that engages principally in the business of
community banking and mortgage loan servicing. Community banking consists
primarily of attracting checking and savings deposits from the public in a
localized market area and investing such deposits, together with borrowings and
other funds, in various types of loans and other permitted investments. In
connection with its community banking activities, Suncoast originates and
purchases, for its own portfolio, both residential and commercial real estate
loans.
Suncoast's mortgage loan servicing activities include processing loan
payments, remitting principal and interest to investors, administering escrow
funds and providing other services in the administration of mortgage loans.
Suncoast is an approved seller/servicer for the GNMA, the Federal Home Loan
Mortgage Corporation ("FHLMC") and Fannie Mae. Suncoast also services loans
under contracts with the FDIC and other financial institutions.
Suncoast operates six savings branches in Broward and Palm Beach
counties in Florida. Suncoast's executive offices are located at 4000
Hollywood Boulevard, Hollywood, Florida 33021 (954) 981-6400.
SPECIAL MEETING OF BANKUNITED STOCKHOLDERS
DATE, TIME, PLACE, PURPOSE OF MEETING
This Joint Proxy Statement-Prospectus is being furnished in connection
with the solicitation of proxies by the BankUnited Board for use at the
BankUnited Special Meeting. The BankUnited Special Meeting will be held at the
Omni Colonnade Hotel, 180 Aragon Avenue, Coral Gables, Florida at 10:00 a.m. on
October 29, 1996.
The BankUnited Special Meeting will be held for the purpose of
considering and voting upon proposals to (i) approve the Merger Agreement and
the consummation of the transactions contemplated thereby; (ii) approve an
amendment to Article VI of the Articles of Incorporation of BankUnited to
increase BankUnited's authorized shares of the Class A Common Stock, par value
$.01 per share, from 15,000,000 to 30,000,000 shares; and (iii) transact such
other business as may properly come before the meeting and any postponements or
adjournments thereof. Management of BankUnited knows of no matters to be
brought before the meeting other than those referred to herein. If any other
business should properly come before the BankUnited Meeting, the persons named
in the proxy will vote in accordance with their best judgment.
THE BANKUNITED BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
THE PROPOSAL TO AMEND BANKUNITED'S ARTICLES OF INCORPORATION AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND
THE PROPOSAL.
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RECORD DATE
The BankUnited Board has set the close of business on October 1, 1996
as the record date. Only the holders of record of the outstanding shares of
the BankUnited Class A Common Stock, the BankUnited Class B Common Stock, and
the BankUnited Series B Preferred Stock at the close of business on the record
date will be entitled to vote at the BankUnited Special Meeting, in the manner
set forth in "Special Meeting of BankUnited Stockholders-Proxies; Voting and
Revocation." At the record date, BankUnited had outstanding 5,454,201 shares
of the BankUnited Class A Common Stock, 251,515 shares of the BankUnited Class
B Common Stock and 183,818 shares of the BankUnited Series B Preferred Stock.
PROXIES; VOTING AND REVOCATION
Holders of the BankUnited Class A Common Stock, the BankUnited Class B
Common Stock, and the BankUnited Series B Preferred Stock are entitled to vote
together on the proposal to approve the Merger Agreement and the proposal to
approve the amendment to BankUnited's Articles of Incorporation, with each
share of the BankUnited Class A Common Stock entitled to one-tenth vote; each
share of the BankUnited Class B Common Stock entitled to one vote; and each
share of the BankUnited Series B Preferred Stock entitled to two and one-half
votes. In addition the BankUnited Class A Common Stock and the BankUnited
Class B Common Stock, each voting as a separate class, must approve the
proposed amendment to BankUnited Articles of Incorporation by the affirmative
vote of a majority of the votes cast. The presence, in person or by proxy, of
shares as of the record date representing at least a majority of the votes
entitled to be cast as to a matter is necessary to constitute a quorum at the
BankUnited Special Meeting for action on such matter. In the event there are
not sufficient votes for a quorum, the BankUnited Special Meeting may be
adjourned from time to time until a quorum is obtained. An automated system
administered by BankUnited's transfer agent will tabulate the votes for the
BankUnited Special Meeting.
Shares of BankUnited capital stock entitled to vote at the BankUnited
Special Meeting represented by a properly executed proxy received prior to the
vote at the BankUnited Special Meeting and not revoked will be voted at the
BankUnited Special Meeting as directed in the proxy. IF A PROXY IS SUBMITTED
AND NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE VOTED "FOR" APPROVAL OF THE
MERGER AGREEMENT AND "FOR" THE AMENDMENT TO BANKUNITED'S ARTICLES OF
INCORPORATION. The proposal to approve the Merger Agreement and the amendment
to BankUnited's Articles of Incorporation are considered "non-discretionary
items" whereby brokerage firms may not vote in their discretion on behalf of
their clients if such clients have not furnished voting instructions.
BankUnited intends to count shares of BankUnited capital stock present in
person at the BankUnited Special Meeting and entitled to vote but not voting,
abstentions and broker "non-votes," as present at the BankUnited Special
Meeting for purposes of determining the presence or absence of a quorum for the
transaction of business. However, abstentions and broker "non-votes" will not
be counted as votes cast at the BankUnited Special Meeting.
A stockholder of record may revoke a proxy by filing an instrument of
revocation with Marc D. Jacobson, Secretary of BankUnited (255 Alhambra Circle,
Coral Gables, Florida 33134), by filing a duly executed proxy bearing a later
date, or by appearing at the BankUnited Special Meeting in person, notifying
the Secretary, and voting by ballot at the BankUnited Special Meeting. Any
stockholder of record attending the BankUnited Special Meeting may vote in
person whether or not a proxy has been previously given, but the mere presence
(without notifying the Secretary) of a stockholder at the BankUnited special
meeting will not constitute revocation of a previously given proxy. In
addition, stockholders whose shares of BankUnited capital stock are not
registered in their own name will need additional documentation from the record
holder of such shares to vote personally at the BankUnited Special Meeting.
VOTES REQUIRED; PRINCIPAL STOCKHOLDERS
The affirmative vote of a majority of the votes of the BankUnited
Class A Common Stock, the BankUnited Class B Common Stock, and the BankUnited
Series B Preferred Stock, cast at the BankUnited Special Meeting, is necessary
to approve the Merger Agreement and the transactions contemplated thereby and
the
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amendment to BankUnited's Articles of Incorporation. In addition the
BankUnited Class A Common Stock and the BankUnited Class B Common Stock, each
voting as a separate class, must approve the proposed amendment to BankUnited
Articles of Incorporation by the affirmative vote of a majority of the votes
cast. Such approval of the Merger Agreement by holders of BankUnited capital
stock is a condition to the consummation of the Merger.
As of the record date 5,454,201 shares of the BankUnited Class A
Common Stock, 251,515 shares of the BankUnited Class B Common Stock, and
183,818 shares of the BankUnited Series B Preferred Stock were outstanding and
entitled to cast 545,420, 251,515, and 459,545 votes, respectively, for a total
of 1,256,480 votes as to approval of the Merger Agreement and the proposal to
amend BankUnited's Articles of Incorporation. Directors and executive officers
of BankUnited and their affiliates are entitled to cast approximately 534,076
(42.5%) votes. Each such director and executive officer of BankUnited has
indicated his or her intention to vote the BankUnited capital stock
beneficially owned by him or her for approval of the Merger Agreement and the
consummation of the transactions contemplated thereby and for approval of the
amendment to BankUnited's Articles of Incorporation. In addition, concurrently
with the execution of the Merger Agreement, Alfred R. Camner, Chairman of the
Board of Directors of BankUnited, Earline G. Ford, Executive Vice President and
director of BankUnited, Lawrence Blum, Vice Chairman of the Board of Directors
of BankUnited and director of BankUnited, Allen M. Bernkrant, director of
BankUnited, and Marc D. Jacobson, a director of BankUnited, have entered into
letter agreements with Suncoast in which they agree to vote their shares of
BankUnited capital stock in favor of the Merger. As of the record date such
persons owned BankUnited capital stock entitled to cast a total of 530,083
votes on the proposals being submitted to the BankUnited stockholders for a
vote at the BankUnited Special Meeting (42% of the votes entitled to be cast at
the BankUnited Special Meeting).
SPECIAL MEETING OF SUNCOAST STOCKHOLDERS
DATE, TIME AND PLACE; PURPOSE OF MEETING
This Joint Proxy Statement-Prospectus is being furnished in connection
with the solicitation of proxies by the Suncoast Board for use at the Suncoast
Special Meeting. The Suncoast Special Meeting will be held at 4000 Hollywood
Boulevard, Suite 500, North Tower, Hollywood, Florida at 11:00 a.m. on November
12, 1996.
The Suncoast Special Meeting will be held for the purpose of
considering and voting upon a proposal to approve the Merger Agreement and the
consummation of the transactions contemplated thereby. Action may be taken
with respect to the foregoing at the Suncoast Special Meeting or at any
adjournments or postponements thereof.
Management of Suncoast knows of no matters to be brought before the
meeting other than those referred to herein. If any other business should
properly come before the Suncoast Special Meeting, the persons named in the
proxy will vote in accordance with their best judgment.
THE SUNCOAST BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER
AGREEMENT.
RECORD DATE
The Suncoast Board has fixed the close of business on September 30,
1996 as the record date. Only the holders of record of the outstanding shares
of the Suncoast Common Stock and the Suncoast Preferred Stock at the close of
business on the record date will be entitled to notice of, and to vote at, the
Suncoast Special Meeting. At the record date, 2,195,230 shares of the Suncoast
Common Stock were outstanding and entitled to cast a total of 2,195,230 votes,
and 920,000 shares of Suncoast Preferred Stock were outstanding and entitled to
cast a total of 1,536,400 votes. The presence, in person or by proxy, of
shares representing at least a majority of the votes entitled to be cast by the
holders of the Suncoast Common Stock and the Suncoast Preferred Stock
outstanding on the record date is necessary to constitute a quorum at the
Suncoast Special Meeting.
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PROXIES; VOTING AND REVOCATION
Shares represented by a properly executed proxy received prior to the
vote at the Suncoast Special Meeting and not revoked will be voted at the
Suncoast Special Meeting as directed in the proxy. IF A PROXY IS SUBMITTED AND
NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE VOTED "FOR" APPROVAL OF THE MERGER
AGREEMENT. The proposal to approve the Merger Agreement is considered a
"non-discretionary item" whereby brokerage firms may not vote in their
discretion on behalf of their clients if such clients have not furnished voting
instructions. Suncoast intends to count shares of the Suncoast Common Stock
and the Suncoast Preferred Stock present in person at the Suncoast Special
Meeting but not voting, abstentions and broker "non-votes," as present at the
Suncoast Special Meeting for purposes of determining the presence or absence of
a quorum for the transaction of business. However, abstentions and broker
"non-votes" will not be counted as votes cast at the Suncoast Special Meeting.
Because the Merger Agreement is required to be approved by the holders of
two-thirds of the outstanding shares of Suncoast Common Stock and Suncoast
Preferred Stock, abstentions and" broker "non-votes" will have the same effect
as a vote against such proposal.
Each share of the Suncoast Common Stock is entitled to one vote on
each matter voted upon at the Suncoast Special Meeting. Each share of the
Suncoast Preferred Stock is entitled to 1.67 votes on the approval of the
Merger (the number of shares of the Suncoast Common Stock into which each share
of Suncoast Preferred Stock is presently convertible). The persons named as
proxies by a stockholder may propose and vote for one or more adjournments or
postponements of the Suncoast Special Meeting to permit further solicitation of
proxies in favor of such proposal.
The giving of a proxy does not affect the rights of a holder of the
Suncoast Common Stock or the Suncoast Preferred Stock who attends the Suncoast
Special Meeting to vote at such meeting, since a stockholder may revoke his or
her proxy at any time before it is voted at the Suncoast Special Meeting. A
stockholder of record may revoke a proxy by filing an instrument of revocation
with Wendy M. Mitchler, Secretary of Suncoast (4000 Hollywood Boulevard,
Hollywood, Florida 33021), by filing a duly executed proxy bearing a later
date, or by appearing at the Suncoast Special Meeting in person, notifying the
Secretary, and voting by ballot at the Suncoast Special Meeting. Any
stockholder of record attending the Suncoast Special Meeting may vote in person
whether or not a proxy has been previously given, but the mere presence
(without notifying the Secretary) of a stockholder at the Suncoast Special
Meeting will not constitute revocation of a previously given proxy. In
addition, stockholders whose shares of the Suncoast Common Stock or the
Suncoast Preferred Stock are not registered in their own name will need
additional documentation from the record holder of such shares to vote
personally at the Suncoast Special Meeting.
VOTES REQUIRED; PRINCIPAL STOCKHOLDERS
Holders of the Suncoast Common Stock and the Suncoast Preferred Stock
are entitled to vote together on approval of the Merger, with each share of the
Suncoast Common Stock entitled to one vote and each share of the Suncoast
Preferred Stock entitled to 1.67 votes (the number of shares of the Suncoast
Common Stock into which each share of Suncoast Preferred Stock is presently
convertible). The affirmative vote of two-thirds of the votes of the Suncoast
Common Stock and the Suncoast Preferred Stock outstanding as of the record date
is necessary to approve the Merger. The approval of the Merger Agreement by
Suncoast's stockholders is a condition to the consummation of the Merger.
As of the record date, 2,195,230 shares of the Suncoast Common Stock
were outstanding and entitled to vote, of which approximately 539,505 shares
entitled to cast 539,505 votes (25%) were held by directors and executive
officers of Suncoast and their affiliates, and 920,000 shares of Suncoast
Preferred Stock were outstanding and entitled to vote, of which approximately
26,399 shares entitled to cast 44,086 votes (3%) were held by directors and
executive officers and their affiliates. Each such director and executive
officer of Suncoast has indicated his or her intention to vote the Suncoast
Common Stock and the Suncoast Preferred Stock beneficially owned by him or her
for approval of the Merger Agreement and the consummation of the transactions
contemplated thereby. In addition, concurrently with the execution of the
Merger Agreement, Albert Finch, Chief Executive Officer and Chairman of the
Board of Directors of Suncoast, holder of 49,967 shares of the Suncoast Common
Stock and 1,133
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shares of the Suncoast Preferred Stock; Sumner Kaye, director, holder of 665
shares of the Suncoast Preferred Stock; Irving P. Cohen, director, holder of
27,400 shares of the Suncoast Common Stock and 6,581 shares of the Suncoast
Preferred Stock; Norman E. Mains, director, holder of 21,500 shares of the
Suncoast Common Stock and 4,990 shares of the Suncoast Preferred Stock; Elia J.
Giusti, director, holder of 98,198 shares of the Suncoast Common Stock; Paul B.
Fay, Jr., director, holder of 101,840 shares of the Suncoast Common Stock and
11,050 shares of the Suncoast Preferred Stock; William E. Hammonds, director,
holder of 55,083 shares of the Suncoast Common Stock and 118 shares of the
Suncoast Preferred Stock; Wendy M. Mitchler, General Counsel and Senior Vice
President, holder of 4,348 shares of the Suncoast Common Stock and 765 shares
of the Suncoast Preferred Stock; Richard L. Browdy, Chief Financial Officer,
holder of 6,810 shares of the Suncoast Common Stock and 728 shares of the
Suncoast Preferred Stock, have entered into letter agreements with BankUnited
in which they agree to vote their shares of Suncoast capital stock in favor of
the Merger. Certain trusts related to Alfred R. Camner, Chairman of the Board,
Chief Executive Officer, President and a director of BankUnited own
beneficially a total of 20,000 shares of the Suncoast Preferred Stock. Such
shares were acquired in the open market.
Information with respect to beneficial ownership of the Suncoast
Common Stock and the Suncoast Preferred Stock by directors owning more than 5%
of such stock and more detailed information with respect to the beneficial
ownership of the Suncoast Common Stock and the Suncoast Preferred Stock by
Suncoast directors and executive officers is incorporated by reference to
Suncoast's 1996 Annual Report on Form 10-K which is incorporated herein by
reference. See "Information Incorporated by Reference."
THE MERGER
GENERAL
The Boards of Directors of BankUnited and Suncoast have unanimously
approved the Merger Agreement, which provides for the Merger, at the Effective
Time, of Suncoast with and into BankUnited, FSB, a wholly-owned subsidiary of
BankUnited.
Each of the Boards of Directors of BankUnited and Suncoast believes
that the terms of the Merger Agreement are fair to and in the best interests of
the parties and their respective stockholders and unanimously recommends that
the stockholders of BankUnited and Suncoast, respectively, vote to approve and
adopt the Merger Agreement and the consummation of the transactions
contemplated thereby and the other proposal set forth herein. The Merger
Agreement is attached to this Joint Proxy Statement-Prospectus as Exhibit A and
is incorporated by reference herein in its entirety. All stockholders of
BankUnited and Suncoast are urged to read the Merger Agreement in its entirety.
BACKGROUND OF THE MERGER
Historically, Suncoast has primarily conducted a mortgage banking and
servicing business. During the second half of the year ended June 30, 1994,
however, rising interest rates produced a significant decline in mortgage loan
originations, in particular, loan refinancings. As a result, beginning in
1994, Suncoast reduced its mortgage banking operations by closing offices,
terminating employees and reducing overhead expenses. Suncoast then began to
implement a new strategy to shift its business to activities related to
community banking. This strategy emphasized increasing net interest income
through the purchase of mortgage-backed securities, origination of high quality
commercial loans and retention of selected originated residential loans in
portfolio. As a result of this change in strategy and subsequent reduction in
assets, the Suncoast Board realized that it would become increasingly difficult
to maintain Suncoast's earnings and revenues at pre-1994 levels. Accordingly,
while developing this new strategy, Suncoast's management and the Suncoast
Board recognized that in order to succeed as a community bank in South Florida,
a merger or other possible business combination with another financial
institution could be beneficial to Suncoast.
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As a result of the developments discussed above, during 1994, Suncoast
engaged an investment banking firm as its initial financial advisor to
investigate alternatives for Suncoast in its efforts to strategically refocus
its business in South Florida. As part of the pursuit of strategic
alternatives, Suncoast's initial financial advisor considered and explored the
interest of possible suitors in a business combination. Suncoast's initial
financial advisor contacted approximately twenty-five financial services
companies that were considered by Suncoast's initial financial advisor to be
companies that were likely to have an interest in acquiring Suncoast. As a
result of these initial contacts regarding a potential business combination,
Suncoast entered into discussions with an entity that resulted in an indication
of interest which was considered by the Suncoast Board at a meeting in January
1995 at which time Suncoast decided to proceed with negotiations with the
entity within a set price range. In February 1995, the entity withdrew its
previous indication of price, and proposed a substantially lower indication of
price than that previously presented to Suncoast, which price would have been
subject to further adjustment in the event Suncoast's net worth declined. At a
special meeting in February 1995, the Suncoast Board determined that the
revised indication of price was not an acceptable alternative for Suncoast.
Suncoast communicated this decision to the entity and discussions were mutually
terminated. Subsequently, in March of 1995, Suncoast terminated its agreement
with its initial financial advisor.
In August of 1995, Suncoast engaged Raymond James to contact a certain
financial institution holding company which had expressed to Mr. Finch an
interest in combining with Suncoast. Although there were serious discussions
regarding a possible transaction between that company and Suncoast and the
sharing of confidential information by Suncoast, discussions did not proceed to
a stage where Suncoast was given an indication of a price to consider.
In February of 1996, BankUnited successfully completed a public
offering of equity securities through an underwriting in which Raymond James
was a manager; shortly thereafter Suncoast requested that Raymond James contact
BankUnited to determine BankUnited's interest in a business combination with
Suncoast. In March of 1996, Mr. Finch and Mr. Camner held an informal meeting
in Miami to explore, on a preliminary basis, the possible combination of
BankUnited and Suncoast. After that meeting, BankUnited and Suncoast entered
into mutual confidentiality agreements and thereafter proceeded to exchange
information with each other. In April of 1996, a subsequent meeting was held
that involved Mr. Finch, one other executive of Suncoast and Raymond James.
This meeting was held to give consideration to the possible financial basis and
detailed other terms upon which a transaction with BankUnited might be
consummated. On May 6, 1996, there was a formal presentation to Mr. Camner and
other executives of BankUnited by Raymond James as to information regarding the
possible combination of BankUnited and Suncoast. On May 17, 1996, a meeting
involving Mr. Camner, Mr. Finch and one other executive of each party, legal
counsel for both parties, Raymond James and representatives of Friedman,
Billings, Ramsey & Co., Inc., BankUnited's financial advisor, took place in
Miami. That meeting involved the discussion of a number of basic issues
relating to the combination, including the exchange ratio and the basis upon
which the Board of Directors of the combined entity would be selected.
On May 29, 1996, Mr. Finch brought the possible combination before the
Suncoast Board at its regular meeting. At that meeting, the Suncoast Board
appointed a special committee (the "Suncoast Special Committee") with the
authority to: (i) engage legal counsel; (ii) issue a report to the Suncoast
Board on the desirability of the combination; and (iii) negotiate the terms of
a definitive agreement with BankUnited. On June 20, 1996, the Suncoast Special
Committee met to discuss, in detail, the possible combination. Later that
month, the Suncoast Special Committee met with Mr. Camner to discuss his
strategy with respect to the future of BankUnited and Mr. Camner's intentions
with respect to the combined organizations. On June 24, 1996 Raymond James
mailed to the Suncoast Board a comprehensive valuation analysis of the proposed
transaction. During the week of July 1, 1996, the Suncoast Special Committee
held an additional meeting. At that time, the Suncoast Special Committee
authorized Mr. Finch to finalize a definitive agreement relating to the Merger
and formulated a report and proposal to give to the full Suncoast Board
recommending the Merger and the execution of the Merger Agreement.
At a special meeting of the Board of Directors of Suncoast held on
July 15, 1996, the proposed combination was considered in detail by the
directors with certain members of Suncoast executive management and legal
counsel.
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Raymond James also attended the special meeting and presented its opinion
regarding the financial aspects of the Merger. It was the opinion of Raymond
James that, as of July 15, 1996, the Exchange Ratio set forth in the Merger
Agreement was fair to the Suncoast stockholders from a financial point of view.
At the special meeting, the members of the Board of Directors of Suncoast voted
unanimously to approve the Merger and related matters, subject to the approval
of stockholders, receipt of the necessary regulatory approvals and the further
conditions set forth in the Merger Agreement.
By written consent of the Board of Directors of BankUnited dated July
15, 1996, which was ratified at a meeting held on July 17, 1996, the Merger and
related matters were approved subject to approval of stockholders, receipt of
the necessary regulatory approvals and the further conditions set forth in the
Merger Agreement.
BANKUNITED'S REASONS FOR THE MERGER
In considering the Merger, the BankUnited Board concluded that the
combination of Suncoast and BankUnited represented a combination of two
institutions with complementary businesses and business strategies and would
result in a merged institution with greater size, flexibility, efficiency,
capital strength, and profitability.
In addition, in reaching its determination to approve the Merger the
BankUnited Board considered the following factors:
(a) BankUnited and Suncoast each conduct banking and financial
services operations in South Florida. The two institutions, however, have
branches which do not compete with one another. Therefore, the BankUnited
Board concluded that the Merger would permit the expansion of BankUnited's
branch network while achieving real reductions in administrative costs. The
increased number of branches would, in turn, permit more rapid expansion and
development of the community banking business.
(b) BankUnited and Suncoast currently have very similar
businesses. Both institutions are spread oriented, community banks seeking, in
part, to service niche markets which have become available due to the
consolidation of the banking business in South Florida; both institutions
provide traditional savings and loan services to their depositors.
(c) The short and long term goals of BankUnited and Suncoast are
similar. Specifically, the short term goal of becoming a community bank with a
significant franchise in South Florida is similar for both institutions. The
long term strategy of building a valuable franchise in South Florida which will
be recognized by the market place as a valuable asset is also similar.
(d) The redundancies of the institutions are at the administrative
level and officer level; therefore, the BankUnited Board concluded that the
savings to be realized as a result of greater efficiencies would be
accomplished without a noticeable impact to the customer. This would enhance
the probability that a significant portion of Suncoast's core deposits will
remain as deposits of BankUnited, FSB.
(e) The Merger would substantially increase BankUnited's market
share, particularly in Broward County.
The BankUnited Board did not assign any specific or relative weight to
the foregoing factors in the course of its consideration.
SUNCOAST'S REASONS FOR THE MERGER
After careful review and consideration, the Suncoast Board unanimously
concluded that the terms of the Merger were fair to, and in the best interests
of, the stockholders of Suncoast. In approving the Merger and
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recommending that Suncoast's stockholders approve the Merger Agreement, the
Suncoast Board reviewed a number of factors with a view to increasing
stockholder value in the intermediate and long term.
In considering the Merger, the Suncoast Board determined that the
Merger would better serve Suncoast's new business strategy than expansion
through internal growth and/or acquisitions. In particular, the Suncoast Board
considered the increased competition in the banking industry as a whole and, in
particular, in the South Florida market area.
The Suncoast Board also considered the report and recommendation of
the Suncoast Special Committee and the opinion of Raymond James that the
proposed transaction with BankUnited was fair from a financial point of view.
The Suncoast Board concluded that the combination of Suncoast and BankUnited
represented a combination of two institutions with complementary businesses and
business strategies and would result in a merged institution with greater size,
flexibility, efficiency, capital strength, and profitability than Suncoast
would possess if it remained independent.
In addition, in reaching its determination to approve the Merger the
Suncoast Board considered the following factors:
(a) BankUnited and Suncoast each conduct banking and financial
services operations in South Florida. The two institutions, however, have
branches which do not compete with one another. Therefore, the Suncoast Board
concluded that the Merger would permit the expansion of BankUnited's branch
network while achieving real reductions in administrative costs. The increased
number of branches would, in turn, permit more rapid expansion and development
of the community banking business.
(b) BankUnited and Suncoast currently have very similar
businesses. Both institutions are spread oriented, community banks seeking, in
part, to service niche markets which have become available due to the
consolidation of the banking business in South Florida.
(c) The short and long term goals of BankUnited and Suncoast are
similar. Specifically, the short term goal of becoming a community bank with a
significant franchise in South Florida is similar for both institutions. The
long term strategy of building a valuable franchise in South Florida which will
be recognized by the market place as a valuable asset is also similar.
(d) The Suncoast Board concluded that the increased capital base
of the merged institution would permit growth for Suncoast stockholders which
otherwise could only be accomplished through an additional offering of Suncoast
Common Stock and a probable dilution of the current stockholders' equity
ownership.
(e) The redundancies of the institutions are at the administrative
level and officer level; therefore, the Suncoast Board concluded that the
savings to be realized as a result of greater efficiencies would be
accomplished without a noticeable impact to the customer. This would enhance
the probability that the goodwill of Suncoast could be transferred to the
merged institution.
The Suncoast Board did not assign any specific or relative weight to
the foregoing factors in the course of its consideration.
OPINION OF FINANCIAL ADVISOR
Raymond James has delivered its written opinion to the Suncoast Board
that, as of July 15, 1996 and as of the date of this Joint Proxy
Statement-Prospectus, the Exchange Ratio presented in the Merger Agreement is
fair, from a financial point of view, to the Suncoast stockholders. No
limitations were imposed by the Suncoast Board upon Raymond James with respect
to the investigations made or procedures followed by Raymond James in rendering
its opinion.
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The full text of the opinion of Raymond James dated the date of this
Joint Proxy Statement-Prospectus, which sets forth the assumptions made,
matters considered, and limits on review undertaken by Raymond James, is
attached hereto as Exhibit B and is incorporated herein by reference. Suncoast
stockholders are urged to read this opinion in its entirety. Raymond James'
opinions are directed only to the Exchange Ratio in the Merger and do not
constitute recommendations to any Suncoast stockholder as to how such
stockholder should vote at the Suncoast Special Meeting. Raymond James is not
expressing any opinion as to what the value will be of either the BankUnited
Class A Common Stock or the BankUnited New Preferred Stock when such shares are
issued to the holders of the Suncoast Common Stock or the holders of the
Suncoast Preferred Stock, as the case may be, in connection with the Merger,
nor is it expressing any opinion as to the price at which BankUnited stock will
trade subsequent to the Merger. The summary set forth in this Joint Proxy
Statement-Prospectus of the opinions of Raymond James is qualified in its
entirety by reference to the full text of the opinion dated the date of this
Joint Proxy Statement-Prospectus attached as Exhibit B. The July 15, 1996
opinion was substantially identical to the opinion attached hereto.
In arriving at its opinion, Raymond James reviewed, analyzed and
relied upon material bearing upon the financial and operating condition of
Suncoast and BankUnited, including, among other things, the following: (i) the
Merger Agreement; (ii) Annual Reports for fiscal years 1994 and 1995,
respectively, of Suncoast and BankUnited; (iii) certain interim reports to
stockholders of Suncoast and BankUnited; (iv) other financial information
concerning the businesses and operations of Suncoast and BankUnited furnished
to Raymond James by Suncoast and BankUnited for purposes of its analysis,
including certain financial information prepared by the senior management of
Suncoast and BankUnited, respectively; (v) certain preliminary internal
financial analyses and forecasts of Suncoast prepared by the senior management
of Suncoast; (vi) preliminary estimates of cost savings to be achieved after
the Merger furnished to Raymond James by Suncoast and BankUnited for purposes
of its analysis; (vii) plans for the combined company and the strategic
objectives of the Merger furnished to it by the senior executives of BankUnited
and Suncoast; (viii) certain publicly available information concerning trading
of, and the trading market for, the Suncoast Common Stock and the BankUnited
Class A Common Stock; and (ix) certain publicly available information with
respect to banking companies and the nature and terms of certain other
transactions that Raymond James considered relevant to its inquiry.
In conducting its review and arriving at its opinions, Raymond James
relied upon and assumed the accuracy and completeness of all of the financial
and other information provided to it or publicly available, and did not attempt
to independently verify such information. Raymond James relied upon the
management of Suncoast and BankUnited as to the reasonableness and
achievability of the financial and operating forecasts and projections (and the
assumptions and bases therefor) provided or discussed with Raymond James, and
assumed that such forecasts and projections reflected the best currently
available estimates and judgments of such managements and that such forecasts
and projections would be realized in the amounts and in the time periods
currently estimated by such managements. Raymond James also relied upon each
party to advise it promptly if any information previously provided became
inaccurate or was required to be updated during the period of review. Raymond
James also assumed, without independent verification, that the aggregate
allowances for loan losses for Suncoast and BankUnited were adequate to cover
losses in their respective loan portfolios. Raymond James did not make or
obtain any evaluations or appraisals of the property of Suncoast or BankUnited,
nor did it examine any individual loan credit files. Raymond James also
assumed that the Merger will be recorded as a purchase under generally accepted
accounting principles.
In connection with rendering its opinions, Raymond James considered
such financial and other factors as it deemed appropriate under the
circumstances, including, among others, the following: (i) the historical,
current and projected financial position and results of operations of Suncoast
and BankUnited, (ii) the assets and liabilities of Suncoast and BankUnited,
(iii) the historical market prices and trading activity of the Suncoast Common
Stock, and (iv) the nature and terms of certain other merger transactions
involving banks and bank holding companies. Raymond James also took into
account its assessment of general economic, market and financial conditions and
its experience in other transactions, as well as its experience in the
valuation of securities and its knowledge of the banking industry generally.
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The following is a brief summary of the analyses performed by Raymond
James in connection with its opinion delivered to the Suncoast Board of
Directors on July 15, 1996 and as updated through the date of this Joint Proxy
Statement-Prospectus. All analyses assume a BankUnited Class A Common Stock
price of $7.75 per share (which was the closing price on August 30, 1996) in
calculating the value of the consideration offered in the Merger. The price
used in performing the analyses to support the opinion dated July 15, 1996 was
$7.25 per share.
PRO FORMA MERGER ANALYSIS
Using the earnings estimates for BankUnited prepared by BankUnited
management, the earnings estimates for Suncoast prepared by Suncoast
management, and the post merger cost savings estimates prepared by BankUnited
management, Raymond James compared the estimated fiscal year 1996 and 1997
(adjusted to assume a September 30 fiscal year end for Suncoast) fully diluted
earnings per share of Suncoast common stock on a stand alone basis to the pro
forma fully diluted earnings per share of the combined company after the
Merger. Such comparison resulted in an accretion in earnings per share to the
current stockholders of Suncoast.
Based on the analysis of Raymond James using the assumptions described
above, the estimated earnings per share allocable to the Suncoast shareholders
would increase from $0.64 and $0.96 for the two fiscal years 1996 and 1997,
respectively on a stand alone basis, to $0.68 and $1.03 on a pro forma basis
after giving effect to the Merger. The actual results achieved by the combined
company may vary from the projected results and the variations may be material.
MERGER PREMIUMS IN PRECEDENT THRIFT ACQUISITIONS
Using publicly available information, Raymond James analyzed the
approximately 116 acquisitions of savings and loan associations with less than
one billion dollars in total assets which had occurred since the beginning of
1995. Specifically, Raymond James compared the median announced deal value of
these transactions as a multiple of reported book value of the target, and as a
multiple of the immediately preceding twelve months earnings per share of the
target, to those same statistics for Suncoast. This analysis showed that:
(a) The median announced deal value for the examined financial
institution transactions as a multiple of the target's book value at the time
of announcement was 1.45 times while the Merger is being accomplished at a
multiple of 1.42 times Suncoast's book value.
(b) The median multiple of announced deal value to the earnings
per share of the target for the most recently reported twelve months preceding
the announcement of the transaction was 17.99 times while the Merger is being
accomplished at a multiple of approximately 18.32 times Suncoast's earnings for
the twelve months immediately preceding the announcement of the transaction.
MARKET TRADING MULTIPLES IN COMPARABLE PUBLIC COMPANIES
Using publicly available information Raymond James analyzed, among
other things, the market values and trading multiples of eleven southeastern
savings and loan associations which they considered to be comparable to
Suncoast, and compared these multiples to those of Suncoast. This analysis
showed that:
(a) The median multiple of stock price to the most recently
reported book value as of August 30, 1996 for the comparable public companies
was 1.11 times while the Merger reflects a multiple of approximately 1.42 times
Suncoast's book value.
(b) The median multiple of the stock price to the earnings per
share for the comparable public companies for the most recently reported
twelve-month period was 13.58 times while the Merger reflects a multiple of
approximately 18.32 times Suncoast's earnings per share for the Suncoast
twelve-month period.
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(c) The median multiple of associated 1996 calendar year earnings
per share for the comparable public companies was 12.50 times while the Merger
reflects a multiple of approximately 12.91 times Suncoast's estimated 1996
calendar year earnings per share.
(d) The median multiple of projected 1997 calendar year earnings
per share for the comparable public companies was 9.55 times while the Merger
reflects a multiple of approximately 7.68 times Suncoast's projected 1997
earnings per share.
No company or transaction used in any comparable analysis as a
comparison was identical to Suncoast or BankUnited. Accordingly, these
analyses are not mathematical; rather, they involve complex considerations and
judgments concerning differences in the financial and operating characteristics
of the comparable companies and other factors that could affect the public
trading and acquisition values of the comparable companies and transactions to
which they are being compared, including, among other things, taking into
consideration the size, financial condition and financial services market
segment of the companies reviewed as well as the nature of the transactions
reviewed.
The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant quantitative and qualitative methods of
financial analysis and the application of those methods to particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, Raymond James believes that its analyses
must be considered as a whole and that considering any portions of such
analyses and of the factors considered, without considering all analyses and
factors, could create a misleading or incomplete view of the process underlying
its opinion. In its analyses, Raymond James made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of either Suncoast or
BankUnited. These assumptions included assumptions that the economic, monetary
and market conditions existing as of the date of Raymond James' opinion would
be applicable throughout the periods analyzed, and that Suncoast's and
BankUnited's financial forecasts provided by their respective managements were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of such managements at the time of preparation of the future
operating and financial performance of Suncoast and BankUnited. Any estimates
contained in these analyses are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than as set forth therein. Additionally, analyses relating to the
values of businesses or assets do not purport to be appraisals or necessarily
reflect the prices at which businesses or assets may actually be sold.
Raymond James is a nationally recognized investment banking firm. As
part of its investment banking business, Raymond James engages in the valuation
of securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements, and valuations for corporations for other purposes. In the
ordinary course of its business as a broker/dealer Raymond James may from time
to time have a long or short position in and buy or sell equity securities of
Suncoast and/or BankUnited for its own account and for the accounts of its
customers. Additionally, Raymond James acted as a managing underwriter in
BankUnited's public offerings and received customary compensation for such
services. Raymond James also currently publishes investment research on
BankUnited. Raymond James was retained by Suncoast based on Raymond James'
experience as a financial advisor in connection with mergers and acquisitions,
as well as Raymond James' investment banking relationship and familiarity with
Suncoast and BankUnited. Suncoast paid Raymond James a fee of $75,000 upon
delivery of its fairness opinion to the Board of Directors on July 15, 1996,
and has agreed to pay additional fees of $50,000 upon delivery of the fairness
opinion to be included in this Joint Proxy Statement-Prospectus and $350,000,
for assistance in negotiating the Merger, payable upon the closing of the
Merger. Suncoast has also agreed to indemnify Raymond James for certain
liabilities, including liabilities under federal securities laws or relating to
or arising out of Raymond James' engagement as financial advisor to Suncoast.
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STRUCTURE OF THE MERGER
Subject to the terms and conditions of the Merger Agreement and in
accordance with applicable law, at the Effective Time, Suncoast will merge with
and into BankUnited, FSB. BankUnited, FSB will be the surviving entity in the
Merger and will continue its corporate existence as a wholly-owned subsidiary
of BankUnited. At the Effective Time, the separate corporate existence of
Suncoast will terminate. The Charter of BankUnited, FSB, as in effect at the
Effective Time, will be the Charter of the surviving association and the bylaws
of BankUnited, FSB, as in effect immediately prior to the Effective Time, will
be the bylaws of the surviving association.
CONVERSION OF SUNCOAST CAPITAL STOCK; TREATMENT OF SUNCOAST STOCK OPTIONS AND
WARRANTS
At the Effective Time, each share of the Suncoast Common Stock
outstanding will be converted into the right to receive one share of the
BankUnited Class A Common Stock and each share of the Suncoast Preferred Stock
will be converted into the right to receive one share of the New BankUnited
Preferred Stock. Each share of the BankUnited Class A Common Stock is entitled
to one-tenth vote on all matters upon which stockholders have the right to
vote. The holders of the BankUnited Class A Common Stock are entitled to
dividends when, as, and if declared by the BankUnited Board out of funds
legally available therefor. The BankUnited Board may declare dividends solely
on the BankUnited Class A Common Stock or may declare dividends on both the
BankUnited Class A Common Stock and the BankUnited Class B Common Stock
provided that the dividend declared for a share of the BankUnited Class A
Common Stock is not less than 110% (subject to adjustment upon the occurrence
of certain events) of the amount per share of any dividend declared on the
BankUnited Class B Common Stock. The New BankUnited Preferred Stock will have
terms and rights substantially similar to those of the Suncoast Preferred
Stock. See "Description of BankUnited Capital Stock" and "Description of New
BankUnited Preferred Stock." Suncoast's obligation to consummate the Merger is
not conditioned upon the BankUnited Class A Common Stock continuing to trade at
any specified minimum price during any period prior to the Effective Time.
Because the Exchange Ratio is fixed and because the market price of the
BankUnited Class A Common Stock is subject to fluctuation, the value of the
shares of the BankUnited Class A Common Stock that holders of the Suncoast
Common Stock will receive in the Merger may increase or decrease prior to the
Merger.
At the Effective Time, all rights with respect to any shares of the
Suncoast Common Stock pursuant to stock options granted by Suncoast under the
Suncoast Stock Option Plan, including options granted under such plan pursuant
to employment or acquisition agreements, which are outstanding at the Effective
Time, whether or not then exercisable, will be converted into and become rights
with respect to the BankUnited Class A Common Stock, and BankUnited will assume
each Suncoast Option, in accordance with the terms of the Suncoast Stock Option
Plan. At the Effective Time, each Suncoast Option will be exercisable for the
number of shares of the BankUnited Class A Common Stock equal to the number of
shares of the Suncoast Common Stock subject to such Suncoast Option immediately
prior to the Effective Time, and the per share exercise price of the Suncoast
Option will remain the same. At the Effective Time, the Suncoast Stock Option
Plan will be automatically and without further action assumed by BankUnited and
thereupon become a stock option plan of BankUnited, although BankUnited will
not grant any new options under the plan.
Currently, holders of the Suncoast Warrants, which expire on July 9,
1998, have the right to purchase (a) up to 80,000 shares of Suncoast Preferred
Stock at an exercise price of $18.00 per share, (b) up to 134,457 shares of
Suncoast Common Stock at an exercise price of $10.80 per share, or (c) any
combination of Suncoast Preferred Stock or Suncoast Common Stock at the
exercise prices set forth above which results in an aggregate exercise price of
up to $1,440,000.
Shares of BankUnited capital stock issued and outstanding immediately
prior to the Effective Time will remain issued and outstanding immediately
after the Merger.
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EXCHANGE OF CERTIFICATES
At or prior to the Effective Time, BankUnited will deposit, or cause
to be deposited, with American Stock Transfer and Trust Company (the "Exchange
Agent"), for the benefit of the holders of certificates of Suncoast capital
stock, certificates representing the shares of the BankUnited Class A Common
Stock and the New BankUnited Preferred Stock to be delivered pursuant to the
terms of the Merger.
Promptly after the Effective Time, a form of transmittal letter will
be mailed by the Exchange Agent to the holders of Suncoast capital stock. The
form of transmittal letter will contain instructions with respect to the
surrender of certificates representing Suncoast capital stock.
SUNCOAST STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED
PROXY AND SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNTIL THE SUNCOAST
STOCKHOLDER RECEIVES A LETTER OF TRANSMITTAL FOLLOWING THE EFFECTIVE TIME.
Former holders of the Suncoast Common Stock of record will be entitled
to vote after the Effective Time at any meeting of holders of the BankUnited
capital stock the number of whole shares of the BankUnited Class A Common Stock
into which their shares of the Suncoast Common Stock are converted, regardless
of whether such holders have exchanged their certificates representing the
Suncoast Common Stock for certificates representing the BankUnited Class A
Common Stock. Each share of the BankUnited Class A Common Stock entitles the
holder thereof to one-tenth of a vote on each matter upon which stockholders of
BankUnited have the right to vote. Former holders of the Suncoast Preferred
Stock will have the right to vote the New BankUnited Preferred Stock into which
their shares of the Suncoast Preferred Stock are converted under the same
circumstances that their Suncoast Preferred Stock could be voted. Until
surrendered for exchange, each certificate representing shares of the Suncoast
capital stock after the Effective Time will represent for all purposes only the
right to receive shares of the BankUnited Class A Common Stock or the New
BankUnited Preferred Stock under the terms of conversion thereof in the Merger.
Whenever a dividend is declared by BankUnited on the BankUnited Class A Common
Stock or the New BankUnited Preferred Stock, the record date for which is at or
after the Effective Time the declaration will include dividends on all shares
issuable in the Merger. However, no dividend or other distribution payable to
the holders of record of BankUnited capital stock, as of any time after the
Effective Time, will be paid to the holder of any certificate representing
shares of Suncoast capital stock outstanding at the Effective Time until such
holder physically surrenders such certificate for exchange, at which time all
such dividends or distributions will be paid (without interest).
None of BankUnited, Suncoast, the Exchange Agent or any other person
will be liable to any former holder of Suncoast capital stock for any amount
delivered in good faith to a public official pursuant to applicable abandoned
property, escheat or similar laws.
If a certificate for Suncoast capital stock has been lost, stolen or
destroyed, the Exchange Agent will issue the consideration payable in
accordance with the Merger Agreement upon receipt of appropriate evidence as to
such loss, theft or destruction, appropriate evidence as to the ownership of
such certificate by the claimant, and appropriate and customary
indemnification.
For a description of the differences between the rights of the holders
of BankUnited capital stock and Suncoast capital stock, see "Comparison of
Stockholders' Rights." For a description of the BankUnited capital stock,
including the New BankUnited Preferred Stock, see "Description of BankUnited
Capital Stock" and "Description of New BankUnited Preferred Stock."
Shares of BankUnited capital stock issued and outstanding immediately
prior to the Effective Time will remain issued and outstanding and be
unaffected by the Merger.
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EFFECTIVE TIME
The Effective Time will be as set forth in the Articles of
Consolidation (the "Articles of Consolidation") which will be filed with the
OTS on the closing date in accordance with the Merger Agreement (the "Closing
Date"). The Effective Time shall be determined by BankUnited and Suncoast, but
will occur no later than ten business days following the last to occur of (i)
the date that is 30 days after the date of the order of the OTS approving the
Merger, (ii) the effective date of the last order, approval, or exemption of
any other federal or state regulatory agency approving or exempting the Merger
if such action is required, (iii) the expiration of all required waiting
periods after the filing of all notices to all federal or state regulatory
agencies required for consummation of the Merger, and (iv) the date on which
the respective stockholders of Suncoast and BankUnited approve the Merger
Agreement. BankUnited and Suncoast each anticipate that the Merger will be
consummated by the end of 1996. However, the consummation of the Merger could
be delayed as a result of delays in obtaining any necessary regulatory agency
or other governmental approvals required for the transactions contemplated by
the Merger Agreement (the "Requisite Regulatory Approvals"). There can be no
assurance as to if or when such approvals will be obtained or whether the
Merger will be consummated. If the Merger is not effected on or before
February 28, 1997, the Merger Agreement may be terminated by either BankUnited
or Suncoast.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of
BankUnited and Suncoast as to, among other things, (i) the corporate
organization and existence of each party and its subsidiaries; (ii) the
capitalization of each party and its subsidiaries; (iii) the corporate power
and authority of each party and the compliance of the Merger Agreement with (a)
the articles of incorporation or charter and bylaws of each party, (b)
applicable law, and (c) certain material agreements; (iv) governmental and
third-party approvals; (v) the timely filing of required regulatory reports;
(vi) each party's financial statements and filings with the Commission or the
OTS, as applicable; (vii) other than as disclosed in disclosure schedules the
absence of the need for either party to pay brokers' fees; (viii) the absence
of certain changes in each party's business since March 31, 1996; (ix) the
absence of material legal proceedings; (x) the filing and accuracy of each
party's tax returns; (xi) each party's employee benefit plans and related
matters; (xii) material accuracy and completeness of the filings made by each
party with the Commission or the OTS, as applicable; (xiii) each party's
compliance with applicable law; (xiv) the absence of material defaults under
certain contracts; (xv) agreements between each party and regulatory agencies;
(xvi) activities of the subsidiaries of each party; and (xvii) the absence of
undisclosed liabilities; and (xviii) specified matters as to Suncoast's
business and property.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Pursuant to the Merger Agreement, prior to the Effective Time Suncoast
has agreed (i) to conduct its business in the usual, regular and ordinary
course consistent with past practice, (ii) to use its best efforts to maintain
and preserve intact its business organization, employees and advantageous
business relationships and retain the services of its officers and key
employees, and (iii) to take no action which would adversely affect or delay
the ability of Suncoast to obtain any Requisite Regulatory Approvals or to
perform its covenants and agreements under the Merger Agreement.
BankUnited and Suncoast have also agreed to use their reasonable best
efforts to promptly prepare and file all necessary documentation to effect all
applications, notices, petitions and filings, and to obtain and to cooperate in
obtaining permits, consents, approvals and authorizations of all third parties
and governmental entities necessary or advisable to consummate the transactions
contemplated by the Merger Agreement and to comply with the terms and
conditions of all such permits, consents, approvals and authorizations.
BankUnited and Suncoast have each agreed upon request to furnish to the other
party all information concerning themselves and their subsidiaries, directors,
officers and stockholders and such other matters as may be necessary or
advisable in connection with the Merger. BankUnited and Suncoast have also
agreed, subject to the terms and conditions of the Merger Agreement, to use
their best efforts to take, or cause to be taken, all actions necessary, proper
or advisable to comply promptly with all legal requirements which may be
imposed on such party or its subsidiaries to consummate the Merger. BankUnited
also agreed to cause the shares of the BankUnited Class A Common Stock and the
New BankUnited
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Preferred Stock to be issued in the Merger to be approved for listing on the
Nasdaq, subject to official notice of issuance.
BankUnited has agreed that all Suncoast employees who are employed by
BankUnited as of the Effective Time will be eligible to participate in the
employee benefit plans and other fringe benefits of BankUnited on the same
terms and conditions as those provided from time to time by BankUnited to its
similarly situated officers and employees, giving effect, for eligibility and
vesting of benefits, to years of service with Suncoast as if such service were
with BankUnited. BankUnited and Suncoast also reached certain agreements with
respect to directors' and officers' indemnification and insurance. See
"Interests of Certain Persons in the Merger."
Each of BankUnited and Suncoast has further agreed to give to the
other party access to all of its properties, books, contracts, tax returns,
commitments and records and to furnish to the other party information
concerning its businesses, properties and personnel, for the purpose of
conducting any review related to the Merger, subject to the restrictions set
forth in the Merger Agreement.
In addition, except as contemplated by the Merger Agreement, Suncoast
has agreed that, without the consent of BankUnited, it will not, among other
things:
(i) other than in the ordinary course of business consistent with
past practice ("In the Ordinary Course"), incur any indebtedness for borrowed
money (other than certain short-term indebtedness specified in the Merger
Agreement), assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or other
entity, or make any loan or advance other than In the Ordinary Course;
(ii) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend (other than dividends specified in the Merger
Agreement), or make any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of
its capital stock; grant any stock appreciation rights or grant to any person,
corporation or other entity any right to acquire any shares of its capital
stock; or issue any additional shares of capital stock (other than as specified
in the Merger Agreement);
(iii) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other entity, or
cancel, release or assign any indebtedness to any such person or any claims
held by any such person, except In the Ordinary Course or pursuant to contracts
or agreements in force at the date of the Merger Agreement;
(iv) except for transactions identified by Suncoast to BankUnited
or pursuant to contracts in force on the date of the Merger Agreement, make any
investment of more than $25,000 either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any property or
assets of any individual, corporation or other entity;
(v) except for transactions identified by Suncoast to BankUnited,
enter into or terminate any contract or agreement or make any change in any of
its leases or contracts, involving annual payments in excess of $25,000 and not
terminable upon 30 days' prior notice;
(vi) except as identified by Suncoast to BankUnited, increase or
modify in any manner the compensation or fringe benefits of any of its current
or former employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such current or former employees or
become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment agreement
with or for the benefit of any current or former employee other than routine
adjustments In the Ordinary Course or accelerate the vesting of any stock
options or other stock-based compensation;
(vii) originate non-residential loans over $500,000, originate or
purchase any loans with fixed rate terms over three years or not at market
rates, or increase rates on its deposits with terms over one year, except under
conditions specified in the Merger Agreement;
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(viii) except In the Ordinary Course, settle any claim, action or
proceeding involving money damages in excess of $50,000;
(ix) amend its charter or its bylaws;
(x) other than in prior consultation with BankUnited, materially
restructure or change its investment securities portfolio, loan portfolio or
servicing portfolio, or the manner in which the portfolio is classified or
reported; or
(xi) agree to, or make any commitment to, take any of the actions listed
above.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject to the
satisfaction or waiver, where permissible, of the following conditions at or
prior to the Effective Time:
(i) the Merger Agreement and the transactions contemplated thereby
shall have been adopted and approved by the respective requisite affirmative
votes of the holders of BankUnited capital stock and Suncoast capital stock
entitled to vote thereon;
(ii) the shares of the BankUnited Class A Common Stock and the New
BankUnited Preferred Stock which are to be issued to Suncoast stockholders upon
consummation of the Merger shall have been authorized for trading on the
Nasdaq, subject to official notice of issuance;
(iii) the Merger Agreement and the other transactions contemplated
hereby shall have received the Requisite Regulatory Approvals, including that
of the OTS and any other regulatory authority whose approval is required for
consummation of the transactions contemplated hereby, which approvals are
subject to no conditions that in the reasonable judgment of BankUnited would
restrict it or its subsidiaries or affiliates in their respective sphere of
operations and business activities after the Effective Time;
(iv) the Registration Statement of which this Joint Proxy
Statement-Prospectus forms a part shall have become effective and no stop order
suspending the effectiveness of such Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission;
(v) neither BankUnited nor Suncoast shall be subject to any active
litigation which seeks any order, decree or injunction of a court or agency of
competent jurisdiction to enjoin or prohibit the consummation of the Merger and
there shall be in effect no order, decree, or injunction of any court or agency
of competent jurisdiction, directing that the consummation of the transactions
contemplated by the Merger Agreement be prohibited or enjoined;
(vi) the representations and warranties of the other party to the
Merger Agreement shall be true and correct in all material respects as of the
date of the Merger Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on the Closing Date; and
(vii) each party shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Closing Date.
BankUnited's obligation to effect the Merger is subject to the
satisfaction or waiver of the following additional conditions at or prior to
the Effective Time:
(i) Suncoast's net worth as of the Effective Time shall be not
less than $22 million. For purposes of this condition Suncoast's net worth
means the net worth of Suncoast determined in accordance with GAAP (A) without
giving any effect to (1) any special assessment to recapitalize the Savings
Association Insurance Fund of the FDIC (the "SAIF") or (2) certain other items
specified in the Merger Agreement; and (B) adjusted as of the month end before
the Effective Time to reflect the tax adjusted current market value of the
capitalized portion of Suncoast's mortgage loan servicing portfolio as
determined by a BankUnited consultant.
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(ii) no event, occurrence, or circumstance shall have occurred that
would constitute a Material Adverse Effect, as defined herein, as to Suncoast.
Suncoast's obligation to effect the Merger is subject to the
satisfaction or waiver of the following additional conditions at or prior to
the Effective Time:
(i) as of the Effective Time, BankUnited's net worth shall be not
less than $64.7 million. For purposes of this condition BankUnited's net worth
means BankUnited's net worth in accordance with GAAP without giving any effect
to (A) any special assessment to recapitalize the SAIF or (B) any changes in
BankUnited's net worth due to any acquisition by BankUnited of BankUnited's
preferred stock through purchase or exchange for subordinated debt of
BankUnited.
(ii) no event, occurrence or circumstance shall have occurred that
would constitute a Material Adverse Effect, as defined herein, as to
BankUnited; and
(iii) Suncoast shall have received an opinion of Kronish, Leib,
Weiner & Hellman LLP addressed to Suncoast and/or BankUnited in a form
reasonably satisfactory to them that for federal income tax purposes the Merger
qualifies as a reorganization under the provisions of Section 368 of the Code.
For purposes of the foregoing, "Material Adverse Effect" means any
event, occurrence or circumstance which (a) has or is reasonably likely to have
a material adverse effect on the financial condition, results of operations,
business or prospects of Suncoast or BankUnited, or (b) would materially impair
BankUnited's or Suncoast's ability to perform its respective obligations under
the Merger Agreement; provided that, Material Adverse Effect will not include
any effect resulting from:
(i) changes in banking and similar laws of general applicability
or interpretations thereof by courts or governmental authorities;
(ii) changes in GAAP or regulatory accounting principles or
requirements;
(iii) the contemplated special assessment on deposits of SAIF
insured institutions to recapitalize the SAIF; or
(iv) fees and expenses of counsel, accountants, and advisors, and
costs related to the Merger Agreement.
No assurance can be provided as to if or when the Requisite Regulatory
Approvals necessary to consummate the Merger will be obtained or whether all of
the other conditions precedent to the Merger will be satisfied or waived by the
party permitted to do so. If the Merger is not effected on or before February
28, 1997, the Merger Agreement may be terminated by either BankUnited or
Suncoast.
REGULATORY APPROVAL REQUIRED FOR THE MERGER
BankUnited and Suncoast have agreed to use their reasonable best
efforts to obtain the Requisite Regulatory Approvals, which include approval
from the OTS, and have filed applications to obtain such Requisite Regulatory
Approvals. The Merger is subject to the approval of the OTS. Under federal
law, a period of 15 days must expire following approval by the OTS within which
period the United States Department of Justice may file objections to the
Merger under the federal antitrust laws. The Merger cannot proceed in the
absence of the Requisite Regulatory Approvals. There can be no assurance that
such Requisite Regulatory Approvals will be obtained, and, if obtained, there
can be no assurance as to the date of any such approvals or the absence of any
litigation challenging such approvals. There can likewise be no assurance that
the United States Department of Justice will not attempt to challenge the
Merger on antitrust grounds or, if such a challenge is made, as to the result
thereof.
BankUnited and Suncoast are not aware of any other material
governmental approvals or actions that are required prior to the consummation
of the Merger other than those described above. It is presently contemplated
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that, if any such additional governmental approvals or actions are required,
such approvals or actions will be sought. There can be no assurance, however,
that any such additional approvals or actions will be obtained.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of the material
Federal income tax consequences of the Merger. This summary is not a complete
description of all of such consequences of the Merger and, in particular, may
not address Federal income tax considerations that may affect the treatment of
a stockholder which, at the Effective Time, is not a United States citizen, is
a tax-exempt entity or an individual who acquired the Suncoast Common Stock
pursuant to an employee stock option, or which exercises some form of control
over Suncoast. In addition, no information is provided herein with respect to
the tax consequences of the Merger under applicable foreign, state or local
laws. Consequently, each Suncoast stockholder is advised to consult a tax
advisor as to the specific tax consequences of the transaction to that
stockholder. The following discussion is based on the Code, as in effect on
the date of this Joint Proxy Statement-Prospectus, without consideration of the
particular facts or circumstances of any holder of Suncoast capital stock.
The Merger. BankUnited and Suncoast have received an opinion from
Kronish, Lieb, Weiner & Hellman LLP, dated as of the date hereof, based upon
certain customary representations and assumptions set forth therein,
substantially to the effect that for Federal income tax purposes the Merger
will constitute a reorganization within the meaning of Section 368 of the Code.
Each of BankUnited's and Suncoast's obligation to effect the Merger is
conditioned on the receipt of an opinion to the same effect updated as of the
Effective Time.
Based on such opinion, the material Federal income tax consequences of
the Merger will be:
(i) no gain or loss will be recognized by BankUnited or by
Suncoast as a result of the Merger;
(ii) no gain or loss will be recognized by Suncoast stockholders
upon their exchange of Suncoast capital stock for the BankUnited Class A Common
Stock or the New BankUnited Preferred Stock;
(iii) the tax basis of the BankUnited Class A Common Stock or the
New BankUnited Preferred Stock received by a Suncoast stockholder who exchanges
his or her Suncoast capital stock for the BankUnited Common Stock or the New
BankUnited Preferred Stock will be the same as such stockholder's tax basis in
the Suncoast capital stock surrendered in exchange therefor; and
(iv) the holding period of the BankUnited Class A Common Stock or
the New BankUnited Preferred Stock received by a Suncoast stockholder will
include the period during which the Suncoast capital stock surrendered in
exchange therefor was held (provided that such Suncoast capital stock was held
by such Suncoast stockholder as a capital asset at the Effective Time).
Each Suncoast stockholder will be required to report on such
stockholder's Federal income tax return for the fiscal year of such stockholder
in which the Merger occurs that such stockholder has received BankUnited
capital stock in a reorganization to which Section 368 of the Code is
applicable.
ACCOUNTING TREATMENT
The acquisition of Suncoast pursuant to the Merger will be accounted
for under the purchase method of accounting. Under the purchase method of
accounting, the assets and liabilities of Suncoast will be recorded on the
consolidated books of BankUnited at their fair values at the Effective Time.
Any excess of the value of the consideration paid by BankUnited over the fair
value of Suncoast's identifiable net assets acquired by BankUnited will be
treated as goodwill and will be amortized over a period of 20 years. It is not
anticipated that any such excess will be material.
The unaudited pro forma financial information contained in this Joint
Proxy Statement-Prospectus has been prepared using the purchase accounting
method to account for the Merger. See "Summary of Joint Proxy Statement-
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Prospectus--Selected Historical and Pro Forma Per Share Data" and "Unaudited
Pro Forma Condensed Combined Financial Statements."
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement provides that the Merger may be terminated at any
time prior to the Effective Time, whether before or after approval by
BankUnited's or Suncoast's stockholders:
(i) by mutual consent of BankUnited and Suncoast;
(ii) by BankUnited or Suncoast if (A) the OTS has denied approval
of the Merger and such denial has become final and nonappealable or has
approved the Merger subject to conditions that in the judgment of BankUnited
would restrict its spheres of operations and business activities after the
Effective Time or (B) the Effective Time does not occur by February 28, 1997;
(iii) by BankUnited or Suncoast (if not in material breach of any of
its obligations hereunder) pursuant to notice in the event of a breach or
failure by the other that is material in the context of the transactions
contemplated hereby of any representation, warranty, covenant or agreement by
the other contained herein which has not been, or cannot be, cured within 30
days after written notice of such breach is given;
(iv) by BankUnited or Suncoast if the stockholders of BankUnited or
Suncoast fail to approve the Merger at the BankUnited Special Meeting or the
Suncoast Special Meeting; or
(v) by Suncoast if (A) there shall not have been a material breach
of any agreement on the part of Suncoast under the Merger Agreement and (B)
prior to the Effective Time, a bona fide Acquisition Proposal (as defined in
the Merger Agreement) has been made to Suncoast that the Suncoast Board
determines in its good faith judgment and in the exercise of its fiduciary
duties, based as to legal matters on the written opinion of legal counsel and
as to financial matters on the written opinion of an investment banking firm
familiar with savings institutions, that is more favorable to the holders of
Suncoast capital stock than the Merger and that the failure to terminate the
Merger Agreement and accept such alternative acquisition proposal would be
inconsistent with the proper exercise of its fiduciary duties.
BankUnited Termination Fees. Under the Merger Agreement, Suncoast is
obligated to pay BankUnited termination fees of:
(i) $1 million if Suncoast receives an acquisition proposal and
terminates the Merger Agreement under the conditions described in clause (v),
above, plus up to $300,000 in out-of-pocket expenses of BankUnited;
(ii) $100,000 if the stockholders of Suncoast fail to approve the
Merger, plus up to $10,000 in out-of- pocket expenses of BankUnited;
(iii) $1,000,000 (or $900,000 if Suncoast has already paid
BankUnited the termination fee set forth in the immediately preceding clause)
if (A) BankUnited terminates the Merger Agreement for a material breach of the
Merger Agreement by Suncoast (if the breach by Suncoast giving rise to
BankUnited's right of termination is for the purpose of inducing BankUnited to
terminate the Merger Agreement in anticipation of an Acquisition Event (defined
below) (a "Willful Breach") and pursuant to arbitration a determination has
been made that such Willful Breach occurred and that an Acquisition Event
occurred within 12 months of the date of such Willful Breach by Suncoast); or
(B) BankUnited terminates the Merger Agreement because the stockholders of
Suncoast fail to approve the Merger and an Acquisition Event occurs within four
months after the date of such termination. BankUnited has agreed that any fee
paid to Suncoast pursuant to the terms of this paragraph will be its exclusive
remedy for a Willful Breach.
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For purposes of the preceding paragraph, an "Acquisition Event" is any
of the following:
(i) the acquisition by any person pursuant to a tender offer,
exchange offer or otherwise of beneficial ownership of 50% or more of any class
of equity securities of Suncoast;
(ii) the receipt by any person of approval from the OTS to acquire
ownership of 50% or more of any class of equity securities of Suncoast; or
(iii) the determination by Suncoast to recommend or enter into an
agreement with any entity (A) to effect a merger, consolidation, business
combination, sale of substantially all of the assets, or a similar transaction
involving Suncoast, (B) to sell, lease or otherwise dispose of assets of
Suncoast representing 50% or more of the consolidated assets of Suncoast, (C)
to issue, sell or otherwise dispose of, other than by means of a widely
disbursed public offering, securities representing 50% or more of any class of
equity securities of Suncoast, or (D) to have such entity effect a tender offer
or exchange offer that, if consummated, would result in any entity beneficially
owning 50% or more of any class of equity securities of Suncoast in the
aggregate.
Suncoast Termination Fees. Under the Merger Agreement, BankUnited is
obligated to pay Suncoast a termination fee of $100,000 plus up to $10,000 of
out-of-pocket expenses if the Merger Agreement is terminated because either (i)
the OTS denies approval of the Merger, or the OTS has approved the Merger
subject to terms that in the judgement of BankUnited would restrict it or its
subsidiaries or affiliates in their respective spheres of operations and
business activities after the Effective Time; or (ii) the Effective Time has
not occurred by February 28, 1997.
MODIFICATION AND WAIVER OF THE MERGER AGREEMENT
At any time prior to the Effective Time, BankUnited and Suncoast may,
to the extent legally allowed:
(i) extend the time for the performance of any of the obligations
or other acts of the other party;
(ii) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement; and
(iii) waive compliance with any of the agreements or conditions
contained in the Merger Agreement; except that after any approval of the
transactions contemplated by the Merger Agreement by the respective
stockholders of BankUnited or Suncoast, there may not be, without further
approval of such stockholders, any extension or waiver of the Merger Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the holders of Suncoast capital stock.
Subject to compliance with applicable law, the Merger Agreement may be
amended by a subsequent writing signed by each of BankUnited and Suncoast at
any time before or after approval of the matters presented in connection with
the Merger to the stockholders of BankUnited or Suncoast, except that after any
approval of the transactions contemplated by the Merger Agreement by the
respective stockholders of BankUnited or Suncoast, there may not be, without
further approval of such stockholders, any amendment of the Merger Agreement
which changes the amount or the form of the consideration to be delivered to
the holders of Suncoast capital stock in the Merger. In the event the parties
contemplate an amendment to the Merger Agreement of the type which by law or
pursuant to the foregoing may not be made without stockholder approval,
BankUnited and/or Suncoast, as the case may be, may resolicit proxies from the
stockholders of BankUnited and/or Suncoast, as the case may be, to obtain such
approval.
The Merger Agreement provides that BankUnited may at any time change
the structure of its acquisition of Suncoast if and to the extent that it deems
such a change desirable. In no case, however, may any such change alter the
amount or kind of consideration to be received by the holders of Suncoast
capital stock under the Merger Agreement, adversely affect the tax treatment of
the holders of Suncoast capital stock as a result of the receipt of such
consideration, or materially and adversely affect any agreement between
Suncoast and its employees.
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NASDAQ LISTING
The Merger Agreement provides for BankUnited to use its best efforts
to list, prior to the Effective Time, on the Nasdaq, upon official notice of
issuance, the shares of the BankUnited Class A Common Stock and the New
BankUnited Preferred Stock to be issued to holders of Suncoast capital stock in
the Merger. BankUnited has reserved the Nasdaq symbol "BKUNN" for the New
BankUnited Preferred Stock and plans to apply for listing on Nasdaq shortly.
It is a condition to the consummation of the Merger that such shares of
BankUnited capital stock be authorized for listing on the Nasdaq effective upon
the official notice of issuance.
BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
From and after the Effective Time, the Board of Directors of
BankUnited will consist of 17 persons, including Albert J. Finch, the Chairman
of the Board, Chief Executive Officer and President of Suncoast, and Norman
Mains, Irving Cohen, and E.J. Guisti, each a director of Suncoast. At the
Effective Time, each of the foregoing persons will also be appointed to the
Board of Directors of BankUnited, FSB. The Merger Agreement also provides that
Albert J. Finch will be appointed as a Vice Chairman of the boards of both
BankUnited and BankUnited, FSB. The BankUnited Board currently has 13 members,
which will be changed to 17 members at the Effective Time.
The executive officers of BankUnited after the Merger will be
comprised of members of BankUnited's current senior management and certain
members of Suncoast's current senior management. It has not yet been
determined which members of Suncoast's management will become officers of
BankUnited following the Merger. Additional information about the above
mentioned Suncoast directors is contained in Suncoast's Annual Report on Form
10-K for the year ended June 30, 1996, which is incorporated by reference in
this Joint Proxy Statement-Prospectus.
See "Available Information," "Information Incorporated by Reference"
and "Unaudited Pro Forma Condensed Combined Financial Statements."
EXPENSES
The Merger Agreement provides that BankUnited and Suncoast will each
pay its own expenses in connection with the Merger and the transactions
contemplated thereby.
RESALES OF BANKUNITED CLASS A COMMON STOCK AND NEW BANKUNITED PREFERRED STOCK
IN THE MERGER
The BankUnited Class A Common Stock and the New BankUnited Preferred
Stock issued pursuant to the Merger will be registered under the Securities Act
and will be freely transferable under the Securities Act, except for shares
issued to any Suncoast stockholder who may be deemed to be an affiliate of
BankUnited for purposes of Rule 144 promulgated under the Securities Act ("Rule
144") or an affiliate of Suncoast for purposes of Rule 145 promulgated under
the Securities Act ("Rule 145") (each an "Affiliate"). Affiliates will include
persons (generally executive officers, directors and 10% stockholders) who
control, are controlled by, or are under common control with (i) BankUnited or
Suncoast at the time of the Suncoast Special Meeting or (ii) BankUnited at or
after the Effective Time.
Rules 144 and 145 will restrict the sale of the BankUnited Class A
Common Stock and the New BankUnited Preferred Stock received in the Merger by
Affiliates and certain of their family members and related interests.
Generally speaking, during the two years following the Effective Time, those
persons who are Affiliates of Suncoast at the time of the Suncoast Special
Meeting, provided they are not Affiliates of BankUnited at or following the
Effective Time, may publicly resell any shares of the BankUnited Class A Common
Stock and the New BankUnited Preferred Stock received by them in the Merger,
subject to certain limitations as to, among other things, the amount of the
BankUnited Class A Common Stock and the New BankUnited Preferred Stock, as the
case may be, sold by them in any three-month period and as to the manner of
sale. After the two-year period, such Affiliates may resell their shares
without such restrictions so long as there is adequate current public
information with respect to BankUnited as required by Rule 144. Persons who
become Affiliates of BankUnited prior to or after the Effective
49
<PAGE> 63
Time, may publicly resell the BankUnited Class A Common Stock and the New
BankUnited Preferred Stock received by them in the Merger subject to the
volume, manner of sale and current public information limitations and certain
filing requirements specified in Rule 144.
The ability of Affiliates to resell shares of the BankUnited Class A
Common Stock and the New BankUnited Preferred Stock received in the Merger
under Rule 144 or Rule 145 as summarized herein generally will be subject to
BankUnited having satisfied its Exchange Act reporting requirements for
specified periods prior to the time of sale. Affiliates also would be
permitted to resell the BankUnited Class A Common Stock and the New BankUnited
Preferred Stock received in the Merger pursuant to an effective registration
statement under the Securities Act or another available exemption from the
Securities Act registration requirements.
This Joint Proxy Statement-Prospectus does not cover any resales of
the BankUnited Class A Common Stock or the New BankUnited Preferred Stock
received by persons who may be deemed to be Affiliates of BankUnited or
Suncoast in the Merger.
Suncoast has agreed in the Merger Agreement to use its best efforts to
cause each person who is an Affiliate (for purposes of Rule 145) of Suncoast to
deliver to BankUnited a written agreement intended to ensure compliance with
the Securities Act. A form of the written agreement to be obtained is set
forth as Exhibit E to the Merger Agreement which is attached hereto as Exhibit
A.
NO APPRAISAL RIGHTS
Under applicable law, holders of the BankUnited capital stock and the
Suncoast capital stock will have no appraisal rights in connection with the
Merger Agreement and the consummation of the transactions contemplated thereby.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Suncoast's management and the Suncoast Board may be
deemed to have certain interests in the Merger that are in addition to their
interests as stockholders of Suncoast, generally. The Suncoast Board was aware
of these interests and considered them, among other matters, in approving the
Merger Agreement and the transactions contemplated thereby.
Suncoast Directors and Officers. The Merger Agreement provides that
at the Effective Time, Albert J. Finch, Chairman of the Board, Chief Executive
Officer, and President of Suncoast, will be appointed as a Vice-Chairman of the
Board of Directors of BankUnited and BankUnited, FSB and as a member of the
BankUnited Board for three years. The Merger Agreement also provides that at
the Effective Time, the following persons, who are members of the Suncoast
Board, will be appointed to the BankUnited Board for the terms indicated:
Norman Mains and Irving Cohen - two years; and E.J. Giusti - one year. The
appointment of each of these persons to the BankUnited Board is subject to each
of them being elected to the BankUnited Board by the holders of BankUnited
capital stock at the 1997 BankUnited Annual Meeting of Stockholders. The
Merger Agreement also provides that at the Effective Time Albert J. Finch,
Norman Mains, Irving Cohen, and E.J. Giusti will be appointed to the Board of
Directors of BankUnited, FSB for a term of one year.
Indemnification and Directors' and Officers' Insurance for Suncoast
Officers and Directors. The Merger Agreement provides that for a period of
three years following the Effective Time, BankUnited will indemnify the present
and former officers and directors of Suncoast against all expenses or
liabilities arising out of actions or omissions occurring on or prior to the
Effective Time to the fullest extent permitted by applicable OTS regulations
and Suncoast's Charter and Bylaws. In addition, BankUnited has agreed to
purchase $5,000,000 of directors' and officers' liability insurance coverage
for the Suncoast directors and officers with respect to expenses or liabilities
that may be incurred by them, arising out of matters occurring at or prior to
the Effective Time in their capacity as an officer or director of Suncoast,
which coverage will be for a term of three years commencing at the Effective
Time and will have a deductible of $500,000, subject to a $130,000 limit for
total premiums for the three-year period.
50
<PAGE> 64
Agreements with Suncoast Officers. The Merger Agreement provides
that, prior to the Effective Time, Suncoast will enter into severance and/or
employment continuation agreements (the "Change in Control Agreements") with
each of Albert J. Finch, Richard L. Browdy, and Wendy M. Mitchler, each of whom
is an executive officer of Suncoast. The benefits payable to them under the
Change in Control Agreements include a severance payment to Mr. Finch in the
amount of $150,000, a payment to Mr. Finch in an amount equal to the amount of
compensation that Suncoast otherwise would have paid to Mr. Finch for the
period from the Effective Time through the end of the month in which the
Effective Time occurs (but only in the event the Effective Time is prior to
November 30, 1996), and an employment continuation payment to Mr. Finch in the
amount of $150,000 at the Effective Time, and employment continuation payments
to Mr. Browdy in the amount of $280,000 and to Ms. Mitchler in the amount of
$110,000, on the later of January 2, 1997, or the Effective Time. The
severance payment to Mr. Finch is in lieu of the payment to which he would
otherwise be entitled under Suncoast's senior officer severance policy. The
employment continuation payments to Mr. Finch and Ms. Mitchler are to be made
for their remaining in the employ of Suncoast through the Effective Time, or in
the event of Suncoast's prior termination of their employment other than for
cause. The employment continuation payment to Mr. Browdy is to be made for his
remaining in the employ of Suncoast through the Effective Time and for two
subsequent three-month periods (terminable by either upon thirty days' notice
during the second three-month period), or in the event of Suncoast's prior
termination of his employment other than for cause. For these purposes,
"cause" includes any action or inaction of the executive involving personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform his or her duties,
willful violation of any law, rule or regulation (other than traffic violation
or similar offenses), or final cease-and-desist order, or material breach of
any provision of the Change in Control Agreements. Under the Merger Agreement,
BankUnited has agreed to provide after the Effective Time the benefits and
perform the obligations of Suncoast set forth in the Change in Control
Agreements in accordance with the terms thereof. In addition, under the Merger
Agreement, BankUnited has agreed to enter into a consulting agreement with
Albert J. Finch, effective as of the Effective Time. The terms of such
consulting agreement include payment of a monthly consultant fee at the rate of
$100,000 per year for a three-year period for consulting services of up to 600
hours per year. In addition, BankUnited will pay all out-of-pocket expenses
incurred by Mr. Finch in performance of his consulting duties and will, through
April 1998, make the lease payments on a leased automobile to be used by Mr.
Finch. In addition, BankUnited will provide health insurance coverage to Mr.
Finch to the same extent and on the same terms and conditions as that provided
for BankUnited employees for the greater of three years or as long as he
remains a director of BankUnited, with continuation coverage for 18 months
thereafter. The consulting agreement further provides that, as long as Mr.
Finch remains willing to stand for election as a director, whether or not he is
elected, the Split Dollar Agreement between Suncoast and Mr. Finch, dated
January 28, 1991, as amended, shall remain in full force and effect in
accordance with its terms. BankUnited has the right to terminate the
consulting agreement only for cause, as defined above.
In connection with the Merger, BankUnited and Suncoast have agreed
that Suncoast may pay up to $205,000 in employment continuation and retention
bonuses to certain officers of Suncoast at the Closing. The payment of such
employment continuation and retention bonuses will be at the discretion of the
Suncoast Board. A portion of the $205,000 may be paid to Mr. Finch, Ms.
Mitchler, or Mr. Browdy, in addition to the amounts such officers will receive
under their respective Change in Control Agreements.
As part of the Merger, the Suncoast Board approved an amendment to the
Suncoast Deferred Compensation Plan, in which Mr. Finch is a participant, to
clarify the original intent of the plan that a participant becomes 100% vested
upon a change in control. The amendment further provides that, after a change
in control or upon termination of employment, benefits under the plan are not
paid in a lump sum but rather are paid in accordance with the election made by
the participant with respect to the payment of retirement benefits under the
plan, which, in the case of Mr. Finch, was for equal monthly payments over a
period of 60 months. In addition, the amendment provides that the crediting
rate for earnings on a participant's account balance for the three-year period
following a change in control shall be 9% per annum, with benefits determined
by applying this rate without reduction for present value. After the
three-year period following the change in control, the amendment provides that
the crediting rate shall be zero. The amendment also provides that, prior to
the change in control, Suncoast will make a contribution to the trust
maintained pursuant to the plan to the extent necessary to fully fund the trust
to provide the benefits to which participants are entitled under the plan.
51
<PAGE> 65
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Statement of
Financial Condition as of June 30, 1996, and the Unaudited Pro Forma Condensed
Combined Statements of Operations for the nine months ended June 30, 1996 and
for the year ended September 30, 1995 give effect to the Merger accounted for
as a purchase of Suncoast by BankUnited. Under the purchase method of
accounting, all assets and liabilities of Suncoast at June 30, 1996 have been
adjusted to their current estimated fair values and combined with the asset and
liability book values of BankUnited. The Unaudited Pro Forma Condensed
Combined Statement of Financial Condition assumes the Merger was effective on
June 30, 1996. The Unaudited Pro Forma Condensed Combined Statements of
Operations give effect to the Merger as if the Merger had occurred at the
beginning of each of the periods presented.
The pro forma information is based on the historical consolidated
financial statements of BankUnited and of Suncoast, as adjusted, as set forth
in the accompanying Notes to the Unaudited Pro Forma Condensed Combined
Financial Statements. Suncoast's fiscal year-end is June 30, and thus
Suncoast's financial statements have been adjusted to reflect an unaudited
fiscal year ending September 30, 1995 and a nine-month period ending June 30,
1996. The Unaudited Pro Forma Condensed Combined Financial Statements do not
give effect to any anticipated cost savings or potential revenue enhancements
in connection with the Merger.
The information shown below should be read in conjunction with the
consolidated historical financial statements of BankUnited and of Suncoast,
including the respective notes thereto, which are included or incorporated by
reference in this Joint Proxy Statement-Prospectus, and the unaudited pro forma
condensed combined per share financial information, including the notes
thereto, which appears elsewhere in this Joint Proxy Statement-Prospectus. The
pro forma data are presented for comparative purposes only and are not
necessarily indicative of the combined financial position or results of
operations in the future or of the combined financial position or results of
operations which would have been realized had the Merger been consummated
during the periods or as of the dates for which the pro forma data are
presented.
Pro forma per share amounts for BankUnited giving effect to the Merger
are based on the Exchange Ratio of one share of the BankUnited Class A Common
Stock for each share of the Suncoast Common Stock and the issuance of New
BankUnited Preferred Stock having substantially similar terms as the Suncoast
Preferred Stock. See "Information Incorporated by Reference," "Summary of
Joint Proxy Statement-Prospectus--Comparative Stock Prices and Dividends; Pro
Forma Equivalent Market Value Per Share," "--Selected Historical and Pro Forma
Per Share Data," and "--BankUnited Selected Consolidated Financial Data."
52
<PAGE> 66
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL CONDITION
June 30, 1996
<TABLE>
<CAPTION>
COMBINED
BANKUNITED SUNCOAST ADJUSTMENTS PRO FORMA
---------- -------- ----------- ---------
ASSETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Cash and due from banks . . . . . . . . . . . . . . . . $ 5,176 $ 1,260 $ -- $ 6,436
FHLB overnight deposits and federal funds sold . . . . 10,579 622 -- 11,201
Tax certificates (net of reserves) . . . . . . . . . . 49,520 -- -- 49,520
Investments, available for sale, net, at market . . . 7,657 -- -- 7,657
Mortgage-backed securities, held to maturity, net . . . 15,526 -- -- 15,526
Mortgage-backed securities available for sale,
net, at market . . . . . . . . . . . . . . . . . . . 57,435 18,391 -- 75,826
Loans receivable, net . . . . . . . . . . . . . . . . . 629,567 320,828 (530)(1) 949,865
Mortgage loans held for sale . . . . . . . . . . . . . -- 6,730 -- 6,730
Other interest earning assets . . . . . . . . . . . . . 12,236 3,875 -- 16,111
Loan servicing assets . . . . . . . . . . . . . . . . . -- 11,718 422(1) 12,140
Office properties and equipment, net . . . . . . . . . 2,554 6,640 1,000(1) 10,194
Real estate owned, net . . . . . . . . . . . . . . . . 998 261 -- 1,259
Accrued interest receivable . . . . . . . . . . . . . . 6,534 3,042 -- 9,576
Cost over fair value of net assets acquired and other
intangible assets . . . . . . . . . . . . . . . . . . 2,501 -- 2,792(1) 5,293
Prepaid expenses and other assets . . . . . . . . . . . 1,248 29,202 -- 30,450
--------- --------- ------- ----------
Total assets . . . . . . . . . . . . . . . . . . . $ 801,531 $ 402,569 $ 3,684 $1,207,784
========= ========= ======= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits . . . . . . . . . . . . . . . . . . . . . . $ 470,237 $ 301,201 $ -- $771,438
Advances from FHLB and other borrowings . . . . . . . 244,000 68,500 -- 312,500
Subordinated notes . . . . . . . . . . . . . . . . . 775 -- -- 775
Advance payments by borrowers for taxes and insurance 2,955 3,138 -- 6,093
Accrued expenses and other liabilities . . . . . . . 13,904 4,192 2,400(3) 19,998
(498)(6)
--------- --------- ------- ----------
Total liabilities . . . . . . . . . . . . . . . . . 731,871 377,031 1,902 1,110,804
--------- --------- ------- ----------
Stockholders' Equity:
Preferred stock . . . . . . . . . . . . . . . . . . . 27 4,600 (4,591)(2) 36
Class A Common Stock . . . . . . . . . . . . . . . . 54 2,197 (2,177)(2) 74
Class B Common Stock . . . . . . . . . . . . . . . . 3 -- -- 3
Additional paid-in capital . . . . . . . . . . . . . 62,044 17,295 9,996(2) 89,335
Retained earnings . . . . . . . . . . . . . . . . . . 7,967 1,642 (1,642)(2) 7,967
Net unrealized gains on securities available for sale (435) (196) 196(2) (435)
--------- --------- ------- ----------
Total stockholders' equity . . . . . . . . . . . . 69,660 25,538 1,782 96,980
--------- --------- ------- ----------
Total liabilities and stockholders' equity . . . . $ 801,531 $ 402,569 $ 3,684 $1,207,784
========= ========= ======= ==========
Book value per common share . . . . . . . . . . . . . . $ 7.95 -- -- $ 7.65
Tangible book value per common share . . . . . . . . . $ 7.51 -- -- $ 6.96
Fully converted tangible book value per share . . . . . $ 7.20 -- -- $ 7.12
</TABLE>
53
<PAGE> 67
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
Nine Months Ended June 30, 1996
<TABLE>
<CAPTION>
COMBINED
BANKUNITED SUNCOAST ADJUSTMENTS(5) PRO FORMA
---------- -------- -------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income . . . . . . . . . . . . . . . . . . . . . . $ 36,953 $21,188 $ 641(1) $58,782
Interest expense . . . . . . . . . . . . . . . . . . . . . 24,934 13,342 15(1) 38,291
--------- ------- ----- -------
Net interest income before provision for loan losses . . . 12,019 7,846 626 20,491
Provision for loan losses . . . . . . . . . . . . . . . . . (225) 153 -- (72)
--------- ------- ----- -------
Net interest income after provision for loan losses . . . . 12,244 7,693 626 20,563
--------- ------- ----- -------
Non-interest income:
Loan servicing income, net . . . . . . . . . . . . . . . -- 3,163 (63)(1) 3,100
Gain on sale of assets . . . . . . . . . . . . . . . . . 2 2,648 -- 2,650
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 483 975 -- 1,458
--------- ------- ----- -------
Total non-interest income . . . . . . . . . . . . . 485 6,786 (63) 7,208
--------- ------- ----- -------
Non-interest expense:
Employee compensation and benefits . . . . . . . . . . . 3,161 5,613 (225)(4) 8,549
Occupancy and equipment . . . . . . . . . . . . . . . . . 1,232 2,135 38(1) 3,405
Other operating expenses . . . . . . . . . . . . . . . . 3,905 4,038 97(1) 8,115
75(4)
--------- ------- ----- -------
Total non-interest expenses . . . . . . . . . . . . . . 8,298 11,786 (15) 20,069
--------- ------- ----- -------
Income before income taxes and preferred stock dividends: . 4,431 2,693 578 7,702
Provision for income taxes . . . . . . . . . . . . . . . . 1,693 997 262(6) 2,952
--------- ------- ----- -------
Net income before preferred stock dividends . . . . . . . 2,738 1,696 316 4,750
Preferred stock dividends . . . . . . . . . . . . . . . . . 1,609 828 -- 2,437
--------- ------- ----- -------
Net income after preferred stock dividends . . . . . . . . $ 1,129 $ 868 $ 316 $ 2,313
========= ======= ===== =======
PER COMMON SHARE DATA:
Primary earnings per common share and common equivalent share $ .28 -- -- $ .39
Earnings per common share assuming full dilution . . . . . .28 -- -- .38
Weighted average number of common shares and common
equivalent shares assumed outstanding during the period:
Primary . . . . . . . . . . . . . . . . . . . . . . . . 3,997,331 -- -- 5,994,261
Fully diluted . . . . . . . . . . . . . . . . . . . . . 3,997,331 -- -- 6,797,259
</TABLE>
54
<PAGE> 68
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
Year Ended September 30, 1995
<TABLE>
<CAPTION>
COMBINED
BANKUNITED SUNCOAST ADJUSTMENTS(1) PRO FORMA
---------- -------- ------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income . . . . . . . . . . . . . . . . . . . . . . $ 39,419 $28,887 $ 854(1) $69,160
Interest expense . . . . . . . . . . . . . . . . . . . . . 26,305 20,410 20(1) 46,735
--------- ------- --------- -------
Net interest income before provision for loan losses . . . 13,114 8,477 834 22,425
Provision for loan losses . . . . . . . . . . . . . . . . . 1,221 100 -- 1,321
--------- ------- --------- -------
Net interest income after provision for loan losses . . . . 11,893 8,377 834 21,104
--------- ------- --------- -------
Non-interest income:
Loan servicing income, net . . . . . . . . . . . . . . . -- 5,683 (84)(1) 5,599
Gain on sale of assets . . . . . . . . . . . . . . . . . 9,808 2,965 -- 12,773
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 429 1,258 -- 1,687
--------- ------- --------- -------
Total non-interest income . . . . . . . . . . . . 10,237 9,906 (84) 20,059
--------- ------- --------- -------
Non-interest expense:
Employee compensation and benefits . . . . . . . . . . . 3,997 7,319 (300)(4) 11,016
Occupancy and equipment . . . . . . . . . . . . . . . . . 1,727 3,757 50(1) 5,534
Other operating expenses . . . . . . . . . . . . . . . . 6,425 5,634 130(1) 12,289
100(4)
--------- ------- --------- -------
Total non-interest expenses . . . . . . . . . . . 12,149 16,710 (20) 28,839
--------- ------- --------- -------
Income before income taxes and preferred stock dividends . 9,981 1,573 770 12,324
Provision for income taxes . . . . . . . . . . . . . . . . 3,741 567 350(6) 4,658
--------- ------- --------- -------
Net income before preferred stock dividends . . . . . . . . 6,240 1,006 420 7,666
Preferred stock dividends . . . . . . . . . . . . . . . . . 2,210 1,104 -- 3,314
--------- ------- --------- -------
Net income after preferred stock dividends . . . . . . . . $ 4,030 $ (98) $ 420 $ 4,352
========= ======= ========= =======
PER COMMON SHARE DATA:
Primary earnings per common share and common equivalent share $ 1.77 -- -- $ 1.02
Earnings per common share assuming full dilution . . . . . 1.26 -- -- .87
Weighted average number of common shares and common
equivalent shares assumed outstanding during the period:
Primary . . . . . . . . . . . . . . . . . . . . . . . . 2,296,021 -- -- 4,292,951
Fully diluted . . . . . . . . . . . . . . . . . . . . . 4,158,564 -- -- 7,688,827
</TABLE>
55
<PAGE> 69
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(1) Adjustments to fair value for Suncoast's assets and liabilities are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
AMORTIZATION ANNUAL IMPACT ON
ADJUSTMENTS PERIOD AND METHOD STATEMENT OF OPERATIONS
----------- ----------------- -----------------------
<S> <C> <C> <C> <C>
Commercial loans $(1,600) 18 months/straight line $1,068
Residential loans 1,070 5 years/straight line (214)
------- ------
Total loans (530) 854
Deposits premium 200 10 years/straight line (20)
Loan servicing assets 422 5 years/straight line (84)
Land and buildings 1,000 20 years/straight line (50)
Cost over fair value of net assets acquired
(goodwill) 2,592 20 years/straight line (130)
</TABLE>
(2) The purchase price of $26,120,000 represents the issuance of 1,989,930
shares of BankUnited Class A Common stock at a price of $7.00 per
share (the closing bid price on the day of the Merger Agreement) and
the issuance of 920,000 shares of New BankUnited Preferred stock
having an estimated value of $13.25 per share. Also, $1.2 million,
representing the fair value of Suncoast's outstanding stock options
and warrants which will be exchanged for BankUnited stock options and
warrants having similar terms and conditions, was credited to paid- in
capital.
The following summarizes the entries to Stockholders' Equity (dollars
in thousands):
<TABLE>
<CAPTION>
ENTRY TO
ENTRIES TO ENTRIES TO RECORD STOCK
ELIMINATE SUNCOAST'S RECORD STOCK TO OPTIONS AND
EQUITY BE ISSUED WARRANTS TOTAL
------ --------- -------- -----
<S> <C> <C> <C>
Preferred Stock $ (4,600) $ 9 $ -- $(4,591)
Class A Common Stock (2,197) 20 -- (2,177)
Class B Common Stock -- -- -- --
Additional Paid-in Capital (17,295) 26,091 1,200 9,996
Retained Earnings (1,642) -- -- (1,642)
Net unrealized gains on securities
available for sale 196 -- -- 196
-------- ------- ------- -------
Total Stockholders' Equity $(25,538) $26,120 $ 1,200 $ 1,782
======== ======= ======= =======
</TABLE>
(3) The total purchase price includes $2.4 million of accrued liabilities
as follows:
- $1.1 million in severance costs.
- $1.3 million for direct acquisition costs such as legal,
accounting, investment banking and other professional fees and
expenses.
(4) The pro forma statements of operations include an annual reduction in
salary expense of $300,000 and an annual increase in professional fees
of $100,000 representing the change in status and compensation of Mr.
Finch in accordance with the terms of his change-of-control agreement.
(5) The pro forma adjustments do not include the effect of any potential
expense reductions, revenue enhancements or restructuring charges.
(6) The statutory income tax rate is assumed to be 38%. Amortization of
the cost over fair value of net assets acquired (goodwill) is not
deductible for tax purposes.
56
<PAGE> 70
DESCRIPTION OF BANKUNITED CAPITAL STOCK
GENERAL
Set forth below is a summary of certain terms and provisions of the
capital stock of BankUnited, which is qualified in its entirety by reference to
BankUnited's Articles of Incorporation, as amended on November 27, 1995 (the
"BankUnited Articles of Incorporation"), and to the Certificates of Designation
setting forth the resolutions establishing the rights and preferences of
BankUnited's capital stock.
Under the BankUnited Articles of Incorporation, the authorized but
unissued and unreserved shares of the BankUnited capital stock are available
for issuance for general corporate purposes, including, but not limited to,
possible stock dividends, future mergers or acquisitions, or private or public
offerings. Except as may otherwise be required, stockholder approval will not
be required for the issuance of those shares.
The BankUnited Articles of Incorporation currently authorize the
issuance of up to 15,000,000 shares of Class A Common Stock, $.01 par value per
share (of which the BankUnited Series I Class A Common Stock is the only series
outstanding), up to 3,000,000 shares of the BankUnited Class B Common Stock,
and up to 10,000,000 shares of Preferred Stock, par value $.01 per share (the
"BankUnited Preferred Stock"). If at the BankUnited Special Meeting
BankUnited's stockholders approve the proposal to amend Article VI of
BankUnited's Articles of Incorporation, the number of authorized shares of the
Class A Common Stock, $.01 par value per share, will increase to 30,000,000
shares.
The BankUnited Board may authorize and BankUnited may make
distributions to its stockholders subject to (a) the other provisions of the
BankUnited Articles of Incorporation, and (b) except as the following otherwise
provides, the law currently in effect or hereinafter enacted. No distribution
may be made if, after giving it effect: (i) BankUnited would not be able to
pay its debts as they become due in the usual course of business; or (ii)
BankUnited's total assets would be less than the sum of its total liabilities
plus, unless the BankUnited Board determines otherwise, the amount that would
be needed if BankUnited were to be dissolved at the time of distributions to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights are superior to those receiving the distribution.
Certain provisions of the BankUnited Articles of Incorporation and
Bylaws as well as certain provisions of Florida law could have the effect of
deterring takeovers of BankUnited. See "Comparison of Stockholders
Rights--Certain Anti-Takeover Provisions."
The BankUnited Articles of Incorporation authorize the BankUnited
Board to establish the rights and preferences of each series of the Class A
Common Stock, $.01 par value per share and the BankUnited Preferred Stock and
to establish certain rights of the BankUnited Class B Common Stock.
CLASS A COMMON STOCK
The BankUnited Board has allocated 15,000,000 shares of the authorized
Class A Common Stock, $.01 par value per share, to the Series I Class A Common
Stock, the only series of Class A Common Stock outstanding. As of October 1,
1996 5,454,201 shares of the BankUnited Class A Common Stock were issued and
outstanding and 2,929,131 shares were reserved for issuance under BankUnited's
stock option and stock bonus plans and upon the conversion of other classes of
stock, as described below.
Dividends. The holders of the BankUnited Class A Common Stock are
entitled to dividends when, as, and if declared by the BankUnited Board out of
funds legally available therefor. The BankUnited Board may declare dividends
solely on the BankUnited Class A Common Stock or may declare dividends on both
the BankUnited Class A Common Stock and the BankUnited Class B Common Stock
provided that the dividend declared for a share of the BankUnited Class A
Common Stock is not less than 110% (subject to adjustment upon the occurrence
of certain events) of the amount per share of any dividend declared on the
BankUnited Class B Common Stock. The payment of dividends by BankUnited will
depend on BankUnited's net income, financial condition, regulatory
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requirements and other factors deemed relevant by the BankUnited Board.
BankUnited has not paid dividends on the BankUnited Class A Common Stock since
1994.
Voting. Each share of the BankUnited Class A Common Stock entitles
the holder thereof to one-tenth of a vote on each matter upon which
stockholders have the right to vote. The BankUnited Class A Common Stock does
not have cumulative voting rights in the election of directors.
Liquidation. Subject to payment of all debts and liabilities of
BankUnited and the prior rights of holders of shares of the BankUnited
Preferred Stock, the holders of shares of the BankUnited Class A Common Stock
are entitled to share equally with the holders of shares of the BankUnited
Class B Common Stock in the remaining assets of BankUnited in the event of any
liquidation, dissolution or winding up of BankUnited.
No Preemptive Rights; Redemption; Assessability. The holders of the
BankUnited Class A Common Stock are not entitled to preemptive rights with
respect to any shares of any stock of BankUnited that may subsequently be
issued. The BankUnited Class A Common Stock is not subject to call or
redemption. All outstanding shares of the BankUnited Class A Common Stock are
fully paid and non-assessable.
CLASS B COMMON STOCK
The BankUnited Articles of Incorporation provide that the shares of
the BankUnited Class B Common Stock have the rights and preferences described
below. The BankUnited Articles of Incorporation authorize 3,000,000 shares of
Class B Common Stock. The BankUnited Class B Common Stock is held by
directors, executive officers and certain other stockholders of BankUnited. As
of the record date, October 29, 1996, 251,515 shares of the BankUnited Class B
Common Stock were issued and outstanding and 991,262 shares were reserved for
issuance under BankUnited's stock option and stock bonus plans and upon the
conversion of the Noncumulative Convertible Preferred Stock Series B (as
defined below).
Dividends. The holders of the BankUnited Class B Common Stock are
entitled to dividends when, as, and if declared by the BankUnited Board out of
funds legally available therefor. The payment of dividends on the BankUnited
Class B Common Stock is subject to the right of the holders of the BankUnited
Class A Common Stock to receive a dividend per share of 110% (subject to
adjustment upon the occurrence of certain events) of the amount per share of
any dividend declared on the BankUnited Class B Common Stock.
Voting. Each share of the BankUnited Class B Common Stock entitles
the holder thereof to one vote on each matter upon which stockholders have the
right to vote. The BankUnited Class B Common Stock does not have cumulative
voting rights in the election of directors.
Conversion. Each share of the BankUnited Class B Common Stock is
convertible at the holder's option into one share of the BankUnited Class A
Common Stock, subject to adjustment on the occurrence of certain events.
Liquidation. Subject to payment of all debts and liabilities of
BankUnited and the prior rights of holders of shares of the BankUnited
Preferred Stock, the holders of shares of the BankUnited Class B Common Stock
are entitled to share equally with the holders of shares of the BankUnited
Class A Common Stock in the remaining assets of BankUnited in the event of any
liquidation, dissolution or winding up of BankUnited.
No Preemptive Rights; Redemption; Assessability. The holders of the
BankUnited Class B Common Stock are not entitled to preemptive rights with
respect to any shares of any stock of BankUnited that may be issued. The
BankUnited Class B Common Stock is not subject to call or redemption. All
outstanding shares of the BankUnited Class B Common Stock are fully paid and
non-assessable.
OUTSTANDING PREFERRED STOCK
The BankUnited Articles of Incorporation authorize the issuance, in
series, of up to 10,000,000 shares of the BankUnited Preferred Stock and permit
the BankUnited Board to establish the rights and preferences of each of
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such series. As of the record date, October 1, 1996, 745,870 shares of the
BankUnited 8% Preferred Stock, 1,150,000 shares of the BankUnited 9% Preferred
Stock, no shares of Noncumulative Convertible Preferred Stock, Series A (the
"BankUnited Series A Preferred Stock"), 183,818 shares of the BankUnited Series
B Preferred Stock, 363,636 shares of Noncumulative Convertible Preferred Stock,
Series C (the "BankUnited Series C Preferred Stock"), and 222,223 shares of
Noncumulative Convertible Preferred Stock, Series C-II ("BankUnited Series C-II
Preferred Stock") were issued and outstanding. The shares of the BankUnited 8%
Preferred Stock and the BankUnited 9% Preferred Stock are publicly held. The
shares of the BankUnited Series B Preferred Stock are held by directors,
executive officers and other stockholders of BankUnited. The shares of the
BankUnited Series C Preferred Stock and the BankUnited Series C-II Preferred
Stock are held by a limited partnership controlled by the spouse of a director
of BankUnited.
Dividends. The total annual dividend requirement for all series of
the outstanding BankUnited Preferred Stock is $2,144,240. As of the record
date, BankUnited had paid in full all dividends provided for on the BankUnited
Preferred Stock.
Voting. Each share of the BankUnited Series B Preferred Stock is
entitled to two and one-half votes per share on each matter submitted to the
vote of stockholders. The BankUnited Series B Preferred Stock does not have
cumulative voting rights in the election of directors. The BankUnited Series C
Preferred Stock, the BankUnited Series C-II Preferred Stock, the BankUnited 8%
Preferred Stock, and the BankUnited 9% Preferred Stock are non-voting, except
as otherwise provided by law. Holders of the BankUnited 8% Preferred Stock
and the BankUnited 9% Preferred Stock are entitled to certain voting rights on
(i) any amendment, alteration or repeal of provisions of the BankUnited
Articles of Incorporation that would adversely affect that series and (ii) the
creation, authorization, issuance or similar addition of any equity securities
or rights convertible or exchangeable into equity securities ranking senior to
those series.
In addition, the holders of the BankUnited 8% Preferred Stock and the
holders of the BankUnited 9% Preferred Stock, each voting as a class, and
holders of the BankUnited Series B Preferred Stock are each entitled to elect
two additional directors to the BankUnited Board, if BankUnited fails to
declare and pay dividends to such holders for six dividend periods, whether or
not those periods are consecutive. The right to elect directors continues
until BankUnited pays dividends for four consecutive periods.
Conversion. Each share of the BankUnited Series B Preferred Stock is
convertible into 1.5 shares of the BankUnited Class B Common Stock, subject to
adjustment on the occurrence of certain events. Each share of the BankUnited
Series C Preferred Stock and the BankUnited Series C-II Preferred Stock is
convertible into 1.45 and 1.32 shares of the BankUnited Class A Common Stock,
respectively, subject to adjustment on the occurrence of certain events. Each
share of the BankUnited 8% Preferred Stock is convertible into one share of the
BankUnited Class A Common Stock, subject to adjustment on the occurrence of
certain events.
Liquidation. The BankUnited 9% Preferred Stock provides for a fixed
liquidation preference of $10.00 per share upon any liquidation, whether
voluntary or involuntary. The BankUnited 8% Preferred Stock provides for a
fixed liquidation preference of $10.00 per share upon an involuntary
liquidation and a liquidation preference equal to the applicable redemption
price in the event of a voluntary liquidation. See "Outstanding Preferred
Stock--Redemption." The 8% Preferred Stock is not redeemable until 1998 and at
such time can be redeemed at a price of $10.40, thereafter declining at a rate
of $.08 per year until 2003, when the redemption price will become fixed at
$10.00 per share. In the event of any liquidation, dissolution or winding up
of BankUnited, after payment of any debts and other liabilities of BankUnited
and the liquidation preference to the holders of the BankUnited 9% Preferred
Stock and the BankUnited 8% Preferred Stock stated above and prior to any
distribution of assets is made to the holders of the BankUnited Class A Common
Stock or the BankUnited Class B Common stock, (i) the holders of the BankUnited
Series A Preferred Stock, if any, and the holders of the BankUnited Series B
Preferred Stock will be entitled to a preference on liquidation of $7.375 per
share, respectively, if the liquidation is involuntary and, if the liquidation
is voluntary, then such holders will be entitled to receive the redemption
price per share applicable at the time of liquidation, and (ii) the holders of
the BankUnited Series C Preferred Stock and the BankUnited Series C-II
Preferred Stock, will be entitled to a preference on liquidation of $5.50 and
$9.00 per share, respectively, whether the liquidation is voluntary or
involuntary.
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Redemption. In 1995, BankUnited offered to exchange shares of the
BankUnited Series A Preferred Stock for the BankUnited Series B Preferred
Stock. There are currently no shares of the BankUnited Series A Preferred
Stock outstanding. As part of the exchange, BankUnited agreed not to redeem
shares of the BankUnited Series B Preferred Stock for three years after the
date of exchange, and, for three years thereafter, such shares will only be
redeemable at $11.0625 per share. After this six-year period, the BankUnited
Series B Preferred Stock will be redeemable at BankUnited's option at $7.375
per share.
The BankUnited Series C Preferred Stock and the BankUnited Series C-II
Preferred Stock are each redeemable at BankUnited's option at $5.50 and $9.00
per share, respectively.
The BankUnited 8% Preferred Stock is not redeemable prior to July 1,
1998 unless certain criteria are met in which case the redemption price is
$10.00 per share. After June 30, 1998, redemption is at the option of
BankUnited at a redemption price of $10.40 per share, declining thereafter by
$.08 per share during each year through July 1, 2003 at which point the value
will become fixed at $10.00 per share.
The BankUnited 9% Preferred Stock is not redeemable prior to October
1, 1998. After September 30, 1998, the BankUnited 9% Preferred Stock is
redeemable at the option of BankUnited at a redemption price of $10.00 per
share.
Rank. The BankUnited 9% Preferred Stock and the BankUnited 8%
Preferred Stock (the "BankUnited Senior Preferred") rank senior to all other
classes of stock of BankUnited with respect to dividend rights and rights upon
liquidation. The BankUnited Series A Preferred Stock, the BankUnited Series B
Preferred Stock and the BankUnited Series C Preferred Stock rank, as to
dividend rights, rights upon liquidation, dissolution or winding up of
BankUnited, and redemption rights, on a parity with each other and senior to
the BankUnited Class A Common Stock and the BankUnited Class B Common Stock.
The BankUnited Series C-II Preferred Stock ranks, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of BankUnited, on
a parity with the BankUnited Series A Preferred Stock, the BankUnited Series B
Preferred Stock and the BankUnited Series C Preferred Stock and senior to the
BankUnited Class A Common Stock and the BankUnited Class B Common Stock. With
respect to redemption rights, BankUnited may redeem the BankUnited Series C-II
Preferred Stock at any time without regard to whether or not shares of any of
the other series of BankUnited Preferred Stock are also being redeemed.
No Preemptive Rights; Assessability. Holders of the BankUnited
Preferred Stock are not entitled to preemptive rights with respect to any
shares of any stock of BankUnited that may be issued. The outstanding
BankUnited Preferred Stock is fully paid and non-assessable.
DESCRIPTION OF NEW BANKUNITED PREFERRED STOCK
GENERAL
Set forth below is a summary of certain terms and provisions of the
New BankUnited Preferred Stock that BankUnited will issue to the holders of the
Suncoast Preferred Stock in connection with the Merger. (See Form of
Statement of Designation of BankUnited's 8% Noncumulative Convertible Preferred
Stock, Series 1996 attached hereto as Exhibit B).
NEW BANKUNITED PREFERRED STOCK
In connection with approving the Merger, the BankUnited Board has
determined to designate 1,000,000 shares of authorized but unissued BankUnited
8% Noncumulative Convertible Preferred Stock, Series 1996, par value $.01 per
share (the "New BankUnited Preferred Stock"). Upon issuance, shares of the New
BankUnited Preferred Stock will have substantially similar rights, preferences
and terms as the Suncoast Preferred Stock. For a description
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of the comparison of the New BankUnited Preferred Stock to the Suncoast
Preferred Stock see "Comparison of Stockholders Rights--Preferred Stock."
Dividends. The holders of the New BankUnited Preferred Stock will be
entitled to receive, when, as and if declared by the BankUnited Board out of
funds legally available therefor, noncumulative cash dividends, payable
quarterly in arrears, at the rate of $1.20 per share per annum. Dividends on
the New BankUnited Preferred Stock will be payable, if declared, quarterly for
the three-month periods ending on March 31, June 30, September 30 and December
31, of each year (each, a "Dividend Period") in arrears at the end of each
period (each, a "Dividend Payment Date").
No full dividends may be declared, paid or set apart for payment on
any series of stock ranking on a parity with the New BankUnited Preferred Stock
as to dividends or liquidation preference (the "Parity Stock") during any
calendar quarter unless full dividends on the New BankUnited Preferred Stock
for the Dividend Period ending during such calendar quarter have been paid or
declared and set aside. If dividends are not so paid in full upon the New
BankUnited Preferred Stock, dividends on the New BankUnited Preferred Stock and
any Parity Stock payable during such calendar quarter may only be declared pro
rata so that the amounts of dividends so payable per share on the New
BankUnited Preferred Stock and on any Parity Stock will in all cases bear to
each other the same proportions that the respective dividend rates of such
stock for such period bear to each other.
BankUnited may not declare, pay or set apart funds for any dividend or
other distribution (other than in common stock or other capital stock ranking
junior to the New BankUnited Preferred Stock as to dividends or liquidation
preference ("Junior Stock")) with respect to common stock or any other Junior
Stock of BankUnited, or purchase, redeem, or otherwise acquire through a
sinking fund or otherwise, or set apart funds for the repurchase, redemption or
other acquisition of any shares of Junior Stock, unless (i) all declared and
unpaid dividends with respect to the New BankUnited Preferred Stock have been
paid, or funds have been set apart for payment of such dividends and (ii)
BankUnited has declared a cash dividend on the New BankUnited Preferred Stock
at the annual dividend rate for the current Dividend Period and sufficient
funds have been paid over to the dividend disbursing agent for BankUnited.
Voting. The holders of the New BankUnited Preferred Stock will not be
entitled to any voting rights, except as to be set forth in the Statement of
Designation for the New BankUnited Preferred Stock or as required by applicable
law. Such Statement of Designation will provide that so long as any shares of
the New BankUnited Preferred Stock are outstanding, BankUnited may not, without
the approval of the holders of at least 66 2/3% of the outstanding shares of
the New BankUnited Preferred Stock, voting separately as a class, (a) amend,
alter or repeal or otherwise change any provision of the BankUnited Articles of
Incorporation (including the Statements of Designations) so as to materially
and adversely affect the rights, preferences, powers or privileges of the New
BankUnited Preferred Stock, or (b) create, authorize, issue or increase the
authorized or issued amount of any class or series of any equity securities of
BankUnited, or any warrants, options or other rights convertible or
exchangeable into any class or series of any equity securities of BankUnited,
ranking senior to the New BankUnited Preferred Stock either as to payment of
dividends or rights on liquidation, winding-up or dissolution of BankUnited.
In addition, so long as any shares of the New BankUnited Preferred Stock are
outstanding, in the event of any consolidation, merger, sale of all or
substantially all of the assets of BankUnited, reclassification, capital
reorganization or liquidation, the holders of the New BankUnited Preferred
Stock are entitled to vote with the holders of the shares of the BankUnited
Class A Common Stock, and not as a separate class, to the same extent as the
holders of the shares of the BankUnited Class A Common Stock, provided that
each share of the New BankUnited Preferred Stock will be entitled to the same
number of votes that a holder would have had if such holder had converted his
shares of the New BankUnited Preferred Stock into shares of BankUnited Class A
Common Stock as of the record date for the meeting of stockholders.
Conversion. Holders of the New BankUnited Preferred Stock will have
the right, at their option at any time and from time to time and prior to
redemption, to convert any or all of their shares of New BankUnited Preferred
Stock into shares of the BankUnited Class A Common Stock at a conversion rate
of approximately 1.67 shares of the BankUnited Class A Common Stock for each
share of New BankUnited Preferred Stock. The conversion rate
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is based upon a Conversion Price equal to $9.00, subject to adjustment from
time to time as described below, divided into $15.00 for each share of New
BankUnited Preferred Stock converted.
The Conversion Price will be subject to adjustment upon the occurrence
of certain events, including the issuance of the BankUnited Class A Common
Stock as a dividend with respect to the outstanding Bank United Class A Common
Stock, subdivisions or combinations of the BankUnited Class A Common Stock or
the distribution to holders of the BankUnited Class A Common Stock of shares of
BankUnited capital stock other than the BankUnited Class A Common Stock, rights
or warrants to subscribe for or purchase shares of the BankUnited Class A
Common Stock at a price per share less than the current market price (as
defined), evidences of indebtedness, assets (excluding cash dividends or
distributions paid out of retained earnings) or rights or warrants to subscribe
for or purchase securities of BankUnited other than those rights and warrants
mentioned above. No adjustment of the Conversion Price will be required to be
made in any case until cumulative adjustments amount to one percent or more of
the Conversion Price.
In case of any consolidation or merger that results in a
reclassification, change, conversion, exchange or cancellation of the
outstanding shares of the BankUnited Class A Common Stock, or in case of any
sale or transfer to another corporation of all or substantially all of the
assets of BankUnited or any reclassification or similar change of the
outstanding shares of BankUnited Class A Common Stock, there will be no
adjustment of the Conversion Price but each holder of shares of the New
BankUnited Preferred Stock then outstanding will have the right thereafter to
convert such shares into the kind and amount of securities, cash or other
property which such holder would have been entitled to receive upon such
consolidation, merger, change, sale, transfer or reclassification had such
shares been converted immediately prior to the consolidation, merger, change,
sale, transfer or reclassification.
Liquidation. In the event of any liquidation, dissolution or winding
up of BankUnited, voluntary or involuntary, and subject to the rights of the
holders of any class or series of stock having preference with respect to a
distribution upon liquidation and BankUnited's general creditors, the New
BankUnited Preferred Stock will be entitled to a distribution of $15.00 per
share out of assets of BankUnited legally available for distribution to
stockholders, prior to any distributions being made with respect to the
BankUnited Class A Common Stock, the BankUnited Class B Common Stock or other
Junior Stock, plus an amount per share equal to any dividends declared and
unpaid, without interest. Upon any such liquidation, dissolution or winding
up, such preferential amounts with respect to the New BankUnited Preferred
Stock and any Parity Stock if not paid in full will be distributed pro rata.
Redemption. If the BankUnited Class A Common Stock has a closing
price that is equal to at least 120% of the Conversion Price for 20 out of 30
consecutive trading days ending within five days of the date of the redemption
notice, BankUnited will have the right to redeem the New BankUnited Preferred
Stock, in whole or in part, at $15.00 per share, plus any declared but unpaid
dividends, if any, with respect to Dividend Periods preceding the date fixed
for redemption. In addition, on or after July 1, 1998, the New BankUnited
Preferred Stock will be redeemable at BankUnited's option, in whole or in part,
at a redemption price of $16.20, declining thereafter by $.24 per share during
each year through July 1, 2003 at which point the value will become fixed at
$15.00 per share together, in each case, with an amount equal to any declared
but unpaid dividends, if any, with respect to Dividend Periods preceding the
date fixed for redemption. There will be no sinking fund requirement for
redemption of the New BankUnited Preferred Stock.
Rank. The New BankUnited Preferred Stock will rank with respect to
currently outstanding classes and series of capital stock of BankUnited on a
parity with the BankUnited 8% Preferred Stock and the BankUnited 9% Preferred
Stock and senior to the BankUnited Class A Common Stock, the BankUnited Class B
Common Stock, the BankUnited Class B Preferred Stock, the BankUnited Class C
Preferred Stock and the BankUnited Class C-II Preferred Stock as to payment of
dividend rights and rights upon liquidation. The rights of the holders of
shares of the New BankUnited Preferred Stock will be subordinate to the rights
of BankUnited's general creditors, including its depositors. While any shares
of the New BankUnited Preferred Stock are outstanding, BankUnited will not be
permitted to issue any capital stock that ranks senior to the New BankUnited
Preferred Stock without the approval of holders of at least 66 2/3% of the
outstanding shares of the New BankUnited Preferred Stock. BankUnited will have
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the power to create and issue additional shares of other series of Parity
Stock, or that constitute Junior Stock, without any approval or consent of the
holders of the New BankUnited Preferred Stock.
No Preemptive Rights; Assessability. Holders of the New BankUnited
Preferred Stock will not be entitled to preemptive rights with respect to any
shares of any stock of BankUnited that may be issued. If BankUnited grants
preemptive rights to holders of the BankUnited Class A Common Stock, the
BankUnited Class B Common Stock, the other Junior Stock or the Parity Stock of
BankUnited, the holders of the New BankUnited Preferred Stock will obtain
similar preemptive rights. The New BankUnited Preferred Stock will be fully
paid and non-assessable upon issuance.
COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
The rights of Suncoast's stockholders are currently governed by
Suncoast's Federal Stock Charter (the "Suncoast Charter"), Suncoast's bylaws
(the "Suncoast Bylaws") and the Home Owner's Loan Act of 1933 (the "HOLA").
The rights of BankUnited's stockholders are governed by the BankUnited Articles
of Incorporation, the Bylaws of BankUnited (the "BankUnited Bylaws") and the
Florida Business Corporations Act (the "FBCA"). After the Effective Date, the
rights of Suncoast's stockholders who become stockholders of BankUnited will be
governed by the BankUnited Articles of Incorporation, the BankUnited Bylaws
and the FBCA. In most respects, the rights of holders the Suncoast Common
Stock and the Suncoast Preferred Stock are similar to those of holders of the
BankUnited Class A Common Stock and the New BankUnited Preferred Stock. The
following is a summary of the material differences between the rights of
holders of the Suncoast Common Stock and the Suncoast Preferred Stock and the
rights of holders of the BankUnited Class A Common Stock and the New BankUnited
Preferred Stock. This summary does not purport to be a complete discussion of,
and is qualified in its entirety by reference to the Suncoast Charter and
Bylaws, the HOLA, the BankUnited Articles of Incorporation and Bylaws and the
FBCA.
REQUIRED SHAREHOLDER VOTES
OTS regulations require the affirmative vote of the stockholders of at
least 66 2/3% of the votes eligible to be cast with respect to any merger,
consolidation or other business combination to which Suncoast is a party.
Under Florida law and BankUnited's Bylaws, the affirmative vote of a majority
of the holders of BankUnited capital stock entitled to vote would be required
to approve a merger, consolidation, or other business combination to which
BankUnited is a party and which requires the consent of holders of BankUnited
capital stock under Florida law. Furthermore, the Statement of Designation of
the BankUnited Series I Class A Common Stock and the BankUnited Class B Common
Stock, attached as Exhibit A to BankUnited's Articles of Incorporation,
provides that in the event of any consolidation of BankUnited with or merger of
BankUnited into another corporation, or in the event of any sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of
BankUnited to another corporation, then, in any such consolidation, merger,
sale, conveyance, exchange or transfer, if the consideration per share to be
received for the shares of the BankUnited Class A Common Stock differs in any
substantial kind or amount from the per share consideration to be received for
the BankUnited Class B Common Stock, the majority of the holders of the
outstanding BankUnited Class A Common Stock, by a separate vote of the holders
of the BankUnited Class A Common Stock, must approve such consolidation,
merger, sale, conveyance, exchange or transfer.
AMENDMENT TO CHARTER OR ARTICLES OF INCORPORATION AND BYLAWS
The Suncoast Charter provides that any amendment to the Suncoast
Charter must first be proposed by the Suncoast Board, then preliminarily
approved by the OTS, and thereafter approved by the holders of a majority of
the votes eligible to be cast at a legal meeting of the holders of Suncoast
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capital stock. The Suncoast Bylaws provide for amendment to the Suncoast
Bylaws in any manner consistent with regulations of the OTS by the affirmative
vote of a majority of the full board of directors of Suncoast or by a majority
of the votes cast by holders of Suncoast capital stock. The BankUnited
Articles of Incorporation provide that the BankUnited Articles of Incorporation
may be amended in the manner authorized by law at the time of amendment. The
BankUnited Bylaws may be amended at any time by either a majority vote of the
BankUnited Board or a majority vote of the holders of BankUnited capital stock.
However, the BankUnited Board may not amend or repeal any bylaw adopted by the
holders of BankUnited capital stock if the bylaw specifically provides that the
bylaw is not subject to amendment or repeal by the directors.
PROVISIONS RELATING TO DIRECTORS
Number of Directors. The BankUnited Articles of Incorporation provide
that the number of directors shall be equal to or greater than one and may be
fixed by the bylaws of BankUnited. The BankUnited Bylaws provide that the
number of directors shall be no less than five and no more than 15. The
BankUnited Board currently has 13 members. The Suncoast Charter provides that
the number of directors, as stated in the Suncoast Bylaws, shall be no less
than seven and no greater than 15. The Suncoast Bylaws currently set the
number of directors at seven. Pursuant to the Merger Agreement, the number of
directors of the combined company after the Effective Time will be 17 until
such number is changed by the BankUnited Board of the combined company pursuant
to the BankUnited Bylaws.
Removal. The Suncoast Bylaws provide that at a meeting of the holders
of Suncoast capital stock called expressly for the purpose of removal of a
director, any director may be removed for cause by a vote of the holders of a
majority of the Suncoast capital stock then entitled to vote at an election of
directors. Whenever the holders of the shares of any class are entitled to
elect one or more directors by the provisions of the charter or supplemental
sections thereto, the removal provisions shall apply in respect to the removal
of a director or directors so elected, only as to the vote of the holders of
the outstanding shares of that class and not to the vote of the outstanding
shares as a whole. Neither the BankUnited Articles of Incorporation or Bylaws
expressly provide for the removal of directors. Under Florida law, the holders
of BankUnited capital stock may remove one or more directors with or without
cause at a meeting of the holders of BankUnited capital stock, provided that
the notice of the meeting states that one of the purposes of the meeting is to
remove the director.
CERTAIN ANTI-TAKEOVER PROVISIONS
BankUnited. Certain provisions of the BankUnited Articles of
Incorporation and Bylaws, certain provisions of Florida law, and certain
effects of the proposal to amend the BankUnited Articles of Incorporation could
operate to deter a potential takeover of BankUnited.
The issuance of additional shares of BankUnited stock, pursuant to
the proposal to increase the number of authorized shares of the Class A Common
Stock, $.01 par value per share, under the BankUnited Articles of
Incorporation, could operate to deter a potential takeover of BankUnited. For
example, the additional shares proposed to be authorized could be issued to
dilute the stock ownership of a person seeking to obtain control of BankUnited.
Thus, issuance of the shares authorized under the proposed amendment to the
BankUnited Articles of Incorporation could operate to (i) preserve current
management; (ii) make more difficult or discourage a merger, tender offer or
proxy contest directed at BankUnited; (iii) delay the assumption of control by
a holder of a large block of BankUnited's shares and the removal of incumbent
management; or (iv) increase the degree of control of current management.
Approval of the proposed amendment could be to the advantage of incumbent
management in a hostile takeover attempt and to the disadvantage of
stockholders who might want to participate in the takeover transaction. With
the exception of the proposed acquisition of Suncoast by BankUnited, the
BankUnited Board currently has no plans, arrangements or understandings,
written or oral, for the issuance of any additional stock except in connection
with employee benefit plans and is not aware of the proposal or intention on
the part of any person to attempt a merger, tender offer or any other similar
transaction with BankUnited.
Other provisions of the BankUnited Articles of Incorporation currently
in effect could have the effect of deterring takeovers. The BankUnited
Articles of Incorporation (i) provide for a Board of Directors that is divided
into three classes of directors serving staggered three-year terms; (ii)
requires that written notice of the intent to make
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a nomination for the election of directors at a meeting of stockholders be
received by the Secretary of BankUnited not later than specified periods prior
to the meeting; (iii) does not permit stockholder action by written consent;
and (iv) does not provide for cumulative voting. Approval of the proposed
amendment to the BankUnited Articles of Incorporation could, when taken
together with the existing provisions noted above, increase the aggregate
anti-takeover effect of provisions in the BankUnited Articles of Incorporation.
Management has no present intention to propose in any future proxy
solicitations any other amendments to the BankUnited Articles of Incorporation
that would have an anti-takeover effect.
Suncoast. The Suncoast Charter and Bylaws provide similar
anti-takeover protections to those applicable to BankUnited. In addition,
federal laws and regulations contain a number of provisions that affect the
acquisition of institutions such as Suncoast. Subject to certain limited
exceptions, control of a savings association, such as Suncoast, may only be
obtained with the approval (or in the case of an acquisition by an individual,
the non-objection) of the OTS, after a public comment and application review
process.
COMMON STOCK
The principal difference between the BankUnited Class A Common Stock
that the holders of the Suncoast Common Stock will receive upon consummation of
the Merger and the Suncoast Common Stock is that each share of the BankUnited
Class A Common Stock entitles the holder thereof to one-tenth of a vote on each
matter upon which stockholders have the right to vote. In contrast, holders of
the Suncoast Common Stock are entitled to one vote per share under identical
circumstances. In other respects, the Suncoast Common Stock has essentially
the same rights and preferences as the BankUnited Class A Common Stock.
Dividends may be paid to the holders of each of the Suncoast Common Stock and
the BankUnited Class A Common Stock if declared by the board of directors out
of assets of the respective entity which are by law available for the payment
of dividends to holders of common stock. BankUnited has not paid dividends on
its common stock since 1994. It is BankUnited's present intention not to pay
dividends on its common stock for the foreseeable future. In addition, neither
of these classes of common stock have preemptive rights or preferences upon
liquidation.
BankUnited, unlike Suncoast, however, has two classes of common stock.
Each share of the BankUnited Class B Common Stock has ten times the voting
power of the BankUnited Class A Common Stock and is entitled to a lower
dividend amount than any dividend declared with respect to a share of the
BankUnited Class A Common Stock. Each share of the BankUnited Class B Common
Stock is also convertible into one share of BankUnited Class A Common Stock,
subject to adjustment for certain events. Neither the Suncoast Common Stock
nor the BankUnited Class A Common Stock is convertible. In other respects, the
BankUnited Class B Common Stock is the same as the BankUnited Class A Common
Stock.
PREFERRED STOCK
The Suncoast Preferred Stock has substantially the same rights as the
New BankUnited Preferred Stock that the holders of the Suncoast Preferred Stock
will receive upon consummation of the Merger and similar rights and preferences
to BankUnited's shares of preferred stock that rank senior to the BankUnited
Class A Common Stock, the BankUnited Class B Common Stock and the outstanding
shares of the preferred stock that is Junior Stock. BankUnited has outstanding
two series of senior preferred stock (the BankUnited 8% Preferred Stock and the
BankUnited 9% Preferred Stock), and three series of preferred stock that are
Junior Stock (the BankUnited Series B Preferred Stock, the BankUnited Series C
Preferred Stock and the BankUnited Series C-II Preferred Stock). No shares of
the BankUnited Series A Preferred Stock are currently outstanding.
General. The principal differences between the New BankUnited
Preferred Stock that the holders of shares of the Suncoast Preferred Stock will
receive upon consummation of the Merger and the Suncoast Preferred Stock are
that BankUnited has two classes of common stock and five classes of BankUnited
Preferred Stock outstanding, whereas Suncoast only has one class of common
stock and one class of preferred stock outstanding, and the New BankUnited
Preferred Stock provides for the payment of dividends approximately 45 days
earlier than the payment of dividends to the holders of the Suncoast Preferred
Stock. The Statement of Designation for the New BankUnited Preferred Stock,
which is similar to the statements of designation for BankUnited's other
BankUnited Senior Preferred Stock, contains certain provisions that are not
included in the Suncoast Preferred Stock or that differ from
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<PAGE> 79
or clarify the terms of the Suncoast Preferred Stock. For example, the terms
of the New BankUnited Preferred Stock, unlike those of the Suncoast Preferred
Stock, require BankUnited to provide to holders of the New BankUnited Preferred
Stock reports and stockholder notices it provides to its stockholders. In
addition, certain terms differ from terms of the Suncoast Preferred Stock, such
as (i) the requirement that quotations from two securities dealers be used to
determine the "Current Market Price" for purposes of certain adjustments to the
Conversion Price if the New BankUnited Preferred Stock is not listed on a
national securities exchange or quoted on Nasdaq, (ii) the right of BankUnited
to defer the issuance of shares of Class A Common Stock and the payment of any
cash in lieu of any fractional share upon a conversion of the New BankUnited
Preferred Stock until the occurrence of the event requiring an adjustment to
the Conversion Price immediately after the record date for such event, and
(iii) the determination of the record date for payment of dividends as a date
not more than 40 and not less than 10 calendar days rather than, as provided in
the Suncoast Preferred Stock, not more than 45 days and not less than 15
calendar days prior to the dividend payment date. Finally, the New BankUnited
Preferred Stock clarifies certain aspects of the Suncoast Preferred Stock, such
as various procedural steps in a conversion and the consequences of a failure
to provide notice to holders of the New BankUnited Preferred Stock, and omits
various other provisions, such as the requirement that any parity stock only
have dividend periods which end on the same day as a Dividend Period and that,
upon conversion after a cash merger, the holder of the New BankUnited Preferred
Stock can only receive the cash to which the holder would have been entitled if
the holder had converted prior to the merger.
Dividends. Each of the Suncoast Preferred Stock, the New BankUnited
Preferred Stock into which the Suncoast Preferred Stock will be exchanged upon
consummation of the Merger and the BankUnited Senior Preferred Stock entitles
holders to non-cumulative dividends payable quarterly in arrears when declared
by the BankUnited Board. The dividend payment rates for the Suncoast Preferred
Stock and the New BankUnited Preferred Stock are higher than those of the
BankUnited Senior Preferred Stock, but the dividend payment dates for the
Suncoast Preferred Stock are later than the dividend payment dates of the New
BankUnited Preferred Stock and the BankUnited Senior Preferred Stock.
Redemption. Each of the Suncoast Preferred Stock, the New BankUnited
Preferred Stock and the BankUnited Senior Preferred Stock allows for redemption
at the option of Suncoast or BankUnited. The BankUnited 9% Preferred Stock
becomes redeemable on October 1, 1998. The Suncoast Preferred Stock and the
New BankUnited Preferred Stock are redeemable at $15.00 per share and the
BankUnited 8% Preferred Stock is redeemable prior to July 1, 1998 at $10.00 per
share, in each case only if the closing bid price for the shares of the stock
is at least 120% of the conversion price (or 140% of the conversion price for
the BankUnited 8% Preferred Stock) for a specified period of time. In
addition, the Suncoast Preferred Stock, the New BankUnited Preferred Stock and
the BankUnited 8% Preferred Stock are redeemable on or after July 1, 1998 at
any time at prescribed redemption prices. The redemption prices for the
Suncoast Preferred Stock and the New BankUnited Preferred Stock exceed those of
the BankUnited Senior Preferred Stock. The Suncoast Preferred Stock and the
New BankUnited Preferred Stock are redeemable for the redemption price plus
declared but unpaid dividends whereas the BankUnited Senior Preferred Stock
would receive the redemption price plus accrued but unpaid dividends (whether
or not declared) for the then-current dividend period immediately preceding the
redemption date. In addition, the BankUnited 9% Preferred Stock has a fixed
redemption price rather than the declining redemption prices applicable to the
Suncoast Preferred Stock, the New BankUnited Preferred Stock and the BankUnited
8% Preferred Stock.
Conversion. The BankUnited 9% Preferred Stock, in contrast to the
Suncoast Preferred Stock, the New BankUnited Preferred Stock and the BankUnited
8% Preferred Stock, is not convertible into common stock. The conversion rate
for the Suncoast Preferred Stock, the New BankUnited Preferred Stock and the
BankUnited 8% Preferred Stock is adjustable under similar circumstances except
that the conversion rate for the BankUnited 8% Preferred Stock is reduced in
the event that more than three full dividend payments are not paid in any
five-year period. In addition, in the event of certain distributions of rights
or warrants (the "Rights") (other than issuances of rights exercisable for
shares of the BankUnited Class A Common Stock at a price lower than the then
current market price of the BankUnited Class A Common Stock), the BankUnited 8%
Preferred Stock permits BankUnited to distribute the Rights to the holders of
the BankUnited 8% Preferred Stock upon conversion rather than adjusting the
conversion price for the distribution of the Rights. Neither the Suncoast
Preferred Stock nor the New BankUnited Preferred Stock have this option.
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<PAGE> 80
Voting. Each series of the BankUnited Senior Preferred Stock has the
right to elect two additional directors if BankUnited has failed to declare and
pay dividends on that series for six dividend periods, whether or not those
periods are consecutive. The additional directors are entitled to serve for
the period until BankUnited has declared and paid dividends on that series for
four consecutive dividend periods. Neither the Suncoast Preferred Stock nor
the New BankUnited Preferred Stock has this right. Each series of the
BankUnited Senior Preferred Stock has the right to approve, as a separate
class, by a majority vote any amendment, alteration or repeal of the BankUnited
Articles of Incorporation that adversely affects the powers, preferences,
rights or privileges of that series. The Suncoast Preferred Stock and the New
BankUnited Preferred Stock have a similar right but require a two-thirds vote
for such approval. The Suncoast Preferred Stock and the New BankUnited
Preferred Stock also have the right to vote with the common stock on any
consolidation, merger, sale of all or substantially all of the assets of the
association or corporation, reclassification, capital reorganization, or
liquidation. The BankUnited Senior Preferred Stock does not have this right.
Liquidation. The amount that the Suncoast Preferred Stock and the New
BankUnited Preferred Stock would receive upon liquidation (the "liquidation
preference") is higher than the amount that each series of BankUnited Senior
Preferred Stock would receive upon liquidation. Furthermore, the Suncoast
Preferred Stock and the New BankUnited Preferred Stock would receive their
liquidation preference plus declared and unpaid dividends whereas the
BankUnited Senior Preferred Stock would receive its liquidation preference plus
accrued but unpaid dividends (whether or not declared) for the then-current
dividend period. The Suncoast Preferred Stock, the New BankUnited Preferred
Stock and the BankUnited 9% Preferred Stock provide for a fixed liquidation
preference upon any liquidation, whether voluntary or involuntary. The
BankUnited 8% Preferred Stock provides for a fixed liquidation preference upon
an involuntary liquidation and a liquidation preference equal to the applicable
redemption price in the event of a voluntary liquidation. The Suncoast
Preferred Stock and the New BankUnited Preferred Stock require that notice be
given within a specified time period, and require a valuation, and notice of
the valuation, in case of a liquidation involving the distribution of assets
other than cash. The BankUnited Senior Preferred Stock does not have the same
provisions. In addition, the Suncoast Preferred Stock and the New BankUnited
Preferred Stock provide that cash mergers and other cash transactions in which
the holders of the Suncoast Preferred Stock or the New BankUnited Preferred
Stock would have received less than the liquidation preference for the stock
would result in payment to such holders of the liquidation preference amounts.
The BankUnited Senior Preferred Stock does not have such a provision.
AMENDMENT TO BANKUNITED ARTICLES OF INCORPORATION
The BankUnited Board has approved, and is submitting to its
stockholders for approval, an amendment to Article IV of the BankUnited
Articles of Incorporation that would increase the number of authorized shares
of its Class A Common Stock, par value $.01 per share, to 30,000,000 shares.
The text of this amendment is set forth in Exhibit E hereto. The BankUnited
Articles of Incorporation currently authorize BankUnited to issue up to
15,000,000 shares of the Class A Common Stock, par value $.01 per share,
3,000,000 shares of the BankUnited Class B Common Stock, and 10,000,000 shares
of the BankUnited Preferred Stock. If the proposed amendment to Article IV of
the BankUnited Articles of Incorporation is approved, the BankUnited Board
intends to amend the Statement of Designation of Series I Class A Common Stock
and Class B Common Stock to increase the number of shares of Class A Common
Stock designated as Series I Class A Common Stock from 10,000,000 to
20,000,000.
The proposed amendment to the BankUnited Articles of Incorporation has
been unanimously approved by the BankUnited Board for consideration by the
BankUnited stockholders. The BankUnited Board believes that the increase in
the capitalization of BankUnited would assure that an adequate number of
authorized but unissued shares is available after consummation of the Merger
for BankUnited to issue shares of BankUnited Class A Common Stock as stock
dividends or in stock splits and as awards or grants under BankUnited's stock
bonus and stock option plans. The proposed amendment would also enable
BankUnited to raise additional capital for the operations of BankUnited and
BankUnited, FSB, or effect the acquisition of other financial institutions or
related businesses.
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<PAGE> 81
Once BankUnited's stockholders approve a level of authorized shares
for any class of BankUnited's capital stock, no subsequent approval by
stockholders is required for issuance of shares of that class in an amount up
to the number of shares authorized, except to the extent required by virtue of
Nasdaq listing. Under the BankUnited Articles of Incorporation the BankUnited
Board has the authority to determine the relative rights of the Class A Common
Stock, $.01 par value per share, and the BankUnited Preferred Stock, including
voting, conversion, liquidation and dividend rights and sinking fund
provisions. The BankUnited Articles of Incorporation provide that no holder of
any BankUnited capital stock will have any preemptive right to acquire any
BankUnited securities.
On February 22, 1996, BankUnited issued an aggregate of 3,565,000
shares of BankUnited Class A Common Stock in a public offering. At present the
BankUnited Board is aware of certain circumstances and situations in which
BankUnited capital stock could be issued or reserved for issuance. These
circumstances are exercises of options to purchase BankUnited capital stock
that are currently outstanding; conversion of currently outstanding convertible
BankUnited capital stock; issuance of BankUnited capital stock under the
BankUnited 1992 Stock Bonus Plan (including shares that may be issued as
directors' fees); grants of additional options under BankUnited's existing
stock option plans; issuance of BankUnited capital stock in the Merger, a
portion of which is convertible; and exercise of options and/or warrants to
acquire BankUnited capital stock that will be effective on the closing of the
Merger. In the event additional shares are issued, the rights of the current
holders of BankUnited capital stock may be affected. For example, if
BankUnited Class A Common Stock were issued, the per share voting power,
stockholders' equity, or amounts available for distribution as dividends and on
any liquidation of BankUnited may be diluted as a result of any such additional
issuances.
See "Comparison of Stockholders' Rights--Certain Anti-Takeover
Provisions" below for a discussion of certain anti-takeover effects that may
result from this matter being considered by BankUnited shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE
AMENDMENT TO THE BANKUNITED ARTICLES OF INCORPORATION.
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<PAGE> 82
BANKUNITED SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 30, 1996
concerning (i) each director of BankUnited; (ii) the Chief Executive Officer
and each other executive officer who is named in BankUnited's Summary
Compensation Table in its most recent proxy statement; (iii) all directors and
executive officers of BankUnited as a group; and (iv) each other person known
to management of BankUnited to be the beneficial owner, as such term is defined
in Rule 13d-3 of the Commission under the Exchange Act, of more than 5% of the
outstanding shares of each class of BankUnited's voting securities, according
to filings by such persons with the Commission.
<TABLE>
<CAPTION>
Amount
Amount and Amount and
Nature of and Nature Nature of
Beneficial Percent of of Beneficial Percent of Beneficial Percent of
Ownership Series B Ownership Class B Ownership Class A
of Series B Perferred of Class B Common of Class A Common
Name and Address Preferred (1) Outstanding Common (1) Common (1) Common (1) Outstanding (1)
- ---------------- ------------- ----------- -------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS:
Allen M. Bernkrant . . . 23,560 12.82% 37,860 13.08% 83,068 1.51%
P.O. Box 56-1122 (2)(3) (4)
Miami, FL 33256-1122
Lawrence H. Blum . . . . 23,560 12.82 65,354 20.62 57,0131 2.84
Tenth Floor (2)(3)(5) (4)
One S.E. Third Ave.
Miami, FL 33131
Alfred R. Camner . . . . 71,018 38.63 559,219 81.16 684,392 11.38
255 Alhambra Circle (2)(5)(6) (7)
Coral Gables, FL 33134
James A. Dougherty . . . -- -- -- -- 23,842 .44
255 Alhambra Circle
Coral Gables, Florida
Earline G. Ford . . . . . 5,000 2.72 290,001 56.12 318,595 5.55
255 Alhambra Circle (2)(3)(5) (4)
Coral Gables, FL 33134
Patricia L. Frost . . . . -- -- -- -- 5,412 .10
255 Alhambra Circle (4)(8)
Coral Gables, FL 33134
Sandra Goldstein . . . . -- -- -- -- 7,485 .14
611 Ocean Drive, #2E (9)
Key Biscayne, FL 33149
Marc D. Jacobson . . . . 10,000 5.44 43,540 14.76 124,327 2.26
3050 Biscayne Boulevard (2)(3)(5) (4)
Fourth Floor
Miami, FL 33137
Robert D. Lurie . . . . . -- -- -- -- 20,036 .37
16 South Street (4)
Suite 300
Morristown, NJ 07960
Christina Cuervo Migoya . -- -- -- -- 831 .02
City Hall - 2nd Floor
3500 Pan American Drive
Miami, Florida 33133
Anne W. Solloway . . . . -- -- 31,856 11.41 38,223 .70
8124 S.W. 87th Terrace (3)(5) (7)
Miami, FL 33143
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
All current directors and
executive officers as a
group (12 persons) . . . 133,138 72.43% 995,055 92.13% 1,533,671 23.20%
(10) (10)
OTHER 5% OWNERS:
Phillip Frost, M.D. and . -- -- -- -- 997,905 15.91
Frost-Nevada, (11)
Limited Partnership
8800 N.W. 36th Street
Miami, Florida 33178
Charles B. Stuzin . . . . 16,560 9.01 81,563 25.92 190,335 3.44
1221 Brickell Avenue (5)(12)
16th Floor
Miami, Florida 33131
James M. Stuzin . . . . . 7,000 3.81 66,933 25.66 68,515 1.25
1221 Brickell Avenue (13) (14) (13)
16th Floor
Miami, Florida 33131
Ruth E. Stuzin . . . . . -- -- 13,686 5.44 13,686 .25
1221 Brickell Avenue (15)
16th Floor
Miami, Florida 33131
Harvey Miller . . . . . . 13,560 7.38 20,354 7.49 40,520 .74
Tenth Floor (16)
One S.E. Third Avenue
Miami, Florida 33146
Barry Shulman . . . . . . 13,560 7.38 20,284 7.46 92,521 1.69
3999 N.E. 15th Avenue (16) (17)
Ft. Lauderdale, FL 33334
FMR Corp . . . . . . . . -- -- -- -- 115,850 2.13
82 Devonshire Street (18)
Boston, MA 02109-3614
- ----------
</TABLE>
* Less than 1%.
(1) The nature of the reported beneficial ownership as of June 30, 1996 is
unshared voting and investment power unless otherwise indicated in the
footnotes to this table. The BankUnited Class B Common Stock ownership
of the persons listed includes shares of the BankUnited Class B Common
Stock that would be issued upon the conversion of shares of the
BankUnited Series B Preferred Stock owned by such persons and the
exercise of options granted to such persons to acquire BankUnited
Class B Common Stock. Ownership by the persons listed of the
BankUnited Class A Common Stock, includes shares of the BankUnited
Class A Common Stock that would be issued upon the conversion of
shares of the BankUnited Series B Preferred Stock, the BankUnited 8%
Preferred Stock and the BankUnited Class B Common Stock beneficially
owned by them and the exercise of options to acquire the BankUnited
Class A Common Stock and the BankUnited Class B Common Stock granted
to them. Each share of the BankUnited Series B Preferred Stock is
convertible into 1.4959 shares of the BankUnited Class B Common Stock.
Each share of BankUnited Class B Common Stock is convertible into one
share of BankUnited Class A Common Stock. At June 30,1996, each share
of the BankUnited 8% Preferred Stock is convertible into one share of
the BankUnited Class A Common Stock. Alfred Camner is Anne Solloway's
son and Robert Lurie's first cousin.
(2) Includes 35,243, 35,243, 106,235, 7,479 and 14,959 shares of the
BankUnited Class B Common Stock that would be issued upon the
conversion of shares of the BankUnited Series B Preferred Stock held
individually by each of Allen Bernkrant, Lawrence Blum, Alfred Camner,
Earline Ford and Marc Jacobson, respectively.
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<PAGE> 84
(3) Includes 2,617, 30,111, 252,774, 28,511 and 4,218 shares of the
BankUnited Class B Common Stock that may be acquired individually by
each of Allen Bernkrant, Lawrence Blum, Earline Ford, Marc Jacobson
and Anne Solloway, respectively, through currently exercisable options
under BankUnited's Non-Statutory 1992 Stock Option Plan (the
"Non-Statutory Plan").
(4) Includes 5,444, 8,484, 4,003, 3,501, 3,592, 5,444 and 2,643 shares of
the BankUnited Class A Common Stock that may be acquired by each of
Allen Bernkrant, Lawrence Blum, Earline Ford, Patricia Frost, Sandra
Goldstein, Marc Jacobson and Robert Lurie, respectively, through
currently exercisable options granted under the Non-Statutory Plan.
(5) Includes 25,894 shares of the BankUnited Class B Common Stock that may
be acquired by each of these persons through currently exercisable
options granted to the original organizers of BankUnited, FSB.
(6) Includes 331,244 shares of the BankUnited Class B Common Stock that
may be acquired by Alfred Camner through currently exercisable options
under the Non-Statutory Plan. Also includes, pursuant to a durable
power of attorney given by Mrs. Solloway to Mr. Camner, 4,218 shares
of the BankUnited Class B Common Stock owned by her, 25,894 shares of
the BankUnited Class B Common Stock that may be acquired by her
through options described in note (5) above, and 1,744 shares of the
BankUnited Class B Common Stock that may be acquired by her through
currently exercisable options under the Non-Statutory Plan. Also
includes 1,914 shares of the BankUnited Class B Common Stock owned by
Mr. Camner's wife, for which he has been granted a proxy.
(7) Includes 4,119 shares of the BankUnited Class A Common Stock that may
be acquired by each of Alfred Camner and Anne Solloway through
currently exercisable options under the Non-Statutory Plan. Mr. Camner
also has beneficial ownership of Mrs. Solloway's shares through a
durable family power of attorney.
(8) Does not include the shares of the BankUnited Series C Preferred Stock
or the BankUnited Class A Common Stock beneficially owned by Patricia
Frost's husband (see Note 11).
(9) Includes 500 shares of the BankUnited Class A Common Stock that may be
received upon the conversion of 500 shares of the BankUnited 8%
Preferred Stock owned of record by Sandra Goldstein and 3,592 shares
of BankUnited Class A Common Stock that may be acquired by Sandra
Goldstein through currently exercisable options granted under the
Non-Statutory Plan.
(10) Includes an aggregate of 1,039,746 shares of the BankUnited Class B
Common Stock and 1,533,671 shares of the BankUnited Class A Common
Stock that may be acquired through currently exercisable options, as
described in this note and in Notes 3 through 7 and 9 above.
(11) This amount includes the conversion of shares of BankUnited 8% Series
C and C-II Preferred Stock beneficially owned by Dr. Frost and
Frost-Nevada, Limited Partnership, but does not include shares
beneficially owned by Patricia Frost, Dr. Frost's wife and a director
of BankUnited and BankUnited, FSB.
(12) Includes 81,563 shares of the BankUnited Class B Common Stock that
would be issued upon the conversion of the shares of BankUnited Series
B Preferred Stock held by him, 6,843 shares of the BankUnited Class B
Common Stock held by a family partnership, of which he is a general
partner, and 38,394 shares of the BankUnited Class B Common Stock that
may be acquired by him through currently exercisable options under the
Non-Statutory Plan.
(13) Reflects shares of the BankUnited Series B Preferred held as trustee
of a trust for the benefit of certain family members.
(14) Includes 10,471 shares of the BankUnited Class B Common Stock that
would be issued upon the conversion of 7,000 shares of the BankUnited
Series B Preferred Stock and 49,619 shares of the BankUnited Class B
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<PAGE> 85
Common Stock held as trustee of a family trust, and 6,843 shares of
the BankUnited Class B Common Stock held as general partner of a
family partnership.
(15) Includes 6,843 shares of the BankUnited Class B Common Stock owned of
record by a family partnership, of which Ruth E. Stuzin has been given
voting power pursuant to a revocable proxy.
(16) Includes 20,284 shares of the BankUnited Class B Common Stock that
would be issued upon the conversion of 13,560 shares of the BankUnited
Series B Preferred Stock held by Barry Shulman.
(17) Includes 12,500 shares of the BankUnited Class A Common Stock that
would be issued upon the conversion of 12,500 shares of the BankUnited
Preferred Stock held by Barry Shulman.
(18) This information was provided in a Schedule 13D filed by FMR Corp. on
February 13, 1995.
EXPERTS
The consolidated financial statements of BankUnited incorporated in
this Joint Proxy Statement-Prospectus (and elsewhere in the Registration
Statement) by reference to BankUnited's Annual Report on Form 10-K\A for the
year ended September 30, 1995, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent certified public accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Suncoast as of June 30, 1996
and 1995 and for each of the three years in the period ended June 30, 1996
included in this Joint Proxy Statement-Prospectus (and elsewhere in the
Registration Statement) have been so included in reliance on the report of
Price Waterhouse LLP, independent certified public accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of BankUnited for the year ended
September 30, 1993, have been incorporated by reference herein and in the Joint
Proxy Statement-Prospectus in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in auditing and
accounting.
Representatives of Price Waterhouse LLP are expected to be present at
the BankUnited Special Meeting and the Suncoast Special Meeting and will have
an opportunity to make a statement if they desire to do so and to respond to
appropriate questions from stockholders.
LEGAL MATTERS
The validity of the shares of the BankUnited Class A Common Stock and
the New BankUnited Preferred Stock to be issued to the holders of Suncoast
capital stock pursuant to the Merger will be passed upon for BankUnited by
Stuzin and Camner, Professional Association ("Stuzin and Camner"), Miami,
Florida. Alfred R. Camner, Chairman of the Board, Chief Executive Officer,
President and Director of BankUnited, is the managing director and shareholder
of Stuzin and Camner, and Earline G. Ford, Executive Vice President, Treasurer
and Director of BankUnited, is the legal administrator of Stuzin and Camner.
As of September 27 1996, directors and employees of Stuzin and Camner directly
and indirectly owned in the aggregate approximately 1,247,228 shares of the
BankUnited Class A Common Stock, 974,553 shares of the BankUnited Class B
Common Stock and 92,578 shares of the BankUnited Preferred Stock (including
shares that may be acquired by the exercise of options, but not including
shares received upon the conversion of other classes of stock).
Certain legal matters in connection with the Merger will be passed
upon by Thompson Hine & Flory P.L.L., special counsel to Suncoast. Irving P.
Cohen, a director of Suncoast, is a partner of Thompson Hine & Flory P.L.L.
Mr. Cohen is a holder of 27,400 shares of the Suncoast Common Stock and 6,569
shares of the Suncoast Preferred Stock. Certain tax consequences of the Merger
will be passed upon by Kronish, Lieb, Weiner & Hellman LLP.
72
<PAGE> 86
SOLICITATION OF PROXIES
The proxies are being solicited by each of the Boards of Directors of
BankUnited and Suncoast. The cost of solicitation of proxies from holders of
BankUnited capital stock and Suncoast capital stock, including the cost of
reimbursing brokerage houses and other custodians, nominees or fiduciaries for
forwarding proxies and proxy statements to their principals, will be borne by
each respective party. Shareholder Communications Corporation has been
retained by Suncoast to assist in the solicitation of proxies and will be
compensated in the estimated amount of $4,500 plus reasonable out-of-pocket
expenses. In addition to such solicitation and solicitation by use of the
mails, solicitation may be made in person or by telephone or telegraph by
certain directors, officers and regular employees of BankUnited and Suncoast
who will not receive additional compensation therefor.
STOCKHOLDER PROPOSALS
Stockholder proposals for BankUnited's 1997 Annual Meeting of
Stockholders were required to have been submitted to BankUnited before August
30, 1996, for inclusion in the proxy materials for BankUnited's 1997 Annual
Meeting of Stockholders. BankUnited has not received any stockholder proposals
for its 1997 Annual Meeting of stockholders.
OTHER BUSINESS
BankUnited knows of no other matters to be brought before the
BankUnited Special Meeting other than those referred to herein but if any other
business should properly come before the BankUnited Special Meeting, the
persons named in the proxy, or authorized substitutes, intend to vote in
accordance with their best judgment.
Suncoast knows of no other matters that are to be presented for action
at the Suncoast Special Meeting. If any other matters are properly presented
to the Suncoast Special Meeting, the persons named in the enclosed proxy, or
authorized substitutes, will vote on such matters in accordance with their best
judgment.
73
<PAGE> 87
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Statements of Financial Condition June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for each of the years in the three-year period ended
June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Stockholders' Equity for each of the years in the three-year period
ended June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Cash Flows for each of the years in the three-year period ended
June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
</TABLE>
F-1
<PAGE> 88
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Suncoast Savings and Loan Association, FSA
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of income, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial position
of Suncoast Savings and Loan Association, FSA and its subsidiaries ("Suncoast")
at June 30, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Suncoast's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note A to the consolidated financial statements, Suncoast
changed its method of accounting for mortgage servicing rights during 1996.
Price Waterhouse LLP
Miami, Florida
August 12, 1996
F-2
<PAGE> 89
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
June 30,
----------------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and amounts due from depository institutions . . . . . . . . . . . . $ 1,260 $ 157
Interest-earning deposits . . . . . . . . . . . . . . . . . . . . . . . . 622 43,613
---------- -----------
Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . 1,882 43,770
---------- -----------
Repurchase agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Federal Home Loan Bank Stock . . . . . . . . . . . . . . . . . . . . . . . 3,875 3,758
Loans receivable:
In portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320,828 129,786
Held for sale, sold under commitments . . . . . . . . . . . . . . . . . . 6,730 2,978
---------- -----------
Total loans receivable, net . . . . . . . . . . . . . . . . . . . . . . 327,558 132,764
---------- -----------
Mortgage-backed securities available for sale . . . . . . . . . . . . . . . 18,391 136,856
Loan servicing assets:
Purchased mortgage servicing rights . . . . . . . . . . . . . . . . . . 9,525 8,572
Originated mortgage servicing rights . . . . . . . . . . . . . . . . . . 834
Premiums on the sale of loans . . . . . . . . . . . . . . . . . . . . . . 1,359 1,533
---------- -----------
Total loan servicing assets . . . . . . . . . . . . . . . . . . . . . . 11,718 10,105
---------- -----------
Accrued interest and dividends receivable . . . . . . . . . . . . . . . . . 3,042 2,123
Real estate owned, net . . . . . . . . . . . . . . . . . . . . . . . . . . 261 523
Amounts due from purchasers of loans, loan
servicing rights and mortgage-backed securities . . . . . . . . . . . . . 19,883 43,941
Office properties and equipment . . . . . . . . . . . . . . . . . . . . . 6,640 6,285
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,319 7,228
---------- -----------
$ 402,569 $ 462,353
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 301,201 $ 337,854
Advances by borrowers for taxes and insurance . . . . . . . . . . . . . . . 3,138 1,642
Advances from Federal Home Loan Bank and other borrowings . . . . . . . . . 68,500 88,623
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 115
Principal and interest payable on loans serviced for others . . . . . . . . 274 576
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,811 8,759
---------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 377,031 437,569
---------- -----------
Commitments and contingencies (Notes D, M and N)
Stockholders' equity:
Preferred stock - $5.00 par value; 1,000,000 shares authorized;
920,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . 4,600 4,600
Common stock - $1.10 par value; 5,000,000 shares authorized; 1,996,930 shares
and 1,982,530 shares, respectively, issued and outstanding . . . . . . . 2,197 2,181
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 17,295 17,252
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,642 344
---------- -----------
25,734 24,377
Unrealized gain (loss) on mortgage-backed securities available
for sale, net of deferred income taxes . . . . . . . . . . . . . . . . . (196) 407
---------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . 25,538 24,784
---------- -----------
$ 402,569 $ 462,353
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 90
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Income
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------
1996 1995 1994
---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C>
Interest income:
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,902 $ 9,359 $ 15,220
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . 5,276 16,731 1,575
Premiums on the sale of loans . . . . . . . . . . . . . . . . . . . 127 145 155
Repurchase agreements and investments . . . . . . . . . . . . . . . 1,463 1,344 941
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,190 276 720
--------- --------- ---------
27,958 27,855 18,611
--------- --------- ---------
Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,891 14,087 9,406
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . 2,982 4,931 1,504
Long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . 64
--------- --------- ---------
17,937 19,018 10,910
--------- --------- ---------
Net interest income before provision for loan losses . . . . . . . . 10,021 8,837 7,701
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . 153 95
--------- --------- ---------
Net interest income after provision for loan losses . . . . . . . . . 9,868 8,742 7,701
--------- --------- ---------
Other income (expense):
Loan servicing fees . . . . . . . . . . . . . . . . . . . . . . . . 6,016 7,450 8,088
Amortization of loan servicing assets . . . . . . . . . . . . . . . (1,617) (1,175) (3,508)
--------- --------- ---------
Loan servicing income . . . . . . . . . . . . . . . . . . . . . . . 4,399 6,275 4,580
Gains on the sale of loans and loan servicing assets, net . . . . . 925 560 14,963
Gains on the sale of mortgage-backed securities, net . . . . . . . 2,950 1,388
Loan origination income . . . . . . . . . . . . . . . . . . . . . . 435 391 6,075
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 817 1,316 1,555
--------- --------- ---------
9,526 9,930 27,173
--------- --------- ---------
Non-interest expenses:
Employee compensation and benefits . . . . . . . . . . . . . . . . 7,240 8,005 18,362
Occupancy and equipment . . . . . . . . . . . . . . . . . . . . . . 2,866 4,057 4,209
Provision for losses on real estate . . . . . . . . . . . . . . . . 95 68 150
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,380 5,611 9,045
--------- --------- ---------
15,581 17,741 31,766
--------- --------- ---------
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . 3,813 931 3,108
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . 1,411 330 1,005
--------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,402 $ 601 $ 2,103
========= ========= =========
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,402 $ 601 $ 2,103
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . 1,104 1,104 780
--------- --------- ---------
Earnings (loss) available to common stockholders . . . . . . . . . . $ 1,298 $ (503) $ 1,323
========= ========= =========
Earnings (loss) per common share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.61 $ (0.26) $ 0.63
Fully diluted (omitted in 1995 due to anti-dilution) . . . . . . . $ 0.61 $ 0.59
Weighted-average common and common equivalent shares:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,137,327 1,940,275 2,105,358
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,674,730 3,652,457 3,588,620
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 91
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Cash Flow
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------
1996 1995 1994
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,402 $ 601 $ 2,103
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization of office properties and equipment . . . . . 1,140 1,409 1,330
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . 1,411 330 1,005
Accretion of deferred loan fees . . . . . . . . . . . . . . . . . . . . . . (223) (178) (88)
Amortization of purchased and originated mortgage servicing rights . . . . 1,336 990 3,090
Amortization of premiums on the sale of loans . . . . . . . . . . . . . . . 281 185 418
Amortization of discounts and premiums, net . . . . . . . . . . . . . . . . (488) (1,419) (18)
Net (increase) decrease in loans receivable held for sale . . . . . . . . . (3,002) 21,039 98,494
Provision for loan losses . . . . . . . . . . . . . . . . . . . . . . . . . 153 95
Provision for losses on real estate . . . . . . . . . . . . . . . . . . . . 95 68 150
Net decrease (increase) in amounts due from purchasers of loans,
loan servicing rights and mortgage-backed securities . . . . . . . . . . 24,058 (35,441) 8,329
Federal Home Loan Bank stock dividends . . . . . . . . . . . . . . . . . . (64)
Gains on the sale of loans and loan servicing assets, net . . . . . . . . . (925) (560) (14,963)
Gains on the sale of mortgage-backed securities . . . . . . . . . . . . . . (2,950) (1,388)
Increase in accrued interest and dividends receivable . . . . . . . . . . . (919) (460) (918)
(Increase) decrease in other assets . . . . . . . . . . . . . . . . . . . . (2,122) 4,627 (2,463)
(Decrease) increase in other liabilities . . . . . . . . . . . . . . . . . (6,314) 5,121 (890)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 33
--------- ------- -------
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . 13,964 (4,948) 95,515
--------- ------- -------
Cash flows from investing activities: . . . . . . . . . . . . . . . . . . . . .
Net increase in loans receivable in portfolio . . . . . . . . . . . . . . . . (191,821) (29,089) (65,905)
Principal repayments of mortgage-backed securities . . . . . . . . . . . . . 7,016 18,897 715
Purchase of mortgage-backed securities . . . . . . . . . . . . . . . . . . . (244,701) (256,711) (162,846)
Proceeds from sales of mortgage-backed securities . . . . . . . . . . . . . . 358,630 266,560
Purchase of repurchase agreements . . . . . . . . . . . . . . . . . . . . . .
(2,110,000) (307,000)(2,968,000)
Proceeds from maturities of repurchase agreements . . . . . . . . . . . . . . 2,185,000 252,000 2,948,000
Capital (expenditures) dispositions, net . . . . . . . . . . . . . . . . . . (1,495) 80 (1,927)
Increase in originated mortgage servicing rights . . . . . . . . . . . . . . (863)
Payments for purchased mortgage servicing rights . . . . . . . . . . . . . . (2,260) (51)
Proceeds from sales of purchased servicing rights and premiums on the
sale of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621 380 9,576
Proceeds from sale of real estate owned . . . . . . . . . . . . . . . . . . . 463 650 469
Purchase of Federal Home Loan Bank stock . . . . . . . . . . . . . . . . . . (3,417) (3,075) (3,840)
Proceeds from redemption of Federal Home Loan Bank stock . . . . . . . . . . 3,300 2,867 1,731
------- ------- -------
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . 473 (54,492) (242,027)
------- ------- --------
Cash flows from financing activities:
Net (decrease) increase in deposits . . . . . . . . . . . . . . . . . . . . . (36,653) 77,419 49,350
Increase in advances by borrowers for taxes and insurance . . . . . . . . . . 1,496 335 39
Advances from Federal Home Loan Bank . . . . . . . . . . . . . . . . . . . . 43,500 69,000
Repayments of advances and other borrowings from Federal Home Loan Bank, net (44,000)
(Repayments of) proceeds from other borrowings, net . . . . . . . . . . . . . (63,623) 63,623
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . 59 138 104
Proceeds from issuance of preferred stock . . . . . . . . . . . . . . . . . . 12,228
Cash dividends paid on preferred stock . . . . . . . . . . . . . . . . . . . (1,104) (1,104) (780)
------- ------- -------
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . (56,325) 96,411 129,941
------- ------- -------
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . (41,888) 36,971 (16,571)
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . 43,770 6,799 23,370
------- ------- -------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . $ 1,882 $43,770 $ 6,799
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,088 $18,683 $10,782
Cash paid for income taxes, net of refunds received . . . . . . . . . . . . . 1,208 120 841
Supplemental non-cash activities:
REO obtained through foreclosure . . . . . . . . . . . . . . . . . . . . . . $ 199 $ 1,133 $ 537
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 92
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Unrealized
gain (loss)
on mortgage-
backed
Additional securities Total
Preferred Common paid-in Retained available Stockholders'
stock stock capital earnings for sale, net equity
--------- ------ ---------- -------- ------------- -------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993................. $ - $2,085 $ 9,302 $ (476) $ $10,911
Issuance of common stock............... 27 42 69
Issuance of preferred stock............ 4,600 7,628 12,228
Tax benefit on disqualification of
stock options....................... 35 35
Net income............................. 2,103 2,103
Cash dividends on preferred stock...... (780) (780)
------ ------ ------- ------ ------ -------
Balance, June 30, 1994................. 4,600 2,112 17,007 847 - 24,566
Common stock issued in acquisition..... 33 143 176
Issuance of common stock............... 36 47 83
Tax benefit on disqualification of..... 55 55
stock options.......................
Net income............................. 601 601
Cash dividends on preferred stock...... (1,104) (1,104)
Net change in unrealized gain (loss) on
mortgage-backed securities available
for sale............................ 407 407
------ ------ ------- ------ ------ -------
Balance, June 30, 1995................. 4,600 2,181 17,252 344 407 24,784
Issuance of common stock............... 16 25 41
Tax benefit on disqualification of
stock options....................... 18 18
Net income............................. 2,402 2,402
Cash dividends on preferred stock...... (1,104) (1,104)
Net change in unrealized gain (loss) on
mortgage-backed securities available
for sale............................ (603) (603)
------ ------ ------- ------ ------ -------
Balance, June 30, 1996................. $4,600 $2,197 $17,295 $1,642 $ (196) $25,538
====== ====== ======= ====== ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 93
Suncoast Savings and Loan Association, FSA and Subsidiaries
Notes To Consolidated Financial Statements
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Suncoast Savings and Loan Association, FSA
("Suncoast") conform to generally accepted accounting principles ("GAAP") and
to general practices within the savings and loan industry. The following
summarizes the most significant of those policies and procedures.
1. Principles of Consolidation--The consolidated financial statements
include the accounts of Suncoast and its wholly-owned subsidiaries. All
significant intercompany transactions and balances are eliminated in
consolidation.
In April, 1995, Suncoast issued common stock to acquire Intra-Coastal
Mortgage Company, Inc., a licensed lender/broker. The acquisition was
accounted for using the purchase method of accounting, and the effect of the
acquisition on the financial statements for the year ended June 30, 1995 was
not significant.
2. Cash and cash equivalents--Cash and amounts due from banks and
interest-earning deposits with original maturities of three months or less are
considered cash and cash equivalents for cash flow reporting purposes.
3. Repurchase Agreements, Mortgage-Backed Securities and Investment
Securities--On July 1, 1994, Suncoast adopted Statement of Financial Accounting
Standards No. 115 ("FAS 115"), "Accounting for Certain Investments in Debt and
Equity Securities". Under FAS 115, investments in debt and equity securities
which Suncoast has a positive intent and ability to hold to maturity are
classified as "securities held to maturity" and are carried at cost, adjusted
for discounts and premiums which are accreted or amortized to estimated
maturity under the interest method. In accordance with FAS 115, a security
cannot be classified as held to maturity if it might be sold in response to
changes in market interest rates, related changes in the security's prepayment
risk, liquidity needs, changes in the availability of and the yield on
alternative investments, and changes in funding sources and terms. Debt and
equity securities purchased or sold for the purpose of a short-term profit are
classified as "trading account securities" and are recorded at fair value, with
unrealized gains and losses reflected in operations. Suncoast does not have
trading account securities. Debt and equity securities not classified as held
to maturity or trading account securities are classified as "available for
sale". Debt and equity securities available for sale are carried at fair
value, with the related unrealized appreciation or depreciation, net of
deferred income taxes, reported as a separate component of stockholders'
equity. Realized gain or loss on sales of securities is based on the specific
identification method.
At June 30, 1996 and 1995, the portfolio of mortgage-backed securities was
classified as available for sale with an unrealized loss (net of taxes) of
$196,000 and an unrealized gain (net of taxes) of $407,000, respectively,
recorded as a separate component of stockholders' equity. The portfolio was
classified as such because management restructured Suncoast's assets in Fiscal
1995 and sold its entire $138.7 million portfolio of fixed rate securities,
previously classified as held to maturity, realizing a gain of approximately
$486,000.
F-7
<PAGE> 94
4. Mortgage Banking Activities--Suncoast originates mortgage loans for
portfolio investment or sale in the secondary market. Mortgage loans are
designated as either available for sale or held in portfolio. Mortgage loans
held in the portfolio are stated at unpaid principal balances, less the
allowance for loan losses, and net deferred loan origination fees and
discounts. Mortgage loans available for sale are carried at the lower of cost
or fair market value, determined on an aggregate basis, and net unrealized
losses, if any, are recognized in a valuation allowance with a corresponding
charge to income.
Suncoast recognizes gains or losses on the sales of servicing rights when
the related sales contract has been executed and legal title and substantially
all risks and rewards of ownership of the servicing asset has passed to the
buyer. Gains or losses are computed by deducting any associated deferred
excess servicing rights, mortgage servicing rights, and other related expenses
from the sales proceeds.
Suncoast minimizes its interest rate risk on loan commitments expected to
close and the inventory of mortgage loans held for sale through commitments to
permanent investors.
Effective July 1, 1995, Suncoast adopted Statement of Financial Accounting
Standards No. 114, ("FAS 114") "Accounting by Creditors for Impairment of a
Loan", subsequently amended by FAS 118. Loans within the scope of FAS 114 are
measured for impairment based on (a) the present value of expected future cash
flows discounted at the loan's effective interest rate, (b) the market price,
or (c) if collateral dependent, the fair value of the collateral. If the value
of the loan so determined is less than the loan's recorded value, Suncoast
recognizes a loss for the difference by creating a valuation allowance or
adjusting an existing valuation allowance with a corresponding charge to
operations. FAS 118 amended certain income recognition and disclosure
provisions of FAS 114. The adoption of FAS 114 and FAS 118 did not have any
significant effect on Suncoast's financial condition and results of operations,
due to the composition of the loan portfolio and its policy for establishing
its allowance for loan losses.
At June 30, 1996, 1995 and 1994, Suncoast was servicing loans amounting to
approximately $1.5 billion, $1.6 billion and $2.0 billion, respectively.
Servicing loans generally consists of collecting mortgage payments, maintaining
custodial accounts, disbursing payments to investors and foreclosure
processing. Loan servicing income is recorded on the accrual basis and includes
servicing fees from investors and certain charges collected from borrowers,
such as late payment fees. In connection with loans serviced for others,
Suncoast held in non-interest or low-interest bearing deposit accounts
borrowers' custodial balances of approximately $24.2 million and $37.3 million
at June 30, 1996 and 1995, respectively. Suncoast makes a provision for
expected unreimbursed costs, which are incurred as a result of Suncoast's
responsibility as servicer of Federal Housing Administration (FHA) insured,
Veterans Administration (VA) guaranteed, and other loans for investors. The
provision is determined based on a number of variables, including the amount of
delinquent loans serviced for other investors, the length of delinquency, and
the amounts previously advanced on behalf of the borrower that Suncoast does
not expect to recover. Actual cost incurred may vary from Suncoast's estimate
due to a number of factors beyond Suncoast's control.
F-8
<PAGE> 95
Effective July 1, 1995, Suncoast adopted Statement of Financial Accounting
Standards No. 122 ("FAS 122") "Accounting for Mortgage Servicing Rights." FAS
122 requires that rights to service mortgage loans for others acquired through
either purchase or origination of mortgage loans be recognized as separate
assets if the related mortgage loan is intended to be sold with servicing
retained. The adoption of FAS 122 resulted in aggregate realized net gains of
approximately $600,000 ($380,000 net of income taxes) on the sale of loans
during the year ended June 10, 1996. Purchased mortgage servicing rights
("PMSRs") represent the cost of acquiring the rights to service mortgage loans,
and such cost is capitalized and amortized in proportion to, and over the
period of, estimated net servicing income.
Premiums on the sale of loans represent the present value of the cash flows
associated with the portion of estimated future interest income retained on
loans sold (based upon certain prepayment rate and interest rate assumptions
and net of a normal servicing fee), which are recognized as gains on the sale
of loans at the time the sales occur. As the cash flows are collected, Suncoast
amortizes the premiums and recognizes a normal servicing fee and interest
income on the premiums at the rate assumed in determining the present value of
the premiums. Such premiums are amortized in proportion to and over the
estimated period such cash flows will be collected.
Suncoast periodically makes an assessment of capitalized mortgage servicing
rights for impairment based on the fair value of those rights. The carrying
values of Suncoast's servicing assets, and the amortization thereon, are
evaluated in relation to estimated future net servicing cash flows (discounted)
to be received and retained. Such carrying values are adjusted for indicated
impairments based on management's best estimate of remaining cash flows. Such
estimates may vary from the actual remaining cash flows due to prepayments of
the underlying mortgage loans and increases in servicing costs. Changes in open
market values do not directly affect the expected cash flows used in
determining the carrying values.
5. Office Properties and Equipment--Land is carried at cost. Office
properties and equipment are carried at cost less accumulated depreciation.
Depreciation and amortization are computed on the straight-line method over the
estimated useful lives of the related assets, which range from 3 to 30 years;
amortization of leasehold improvements is computed over the terms of the
respective leases (including renewal periods which management intends to
exercise) or their estimated useful lives, whichever is shorter.
6. Loan Fees--Suncoast defers loan origination fees (after offsetting
certain direct costs of originating the loans) and recognizes these fees using
the interest method over the life of the loans as an adjustment of the loans'
yield. Loan origination fees received on loans sold are recorded as income
upon the sale of the loans. Loan commitment fees received are deferred and
recognized similarly over the life of the loan or at the expiration of the
commitment if the commitment expires unexercised.
7. Provisions for Losses--Provisions for loan losses and losses on real
estate owned (included in non-interest expenses) include charges to adjust the
recorded balances of loans receivable and real estate owned to their estimated
net realizable value, as applicable. Such provisions are based on management's
estimate of fair market value of the collateral, considering the current and
F-9
<PAGE> 96
anticipated future operating or sales conditions. Recovery of the carrying
value of such loans and real estate owned is dependent to a great extent on
economic, operating and other conditions that may be beyond Suncoast's control.
Suncoast also provides an allowance for loan losses based upon historical loss
experience, delinquency trends, the value of underlying collateral, known and
inherent risks in the assets, prepayment rates and the general state of the
real estate market.
8. Provision for Uncollected Interest--When a loan becomes ninety days or
more delinquent, Suncoast stops the accrual of interest income and reverses any
interest previously accrued but uncollected. Such interest, if ultimately
collected, is credited to income in the period of recovery.
9. Real Estate Owned--Real estate owned represents property acquired by
foreclosure or deed in lieu of foreclosure. Real estate owned is initially
recorded at the fair market value less estimated selling expenses of the
property at date of foreclosure. Subsequent adjustments to the fair market
value at date of foreclosure are recorded as an expense. Sales of real estate
are recorded under the accrual method of accounting. Under this method, a sale
is not recognized until payments received aggregate a specific required
percentage of the contract sales price. Until a contract qualifies as a sale,
all collections are recorded as deposits.
The ability of Suncoast to recover the carrying value of its investment in
real estate owned is based upon future sales. The ability to complete such
sales is subject to market conditions and other factors, all of which are
beyond Suncoast's control.
10. Income Taxes--Suncoast uses the asset and liability approach to account
for income taxes. Deferred tax assets and liabilities are recognized for the
expected future tax consequences attributable to differences between the
financial statement carrying amounts and the tax bases of assets and
liabilities.
11. Earnings (Loss) Per Share--Earnings (loss) per share is computed on the
basis of the weighted average number of shares of common stock outstanding
during the period plus common stock equivalents applicable to stock options.
When dilutive, fully diluted earnings per common share is derived as follows:
Earnings (loss) available to common stockholders are increased by preferred
dividends paid eliminated upon conversion of preferred shares to common shares.
This remainder is divided by the sum of the average number of common shares
outstanding for the period plus the added common shares that would have been
outstanding if: (a) all of the outstanding preferred shares had been converted
into common shares at the beginning of the period and (b) all stock options
granted that have economic value were exercised at the beginning of the period,
and the related funds that would have been received by Suncoast upon such
exercise were used to repurchase outstanding common shares.
12. Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Estimates that are particularly susceptible to significant change in the near
term are the adequacy of reserves available for loan
F-10
<PAGE> 97
losses and the present value of the estimated future cash flows utilized to
calculate loan servicing assets.
13. New Accounting Standards--In October 1995, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards No.
123 ("FAS 123"), "Accounting for Stock-Based Compensation." This statement
requires certain disclosures about stock-based employee compensation
arrangements, regardless of the method used to account for them, and defines a
fair value based method of accounting for an employee stock option or similar
equity instrument and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it
also allows an entity to continue to measure compensation cost for stock based
compensation plans using the intrinsic value method of accounting prescribed by
existing principles. Suncoast has elected to remain with the existing
principles and will make pro forma disclosures of net income and earnings per
share as if the fair value method of accounting defined in FAS 123 had been
applied. Under the fair value method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. Under the intrinsic value based
method, compensation cost is the excess, if any, of the quoted market price of
the stock at grant date or other measurement date over the amount an employee
must pay to acquire the stock. The disclosure requirements of FAS 123 are
effective for financial statements for Suncoast's fiscal years beginning after
June 30, 1996.
In June 1996, the FASB issued Statement of Financial Accounting Standards
No. 125 ("FAS 125"), "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities." FAS 125 provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishment of
liabilities based on a financial-components approach that focuses on control.
FAS 125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996 and is to be
prospectively applied. Management is currently evaluating the impact of
adoption of FAS 125 on its financial position and results of operations.
14. Reclassifications--Certain amounts reported in prior periods' financial
statements have been reclassified to conform to current classifications.
B. REGULATORY CAPITAL REQUIREMENTS
Under the regulatory capital regulations of the Office of Thrift Supervision
("OTS"), Suncoast is required to maintain minimum levels of capital as measured
by three ratios. Savings institutions are currently required to maintain
tangible capital of at least 1.5% of tangible assets, core capital of at least
3.0% of adjusted tangible assets and risk based capital of at least 8.0% of
risk-weighted assets (at least half of which must be comprised of core capital).
F-11
<PAGE> 98
At June 30, 1996 Suncoast exceeded all three of its current capital
requirements. The status of the capital requirements of Suncoast at June 30,
1996 is as follows (dollars are in thousands and are unaudited):
<TABLE>
<CAPTION>
Percentage Percentage Risk- Percentage of
Tangible of Core of based risk-based
capital assets(1) capital assets(1) capital assets (1)
-------- --------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity before adjustments $ 25,538 6.36% $ 25,538 6.36% $ 25,538 11.05%
Regulatory adjustments:
General valuation reserves 657 .28
Non-qualifying PMSRs (720) (.18) (720) (.18) (720) (.30)
Goodwill (47) (.01) (47) (.01) (47) (.02)
Unrealized loss on mortgage-backed
securities available for sale, net 196 .05 196 .05 196 .08
-------- ----- -------- ----- -------- ------
Regulatory capital 24,967 6.22 24,967 6.22 25,624 11.08
Minimum capital requirement 6,024 1.50 12,048 3.00 18,486 8.00
-------- ----- -------- ----- -------- ------
Regulatory capital excess $ 18,943 4.72% $ 12,919 3.22% $ 7,138 3.08%
======== ===== ======== ===== ======== =====
Assets for capital calculation $401,605 $401,605 $231,069
======== ======== ========
</TABLE>
_______________________________
(1) Tangible and core capital percentages are computed as a percentage of
tangible and adjusted tangible assets, respectively. The risk-based capital
percentage is computed as a percentage of risk-adjusted assets.
Under current OTS capital rules, PMSRs and OMSRs (collectively, "MSRs") may
be included in regulatory capital only to the extent that, in the aggregate,
they do not exceed 50% of core capital. For purposes on calculating core
capital, MSRs are valued at the lesser of 90 percent of fair market value of
100 percent of their book value (net of any valuation allowance). Any excess
amounts are deducted from assets and core capital. The estimated fair market
value of MSRs must be determined at least quarterly. Suncoast also uses the
services of an independent expert to perform an annual market valuation in
accordance with guidance issued by the OTS. The amount of MSRs that may be
included in tangible capital is the same as that permitted in core capital. At
June 30, 1996, Suncoast's book value of MSRs was $10.4 million, and based upon
a market valuation of MSRs at that date, a deduction from assets and capital
for regulatory capital purposes in the amount of $720,000 was necessary.
The OTS amended risk-based capital rules to incorporate interest-rate risk
("IRR") requirements which require a savings association to hold additional
capital if it is projected to experience an excessive decline in net portfolio
value in the event interest rates increase or decrease by two percentage
points. The additional capital required is equal to one-half of the amount by
which any decline in net portfolio value exceeds 2 percent of the savings
association's total net portfolio value. Suncoast does not expect the
interest-rate risk requirements to have a material impact on its required
capital levels at the present time.
The OTS rules establish the capital levels for which an insured institution
will be categorized as: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized or critically
undercapitalized. A well capitalized institution must have risk-based capital
of 10% or more, core capital of 5% or more and Tier 1 risk-based capital (based
on the ratio of core capital to risk-weighted assets ) of 6% or more and may
not be subject to any written agreement, order, capital directive or prompt
corrective action directive issued by the OTS. The OTS and other federal
banking agencies are required to take prompt corrective action to resolve the
problems of critically
F-12
<PAGE> 99
undercapitalized financial institutions. Suncoast is a well capitalized
institution under the definitions as adopted.
C. REPURCHASE AGREEMENTS AND FEDERAL HOME LOAN BANK STOCK
During the years ended June 30, 1996 and 1995, Suncoast invested in
repurchase agreements but had no such investment at June 30, 1996. These
investments were collateralized by U.S. Government securities through agency
agreements with a national brokerage firm (the "counter-party"). The
securities underlying the agreements are book-entry securities. The securities
were delivered by appropriate entry with a third-party custodian as per
agreement between Suncoast and the counter-party. Based on month-end balances
for the years ended June 30, 1996 and 1995, repurchase agreements averaged
$16.7 million and $21.3 million, respectively, the maximum amount outstanding
at any month-end in each year was $75.0 million, and the maximum amount
outstanding in each year with any single counter-party was $75.0 million. The
market values of these agreements approximated their carrying value.
Federal Home Loan Bank ("FHLB") stock ownership is required for membership
in the bank system. Its carrying value approximates market value.
D. LOANS RECEIVABLE
Loans receivable at June 30 are comprised of (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
Loans in portfolio:
Real estate loans:
Commercial, collateralized by--
Undeveloped land
$ 3,115 $ 5,256
Office buildings 8,287 7,625
Hotel property
21,692 9,082
Retail stores 21,552 17,245
Multi-family residential and other
43,836 34,099
-------- --------
Total commercial 98,482 73,307
Residential (one to four family)
215,044 55,449
Construction 8,491 7,085
Consumer loans 1,917 1,750
-------- --------
323,934 137,591
Allowance for loan losses (657) (504)
Deferred loan fees, net (617) (493)
Undisbursed portion of loans in process (4,354) (7,137)
Premiums paid on loans held in portfolio 2,522 329
-------- --------
$320,828 $129,786
======== ========
Loans held for sale:
Residential real estate loans $ 6,675 $ 2,962
Deferred loan fees, net (31) (19)
Premiums paid on loans held for sale 86 35
-------- --------
$ 6,730 $ 2,978
======== ========
Total loans receivable, net
$327,558 $132,764
======== ========
</TABLE>
F-13
<PAGE> 100
At June 30, 1996, Suncoast had pledged approximately $163.5 million of first
mortgage loans as collateral for FHLB advances (see Note L).
The commercial real estate loans are primarily in the State of Florida and
are considered by management to be of somewhat greater risk of uncollectibility
due to the dependency on income production or future development of real estate.
Loans not accruing interest were $853,000 and $151,000 at June 30, 1996 and
1995, respectively. If non-accrual loans had been accruing interest, interest
income of $54,000, $10,000 and $42,000 would have been recorded during the
years ended June 30, 1996, 1995 and 1994, respectively.
The OTS regulatory capital regulations require that the portion of
nonresidential construction and land loans in excess of 80% loan-to-value ratio
be deducted from total capital for purposes of the risk-based capital standard.
At June 30, 1996, Suncoast had no loans subject to this regulation.
Suncoast originates and purchases both adjustable and fixed interest rate
loans. At June 30, 1996, the composition of these loans was approximately as
follows (in thousands):
<TABLE>
<CAPTION>
Fixed-rate Adjustable-rate
- ------------------------------------------- ----------------------------------------
Term to Term to
maturity Carrying value rate adjustment Carrying value
- -------- -------------- --------------- --------------
<S> <C> <C> <C>
1mo.-1 yr. $ 353 1 mo.-1 yr. $ 217,509
1 yr.-3 yr. 3,138 1 yr.-3 yr. 65,967
3 yr.-5 yr. 4,261 3 yr.-5 yr 8,542
5 yr.-10 yr. 3,016
10 yr.-20 yr. 7,204
Over 20 years 13,944
----------- -----------
Total loans
in portfolio 31,916 292,018
Total loans held
for sale 6,480 195
----------- -----------
$ 38,396 $ 292,213
=========== ===========
</TABLE>
The adjustable-rate loans have interest rate adjustment limitations and are
generally indexed to U.S. Treasury Bill rates. Future market factors may affect
the correlation of the interest rate adjustment with the rates Suncoast pays on
the short-term deposits that have been primarily utilized to fund these loans.
The following summarizes the activity in the allowance for loan losses for
the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Balance, at beginning of year $ 504 $ 504 $ 521
Provision for loan losses 153 95
Chargeoffs and recoveries, net (95) (17)
------ ------ ------
Balance, at end of year $ 657 $ 504 $ 504
====== ====== ======
</TABLE>
F-14
<PAGE> 101
At June 30, 1996, Suncoast had commitments to originate and purchase loans,
excluding the undisbursed portion of loans in process, of approximately $3.7
million. These commitments are scheduled to be disbursed within one year.
Suncoast had also entered into commitments to sell loans of approximately $7.6
million at June 30, 1996 of which approximately $1.0 million are binding on the
investor but not on Suncoast. At June 30, 1996, Suncoast had no floating
market rate commitments outstanding.
Loans to executive officers, directors and principal holders of equity
securities were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other customers (unless they were in effect under regulations prior to
1989) and do not involve more than the normal risk of collectibility. The
activity regarding these loans is as follows (in thousands):
<TABLE>
<CAPTION>
Beginning New Ending
Year Ended June 30, Balance Loans Repayments Balance
- ------------------- --------- ----- ---------- -------
<S> <C> <C> <C> <C>
1996 $2,199 $ 328 $ 336 $2,191
1995 1,083 1,365 249 2,199
1994 2,693 1,610 1,083
</TABLE>
E. MORTGAGE-BACKED SECURITIES
At June 30, 1996, mortgage-backed securities with an aggregate book value of
$11.8 million were pledged as collateral for FHLB advances (see Note L).
Summarized below are the amortized costs and market value of mortgage-backed
securities at June 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
costs gains losses value
-------- -------- ------- --------
<S> <C> <C> <C> <C>
June 30, 1996:
Adjustable rate:
GNMA $ 14,659 $ - $ (312) $ 14,347
Private Issue 4,044 4,044
-------- -------- ------- --------
Total mortgage-backed
securities $ 18,703 $ - $ (312) $ 18,391
======== ======== ======= ========
June 30, 1995:
FHLMC $ 59,015 $ 414 $ (80) $ 59,349
FNMA 51,069 363 (51) 51,381
FNMA Real Estate Mortgage
Investment Conduit 26,126 26,126
-------- -------- ------- --------
Total mortgage-backed
securities $136,210 $ 777 $ (131) $136,856
======== ======== ======= ========
</TABLE>
F-15
<PAGE> 102
Mortgage-backed securities as of June 30, 1996 and 1995 were adjustable-rate
securities with a term to rate adjustment not exceeding one year.
F. LOAN SERVICING ASSETS
1. Purchased mortgage servicing rights--The following table sets forth the
activities of Suncoast's PMSRs for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance, at beginning of year $ 8,572 $ 9,511 $12,830
Cost of acquiring servicing rights 2,260 51
Sales of servicing rights (229)
Amortization charged against loan
servicing fee income (1,307) (990) (3,090)
------- ------- -------
Balance, at end of year $ 9,525 $ 8,572 $ 9,511
======= ======= =======
</TABLE>
2. Originated mortgage servicing rights ("OMSR")--The following table sets
forth the activities of Suncoast's OMSR's for the years ended June 30 (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance, at beginning of year $ - $ - $ -
Servicing rights originated 863
Amortization charged against loan
servicing fee income ( 29)
------ ------- -------
Balance, at end of year $ 834 $ - $ -
====== ======= =======
</TABLE>
The fair value of Suncoast's PMSRs and OMSRs is determined annually by an
independent firm which has the necessary expertise to perform such valuation
studies. At June 30, 1996, the fair value of Suncoast's PMSRs and OMSRs was
approximately $10.0 million and $949,000, respectively.
Fair value has been estimated by using a discounted cash flow model, the
most significant assumptions of which are as follows:
Prepayment Rate--The average "Dealer Prepayment Estimates" as of July
8, 1996 as published by Bloomberg Financial Markets.
Discount Rate--A base rate of 10.5%, adjusted for loan type, size and
remaining term.
Cost of Service--$45 incremental cost per loan per year.
Ancillary Income--Suncoast's actual ancillary income was utilized for
the portfolio purchased prior to 1995 and $10 annually per loan was
utilized on the portfolio purchased subsequent to 1995.
Escrow Balances--Determined using a twelve month weighted average
multiple calculated by state.
F-16
<PAGE> 103
For purposes of evaluating and measuring PMSRs and OMSRs for impairment,
Suncoast stratifies the population by product type, investor type and interest
rate. No valuation allowance for the impairment of PMSRs or OMSRs was required
at June 30, 1996.
The ability of Suncoast to recover the carrying value of the PMSRs and OMSRs
is dependent upon certain factors including future prepayment experience, which
is influenced by economic and other conditions that may be beyond Suncoast's
control. If actual future prepayment experience exceeds the rate anticipated in
the valuation study, a reduction in the carrying value of the PMSRs and OMSRs
may be required.
3. Premiums on the sale of loans--The following table sets forth the
activities of Suncoast's premiums on the sale of loans for the years ended June
30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance, at beginning of year $ 1,533 $ 1,737 $ 2,169
Premium on sales 107 14
Sales of servicing rights (19) (28)
Amortization charged against loan
servicing fee income (281) (185) (418)
------- ------- -------
Balance, at end of year $ 1,359 $ 1,533 $ 1,737
======= ======= =======
</TABLE>
Management has estimated the future constant prepayment rates ("CPRs") used
to determine the above premiums based upon an analysis of the actual historical
CPRs, comparative industry CPRs and market conditions. Suncoast calculates
premiums using the present value model, which calculates present values based
upon estimated annual cash inflows.
G. ACCRUED INTEREST AND DIVIDENDS RECEIVABLE
Interest and dividends receivable at June 30 are accrued for (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Loans receivable $2,782 $ 885
Mortgage-backed securities 164 1,041
Federal Home Loan Bank Stock 88 68
Repurchase agreements 121
Interest-earning deposits 8 8
------ ------
$3,042 $2,123
====== ======
</TABLE>
F-17
<PAGE> 104
H. REAL ESTATE OWNED
At June 30, 1996, real estate owned consisted of one single-family
residence. The following summarizes the activity in the allowance for losses
on real estate owned for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Balance, at beginning of year $ - $ - $ -
Provision for losses on real estate 95 68 150
Chargeoffs and recoveries, net (15) (68) (150)
------ ----- -----
Balance, at end of year $ 80 $ - $ -
====== ====== =====
</TABLE>
I. OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment at June 30 are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Land $ 1,204 $ 827
Buildings 3,971 3,630
Leasehold improvements 839 669
Furniture, fixtures and equipment 6,890 7,341
------- -------
12,904 12,467
Less accumulated depreciation and
amortization 6,264 6,182
------- -------
$ 6,640 $ 6,285
======= =======
</TABLE>
J. OTHER ASSETS
Other assets at June 30 are comprised of (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Foreclosure advances $3,821 $1,633
Other receivables 2,978 1,404
Escrow advances on serviced loans 1,036 1,580
Prepaid income taxes 1,145 302
All other 339 2,309
------ ------
$9,319 $7,228
====== ======
</TABLE>
F-18
<PAGE> 105
K. DEPOSITS
The nominal interest rates paid on deposits and related balances are as
follows (amounts in thousands):
<TABLE>
<CAPTION>
Weighted June 30, 1996 June 30, 1995
Average Rate at ------------------------- ----------------------
June 30, 1996 Amount Percent Amount Percent
--------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Negotiable
order of
withdrawal
("NOW")
accounts 2.42% $ 17,751 5.9% $ 6,418 1.9%
Non-interest
bearing 874 0.3% 556 0.2
Money market 3.19% 11,805 3.9% 16,859 5.0
Passbook 4.08% 40,959 13.6% 48,605 14.3
-------- ------ -------- ------
71,389 23.7% 72,438 21.4
-------- ------ -------- ------
Custodial
accounts
0% 24,198 8.0% 37,275 11.0
-------- ------ -------- ------
Certificates of
deposit:
2.00%-2.99% 204 0.1%
3.00%-3.99% 4 411 0.1
4.00%-4.99% 29,464 9.8% 11,212 3.3
5.00%-5.99% 146,965 48.8% 104,003 30.8
6.00%-6.99% 26,194 8.7% 108,712 32.2
7.00%-7.99% 2,783 0.9% 3,801 1.1
8.00%-8.99% 2 0.1
-------- ------ -------- ------
Total certificates
of deposit 5.46% 205,614 68.3% 228,141 67.6%
-------- ------ -------- ------
4.55% $301,201 100.0% $337,854 100.0%
======== ====== ======== ======
</TABLE>
The amounts of scheduled maturities of certificate accounts, including those
with balances exceeding $100,000, at June 30, 1996 for future fiscal years
ending June 30 are summarized below (in thousands):
<TABLE>
<CAPTION>
Certificates
Exceeding Total
$100,000 Certificates
----------- ------------
<S> <C> <C>
1997 $7,389 $176,957
1998 824 19,699
1999 209 2,955
2000 106 4,430
2001 101 1,573
------ --------
$8,629 $205,614
====== ========
</TABLE>
F-19
<PAGE> 106
Interest on deposits for the years ended June 30 is summarized below (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Certificate accounts $12,537 $11,893 $7,849
Money market accounts 565 420 748
NOW accounts 272 451 92
Passbook accounts 1,368 1,226 27
------- ------- -------
Deposit accounts 14,742 13,990 8,716
------- ------- -------
Interest on custodial accounts:
Escrow accounts 82 78 105
Serviced loans paid off 67 19 585
------- ------- -------
149 97 690
------- ------- -------
Total interest on deposits $14,891 $14,087 $ 9,406
======= ======= =======
</TABLE>
L. ADVANCES FROM FEDERAL HOME LOAN BANK AND OTHER BORROWINGS
Advances from the Federal Home Loan Bank and other borrowings at June 30 are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
At June 30, 1996 During Year Ended June 30, 1996
------------------------------------------ -------------------------------
Average Maximum
Balance Weighted Balance Balance
Outstanding Average Rate Maturity Outstanding Outstanding
----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Advances from FHLB
Short term $67,000 5.30% 7/96-2/97 $50,963 $117,000
Long term 1,500 6.65 12/05 1,000 1,500
Borrowings under reverse
repurchase agreements 850 10,199
Borrowings under fixed coupon
dollar reverse repurchase
agreements 2,631 31,572
-------- -------
$ 68,500 5.30%
======== =======
</TABLE>
F-20
<PAGE> 107
<TABLE>
<CAPTION>
At June 30, 1995 During Year Ended June 30, 1995
------------------------------------------ -------------------------------
Average Maximum
Balance Weighted Balance Balance
Outstanding Average Rate Maturity Outstanding Outstanding
----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Advances from
FHLB - short term $ 25,000 6.13% 5/96 $61,371 $108,000
Borrowings under reverse
repurchase agreements 32,051 6.09 7/95-8/95 20,821 62,766
Borrowings under fixed coupon
dollar reverse repurchase
agreements 31,572 5.77 7/95 10,025 35,148
-------- -----
$ 88,623 5.99%
======== =====
</TABLE>
At June 30, 1996, Suncoast is a party to two advance agreements with the
FHLB whereby the FHLB will provide borrowings as requested by Suncoast when such
borrowings are secured by specific collateral. Under the first agreement,
advances are secured by government securities and U.S. government agency
securities with a market value of 103% of the advance amount. Under the second
agreement, advances are secured by a blanket floating loan on eligible single
family residential mortgage loan collateral. In determining the amount of
advances available under the second agreement, the unpaid principal balance of
eligible collateral is discounted to 75% (see note D). The stock of the FHLB
owned by Suncoast is also pledged as collateral for advances under this
agreement. After meeting all of its collateral requirements, Suncoast had
excess qualifying assets eligible as collateral for additional borrowings under
this agreement of approximately $54.1 million at June 30, 1996.
Suncoast enters into sales of securities under agreements to repurchase,
which are treated as financings. The obligations to repurchase securities sold
are reflected as a liability and the carrying amount of the securities
underlying the agreements is included in mortgage-backed securities available
for sale in the Consolidated Statements of Financial Condition.
Mortgage-backed securities sold under reverse repurchase agreements are
delivered to the broker-dealers who arrange the transactions. The
broker-dealers may sell, loan, or otherwise dispose of such securities to other
parties in the normal course of their operation, and agree to resell to
Suncoast the identical securities at the maturities of the agreements. As of
June 30, 1996, no such financings were outstanding.
Suncoast also enters into fixed coupon dollar reverse repurchase agreements,
which are treated as financings. Under a fixed coupon dollar reverse
repurchase agreement, Suncoast sells a security and agrees to repurchase
another security which is substantially the same as the one sold. These
agreements are accounted for in the same manner as reverse repurchase
agreements. As of June 30, 1996, no such financings were outstanding.
During the period from July 1, 1993 to February 28, 1995, RFC, a lender,
provided Suncoast with a revolving warehouse credit facility for as much as
$100.0 million which bore interest either
F-21
<PAGE> 108
at the prime rate or at tiered rates over the U.S. Dollar London Interbank
Offered Rate. Suncoast drew advances on this line of credit to fund its
mortgage originations and the advances were collateralized by specific
mortgages originated and awaiting sale by Suncoast. Commitment fees of $41,666
and $58,800 were paid during Fiscal 1995 and 1994, respectively, to RFC by
Suncoast to use the credit line. Upon expiration, this credit line was not
renewed by Suncoast.
Interest expense on borrowed funds for the years ended June 30 is summarized
below (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Advances from:
FHLB $2,772 $3,155 $ 349
RFC 1,155
Reverse repurchase agreements 159 1,283
Dollar reverse repurchase agreements 115 493
------ ------ ------
$3,046 $4,931 $1,504
====== ====== ======
</TABLE>
M. LEASES
Suncoast leases space for its administrative offices, two savings branch
offices, storage facilities and certain equipment. All office leases have
escalation clauses tied either to a fixed schedule or to increases in the
Consumer Price Index. The following is a schedule of approximate future minimum
payments required under these operating leases at June 30, 1996 for future
fiscal years ending June 30 (in thousands):
<TABLE>
<S> <C>
1997 $1,078
1998 906
1999 881
2000 610
2001 66
Thereafter -
------
3,541
Less:
Income from subleases 147
------
$3,394
======
</TABLE>
Rent expense was $1.2 million, $2.0 million and $2.1 million for the years
ended June 30, 1996, 1995, and 1994, respectively.
F-22
<PAGE> 109
N. STOCKHOLDERS' EQUITY
Suncoast has an incentive stock option plan approved by its Board of
Directors and stockholders. There are 467,500 total shares in the plan, and a
total of 349,760 shares of common stock are reserved and authorized for
issuance under this plan. Transactions relating to this stock option plan for
the three year period ended June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Options Option Price
Outstanding Per Share
----------- ------------
<S> <C> <C>
Balance, June 30, 1993 349,400 $ 2.00-3.00
Exercised (24,400) 2.00-3.00
Cancelled (8,200) 2.00-3.00
------- -----------
Balance, June 30, 1994 316,800 2.00-3.00
Granted 84,000 7.19-7.38
Exercised (33,000) 2.00-3.00
Cancelled
(11,600) 2.00-7.38
------- -----------
Balance, June 30, 1995 356,200 2.00-7.38
Granted 7,000 6.94
Exercised (14,400) 2.00-3.00
Cancelled (26,800) 2.00-7.38
------- -----------
Balance, June 30, 1996 322,000 $ 2.00-7.38
======= ===========
</TABLE>
At June 30, 1996 and 1995, options for 284,600 and 274,800 shares were
exercisable at an average price per share of $3.26 and $3.12, respectively.
Suncoast has an Employee Stock Bonus/401K Plan (Stock Bonus Plan) for the
benefit of certain eligible employees of Suncoast. Contributions to the Stock
Bonus Plan by Suncoast are at the discretion of Suncoast's Board of Directors.
No contributions were made to the Stock Bonus Plan for the years ended June 30,
1996 and 1995. Suncoast expensed $224,400 for contributions made to the Stock
Bonus Plan for the year ended June 30, 1994.
There are various regulatory limitations on the extent to which Suncoast can
pay dividends. Suncoast is required to comply with the OTS capital distribution
regulations, which condition Suncoast's ability to make certain dividend
distributions on Suncoast's capital level and supervisory condition. The OTS
has established a three-tiered qualification system, and gives savings
associations meeting their fully phased-in capital requirements greater
flexibility to pay dividends than associations that must build their capital
levels to reach the fully phased-in capital requirement. Even though Suncoast
presently meets its fully phased-in capital requirements, dividends cannot be
paid if Suncoast does not meet its capital requirements at a future date or if
payment of dividends would cause Suncoast not to meet its capital requirements.
The payment of dividends is also prohibited if after such payment Suncoast
would be considered undercapitalized. Moreover, the OTS has the authority to
prohibit the payment of dividends even if Suncoast meets its capital
requirements if such payments would affect the safety and soundness of the
institution.
F-23
<PAGE> 110
On July 9, 1993, Suncoast issued 920,000 shares of its 8% Noncumulative
Convertible Preferred Stock, Series A (the "Preferred Stock") in a public
offering which added net proceeds of approximately $12.2 million to
stockholders' equity. The Preferred Stock is convertible by the holder into
Suncoast Common Stock at any time, unless previously redeemed by Suncoast, at a
conversion price of $9.00 per share of Common Stock. Suncoast can redeem the
Preferred Stock after July 1, 1995, at a redemption price of $15.00 per share
if the Common Stock is trading at a minimum price of $10.80 per share for 20 to
30 trading days prior to redemption. The Preferred Stock is otherwise
redeemable from July 1, 1998 to June 30, 1999 at $16.20 per share and at
declining premiums thereafter. Dividends on the Preferred Stock are payable at
an annual rate of $1.20 per share if, when and as declared by Suncoast's Board
of Directors. Dividends are not cumulative and are payable quarterly in
arrears. Dividends on the Preferred Stock were paid each quarter after the
issuance of the stock and amounted to $1.1 million in each of the years ended
June 30, 1996 and 1995. In connection with this stock offering, Suncoast
issued warrants to the offering underwriters to purchase an aggregate of 80,000
shares of Preferred Stock. These warrants are exercisable at a price per share
of $18.00 in the case of Preferred Stock or at $10.80 in the case of Common
Stock for a period of four years after July 9, 1994. At June 30, 1996, none of
these warrants had been exercised and none of the Preferred Stock had been
converted or redeemed.
Suncoast has a deferred compensation plan to provide its President
with a supplemental retirement benefit. Under this plan, Suncoast funded an
irrevocable trust with a lump sum of $213,000, which has been invested in
corporate-owned life insurance. The President will be fully vested in the
plan in 1997. Suncoast recorded an expense of $49,000 and $108,000 under this
plan in Fiscal 1996 and Fiscal 1995, respectively.
O. INCOME TAXES
The provision for income taxes for the years ended June 30 differs from the
amount of income tax determined by applying the applicable U.S. statutory
federal income tax rate to pretax income as a result of the following
differences (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------------------- -------------------- --------------------
% Amount % Amount % Amount
------- ------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S.
tax rates 35.0 $1,335 35.0 $ 326 35.0 $1,088
Increase (decrease)
in rates resulting
from:
Benefit of Federal
surtax exemption (1.0) (31)
State tax (net of
Federal benefit) 3.7 141 3.7 34 3.2 100
Other (1.7) (65) (3.3) (30) (4.9) (152)
------- ------ ----- ------ ------ ------
37.0 $1,411 35.4 $ 330 32.3 $1,005
======= ====== ===== ====== ====== ======
</TABLE>
F-24
<PAGE> 111
The components of the provision for income taxes for the years ended June
30, 1996, 1995 and 1994 consist of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Current:
Federal $ 950 $ 24 $ 555
State 95 61 153
------- ------ ------
Total current 1,045 85 708
------- ------ ------
Deferred:
Federal 326 209 267
State 22 (19) (5)
------- ------ ------
Total deferred 348 190 262
------- ------ ------
Tax benefit for disqualification of
stock options credited to stockholders'
equity 18 55 35
------- ------ ------
Total provision $ 1,411 $ 330 $1,005
======= ====== ======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities as of June 30, 1996 and 1995
are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Deferred tax asset:
Capitalized servicing costs $ 375 $ 442
Deferred loan fees 243 191
Deferred gain on sale of servicing 38
Accrued vacation 76 81
Reserves 278 189
Unrealized loss on mortgage-backed
securities available for sale 117
Alternative minimum tax credit carryover 66
Other 87 40
------ ------
Gross deferred tax asset 1,176 1,047
------ ------
Deferred tax liability:
Deferred premium on loans sold 468 573
Deferred premium on loans in portfolio 230 123
Fixed assets 199 137
Book over tax basis for originated
mortgage servicing rights 312
Unrealized gain on mortgage-backed
securities available for sale 239
Other 74 90
------ ------
Gross deferred tax liability 1,283 1,162
------ ------
Deferred tax asset valuation allowance -- --
------ ------
Net deferred tax liability $ (107) $ (115)
====== ======
</TABLE>
F-25
<PAGE> 112
Management believes, based on Suncoast's earnings history and its future
expectations, that Suncoast will have sufficient taxable income in future years
to realize the deferred income tax asset. In evaluating the expectation of
sufficient future taxable income, management considered future reversal of
temporary differences and available tax planning strategies that could be
implemented, if required. A valuation allowance was not required as of June 30,
1996 and 1995 as it was management's assessment that, based on available
information, it is more likely than not that the deferred tax asset will be
realized. A valuation will be established if there is a change in management's
assessment of the amount of the deferred tax asset that is expected to be
realized.
P. OTHER INCOME
The following is a computation of Suncoast's gains on the sale of loans and
loan servicing rights for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------- --------- -----------
<S> <C> <C> <C>
Proceeds from sales of loans
and loan servicing rights $ 117,818 $ 79,873 $ 2,181,886
Carrying value of loans sold (117,000) (79,313) (2,166,937)
---------- --------- -----------
Cash before premiums
on the sale of loans 818 560 14,949
Premiums on the sale of loans 107 14
---------- --------- -----------
$ 925 $ 560 $ 14,963
========== ========= ===========
</TABLE>
Other income for the years ended June 30 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Loan processing and other
fees from RTC contracts $ 169 $ 573 $1,004
Rental income 306 310 180
Other 342 433 371
------ ------ ------
$ 817 $1,316 $1,555
====== ====== ======
</TABLE>
F-26
<PAGE> 113
Q. OTHER EXPENSES
Other expenses for the years ended June 30 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Loan expenses $ 375 $ 824 $ 2,162
Federal deposit insurance 859 773 772
Foreclosure expenses on servicing
portfolio 995 614 487
Data processing 645 535 634
Telephone 329 469 1,247
Business insurance 421 463 640
Professional and legal 356 381 294
Postage and overnight delivery 172 240 736
Stationery and supplies 240 210 502
Bank service charges and fees 109 95 207
Other 879 1,007 1,364
------- ------- -------
$ 5,380 $ 5,611 $ 9,045
======= ======= =======
</TABLE>
R. BUSINESS SEGMENTS
Suncoast's operations consist of activities in three principal business
segments: banking, mortgage banking and loan servicing. Revenues in the
banking segment consist primarily of interest on mortgage loans and investment
securities. Mortgage banking activities derive revenues primarily from the
interest on loans held for sale, sales of loans in the secondary mortgage
market, sale of loan servicing rights and loan origination income. Loan
servicing activities derive revenues primarily from the collection of fees on
loans serviced. During 1995, Suncoast shifted its primary business emphasis
from mortgage banking to banking. The following is segment information for the
fiscal years ended June 30 (in thousands):
F-27
<PAGE> 114
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
BANKING
Revenues:
Interest income $23,949 $ 25,011 $ 9,358
Gains on the sale of
mortgage-backed securities 2,950 1,388
Other income 731 1,117 1,154
------- -------- --------
27,630 27,516 10,512
------- -------- --------
Expenses:
Interest expense 16,489 18,499 6,449
Employee compensation
and benefits 3,048 1,918 1,311
Depreciation 396 212 178
Provision for losses on real
estate 95 68 150
Provision for loan losses 153 95
Other expenses 2,700 2,318 1,557
------- -------- --------
22,881 23,110 9,645
------- -------- --------
Banking income before income
taxes $ 4,749 $ 4,406 $ 867
======= ======== ========
MORTGAGE BANKING
Revenues:
Interest income $ 1,654 $ 300 $ 5,526
Gains on the sale of loans and
loan servicing assets, net 304 560 14,963
Loan origination and other income 331 336 6,212
------- -------- --------
2,289 1,196 26,701
------- -------- --------
Expenses:
Interest expense 1,009 236 3,703
Employee compensation
and benefits 1,272 2,438 13,347
Depreciation 134 412 564
Other expenses 1,050 2,667 8,249
-------- ------- --------
3,465 5,753 25,863
-------- ------- --------
Mortgage banking income (loss)
before income taxes $ (1,176) $(4,557) $ 838
======== ======= ========
</TABLE>
F-28
<PAGE> 115
<TABLE>
<CAPTION>
LOAN SERVICING
<S> <C> <C> <C>
Revenues:
Loan servicing fees $ 6,016 $ 7,450 $ 8,088
Amortization of loan
servicing assets (1,617) (1,175) (3,508)
--------- -------- --------
Loan servicing income 4,399 6,275 4,580
Interest income 2,355 2,544 3,727
Gain on sale of loans and
loan servicing assets, net 621
Other income 190 254 264
--------- -------- --------
7,565 9,073 8,571
--------- -------- --------
Expenses:
Interest expense 439 283 758
Employee compensation
and benefits 2,920 3,649 3,704
Depreciation 610 784 559
Other expenses 3,356 3,275 2,147
--------- -------- --------
7,325 7,991 7,168
--------- -------- --------
Loan servicing income (loss)
before income taxes $ 240 $ 1,082 $ 1,403
========= ======== ========
Assets:
Banking $ 372,861 $439,175 $297,926
Mortgage banking 8,844 6,356 43,827
Loan servicing 20,864 16,822 17,337
--------- -------- --------
$ 402,569 $462,353 $359,090
========= ======== ========
Capital dispositions
(expenditures), net:
Banking $ (447) $ 8 $ (81)
Mortgage banking (188) 64 (1,760)
Loan servicing (860) 8 (86)
--------- -------- --------
$ (1,495) $ 80 $ (1,927)
========= ======== ========
</TABLE>
S. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
fair value:
-- The book value was used as a reasonable estimate of fair value for
cash and amounts due from depository institutions, interest-bearing
deposits, variable rate loans and fixed rate loans with maturities
less than one year, demand and savings deposits, and short-term time
deposits.
-- The book value was used as a reasonable estimate of fair value for
stock issued by the Federal Home Loan Bank and short-term repurchase
agreements maturing within one month.
F-29
<PAGE> 116
-- Fair values of fixed rate loans and certificates of deposit with
maturities greater than one year are estimated by discounting the
future cash flows using the current rates at which similar instruments
would be issued with comparable credit ratings and terms.
-- The fair values of commitments, letters of credit and guarantees are
equal to their contractual amount based on the assumptions that
Suncoast will be required to perform on all such instruments existing.
-- The fair value of loan servicing assets is determined by independent
valuation or discounted cash flow analysis as discussed in Note F.
Since the reported fair values of financial instruments are based on a
variety of factors, they may not represent actual values that could have been
realized or that will be realized in the future.
The estimated fair values of Suncoast's financial instruments for which fair
value differed from book value are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
---------------------- -------------------------
Book Value Fair Value Book Value Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Loans receivable in portfolio $ 31,563 $ 31,635 $ 16,568 $16,634
Loan servicing assets $ 11,718 $ 12,140 $ 10,105 $10,186
Certificates of deposit $ 28,657 $ 29,103 $ 40,458 $40,758
</TABLE>
T. CONTINGENCIES
In order to increase the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation to its minimum required reserve ratio of
1.25%, a proposal has been made to impose a special one-time assessment of 65
to 90 basis points on all SAIF-insured deposits as of March 31, 1995. This
one-time assessment may be payable in 1997 at which point Suncoast's annual
premium would thereafter be reduced. If the assessment is made at the
currently proposed rate, the effect on Suncoast would be an after-tax charge of
approximately $1.9 million.
Legislation provisions recently passed which eliminated the preferential
tax treatment for deducting additions to the tax bad debt reserves previously
available to thrifts in tax years beginning prior to December 31, 1995. These
provisions require that all thrift institutions recapture all or a portion of
their tax bad debt reserves added since the last taxable year beginning before
January 1, 1988. This legislation has no impact on Suncoast since it utilizes
the direct write-off method for deducting bad debts for tax purposes.
U. SUBSEQUENT EVENT
On July 15, 1996, Suncoast entered into a definitive agreement to be
acquired by BankUnited Financial Corporation ("BankUnited"). Under terms of the
agreement one share of BankUnited Class A Common Stock will be issued for each
share of Suncoast Common Stock. Each share of Suncoast Preferred Stock will be
exchanged for a new issue of BankUnited Preferred Stock having
F-30
<PAGE> 117
substantially similar terms as the Suncoast Preferred Stock. The transaction
is subject to stockholder and regulatory approvals and other conditions and is
expected to close by December 1996.
F-31
<PAGE> 118
EXHIBIT A
<PAGE> 119
AGREEMENT AND PLAN OF MERGER, AS AMENDED
BETWEEN
BANKUNITED FINANCIAL CORPORATION
AND
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
July 15, 1996
<PAGE> 120
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.02 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.03 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.04 Reservation of Right to Revise Transaction; Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.02 Voting and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUNCOAST
5.01 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.02 Suncoast Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.03 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.04 Authorization of Merger and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.06 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.07 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.08 Allowance for Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.09 Servicing Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Title to Certain Mortgage Loans; Mortgage Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Mortgage Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Custodial Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Physical Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.17 Suncoast Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.18 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.19 Investor Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.20 Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.21 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.22 Pool Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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5.23 Loan Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.24 Payment of Taxes, Insurance Premiums, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.25 Tax Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.26 Payoff Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.27 Other Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.28 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.29 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.30 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.31 Commitments and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.32 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.33 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.34 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.35 Securities Reporting Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.36 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.37 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.38 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.39 Material Interests of Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.40 Registration Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.41 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.42 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.43 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.44 Support of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.45 Retail Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.46 Derivatives Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.47 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
6.01 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.02 BankUnited Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.03 Authorization of Merger and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.04 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.05 Securities Reporting Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.06 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.07 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.08 Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.09 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.14 Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.15 Support of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.16 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Suncoast Business Prior to the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.02 Forbearances of Suncoast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.02 Registration Statement; Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.03 Stockholders' Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.04 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.06 Miscellaneous Agreements and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.07 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.08 Indemnification; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.09 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.10 Appointments to Board of Directors of BankUnited and BankUnited, FSB . . . . . . . . . . . . . . . . . . . . 42
8.11 Valuation of Servicing Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.12 Certain Change in Control Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.13 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.14 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.15 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.16 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.17 BankUnited Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.18 Suncoast Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.19 Suncoast Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.02 Conditions to Obligations of Suncoast to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.03 Conditions to Obligations of BankUnited to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE X
TERMINATION
10.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.02 BankUnited Special Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.03 Suncoast Special Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.04 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.05 Non-Survival of Representations, Warranties and Covenants Following the Effective Time . . . . . . . . . 51
10.06 Delivery of BankUnited and Suncoast Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.02 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.03 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.04 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.05 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.07 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
LIST OF EXHIBITS
Exhibit A Board of Directors of Surviving Corporation
Exhibit B Offices of Surviving Corporation
Exhibit C Voting Agreement Pursuant to Section 5.44
Exhibit D Voting Agreement Pursuant to Section 6.15
Exhibit E Rule 145 Affiliate Agreement Pursuant to Section 8.07
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of July
15, 1996, between BANKUNITED FINANCIAL CORPORATION ("BankUnited"), a Florida
corporation and SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a federal stock
savings association ("Suncoast"),
WITNESSETH:
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, BankUnited will acquire Suncoast through the merger of Suncoast into
a federally chartered savings bank ("Merger Sub") and a wholly-owned subsidiary
of BankUnited or by such other means as provided for herein (the "Merger"); and
WHEREAS, the respective Boards of Directors of BankUnited and Suncoast
have resolved that the transactions described herein are in the best interests
of the parties and their respective stockholders and have approved the
transactions described herein; and
WHEREAS, BankUnited and Suncoast desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below. Capitalized terms not otherwise
defined herein shall have the meanings ascribed in this Article I.
(a) "Acquisition Event" shall have the meaning set forth
in Section 8.17.
(b) "Acquisition Event Termination Fee" shall have the
meaning set forth in Section 8.17.
(c) "Acquisition Proposal" shall have the meaning set
forth in Section 8.16.
(d) "Acquisition Transaction" shall have the meaning set
forth in Section 8.16.
(e) "Advances" shall have the meaning set forth in
Section 5.14.
(f) "Affiliate" shall mean, with respect to any Person,
any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person.
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(g) "Agreement" shall have the meaning set forth in the
introduction to this Agreement.
(h) "Allowance" shall have the meaning set forth in
Section 5.08.
(i) "Approvals" shall mean any and all permits, consents,
authorizations and approvals of any governmental or regulatory
authority or of any other third person necessary to give effect to the
arrangement contemplated by this Agreement or necessary to consummate
the Merger.
(j) "Authorizations" shall have the meaning set forth in
Section 5.01.
(k) "BankUnited" shall have the meaning set forth in the
introduction to this Agreement.
(l) "BankUnited Benefit Plans" shall have the meaning
set forth in Section 6.12(a).
(m) "BankUnited Common Stock" shall mean the Series I
Class A Common Stock of BankUnited.
(n) "BankUnited Disclosure Schedule" shall mean that
document containing the written detailed information prepared by
BankUnited and delivered by BankUnited to Suncoast which appropriately
cross-references each Section of the Agreement to which that Section
of the BankUnited Disclosure Schedule applies.
(o) "BankUnited Expenses" shall have the meaning set
forth in Section 8.17(a).
(p) "BankUnited Financial Statements" shall have the
meaning set forth in Section 6.04.
(q) "BankUnited Net Worth" shall mean the net worth of
BankUnited determined in accordance with GAAP, as of the month end
prior to the Effective Time and as adjusted for events occurring
between such month end and the Effective Time which either
individually or in the aggregate have had or immediately will have a
Material Adverse Effect on BankUnited; provided, however, that for
purposes of this definition, the calculation of BankUnited Net Worth
shall not include the effects of (i) any special assessment to
recapitalize the SAIF, or (ii) any changes due to any repurchase by
BankUnited of the BankUnited Preferred Stock or any exchange of
subordinated debt for BankUnited Preferred Stock.
(r) "BankUnited Option" shall mean an option to purchase
BankUnited Common Stock.
(s) "BankUnited Preferred Stock" shall mean BankUnited's
existing classes of Noncumulative Convertible Preferred Stock, Series
B, Noncumulative Convertible Preferred
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Stock, Series C, Noncumulative Convertible Preferred Stock, Series
C-II, 8% Noncumulative Convertible Preferred Stock, Series 1993 and 9%
Noncumulative Perpetual Preferred Stock.
(t) "BankUnited Reporting Document" shall have the
meaning set forth in Section 6.04.
(u) "BankUnited Special Termination Rights" shall have
the meaning set forth in Section 10.02.
(v) "BankUnited Termination Fee" shall have the meaning
set forth in Section 8.17(a).
(w) "Change in Control Agreements" shall have the meaning
set forth in Section 8.12.
(x) "Closing" shall have the meaning set forth in Section
2.02.
(y) "Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
(z) "Conforming Loan" shall have the meaning set forth in
Section 5.09.
(aa) "Costs" shall have the meaning set forth in Section
8.08(a).
(ab) "Current Employee" shall have the meaning set forth
in Section 8.14.
(ac) "Custodial Accounts" shall have the meaning set forth
in Section 5.13.
(ad) "Derivatives Contract" shall have the meaning set
forth in Section 5.46.
(ae) "Effective Time" shall have the meaning set forth in
Section 2.03.
(af) "Employee" shall mean any current or former employee,
officer or director, or retiree of Suncoast or the Suncoast
Subsidiaries.
(ag) "Encumbrance" shall have the meaning set forth in
Section 5.03.
(ah) "Environmental Law" shall have the meaning set forth
in Section 5.43.
(ai) "ERISA" shall have the meaning set forth in Section
5.30(a).
(aj) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(ak) "Exchange Agent" shall have the meaning set forth in
Section 3.01(b).
(al) "FDIA" shall mean the Federal Deposit Insurance Act.
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<PAGE> 127
(am) "FDIC" shall mean the Federal Deposit Insurance
Corporation.
(an) "FHA" shall mean the Federal Housing Administration.
(ao) "FNMA" shall mean Fannie Mae.
(ap) "FHLMC" shall mean the Federal Home Loan Mortgage
Corporation.
(aq) "GNMA" shall mean the Government National Mortgage
Association.
(ar) "GAAP" shall mean generally accepted accounting
principles in the United States.
(as) "HOLA" shall mean the Home Owners Loan Act of 1933,
as amended.
(at) "Hired Employees" shall have the meaning set forth in
Section 8.14.
(au) "HUD" shall mean the Department of Housing and Urban
Development.
(av) "Indemnified Parties" shall have the meaning set
forth in Section 8.08(a).
(aw) "Indemnifying Parties" shall have the meaning set
forth in Section 8.08(a).
(ax) "In the Ordinary Course" shall have the meaning set
forth in Section 7.02(a).
(ay) "Investor Commitment" shall have the meaning set
forth in Section 5.09.
(az) "Joint Proxy Statement" shall have the meaning set
forth in Section 5.36.
(ba) "Material Adverse Effect" shall mean any event,
occurrence or circumstance which (a) has or is reasonably likely to
have a material adverse effect on the financial condition, results of
operations, business or prospects of Suncoast and the Suncoast
Subsidiaries, taken as a whole, or BankUnited and its Subsidiaries,
taken as a whole, as applicable, or (b) would materially impair such
party's ability to perform its obligations under this Agreement or the
consummation of any of the transactions contemplated hereby, provided,
that Material Adverse Effect shall not be deemed to include any effect
resulting from (i) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental
authorities, (ii) changes in GAAP or regulatory accounting principles
or requirements, (iii) the contemplated special assessment on deposits
of SAIF insured institutions to recapitalize the SAIF, or (iv) fees
and expenses of counsel, accountants, and advisors, and costs related
to this Agreement.
(bb) "Maximum Amount" shall have the meaning set forth in
Section 8.08(c).
(bc) "Merger" shall have the meaning set forth in the
recitals to this Agreement.
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<PAGE> 128
(bd) "Merger Sub" shall have the meaning set forth in the
recitals to this Agreement.
(be) "Mortgage Loan" shall mean a closed mortgage loan,
whether or not such mortgage is included in a securitized portfolio.
(bf) "Mortgage Servicing Agreements" shall have the
meaning set forth in Section 5.10(b).
(bg) "NASD" shall mean the National Association of
Securities Dealers, Inc.
(bh) "Nasdaq" shall mean the Nasdaq Stock Market, Inc.
(bi) "New BankUnited Preferred Stock" shall mean the new
series of preferred stock of BankUnited to be authorized by the Board
of Directors of BankUnited and which shall have rights and preferences
substantially similar to those of the Suncoast Preferred Stock and
shall rank on a parity with shares of BankUnited's 8% Noncumulative
Convertible Preferred Stock, Series 1993 (the "Series 1993 Preferred
Stock") and 9% Noncumulative Perpetual Preferred Stock (the "Perpetual
Preferred Stock") as to dividends and upon liquidation, as parity is
determined pursuant to the terms of each of the Series 1993 Preferred
Stock and the Perpetual Preferred Stock; provided, however, and in
accordance with the foregoing to attain parity in no event shall the
terms of such new series of preferred stock of BankUnited include
without limitation, terms that would (i) reduce the dividend rate to a
rate less than that currently payable on the Suncoast Preferred Stock,
(ii) cancel declared and unpaid dividends, (iii) change the seniority
rights of the holders of Suncoast Preferred Stock as to the payment of
dividends, (iv) reduce the amount payable upon liquidation to an
amount less than that currently payable to the holders of the Suncoast
Preferred Stock, (v) change the seniority of the liquidation
preferences of the holders of the Suncoast Preferred Stock, (vi)
cancel or modify the conversion rights currently available to the
holders of the Suncoast Preferred Stock, or (vii) reduce the amount
payable on redemption.
(bj) "OTS" shall mean the Office of Thrift Supervision.
(bk) "Person" or "person" shall mean any individual,
corporation, association, partnership, group (as defined in Section
13(d)(3) of the Exchange Act), joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
(bl) "Registration Statement" shall have the meaning set
forth in Section 5.36.
(bm) "Regulatory Agreements" shall have the meaning set
forth in Section 5.29(b).
(bn) "Regulatory Authorities" shall have the meaning set
forth in Section 5.29(b).
(bo) "REO" shall have the meaning set forth in Section
5.15.
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(bp) "SAIF" shall mean the Savings Association Insurance
Fund of the FDIC.
(bq) "SEC" shall mean the United States Securities and
Exchange Commission.
(br) "Securities Act" shall mean the Securities Act of
1933, as amended.
(bs) "Securities Laws" shall have the meaning set forth in
Section 5.04(c).
(bt) "Securities Reporting Documents" shall have the
meaning set forth in Section 5.35.
(bu) "Servicing Portfolio" shall mean the portfolio of all
mortgage loans subserviced, serviced or master serviced by Suncoast or
the Suncoast Subsidiaries.
(bv) "Servicing Released Loans" shall have the meaning set
forth in Section 5.11.
(bw) "Stockholders' Meetings" shall have the meaning set
forth in Section 5.36.
(bx) "Subsidiary" shall mean, in the case of either
BankUnited or Suncoast, any corporation, association or other entity
in which it owns or controls, directly or indirectly, 25% or more of
the outstanding voting securities or 25% or more of the total equity
interest; provided, however, that the term shall not include any such
entity in which such voting securities or equity interest is owned or
controlled in a fiduciary capacity, without sole voting power, or was
acquired in securing or collecting a debt previously contracted in
good faith.
(by) "Suncoast" shall have the meaning set forth in the
introduction to this Agreement.
(bz) "Suncoast Benefit Plan" shall have the meaning set
forth in Section 5.30(a).
(ca) "Suncoast Board" shall mean the Board of Directors of
Suncoast.
(cb) "Suncoast Capital Stock" shall have the meaning set
forth in Section 4.01.
(cc) "Suncoast Common Stock" shall mean the common stock,
par value $1.10 per share, of Suncoast.
(cd) "Suncoast Disclosure Schedule" shall mean that
document containing the written detailed information prepared by
Suncoast and delivered by Suncoast to BankUnited which appropriately
cross-references each Section of the Agreement to which that Section
of the Suncoast Disclosure Schedule applies.
(ce) "Suncoast ERISA Plan" shall have the meaning set
forth in Section 5.30(a).
(cf) "Suncoast Expenses" shall have the meaning set forth
in Section 8.18(a).
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(cg) "Suncoast Financial Statements" shall have the
meaning set forth in Section 5.05.
(ch) "Suncoast Net Worth" shall mean the net worth of
Suncoast determined in accordance with GAAP, as of the month end prior
to the Effective Time and as adjusted for events occurring between
such month end and the Effective Time which either individually or in
the aggregate have had or immediately will have a Material Adverse
Effect on Suncoast; provided, however, that for purposes of this
definition, the calculation of Suncoast Net Worth (i) shall not
include the effects of (A) any special assessment to recapitalize the
SAIF, (B) any employee severance or change in control payments
described in Section 8.12, or (C) any fees and expenses of counsel,
accountants, and advisors, and costs related to the Agreement; and
(ii) shall be adjusted as of the month end before the Effective Time
to reflect the tax adjusted current market value of the capitalized
portion of the Servicing Portfolio, the market value of which at such
date for purposes of this section shall be the amount specified by,
or, if a range is specified, the mean of the range contained in a
valuation conducted by Bayview Financial Trading Group.
(ci) "Suncoast Options" shall mean options granted under
the Suncoast Option Plan, which are outstanding at the Effective Time.
(cj) "Suncoast Option Plan" shall mean the existing
Suncoast Savings and Loan Association Complete Restatement of Stock
Option Plan.
(ck) "Suncoast Preferred Stock" shall mean the Series A
Noncumulative Convertible Preferred Stock, of Suncoast.
(cl) "Suncoast Reporting Document" shall have the meaning
set forth in Section 5.05.
(cm) "Suncoast Special Termination Rights" shall have the
meaning set forth in Section 10.03.
(cn) "Suncoast Stockholders" shall have the meaning set
forth in Section 2.04(a).
(co) "Suncoast Stock Plan" shall have the meaning set
forth in Section 5.30(a).
(cp) "Suncoast Subsidiary" shall have the meaning set
forth in Section 5.03.
(cq) "Suncoast Termination Fee" shall have the meaning set
forth in Section 8.18(a).
(cr) "Suncoast Warrants" shall have the meaning set forth
in Section 5.02.
(cs) "Surviving Corporation" shall have the meaning set
forth in Section 2.01(a).
(ct) "Tax" or "Taxes" shall mean all federal, state, local
and foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including, without limitation, income, gross
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receipts, excise, intangible, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs
duties, capital stock, paid up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative
or add-on minimum, estimated, or other tax or governmental fee of any
kind whatsoever, imposed or required to be withheld by or for the
United States or any state, local, or foreign government or
subdivision or agency thereof, including, without limitation, any
interest, penalties or additions thereto.
(cu) "Taxable Period" shall mean any period prescribed by
any governmental authority, including, but not limited to, the United
States or any state, local, or foreign government or subdivision or
agency thereof for which a Tax Return is required to be filed or a Tax
is required to be paid.
(cv) "Tax Return" shall mean any report, return,
information return or other information required to be supplied to a
taxing authority in connection with Taxes, including, without
limitation, any return of an affiliated or combined or unitary group
that includes Suncoast or the Suncoast Subsidiaries.
(cw) "Wilful Breach" shall have the meaning set forth in
Section 8.17(b).
(cw) "Warehouse Loan" shall have the meaning set forth in
Section 5.09.
(cx) "VA" shall mean the Veterans Administration.
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 MERGER.
(a) Subject to the terms and conditions of this
Agreement, at the Effective Time of the Merger, Suncoast shall be
merged with and into Merger Sub in accordance with applicable law and
with the effect provided therein. The separate corporate existence of
Suncoast shall thereupon cease, and Merger Sub shall be the surviving
corporation in the Merger (the "Surviving Corporation").
(b) The charter of Merger Sub as in effect at the
Effective Time shall be the charter of the Surviving Corporation after
the Effective Time.
(c) The bylaws of Merger Sub as in effect at the
Effective Time shall be the bylaws of the Surviving Corporation.
(d) The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and
the officers of Merger Sub immediately prior
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to the Effective Time shall be the officers of the Surviving
Corporation, in each case, until their respective successors are duly
elected and qualified. The Surviving Corporation shall have directors
whose terms shall be for 3 years. The directors of the Surviving
Corporation and their home addresses are set forth in Exhibit A
hereto.
(e) All assets of Suncoast as they exist at the Effective
Time shall pass to and vest in the Surviving Corporation without any
conveyance or other transfer. The Surviving Corporation shall be
responsible and liable for all of the liabilities of every kind and
description of Suncoast as of the Effective Time of the Merger.
(f) The name of the Surviving Corporation shall be
Suncoast Savings and Loan Association or BankUnited, FSB, if the
Merger Sub is BankUnited, FSB. The location of the office of the
Surviving Corporation shall be 255 Alhambra Circle, Coral Gables,
Florida 33134. The Surviving Corporation shall have offices at the
locations set forth in Exhibit B hereto.
(g) Upon the consummation of the Merger, the savings
account holders of Suncoast shall be issued savings accounts of the
Surviving Corporation containing substantially the same terms and
conditions as those issued by Suncoast.
2.02 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at the offices of Stuzin
and Camner, P. A. in Miami, Florida at 10:00 A.M. on the date that the
Effective Time occurs, or at such other time, and at such other place, as may
be mutually agreed upon by BankUnited and Suncoast.
2.03 EFFECTIVE TIME. The Effective Time shall be set by mutual
agreement of the parties, but shall occur no later than ten (10) business days
following the last to occur of (i) the date that is 30 days after the date of
the order of the OTS approving the Merger, (ii) the effective date of the last
order, approval, or exemption of any other federal or state regulatory agency
approving or exempting the Merger if such action is required, (iii) the
expiration of all required waiting periods after the filing of all notices to
all federal or state regulatory agencies required for consummation of the
Merger, and (iv) the date on which the respective stockholders of Suncoast and
BankUnited approve this Agreement, in each case as contemplated hereby. The
Effective Time may occur at such other date and time as the parties hereto
shall agree to in writing.
2.04 RESERVATION OF RIGHT TO REVISE TRANSACTION; FURTHER ACTIONS.
(a) BankUnited in its sole discretion may at any time
change the method of effecting the acquisition of Suncoast by
BankUnited (including, without limitation, the selection of
BankUnited, FSB as the Merger Sub and the provisions as set forth in
Article III) if and to the extent that it deems such a change to be
desirable; provided, however, that no such change shall (A) alter or
change the amount or the kind of the consideration to be received by
the holders of Suncoast Capital Stock ("Suncoast Stockholders") as
provided for in this Agreement; (B) adversely affect the tax treatment
to Suncoast Stockholders as a result of receiving the consideration
(in the opinion of tax counsel mutually agreed upon by BankUnited and
Suncoast) to be delivered in the Merger; or (C) materially and
adversely
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affect any agreement between Suncoast and its employees, including
agreements contemplating a change in control of Suncoast.
(b) To facilitate the Merger and the acquisition of
Suncoast by BankUnited, each of the parties will execute or will cause
to be executed such additional agreements and documents and take such
other actions as BankUnited determines necessary or appropriate.
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 CONVERSION.
(a) Subject to the provisions of this Article III and of
Article I, at the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, the shares of the
constituent corporations shall be converted as follows:
(i) Each share of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall
remain outstanding as one share of capital stock of the Surviving
Corporation.
(ii) Each share of Suncoast Common Stock issued
and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive one share of BankUnited
Common Stock. If BankUnited splits, combines, reclassifies, or pays a
stock dividend on the BankUnited Common Stock during the period from
the date of this Agreement to the Effective Time, then the number of
shares of BankUnited Common Stock into which each share of Suncoast
Common Stock is convertible at the Effective Time shall be adjusted so
that in the Merger each share of Suncoast Common Stock shall be
converted into that number of shares of BankUnited Common Stock equal
to one share of BankUnited Common Stock times a fraction the numerator
of which is the number of shares of BankUnited Common Stock issued and
outstanding immediately after such split, combination,
reclassification or dividend and the denominator of which is the
number of shares of BankUnited Common Stock issued and outstanding on
the date of this Agreement.
(iii) Each Suncoast Option outstanding as of the
Effective Time shall be treated in accordance with the provisions of
Section 8.09.
(iv) Each share of Suncoast Preferred Stock issued
and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive one share of New
BankUnited Preferred Stock.
(v) The Suncoast Warrants outstanding as of the
Effective Time shall be treated in accordance with the provisions of
Section 8.19.
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(b) At the Effective Time, the stock transfer books
of Suncoast shall be closed as to holders of Suncoast Capital
Stock immediately prior to the Effective Time and no transfer
of Suncoast Capital Stock by any such holder shall thereafter
be made or recognized. If, after the Effective Time,
certificates are properly presented in accordance with Article
IV of this Agreement to the exchange agent, which shall be
selected by BankUnited (the "Exchange Agent"), such
certificates shall be canceled and exchanged for certificates
representing the appropriate number of shares of BankUnited
Common Stock and New BankUnited Preferred Stock determined
under this Section 3.01. Any other provision of this Agreement
notwithstanding, neither BankUnited, the Surviving Corporation
nor the Exchange Agent shall be liable to a holder of Suncoast
Capital Stock for any amount paid or property delivered in
good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV
EXCHANGE OF SHARES
4.01 EXCHANGE PROCEDURES. Promptly after the Effective Time,
BankUnited and Suncoast shall cause the Exchange Agent to mail appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
capital stock of Suncoast ("Suncoast Capital Stock") shall pass, only upon
proper delivery of such certificates to the Exchange Agent) to the former
Suncoast Stockholders. After the Effective Time, each holder of shares of
Suncoast Capital Stock issued and outstanding immediately prior to the
Effective Time shall surrender the certificate or certificates theretofore
representing such shares, together with such transmittal materials properly
executed, to the Exchange Agent and promptly upon surrender shall receive in
exchange therefor the consideration provided in Section 3.01 of this Agreement.
The certificate or certificates for Suncoast Capital Stock so surrendered shall
be duly endorsed as the Exchange Agent may require. BankUnited shall not be
obligated to deliver the consideration to which any former Suncoast Stockholder
is entitled as a result of the Merger until such holder surrenders his
certificate or certificates representing shares of Suncoast Capital Stock for
exchange as provided in this Article IV. Certificates representing BankUnited
Common Stock or New BankUnited Preferred Stock issued in the Merger to any
person constituting an "affiliate" of Suncoast or BankUnited for purposes of
Rule 145(c) under the Securities Act shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF SUCH RULE
HAVE BEEN FULFILLED."
If any certificate for shares of BankUnited Common Stock or New BankUnited
Preferred Stock is to be issued in a name other than that in which a
certificate surrendered for exchange is issued, the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and the
person requesting such exchange shall affix any requisite stock transfer tax
stamps to the
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certificate surrendered or provide funds for their purchase or establish to the
satisfaction of the Exchange Agent that such taxes are not payable.
4.02 VOTING AND DIVIDENDS. Former Suncoast Stockholders of record
shall be entitled to vote after the Effective Time at any meeting of BankUnited
stockholders the number of whole shares of BankUnited Common Stock and New
BankUnited Preferred Stock into which their respective shares of Suncoast
Capital Stock are converted, regardless of whether such holders have exchanged
their certificates representing Suncoast Capital Stock for certificates
representing BankUnited Common Stock and New BankUnited Preferred Stock, as
applicable, in accordance with the provisions of this Agreement. Until
surrendered for exchange in accordance with the provisions of Section 4.01,
each certificate theretofore representing shares of Suncoast Capital Stock
shall from and after the Effective Time represent for all purposes only the
right to receive shares of BankUnited Common Stock and New BankUnited Preferred
Stock, as set forth in this Agreement. Whenever a dividend is declared by
BankUnited, the record date for which is at or after the Effective Time, the
declaration shall include dividends on all shares issuable pursuant to this
Agreement; provided, however, no dividend or other distribution payable to the
holders of record of BankUnited Common Stock, at or as of any time after the
Effective Time, shall be paid to the holder of any certificate representing
shares of Suncoast Capital Stock issued and outstanding at the Effective Time
until such holder physically surrenders such certificate for exchange as
provided in Section 4.01, promptly after which time all such dividends or
distributions shall be paid (without interest).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUNCOAST
Suncoast represents and warrants to BankUnited, subject to such
exceptions and limitations as are set forth below or in the Suncoast Disclosure
Schedule, as follows:
5.01 ORGANIZATION, STANDING, AND AUTHORITY. Suncoast is a duly
organized, validly existing federally- chartered stock savings association.
Suncoast is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified would have a Material
Adverse Effect. Suncoast has all requisite corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
assets, properties and business, except where the failure to have such power
and authority would not have a Material Adverse Effect, and to execute and
deliver this Agreement and perform the terms of this Agreement. Suncoast has in
effect all federal, state, local and foreign governmental, regulatory and other
authorizations, permits and licenses (collectively, "Authorizations") necessary
for it to own or lease its properties and assets and to carry on its business
as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect.
5.02 SUNCOAST CAPITAL STOCK.
(a) The authorized Suncoast Capital Stock consists of
5,000,000 shares of Suncoast Common Stock and 1,000,000 shares of
Suncoast Preferred Stock. At April 30,
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1996, there were issued and outstanding 1,996,930 shares of Suncoast
Common Stock and 920,000 shares of Suncoast Preferred Stock. All of
the issued and outstanding shares of Suncoast Capital Stock are duly
and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of the Suncoast Capital
Stock has been issued in the violation of any preemptive rights or any
provision of Suncoast's charter. As of April 30, 1996, Suncoast had
reserved 2,020,784 shares of Suncoast Common Stock and 80,000 shares
of Suncoast Preferred Stock for issuance under the Suncoast Options
and the Suncoast Warrants and no other shares of capital stock have
been reserved for any purpose. Suncoast has outstanding warrants
pursuant to that certain Underwriters' Warrant Agreement dated as of
July 9, 1993 between Suncoast and Josephthan Lyon & Ross Incorporated,
Southeast Research Partners, Inc., and Rodman & Renshaw, Inc. (the
"Suncoast Warrants"), under which holders thereof have the right to
purchase up to 134,624 shares of Suncoast Common Stock or up to 80,000
shares of Suncoast Preferred Stock at an exercise price of $10.70 per
share and $18.00 per share, respectively. The representations and
warranties set forth in the preceding sentence shall be materially
true and correct at the Effective Time and shall not be altered
materially by the completion of the Merger.
(b) Except as set forth in Section 5.02(b) of the
Suncoast Disclosure Schedule, there are no shares of capital stock, or
other equity securities of Suncoast issued or outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of Suncoast
Capital Stock or contracts, commitments, understandings or
arrangements by which Suncoast is or may be bound to issue any equity
security of Suncoast including any additional shares of Suncoast
Capital Stock or options, warrants or rights to purchase or acquire
any additional shares of Suncoast Capital Stock. There are no
contracts, commitments, understandings or arrangements by which
Suncoast or the Suncoast Subsidiaries are or may be bound to transfer
any shares of the capital stock of any Suncoast Subsidiary, except for
a transfer to Suncoast or any of its wholly-owned Subsidiaries and
except as set forth in Section 5.02(b) of the Suncoast Disclosure
Schedule, and there are no agreements, understandings or commitments
relating to the right of Suncoast to vote or to dispose of such
shares, other than such as are held in a fiduciary capacity.
(c) Except as set forth in Section 5.02(c) of the
Suncoast Disclosure Schedule, there are no securities required to be
issued by Suncoast under the Suncoast Stock Plan, any dividend
reinvestment plan or similar plan.
5.03 SUBSIDIARIES. Section 5.03 of the Suncoast Disclosure Schedule
contains a complete list of each subsidiary of Suncoast (a "Suncoast
Subsidiary"). All of the issued and outstanding shares of each Suncoast
Subsidiary are owned by Suncoast and no equity securities are or may become
required to be issued by reason of any options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
Suncoast Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Suncoast Subsidiary is bound to issue additional
shares of its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. All of the shares of
capital stock of each Suncoast Subsidiary are fully paid and nonassessable and
are owned by Suncoast free and clear of any Encumbrance. For purposes of this
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Agreement, the term "Encumbrance" means any lien, pledge, security interest,
claim, charge, easement, limitation, commitment, restriction or encumbrance of
any kind or nature whatsoever. Each Suncoast Subsidiary (i) is duly organized,
validly existing, and in good standing under the laws of the jurisdiction in
which it is incorporated or organized, (ii) is duly qualified to do business
and in good standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect, (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted and (iv) has in effect all
Authorizations necessary for it to own or lease its properties and assets and
to carry on its business as now conducted, the absence of which Authorizations,
individually or in the aggregate, would have a Material Adverse Effect.
5.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action in respect
thereof on the part of Suncoast, including approval of the Merger by
its Board of Directors, subject to the approval of the stockholders of
Suncoast with respect to the Merger to the extent required by the
applicable law. This Agreement, subject to any requisite regulatory
and stockholder approval hereof with respect to the Merger, represents
a valid and legally binding obligation of Suncoast, enforceable
against Suncoast in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting
creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
(b) Except as set forth in Section 5.04(b) of the
Suncoast Disclosure Schedule, neither the execution and delivery of
this Agreement by Suncoast, nor the consummation by Suncoast of the
transactions contemplated hereby nor compliance by Suncoast with any
of the provisions hereof will (i) conflict with or result in a breach
of any provision of Suncoast's charter or bylaws or (ii) constitute or
result in a breach of any term, condition or provision of, or
constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result
in the creation of any Encumbrance upon, any property or assets of any
of Suncoast or the Suncoast Subsidiaries pursuant to any note, bond,
mortgage, indenture, license, agreement, lease or other instrument or
obligation to which any of them is a party or by which any of them or
any of their properties or assets may be subject and that would
individually or in the aggregate have a Material Adverse Effect, or
(iii) subject to receipt of the requisite approvals referred to in
Sections 9.01(a) and 9.01(b) of this Agreement, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Suncoast or the Suncoast Subsidiaries or any of their properties or
assets.
(c) Other than (i) in connection with complying with the
provisions of applicable state corporate and securities laws, the
Securities Act, the Exchange Act, and the rules and regulations of the
SEC or the OTS promulgated thereunder (the "Securities Laws"), (ii)
consents, authorizations, approvals or exemptions required from the
OTS, and (iii) as set
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forth on Section 5.04(c) of the Suncoast Disclosure Schedule, no
notice to, filing with, authorization of, exemption by, or consent or
approval of any public body or authority is necessary for the
consummation by Suncoast of the Merger and the other transactions
contemplated in this Agreement.
5.05 FINANCIAL STATEMENTS. Suncoast (i) has delivered to BankUnited
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders'
equity and consolidated statements of cash flows (including related notes and
schedules) of Suncoast and its consolidated Subsidiaries as of and for the
periods ended March 31, 1996, December 31, 1995, September 30, 1995 and June
30, 1995 included in a quarterly report on Form 10-Q or an annual report on
Form 10-K, as the case may be, filed by Suncoast pursuant to the Securities
Laws (a "Suncoast Reporting Document") and (ii) until the Closing will deliver
to BankUnited promptly upon the filing thereof with the OTS copies of the
consolidated balance sheets and related consolidated statements of income,
consolidated statements of changes in shareholders' equity and consolidated
statements of cash flows (including related notes and schedules) included in
any Suncoast Reporting Document filed subsequent to the execution of this
Agreement (the financial statements and related notes and schedules referred to
in clauses (i) and (ii) above are collectively referred to herein as the
"Suncoast Financial Statements"). The Suncoast Financial Statements (as of the
dates thereof and for the periods covered thereby) (A) are or will be in
accordance with the books and records of Suncoast and the Suncoast
Subsidiaries, which are or will be complete and accurate in all material
respects and which have been or will have been maintained in accordance with
good business practices and (B) present or will present fairly the consolidated
financial position and the consolidated results of operations, changes in
stockholders' equity and cash flows of Suncoast and the Suncoast Subsidiaries
as of the dates and for the periods indicated, in accordance with GAAP
consistently applied, except as disclosed, subject in the case of interim
financial statements to normal recurring year-end adjustments and except for
the absence of certain footnote information in the unaudited statements.
Suncoast has delivered to BankUnited (i) copies of all management letters
prepared by Price Waterhouse LLP (and any predecessor thereto) delivered to
Suncoast since July 1, 1992 and (ii) copies of audited balance sheets and
related statements of income, changes in stockholders' equity and cash flows
for any Suncoast Subsidiary since July 1, 1992 for which a separate audit has
been performed.
5.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 5.06 of the Suncoast Disclosure Schedule, neither Suncoast nor any
Suncoast Subsidiary has any obligations or liabilities (contingent or
otherwise) in the amount of $50,000 or more, except obligations and liabilities
(i) which are fully accrued or reserved against in the consolidated balance
sheet of Suncoast and the Suncoast Subsidiaries as of June 30, 1995 included in
the Suncoast Financial Statements or reflected in the notes thereto, or (ii)
which were incurred after June 30, 1995 in the ordinary course of business
consistent with past practice. Except as set forth in Section 5.06 of the
Suncoast Disclosure Schedule, since June 30, 1995 neither Suncoast nor any
Suncoast Subsidiary has incurred or paid any obligations or liabilities which
individually or in the aggregate would have a Material Adverse Effect.
5.07 TAX MATTERS. Except as set forth in Section 5.07 of the
Suncoast Disclosure Schedule:
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(a) All Tax Returns required to be filed by or on behalf
of Suncoast or the Suncoast Subsidiaries have been timely filed, or
requests for extensions have been timely filed, granted and have not
expired, for periods ending on or before March 31, 1996, and all such
returns filed are complete and accurate in all material respects.
(b) There are no audits, examinations, deficiencies or
refund litigation or matters in controversy with respect to any Taxes
that might reasonably be expected individually or in the aggregate to
result in a determination the effect of which would have a Material
Adverse Effect. All Taxes due with respect to completed and settled
examinations or concluded litigation have been paid or adequately
reserved for.
(c) Suncoast has not executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.
(d) Adequate provision for any Taxes due or to become due
for Suncoast and the Suncoast Subsidiaries for any period or periods
through and including March 31, 1996, has been made and is reflected
on the March 31, 1996 financial statements included in the Suncoast
Financial Statements. Deferred Taxes of Suncoast and the Suncoast
Subsidiaries have been provided for in the Suncoast Financial
Statements in accordance with GAAP, applied on a consistent basis.
(e) Suncoast and the Suncoast Subsidiaries have collected
and withheld all Taxes which they have been required to collect or
withhold and have timely submitted all such collected and withheld
amounts to the appropriate authorities. Suncoast and the Suncoast
Subsidiaries are in compliance with the back-up withholding and
information reporting requirements under (1) the Code, and (2) any
state, local or foreign laws, and the rules and regulations,
thereunder.
(f) Neither Suncoast nor any Suncoast Subsidiary has made
any payments, is obligated to make any payments, or is a party to any
contract, agreement or other arrangement that could obligate it to
make any payments that would not be deductible under Section 28OG of
the Code.
5.08 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statement of condition of Suncoast and
the Suncoast Subsidiaries as of March 31, 1996 included in the Suncoast
Financial Statements and the Allowance shown on the consolidated statement of
condition of Suncoast and the Suncoast Subsidiaries, as of dates subsequent to
the execution of this Agreement included in the Suncoast Financial Statements
will be, in each case as of the dates thereof, adequate as determined in
accordance with GAAP.
5.09 SERVICING PORTFOLIO. Suncoast has previously delivered to
BankUnited a tape (magnetic media) on which certain information regarding the
Servicing Portfolio as of March 31, 1996 is recorded. The information so
provided is true, correct and complete, except as disclosed to BankUnited in
Section 5.09 of the Suncoast Disclosure Schedule. Except as disclosed in
Section 5.09 of the Suncoast Disclosure Schedule, each Mortgage Loan (i) is
evidenced by a note with such terms as are customary in the business, (ii) is
duly secured by a mortgage or deed of trust with such terms
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as are customary in the business and which grants the holder thereof a first or
second lien on the subject property (including any improvements thereon), each
such mortgage or deed of trust constituting a security interest that has been
duly perfected and maintained (or is in the process of perfection in due
course) and is in full force and effect, (iii) is accompanied by an insurance
policy covering improvements on the premises subject to such mortgage or deed
of trust, with a loss payee clause in favor of Suncoast, one of its
Subsidiaries or its assignee, such insurance policy covering such risks as are
customarily insured against in accordance with industry practice and in
accordance with investor requirements, and (iv) has been serviced in accordance
with the note and mortgage or deed of trust applicable to such Mortgage Loan.
Suncoast and each Suncoast Subsidiary has complied with all of its obligations
under the insurance policies described in the previous sentence. Except as
disclosed in Section 5.09 of the Suncoast Disclosure Schedule, each Warehouse
Loan is a Conforming Loan or is subject to an Investor Commitment. As used in
this Agreement, the term "Warehouse Loan" means a Mortgage Loan owned by
Suncoast or a Suncoast Subsidiary and held for sale. As used in this Agreement,
the term "Conforming Loan" means a Mortgage Loan which is or is eligible to be
an FHA loan or a VA loan or which is a loan eligible to be sold to FNMA or
FHLMC without recourse. As used in this Agreement, the term "Investor
Commitment" means the optional or mandatory commitment of a person to purchase
a Mortgage Loan owned by Suncoast or a Suncoast Subsidiary or securities based
on and backed by such Mortgage Loans.
5.10 TITLE TO CERTAIN MORTGAGE LOANS; MORTGAGE SERVICING
AGREEMENTS.
(a) All Mortgage Loans held for Suncoast's
account (whether or not for future sale or delivery to an investor)
are owned by Suncoast free and clear of Encumbrances other than
Encumbrances in favor of Suncoast's lender banks. Such Mortgage Loans
have been duly recorded or submitted for recordation in due course in
the appropriate filing office in the name of Suncoast or a Suncoast
Subsidiary as mortgagee. Neither Suncoast nor any Suncoast Subsidiary
has, with respect to any such Mortgage Loan, released any security
therefor, except upon receipt of reasonable consideration for such
release, or accepted prepayment of any such Mortgage Loan which has
not been promptly applied to such Mortgage Loan.
(b) All of the mortgage servicing agreements
between Suncoast and an investor pursuant to which Suncoast (or a
Suncoast Subsidiary) subservices, services or master services Mortgage
Loans for such investor (the "Mortgage Servicing Agreements") and the
rights created thereunder are owned by Suncoast free and clear of any
Encumbrances.
5.11 NO RECOURSE. Except as set forth in Section 5.11 of the
Suncoast Disclosure Schedule, Suncoast is not a party to (i) any agreement or
arrangement with (or otherwise obligated to) any individual, corporation or
other entity to repurchase from any such individual, corporation or other
entity any Mortgage Loan, mortgaged property serviced for others or Mortgage
Loans sold by Suncoast with servicing released ("Servicing Released Loans") or
(ii) any agreement, arrangement or understanding to reimburse, indemnify or
hold harmless any individual, corporation or other entity or otherwise assume
any liability with respect to any loss suffered or incurred as a result of any
default under or the foreclosure or sale of any such Mortgage Loans, mortgaged
property serviced for others or Servicing Released Loans described in clauses
(i) and (ii) above, except insofar as (A) such recourse is based upon breach by
Suncoast of a customary representation, warranty or undertaking,
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including, without limitation, as specified in standard FNMA and FHLMC
agreements, or the misfeasance or malfeasance of Suncoast, and not based solely
upon the default under or foreclosure or sale of any such Mortgage Loan,
mortgaged property or Servicing Released Loan without regard to the occurrence
of any such breach, misfeasance or malfeasance, or (B) Suncoast incurs expenses
such as legal fees in excess of the customary reimbursement limits, if any, set
forth in the applicable Mortgage Servicing Agreement.
5.12 MORTGAGE SERVICING AGREEMENTS. A list and description of
Mortgage Servicing Agreements is included in Section 5.12 of the Suncoast
Disclosure Schedule. All of the Mortgage Servicing Agreements to which Suncoast
is a party, are valid and binding obligations of Suncoast, and to the best
knowledge of Suncoast, of all the other parties thereto, and are in full force
and effect and are enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding in equity or at law).
Except as set forth in Section 5.12 of the Suncoast Disclosure Schedule, there
are no defaults or claims of default by any party under any such Mortgage
Servicing Agreement, and, except for the consummation of the transactions
contemplated by this Agreement, no events have occurred which with the passage
of time or the giving of notice or both would constitute a default by any party
under any such Mortgage Servicing Agreement or would result in any such
Mortgage Servicing Agreement being terminable by any party thereto. As of the
date of this Agreement, there is no pending or, to the best knowledge of
Suncoast, threatened cancellation of any Mortgage Servicing Agreement. Except
as set forth in Section 5.12 of the Suncoast Disclosure Schedule, no sanctions
or penalties which have had a Material Adverse Effect on Suncoast have been
imposed upon Suncoast or Suncoast Subsidiaries under any Mortgage Servicing
Agreement or under any applicable rule or regulation.
5.13 CUSTODIAL ACCOUNTS. Suncoast has full power and authority to
maintain escrow accounts ("Custodial Accounts") for certain serviced loans.
Such Custodial Accounts comply in all respects with (i) all federal, state and
other applicable laws and regulations and (ii) any terms of the Mortgage Loans
(and Mortgage Servicing Agreements) relating thereto. The Custodial Accounts
contain the amounts shown in the records of Suncoast, which amounts represent
all monies received or advanced by Suncoast as required by the applicable
Mortgage Servicing Agreements, less amounts remitted by or on behalf of
Suncoast pursuant to applicable Mortgage Servicing Agreements, except for
checks in process.
5.14 ADVANCES. Except as set forth in Section 5.14 of the Suncoast
Disclosure Schedule, there are no pooling, participation, servicing or other
agreements to which Suncoast is a party which obligate it to make servicing
advances for principal and interest payments with respect to defaulted or
delinquent Mortgage Loans other than as provided in FNMA, FHLMC or GNMA or
other pooling and servicing agreements. The Advances are valid and subsisting
amounts owing to Suncoast, subject to the terms of the applicable Mortgage
Servicing Agreement. As used in this Agreement, the term "Advances" means
amounts that, as of the Closing Date, have been advanced by Suncoast or
Suncoast Subsidiaries in connection with servicing the Mortgage Loans
(including, without limitation, principal, interest, taxes, insurance premiums,
and foreclosure and liquidation expenses) and which are required or permitted
to be paid by Suncoast or Suncoast Subsidiaries as the servicer of the Mortgage
Loans pursuant to applicable investor requirements and the terms of the
applicable Mortgage Servicing Agreements.
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5.15 PHYSICAL DAMAGE. To the best knowledge of Suncoast, there
exists no physical damage to any property securing a Mortgage Loan or any real
estate owned ("REO") by Suncoast, which physical damage is not adequately
insured against and that would cause any Mortgage Loans to become delinquent or
adversely affect in a material manner the value or marketability of any
Mortgage Loans, servicing rights, REO or collateral and that would, in the
aggregate, have a Material Adverse Effect. Suncoast shall promptly notify
BankUnited if it receives any information or learns of any facts that would
cause the representation set forth in this Section 5.15 to be false in any
material respect.
5.16 APPLICATION OF FUNDS. All monies received with respect to each
Mortgage Loan have been properly accounted for and applied by Suncoast.
5.17 SUNCOAST SUBSIDIARIES. Each of the representations and
warranties made by Suncoast in this Agreement shall be deemed to have been made
on behalf of each of the Suncoast Subsidiaries to the extent applicable or
related to such Suncoast Subsidiary.
5.18 ENFORCEABILITY. All Mortgage Loans are genuine, valid and
legally binding obligations of the borrowers thereunder, have been duly
executed by a borrower of legal capacity and are enforceable in accordance with
their terms, except as enforcement thereof may be limited by (i) bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
in equity or at law), (ii) state laws requiring creditors to proceed against
the collateral before pursuing the borrower, (iii) state laws on deficiencies
and (iv) the matters set forth in Section 5.18 of the Suncoast Disclosure
Schedule, except where the invalidity or unenforceability of Mortgage Loans
would not, in the aggregate, have a Material Adverse Effect. Except as set
forth in Section 5.18 of the Suncoast Disclosure Schedule, neither the
operation of any of the terms of any Mortgage Loan, nor the exercise of any
right thereunder, has rendered or will render the related mortgage or note
unenforceable, in whole or in part, or subject it to any right of rescission,
setoff, counterclaim or defense, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
5.19 INVESTOR COMMITMENTS. Set forth in Section 5.19 of the
Suncoast Disclosure Schedule is a complete and correct list of each Investor
Commitment to which Suncoast or any Suncoast Subsidiary is a party as of a date
specified in Section 5.19 of the Suncoast Disclosure Schedule not more than 45
days prior to the date of the Agreement. Suncoast has made available to
BankUnited complete and correct copies of all Investor Commitments in effect on
such date. Each Investor Commitment constitutes a valid and binding obligation,
except as set forth in Section 5.19 of the Suncoast Disclosure Schedule, of
Suncoast or a Suncoast Subsidiary, and, to the best knowledge of Suncoast, all
of the other parties thereto, enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting creditors
rights generally and by general principles of equity (whether applied in a
proceeding at law or in equity).
5.20 INQUIRIES. Section 5.20 of the Suncoast Disclosure Schedule
contains a true and correct list of all the audits, investigations, complaints
and inquiries of Suncoast or the Suncoast Subsidiaries open or ongoing at
January 1, 1995 or commenced thereafter by an agency (including, without
limitation, FNMA, FHLMC, VA or HUD), an investor, or a private mortgage
insurer, the
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result of which audits and investigations claimed a material failure to comply
with applicable regulations and could result in (i) a repurchase of Mortgage
Loans or related mortgage properties by Suncoast or any Suncoast Subsidiary,
(ii) indemnification by Suncoast or any Suncoast Subsidiary in connection with
Mortgage Loans, (iii) rescission of an insurance or guaranty contract or
agreement or (iv) payment of a material penalty to an agency, HUD, an investor,
or a private mortgage insurer. Except for customary ongoing quality control
reviews, no such audit or investigation is pending or, to the best knowledge of
Suncoast, threatened. Suncoast has made available to BankUnited copies of all
written reports and materials received in connection with such audits,
investigations, complaints and inquiries.
5.21 REPRESENTATIONS. Except as set forth in Section 5.21 of the
Suncoast Disclosure Schedule, there is no breach or violation of any
representation, warranty or covenant made by Suncoast or any Suncoast
Subsidiary to any investor or other person in connection with the transfer of
the ownership of any Mortgage Loan and/or the servicing rights thereto from
Suncoast or any Suncoast Subsidiary to such investor or other person, except
where all such breaches or violations would in the aggregate not have a
Material Adverse Effect.
5.22 POOL CERTIFICATION. All pools relating to the Mortgage Loans
have been certified, finally certified and recertified (if required) in
accordance with applicable rules and guidelines, and the securities backed by
such pools have been issued on uniform documents, promulgated in the applicable
investor guide without any material deviations therefrom. The principal balance
outstanding and owing on the Mortgage Loans in each pool equals or exceeds the
amount owing to the corresponding security holders of such pool.
5.23 LOAN DISBURSEMENT. All of the Mortgage Loans were fully
disbursed in accordance with applicable law and regulations.
5.24 PAYMENT OF TAXES, INSURANCE PREMIUMS, ETC. The
responsibilities of Suncoast and the Suncoast Subsidiaries with respect to all
applicable taxes (including tax reporting for the period prior to the Closing),
special assessments, ground rents, flood insurance premiums, hazard insurance
premiums and mortgage insurance premiums that are related to the Mortgage Loans
and REO have been met, except for such failures to meet such responsibilities
individually or in the aggregate which would not have a Material Adverse
Effect.
5.25 TAX IDENTIFICATION. All tax identification numbers or
references utilized in Suncoast's business are correct and complete in all
respects, and property descriptions contained in any loan document are legally
sufficient, except where all failures to be correct and complete in the
aggregate will not have a Material Adverse Effect.
5.26 PAYOFF STATEMENTS. All payoff and assumption statements with
respect to each Mortgage Loan provided by Suncoast or any Suncoast Subsidiary to
borrowers or their agents were, at the time they were provided, complete and
accurate, except where each lack of accuracy or completeness in the aggregate
would not have a Material Adverse Effect.
5.27 OTHER TAX AND REGULATORY MATTERS. Neither Suncoast nor any
Suncoast Subsidiary has taken or agreed to take any action or has any knowledge
of any fact or circumstance that would
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(i) prevent the transactions contemplated hereby, including the Merger, from
qualifying as a reorganization within the meaning of Section 368 of the Code,
or (ii) materially impede or delay receipt of any approval referred to in
Section 9.01(b).
5.28 PROPERTIES. Except as disclosed in any Securities Reporting
Document filed since June 30, 1995 and prior to the date hereof and except for
Encumbrances arising, in the ordinary course of business after the date hereof,
Suncoast and the Suncoast Subsidiaries have good and, in the case of real
property, marketable title, free and clear of all Encumbrances, except for
Encumbrances for taxes not yet due and payable, that individually or in the
aggregate would not have a Material Adverse Effect, to all their material
properties and assets whether tangible or intangible, real, personal or mixed,
reflected in the Suncoast Financial Statements as being owned by Suncoast and
Suncoast Subsidiaries as of the date hereof, except for such imperfections of
title and Encumbrances, if any, as do not materially interfere with the present
use of the property or otherwise materially impair the business operations or
the marketability or value of the properties. All buildings, and all fixtures,
equipment and other property and assets which are material to its business on a
consolidated basis, held under leases or subleases by any of Suncoast or any
Suncoast Subsidiary are held under valid instruments enforceable in accordance
with their respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and similar laws of general
applicability affecting creditors rights generally and by general principles of
equity (whether applied in a proceeding at law or in equity). Substantially
all of Suncoast's and the Suncoast Subsidiaries' equipment in regular use has
been well maintained and is in good serviceable condition, reasonable wear and
tear excepted except where any failure to so maintain such equipment or to
preserve such equipment in good serviceable condition would not individually or
in the aggregate have a Material Adverse Effect.
5.29 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 5.29(a) of the
Suncoast Disclosure Schedule, Suncoast and each Suncoast Subsidiary is
in compliance with all federal, state and local laws, rules,
regulations, policies, guidelines, reporting and licensing
requirements and orders applicable to its business or to its Employees
conducting its business, and with its internal policies and procedures
except for failures to comply which will in the aggregate not result
in a Material Adverse Effect.
(b) Since January 1, 1993, except as set forth in Section
5.29(b) the Suncoast Disclosure Schedule, neither Suncoast nor any
Suncoast Subsidiary has received any notification or communication
from any agency or department of any federal, state or local
government, including, the OTS, the FDIC, the SEC and the NASD and the
staffs thereof (collectively, the "Regulatory Authorities") (i)
asserting that Suncoast or any Suncoast Subsidiary is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such agency,
department or regulatory authority, (ii) threatening to revoke any
license, franchise, permit or governmental authorization which is
material to Suncoast and the Suncoast Subsidiaries on a consolidated
basis, (iii) requiring or threatening to require Suncoast or any
Suncoast Subsidiary, or indicating that Suncoast or any Suncoast
Subsidiary may be required, to enter into a cease and desist order,
agreement or memorandum of understanding
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or any other agreement restricting or limiting or purporting to
restrict or limit in any manner the operations of Suncoast or the
Suncoast Subsidiaries, including, without limitation, any restriction
on the payment of dividends, or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit in any manner the
operations of Suncoast or any Suncoast Subsidiary, including, without
limitation, any restriction on the payment of dividends (any such
notice, communication, memorandum, agreement or order described in
this sentence herein referred to as a "Regulatory Agreement").
(c) Since January 1, 1994 neither Suncoast nor any
Suncoast Subsidiary has consented to or entered into or has
outstanding any Regulatory Agreement or memorandum of understanding.
(d) Neither Suncoast nor any Suncoast Subsidiary is
required by Section 32 of FDIA to give prior notice to a federal
banking agency of the proposed addition of an individual to its board
of directors or the employment of an individual as a senior executive
officer.
5.30 EMPLOYEE BENEFIT PLANS.
(a) Suncoast has delivered or made available to
BankUnited prior to the execution of this Agreement or will deliver or
make available to BankUnited at the time of delivery of the Suncoast
Disclosure Schedule true and complete copies (or, in the case of bonus
or other incentive plans, summaries thereof and financial data with
respect thereto) of all material pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all
other material employee programs, arrangements or agreements, whether
arrived at through collective bargaining or otherwise, all material
medical, vision, dental or other health plans, all life insurance
plans and all other material employee benefit plans or fringe benefit
plans, including, without limitation, all "employee benefit plans" as
that term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), currently adopted by,
maintained by, sponsored in whole or in part by, or contributed to by
Suncoast or the Suncoast Subsidiaries or any Affiliate thereof for the
benefit of any Employee or under which any Employee is eligible to
participate and under which Suncoast or the Suncoast Subsidiaries
could have any liability contingent or otherwise (collectively, the
"Suncoast Benefit Plans"). Section 5.30(a) of the Suncoast Disclosure
Schedule contains a listing of all the Suncoast Benefit Plans. Any of
the Suncoast Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred
to herein as a "Suncoast ERISA Plan." Any of the Suncoast Benefit
Plans pursuant to which Suncoast is or may become obligated to, or
obligated to cause the Suncoast Subsidiaries or any other Person to,
issue, deliver or sell shares of capital stock of Suncoast or the
Suncoast Subsidiaries, or grant, extend or enter into any option,
warrant, call, right, commitment or agreement to issue, deliver or
sell shares, or any other interest in respect of capital stock of
Suncoast or the Suncoast Subsidiaries, is referred to herein as a
"Suncoast Stock Plan." No Suncoast Benefit Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
Suncoast has set forth in Section 5.30 of the Suncoast Disclosure
Schedule (i) a list of all of the Suncoast Benefit Plans, (ii) a list
of Suncoast
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Benefit Plans that are Suncoast ERISA Plans, (iii) a list of Suncoast
Benefit Plans that are Suncoast Stock Plans, and (iv) a list of the
number of shares covered by, exercise prices for, and holders of, all
stock options granted and available for grant under the Suncoast Stock
Plans.
(b) All Suncoast Benefit Plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws,
rules and regulations the breach or violation of which could
reasonably be expected to result in a Material Adverse Effect.
(c) All liabilities under any Suncoast Benefit Plan are
fully accrued or reserved against in the Suncoast Financial Statements
in accordance with GAAP.
(d) Neither Suncoast nor any Suncoast Subsidiary has any
obligations for retiree health and life benefits under any Suncoast
Benefit Plan or otherwise. There are no restrictions on the rights of
Suncoast or the Suncoast Subsidiaries to amend or terminate any such
Suncoast Benefit Plan without incurring any material liability
thereunder, except for such restrictions as would not have a Material
Adverse Effect.
(e) Except as set forth in Section 5.30(e) the Suncoast
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
or thereby will (i) result in any payment (including, without
limitation, severance, golden parachute or otherwise) becoming due to
any Employees under any Suncoast Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Suncoast Benefit
Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
5.31 COMMITMENTS AND CONTRACTS. Except as set forth in Section 5.31
of the Suncoast Disclosure Schedule or with respect to the validity of this
representation, except as may have been permitted by Section 7.01 and 7.02,
neither Suncoast nor any Suncoast Subsidiary is a party or subject to, or has
amended or waived any rights under, any of the following (whether written or
oral, express or implied):
(a) any employment contract or understanding (including
any understandings or obligations with respect to severance or
termination pay liabilities or fringe benefits) with any Employees,
including in any such person's capacity as a consultant (other than
those which either are terminable at will by Suncoast or such
Subsidiary without cost to Suncoast or any Suncoast Subsidiary);
(b) any labor contract or agreement with any labor union;
(c) any contract not made in the usual, regular and
ordinary course of business containing non- competition covenants
which limit the ability of Suncoast or the Suncoast Subsidiaries to
compete in any line of business or which involve any restriction of
the geographical area in which Suncoast or any Suncoast Subsidiary may
carry on its business (other than as may be required by law or
applicable Regulatory Authorities);
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(d) any other contract or agreement which would be
required to be disclosed as an exhibit to Suncoast's annual report on
Form 10-K and which has not been so disclosed;
(e) any real or personal property lease with annual
rental payments aggregating $5,000 or more;
(f) any employment or other contract requiring the
payment of additional amounts as "change in control" payments as a
result of transactions contemplated by this Agreement;
(g) any agreement with respect to (i) the acquisition of
the assets or stock of another financial institution or (ii) the sale
of one or more bank branches which would require additional payments
by Suncoast after the date of this Agreement;
(h) any outstanding interest rate exchange or other
derivative contracts;
(i) any commitment or contract to acquire real property;
or
(j) any other agreement to which Suncoast or any Suncoast
Subsidiary is a party requiring payment by Suncoast or any Suncoast
Subsidiary in excess of $25,000 during the remainder of the term of
such agreement, except as set forth in Section 5.31 of the Suncoast
Disclosure Schedule.
5.32 MATERIAL CONTRACT DEFAULTS. Neither Suncoast nor any Suncoast
Subsidiary is, or has received any notice or has any knowledge that any party
is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which Suncoast or
the Suncoast Subsidiaries is a party or by which Suncoast or the Suncoast
Subsidiaries or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not have, individually
or in the aggregate, a Material Adverse Effect; and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default. Except as set forth in Section 5.32 of the Suncoast
Disclosure Schedule, no consent of any party to any contract to which Suncoast
or any Suncoast Subsidiary is a party is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
consents which in the aggregate if not obtained would not have a Material
Adverse Effect.
5.33 LEGAL PROCEEDINGS. Except as set forth in Section 5.33 of the
Suncoast Disclosure Schedule, there are no actions, suits, proceedings or
investigations by Regulatory Authorities or any other Person instituted or
pending or, to the best knowledge of Suncoast, threatened against Suncoast or
the Suncoast Subsidiaries, or against any property, asset, interest or right of
any of them, that might reasonably be expected to result in a judgment in
excess of $25,000 or that might reasonably be expected to threaten or impede
the consummation of the transactions contemplated by this Agreement. Neither
Suncoast nor any Suncoast Subsidiary is a party to any agreement or instrument
or is subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree, rule, regulation, code or ordinance that,
individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect or, might reasonably be expected to threaten or impede
the consummation of the transactions contemplated by this Agreement.
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5.34 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1996,
except (i) as disclosed in any Securities Reporting Document filed since
December 31, 1995 and prior to the date hereof or (ii) as set forth in Section
5.34 of the Suncoast Disclosure Schedule, neither Suncoast nor any Suncoast
Subsidiary has (A) incurred or paid any liability or obligation (contingent or
otherwise), which individually or in the aggregate had or is reasonably likely
to have a Material Adverse Effect, (B) suffered any change which individually
or in the aggregate is reasonably likely to have a Material Adverse Effect, (C)
failed to operate its business consistent in all material respects with past
practice or (D) changed any accounting practices.
5.35 SECURITIES REPORTING DOCUMENTS. Since July 1, 1992, Suncoast
and each Suncoast Subsidiary has filed on a timely basis all material reports,
schedules, registration statements and definitive proxy statements ("Securities
Reporting Documents"), together with all amendments required to be made with
respect thereto, that they were required to file with (i) the OTS, including,
without limitation, all quarterly reports on Form 10-Q, annual reports on Form
10-K and current reports on Form 8-K, (ii) the FDIC, (iii) any other applicable
state securities or banking authorities (except, in the case of state
securities authorities, filings which are not material) and (iv) the NASD. No
Securities Reporting Document of Suncoast with respect to periods beginning on
or after July 1, 1992 and until the Closing, contained or will contain any
information that was false or misleading with respect to any material fact or
omitted or will omit to state any material fact necessary in order to make the
statements therein not misleading and each such Securities Reporting Document
of Suncoast contained or will contain all information required to be stated
therein.
5.36 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by Suncoast for inclusion in the registration statement on
Form S-4, or other appropriate form, to be filed with the SEC by BankUnited
under the Securities Act in connection with the transactions contemplated by
this Agreement (the "Registration Statement"), or the joint proxy statement to
be used by Suncoast and BankUnited in connection with obtaining all required
approvals of their respective stockholders as contemplated by this Agreement
(the "Joint Proxy Statement") will, in the case of the Joint Proxy Statement,
when it is first mailed to the respective stockholders of Suncoast and
BankUnited, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in
light of the circumstances under which such statements are made, not
misleading, or, in the case of the Registration Statement, when it becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading, or in the case of the Joint Proxy Statement or any amendment
thereof or supplement thereto, at the time of the meeting of the respective
stockholders of Suncoast and BankUnited to be held pursuant to Section 8.03 of
this Agreement, including any adjournments thereof (the "Stockholders'
Meetings"), be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meetings. All documents that Suncoast is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law, including applicable provisions
of the Securities Laws. The information which is set forth in the Suncoast
Disclosure Schedule by Suncoast for the purposes of this Agreement is true and
accurate in all material respects.
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5.37 INSURANCE. Suncoast and each Suncoast Subsidiary is presently
insured, and during each of the past five calendar years has been insured, for
reasonable amounts against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured. The policies of fire, theft, banker's blanket bond, liability
(including directors and officers liability insurance) and other insurance
maintained with respect to the assets or businesses of Suncoast and the
Suncoast Subsidiaries provide adequate coverage against all pending or
threatened claims, and the fidelity bonds in effect as to which Suncoast or any
Suncoast Subsidiary is a named insured are sufficient for their purpose, except
where the failure to have such coverage would not have a Material Adverse
Effect. Such policies are listed and briefly described in Section 5.37 of the
Suncoast Disclosure Schedule.
5.38 LABOR. No material work stoppage involving Suncoast or the
Suncoast Subsidiaries is pending or, to the best knowledge of Suncoast's
management, threatened. Neither Suncoast nor any Suncoast Subsidiary is
involved in, or to the best knowledge of Suncoast's management, threatened with
or affected by, any labor or other employment-related dispute, arbitration,
lawsuit or administrative proceeding which might reasonably be expected to have
a Material Adverse Effect. Employees of Suncoast and the Suncoast Subsidiaries
are not represented by any labor union, and, to the best knowledge of
Suncoast's management, no labor union is attempting to organize employees of
Suncoast or the Suncoast Subsidiaries.
5.39 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
Suncoast's Proxy Statement for its 1995 Annual Meeting of Stockholders or as
set forth in the Suncoast Disclosure Schedule, no executive officer or director
of Suncoast, or any "associate" (as such term is defined in Rule 14a-1 under
the Exchange Act) of any such executive officer or director, has any material
interest in any material contract or property real or personal, tangible or
intangible, used in or pertaining to the business of Suncoast or the Suncoast
Subsidiaries.
5.40 REGISTRATION OBLIGATIONS. Except as set forth in Section 5.40
of the Suncoast Disclosure Schedule, neither Suncoast nor any Suncoast
Subsidiary is under any obligation, contingent or otherwise, presently in
effect or which will survive the Merger to register any of its securities under
the Securities Act.
5.41 BROKERS AND FINDERS. Except as set forth in Section 5.41 of
the Suncoast Disclosure Schedule, neither Suncoast nor any Suncoast Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for Suncoast or Suncoast Subsidiaries in connection with
this Agreement or the transactions contemplated hereby.
5.42 TAKEOVER LAWS. Suncoast has taken all steps necessary to
irrevocably exempt the transactions contemplated by this Agreement from any
applicable state or federal takeover law and from any applicable charter or
contractual provision containing change of control or anti-takeover provisions.
5.43 ENVIRONMENTAL MATTERS. To Suncoast's best knowledge, without
inquiry, neither Suncoast nor any of the Suncoast Subsidiaries has been or is
in violation of or liable under any
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Environmental Law (as hereinafter defined) and no properties owned or leased by
Suncoast or any of the Suncoast Subsidiaries or held as collateral by Suncoast
or any Suncoast Subsidiary, while owned or operated by Suncoast or a Suncoast
Subsidiary or while held as collateral by Suncoast or any Suncoast Subsidiary,
have been or are in violation of any Environmental Law, except for such
violations or liabilities that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect. There are no actions,
suits or proceedings, or demands, claims, notices or investigations (including
without limitation notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the best knowledge of
Suncoast's management, threatened relating to the liability of any properties
owned or leased by Suncoast or any Suncoast Subsidiary under any Environmental
Law, except for liabilities or violations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection, preservation or
restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural resource), and/or
(ii) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any
substance presently listed, defined, designated or classified as hazardous,
toxic radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a component.
5.44 SUPPORT OF STOCKHOLDERS To induce BankUnited to enter into
this Agreement Suncoast has obtained and delivered to BankUnited letter
agreements in the form of Exhibit C hereto, with each of the following
stockholders of Suncoast committing these stockholders to actively support the
Merger by, among other things, voting in favor of the Merger at the Suncoast
Stockholders' Meeting and not disposing of any Suncoast Common Stock or
Suncoast Preferred Stock other than pursuant to the Merger: Albert Finch, Paul
Fay, E. J. Guisti, William Hammonds, Norman Mains, Irving P. Cohen, Sumner G.
Kaye, Richard L. Browdy and Wendy M. Mitchler.
5.45 RETAIL SECURITIES ACTIVITIES. Except as set forth in Section
5.45 of the Suncoast Disclosure Schedule, Suncoast's retail securities
brokerage and annuities sales business conducted through Suncoast's branches
has complied with applicable state and federal securities laws and all
applicable requirements of the NASD, except for instances where failure to so
comply, individually or in the aggregate, would not have a Material Adverse
Effect.
5.46 DERIVATIVES CONTRACTS. None of Suncoast nor any of the
Suncoast Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter swap, forward, future, option, cap, floor
or collar financial contract, or any other contract not included on its
statement of financial condition which is a financial derivative contract
(including various combinations thereof) (each a "Derivatives Contract") except
for those Derivative Contracts disclosed in Section 5.46 of the Suncoast
Disclosure Schedule, which includes a complete list, as applicable, of
Suncoast's assets pledged as security for each Derivatives Contract.
5.47 MATERIALITY. The representations and warranties of Suncoast
contained in Sections 5.01 through 5.45 hereof are true and correct in all
material respects. No failure of any such
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representation or breach of any such warranty shall be deemed a breach of this
Agreement unless the same, individually or collectively, shall be material,
unless a different standard of materiality is specifically contained in the
relevant Section.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
BankUnited represents and warrants to Suncoast as follows:
6.01 ORGANIZATION, STANDING AND AUTHORITY. BankUnited is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. BankUnited is duly qualified to do business and
in good standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be duly
qualified would have a Material Adverse Effect. BankUnited has all requisite
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its assets, properties and business, and to execute and
deliver this Agreement and perform the terms of this Agreement. BankUnited is
duly registered as a savings and loan holding company under the HOLA,
BankUnited has in effect all Authorizations necessary for it to own or lease
its properties and assets and to carry on its business as now conducted, the
absence of which, either individually or in the aggregate, would have a
Material Adverse Effect.
6.02 BANKUNITED CAPITAL STOCK. The authorized capital stock of
BankUnited consists of 18,000,000 shares of BankUnited Common Stock and
10,000,000 shares of BankUnited Preferred Stock. At March 31, 1996, there were
issued and outstanding 5,698,598 shares of BankUnited Common Stock and
2,665,547 shares of BankUnited Preferred Stock and no other shares of capital
stock of any class. All of the issued and outstanding shares of BankUnited
Common Stock and BankUnited Preferred Stock are duly and validly issued and
outstanding and are fully paid and nonassessable.
6.03 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action in respect
thereof on the part of BankUnited, including approval of the Merger by
its Board of Directors, subject to the approval of the stockholders of
BankUnited with respect to the Merger, to the extent required by
applicable law. This Agreement, subject to any requisite regulatory
and stockholder approval hereof with respect to the Merger, represents
a valid and legally binding obligation of BankUnited, enforceable
against BankUnited in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting
creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
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(b) Neither the execution and delivery of this Agreement
by BankUnited, nor the consummation by BankUnited of the transactions
contemplated hereby or thereby nor compliance by BankUnited with any
of the provisions hereof or thereof will (i) conflict with or result
in a breach of any provision of BankUnited's Articles of Incorporation
or bylaws or (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or
give rise to any right of termination, cancellation. or acceleration
with respect to, or result in the creation of any Encumbrance upon any
property or assets of any of BankUnited or its Subsidiaries pursuant
to any note, bond, mortgage, indenture, license, agreement, lease or
other instrument or obligation to which any of them is a party or by
which any of them or any of their properties or assets may be subject,
and that would, in any such event, have a Material Adverse Effect or
(iii) subject to receipt of the requisite approvals referred to in
Section 9.01 of this Agreement, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to BankUnited or any of
its Subsidiaries or any of their properties or assets.
6.04 FINANCIAL STATEMENTS. BankUnited (i) has delivered to Suncoast
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders'
equity and consolidated statements of cash flows (including related notes and
schedules) of BankUnited and its consolidated Subsidiaries as of and for the
periods ended March 31, 1996, December 31, 1995 and September 30, 1995 included
in a quarterly report on Form 10-Q or an annual report of Form 10-K, as the
case may be, filed by BankUnited pursuant to the Securities Laws (a "BankUnited
Reporting Document"), and (ii) until the Closing will deliver to Suncoast
promptly upon the filing thereof with the SEC copies of the consolidated
balance sheets and related consolidated statements of income, consolidated
statements of changes in shareholders' equity and consolidated statements of
cash flows (including related notes and schedules) included in any BankUnited
Reporting Documents filed subsequent to the execution of this Agreement (the
financial statements and related notes and schedules referred to in clauses (i)
and (ii) above are collectively referred to herein as the "BankUnited Financial
Statements"). The BankUnited Financial Statements (as of the dates thereof and
for the periods covered thereby) (A) are or will be in accordance with the
books and records of BankUnited and its consolidated Subsidiaries, which are or
will be complete and accurate in all material respects and which have been or
will have been maintained in accordance with good business practices, and (B)
present or will present fairly the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of BankUnited and its Subsidiaries as of the dates and for the periods
indicated, in accordance with GAAP consistently applied, except as disclosed,
subject in the case of interim financial statements to normal recurring year-
end adjustments and except for the absence of certain footnote information in
the unaudited statements. BankUnited has delivered to Suncoast (i) copies of
all management letters prepared by Price Waterhouse L.L.P (and any predecessor
thereto) delivered to BankUnited since October 1, 1992 and (ii) copies of
audited balance sheets and related statements of income, changes in
stockholders' equity and cash flows for any of Subsidiary of BankUnited since
October 1, 1992 for which a separate audit has been performed.
6.05 SECURITIES REPORTING DOCUMENTS. Since October 1, 1992,
BankUnited and each of its Subsidiaries has filed on a timely basis all
Securities Reporting Documents, together with all amendments required to be
made with respect thereto, that they were required to file with (i) the SEC,
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including without limitation, all quarterly reports on Form 10-Q, annual
reports on Form 10-K, and current reports of Form 8-K, (ii) the OTS, (iii) the
FDIC, (iv) any other applicable state securities or banking authorities (except
in the case of state securities authorities, filings that were not material),
and (v) the NASD. No Securities Reporting Document of BankUnited with respect
to periods beginning on or after October 1, 1992 and until the Closing
contained or will contain any information that was false or misleading with
respect to any material fact or omitted or will omit to state any material fact
necessary in order to make the statements therein not misleading and each
Securities Reporting Document of BankUnited contained or will contain all
information required to be stated therein.
6.06 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by BankUnited for inclusion in the Registration Statement or
the Joint Proxy Statement will, in the case of the Joint Proxy Statement, when
it is first mailed to the respective stockholders of Suncoast and BankUnited,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which such statements are made, not misleading or, in the
case of the Registration Statement, when it becomes effective, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or in
the case of the Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Stockholders' Meetings, be false or misleading with
respect to any material fact or omit to state any material fact necessary to
correct any statement or remedy any omission in any earlier communication with
respect to the solicitation of any proxy for the Stockholders' Meetings. All
documents that BankUnited is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable law,
including applicable provisions of the Securities Laws. The information which
is set forth in the BankUnited Disclosure Schedule by BankUnited for the
purposes of this Agreement is true and correct in all material respects.
6.07 CAPITAL STOCK. At the Effective Time and upon issuance
pursuant to this Agreement, the BankUnited Common Stock and New BankUnited
Preferred Stock issued pursuant to the Merger will be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
6.08 TAX AND REGULATORY MATTERS. Neither BankUnited nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368 of the Code; or materially impede or delay receipt of any approval
referred to in Section 9.01(b).
6.09 LITIGATION. There are no judicial proceedings of any kind or
nature pending or, to the knowledge of BankUnited, threatened against
BankUnited before any court or arbitral tribunal or before or by any
governmental department, agency or instrumentality involving the validity of
the BankUnited Common Stock, the New BankUnited Preferred Stock, or the
transactions contemplated by this Agreement.
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6.10 BROKERS AND FINDERS. Except as set forth in Section 6.10 of
the BankUnited Disclosure Schedule, neither BankUnited nor any of its
Subsidiaries nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for BankUnited or any of its
Subsidiaries in connection with this Agreement or the transactions contemplated
hereby.
6.11 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 6.11(a) of the
BankUnited Disclosure Schedule, each of BankUnited and its
Subsidiaries is in compliance with all federal, state, and local laws,
rules, regulations, policies, guidelines, reporting and licensing
requirements and orders applicable to its business or to BankUnited's
employees conducting its business, and with its internal policies and
procedures except for failures to comply which will in the aggregate
not result in a Material Adverse Effect.
(b) Since January 1, 1993, except as set forth in Section
6.11(b) of the BankUnited Disclosure Schedule, neither BankUnited nor
any Subsidiary of BankUnited has received any notification or
communication from any agency or department of any federal, state or
local government, including, the OTS, the FDIC, the SEC and the NASD
and the staffs thereof (i) asserting that BankUnited or any Subsidiary
of BankUnited is not in substantial compliance with any of the
statutes, regulations, or ordinances which such agency, department or
Regulatory Authority enforces, or the internal policies and procedures
of such agency, department or regulatory authority, (ii) threatening
to revoke any license, franchise, permit or governmental authorization
which is material to BankUnited and the BankUnited Subsidiaries on a
consolidated basis, (iii) requiring or threatening to require
BankUnited or any Subsidiary of BankUnited, or indicating that
BankUnited or any Subsidiary of BankUnited may be required to enter
into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or
purporting to restrict or limit in any manner the operations of
BankUnited or any Subsidiary of BankUnited including, without
limitation, any restriction on the payment of dividends; or (iv)
directing, restricting or limiting, or purporting to direct, restrict
or limit in any manner the operations of BankUnited or any Subsidiary
of BankUnited, including, without limitation, any restriction on the
payment of dividends.
(c) Since January 1, 1994 neither BankUnited nor any
Subsidiary of BankUnited has consented to or entered into any
Regulatory Agreement or memorandum of understanding.
(d) Neither BankUnited nor any Subsidiary of BankUnited
is required by Section 32 of FDIA to give prior notice to a federal
banking agency of the proposed addition of an individual to its board
of directors or the employment of an individual as a senior executive
officer.
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6.12 EMPLOYEE BENEFIT PLANS.
(a) BankUnited has delivered or made available to
Suncoast prior to the execution of this Agreement or will deliver or
make available to Suncoast at the time of delivery of the BankUnited
Disclosure Schedule, true and complete copies (or, in the case of
bonus or other incentive plans, summaries thereof and financial data
with respect thereto) of all material pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other material incentive
plans, all other material employee programs, arrangements or
agreements, whether arrived at through collective bargaining or
otherwise, all material medical, vision, dental or other health plans,
all life insurance plans and all other material employee benefit plans
or fringe benefit plans, including, without limitation, all "employee
benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted by, maintained by, sponsored in whole or in part by,
or contributed to by BankUnited or any Subsidiary of BankUnited or any
affiliate thereof for the benefit of any Employee or under which any
Employee is eligible to participate and under which BankUnited or any
Subsidiary of BankUnited could have any liability contingent or
otherwise (collectively, the "BankUnited Benefit Plans"). Section
6.12(a) of the BankUnited Disclosure Schedule contains a listing of
all the BankUnited Benefit Plans.
(b) All BankUnited Benefit Plans are in compliance with
the applicable terms of ERISA and the Code and any other applicable
laws, rules and regulations the breach or violation of which could
reasonably be expected to result in a Material Adverse Effect.
(c) All liabilities under any BankUnited Benefit Plan are
fully accrued or reserved against in the BankUnited Financial
Statements in accordance with GAAP.
6.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1996,
except (i) as disclosed in any Securities Reporting Document filed since
December 31, 1995 and prior to the date hereof or (ii) as set forth in Section
6.13 of the BankUnited Disclosure Schedule, neither BankUnited nor any
Subsidiary of BankUnited has (A) incurred or paid any liability or obligation
(contingent or otherwise), which has had or is likely to have a Material
Adverse Effect, (B) suffered any change which is likely to have a Material
Adverse Effect, (C) failed to operate its business consistent in all material
respects with past practice or (D) changed any accounting practices.
6.14 MERGER SUB.
(a) When Merger Sub is organized and executes and
delivers this Agreement, Merger Sub will (i) be a federally-chartered
savings bank; (ii) be duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of
its business would require it to be so qualified and in which the
failure to be duly qualified would have a Material Adverse Effect;
(iii) have all requisite corporate power and authority to carry on its
business as now conducted and to own, lease and operate its assets,
properties and business, except where the failure to have such power
and authority would not have a Material Adverse Effect, and to execute
and deliver this Agreement and perform the terms of this Agreement;
(iv) have in effect all Authorizations necessary for it to own or
lease its properties and assets and to carry on its
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business, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect.
(b) When Merger Sub is organized and executes and
delivers this Agreement, (i) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
will have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of Merger Sub, including
approval of the Merger by its Board of Directors and its shareholder;
(ii) this Agreement, subject to any requisite regulatory approval
hereof with respect to the Merger, will represent a valid and legally
binding obligation of Merger Sub enforceable against Merger Sub in
accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, and similar
laws of general applicability affecting creditors rights generally and
by general principles of equity (whether applied in a proceeding at
law or in equity).
(c) When Merger Sub is organized and executes and
delivers this Agreement, (i) neither the execution and delivery of
this Agreement by Merger Sub nor the consummation by Merger Sub of the
transactions contemplated hereby, nor compliance by Merger Sub with
any of the provisions hereof will (A) conflict with or result in a
breach of any provision of Merger Sub's charter or bylaws or (B)
constitute or result in a breach of any term, condition or provision
of, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give rise to any right
of termination, cancellation or acceleration with respect to, or
result in the creation of any Encumbrance upon, any property or assets
of Merger Sub pursuant to any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which
Merger Sub is a party or by which Merger Sub or any of its properties
or assets may be subject and that would individually or in the
aggregate have a Material Adverse Effect, or (C) subject to receipt of
the requisite approvals referred to in Sections 9.01(a) and 9.01(b) of
this Agreement, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Merger Sub or any of its properties
or assets.
6.15 SUPPORT OF STOCKHOLDERS. To induce Suncoast to enter into this
Agreement BankUnited has obtained and delivered to Suncoast letter agreements
in the form of Exhibit D hereto, with each of the following stockholders of
BankUnited committing these stockholders to actively support the Merger by,
among other things, voting in favor of the Merger at the BankUnited
Stockholders' Meeting: Alfred R. Camner, Earline G. Ford, Lawrence H. Blum,
Allen M. Bernkrant and Marc D. Jacobson.
6.16 MATERIALITY. The representations and warranties of BankUnited
contained in Sections 6.01 through 6.14 hereof are true and correct in all
material respects. No failure of any representation or breach of any warranty
shall be deemed a breach of this Agreement unless the same, individually or
collectively, shall be material, unless a different standard of materiality is
specifically contained in the relevant Section.
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ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 CONDUCT OF SUNCOAST BUSINESS PRIOR TO THE EFFECTIVE TIME.
During the period from the date of this Agreement to the Effective Time,
Suncoast shall, and shall cause each Suncoast Subsidiary to, (i) conduct its
business in the usual, regular and ordinary course consistent with past
practice (other than transactions made pursuant to contracts in existence on
the date hereof and described in Sections 7.01 or 7.02 of the Suncoast
Disclosure Schedule) and (ii) use its best efforts to maintain and preserve
intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key Employees.
7.02 FORBEARANCES OF SUNCOAST. Except as required by law,
regulation or regulatory authority, during the period from the date of this
Agreement to the Effective Time, Suncoast shall not, and shall not permit any
Suncoast Subsidiary to, without the prior written consent of BankUnited (and
Suncoast shall provide BankUnited with prompt notice of any events referred to
in this Section 7.02 occurring after the date hereof):
(a) other than in the ordinary course of business
consistent with past practice since June 30, 1994 ("In the Ordinary
Course"), incur any indebtedness for borrowed money, including Federal
Home Loan Bank advances (other than (i) Federal Home Loan Bank
advances having maturities of six months or less and (ii) short-term
indebtedness incurred to refinance short-term indebtedness and
indebtedness of Suncoast or any Suncoast Subsidiary to Suncoast or any
Suncoast Subsidiary) (it being understood and agreed that incurrence
of indebtedness In the Ordinary Course shall include, without
limitation, the creation of deposit liabilities, purchases of federal
funds, sales of certificates of deposit and entering into repurchase
agreements), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance
other than In the Ordinary Course.
(b) adjust, split, combine or reclassify any capital
stock; make, declare or pay any dividend (other than regular quarterly
cash dividends at a rate not in excess of $0.30 per share) on the
Suncoast Preferred Stock or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock,
or grant any stock appreciation rights or grant any Person any right
to acquire any shares of its capital stock; or issue any additional
shares of capital stock, or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, other than
(i) Suncoast Common Stock issuable on the exercise of stock options
outstanding on the date hereof under the Suncoast Option Plan, (ii)
stock options required to be granted to members of the Board of
Directors under the Suncoast Option Plan, (iii) Suncoast Common Stock
or Suncoast Preferred Stock issuable on the exercise of the Suncoast
Warrants, or (iv) Suncoast Common Stock issuable on conversion of
Suncoast Preferred Stock outstanding on the date hereof (The parties
hereto agree that the issuances by Suncoast of Suncoast Preferred
Stock or Suncoast Common Stock or rights to acquire Suncoast Preferred
Stock or Suncoast Common
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Stock described in clauses (i) - (iv) above are outstanding
obligations of Suncoast and not discretionary payments by Suncoast);
(c) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets, including servicing
rights, to any individual, corporation or other entity, or cancel,
release or assign any indebtedness to any such person or any claims
held by any such person, except In the Ordinary Course or pursuant to
contracts or agreements in force at the date of this Agreement, it
being agreed and understood that sales In the Ordinary Course shall
include (i) the sale and/or purchase of those non-residential loans
pending sale or servicing of residential mortgage loans as noted in
Section 7.02(c) of the Suncoast Disclosure Schedule; (ii) the sale of
such other non-residential loans up to an aggregate amount of $5
million as to which BankUnited is first given the option to purchase;
and (iii) the sale of up to an aggregate of $500,000 in residential
loans out of portfolio and all sales of Warehouse Loans pursuant to
Investor Commitments;
(d) make any investment (including loan purchases and
commitments to purchase loans) of more than $25,000 either by purchase
of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any individual, corporation
or other entity, including servicing rights other than in connection
with contracts in existence on the date hereof and described in
Section 7.02(d) of the Suncoast Disclosure Schedule; provided,
however, that Suncoast may purchase or commit to purchase residential
whole loan mortgage loan packages on the terms and conditions
described in writing to BankUnited by Suncoast and agreed to and
accepted by BankUnited in writing prior to the execution and delivery
of this Agreement.
(e) enter into or terminate any contract or agreement
involving annual payments in excess of $25,000 and which cannot be
terminated without penalty upon 30 or fewer days notice, or make any
change in, or extension of, any of its leases or contracts involving,
annual payments in excess of $25,000 and which cannot be terminated
without penalty upon 30 or fewer days notice; provided, however, that
on all extensions of existing loan servicing contracts, except for
extensions for a term of not more than one year on substantially the
same terms and conditions as those before the extension, Suncoast
shall consult with BankUnited before agreeing to any such extension,
but Suncoast shall not be required to obtain the written approval of
BankUnited prior to agreeing to any such extension;
(f) increase or modify in any manner the compensation or
fringe benefits of any of its Employees or pay any pension or
retirement allowance not required by any existing plan or agreement to
any such Employees, except on the terms and conditions described in
writing to BankUnited by Suncoast and agreed to and accepted by
BankUnited in writing prior to the execution and delivery of this
Agreement, or become a party to, amend or commit itself to any
pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any
Employee other than routine adjustments in compensation and fringe
benefits In the Ordinary Course or accelerate the vesting of any stock
options or other stock-based compensation;
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(g) settle any claim, action or proceeding
involving the payment of money damages in excess of $50,000,
except In the Ordinary Course;
(h) amend its charter or its bylaws;
(i) fail to maintain its Regulatory Agreements, material
licenses and permits or to file in a timely fashion all federal,
state, local and foreign tax returns;
(j) make any capital expenditures of more than $25,000
individually or $50,000 in the aggregate except as noted in Section
7.02(j) the Suncoast Disclosure Schedule;
(k) fail to maintain each Suncoast Benefit Plan or timely
make all contributions or accruals required thereunder in accordance
with GAAP applied on a consistent basis;
(l) originate or purchase any loans with fixed rate terms
longer than three years (except where such loans are Warehouse Loans
originated or purchased In the Ordinary Course and subject to Investor
Commitments) or loans that are not at current market rates for
comparable loan originations; except that Suncoast may originate or
purchase In the Ordinary Course up to an aggregate amount of $5
million of whole residential mortgage loans with fixed rate terms in
excess of three years;
(m) increase interest rates on deposits having a term of
greater than one year to a level higher than interest rates applicable
to BankUnited's comparable deposits, unless the rates are being paid
In the Ordinary Course and are causing disintermediation, in which
case BankUnited shall not unreasonably withhold consent to the payment
of such rates necessary to prevent disintermediation of Suncoast
deposits;
(n) change its underwriting standards for originating or
purchasing loans or servicing;
(o) originate any commercial or non-residential loan
having a principal amount in excess of $500,000 or originate or
purchase any other loan not In the Ordinary Course except as described
in Section 7.01(o) of the Suncoast Disclosure Schedule;
(p) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.02; or
(q) other than in prior consultation with BankUnited,
materially restructure or change its investment securities portfolio,
loan portfolio, or servicing portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or
reported.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 ACCESS AND INFORMATION.
(a) During the period from the date of this Agreement
through the Effective Time, each of Suncoast and BankUnited shall, and
shall cause their respective subsidiaries to, afford the other party,
and the other party's accountants, counsel and other representatives
(including Fiserve), full access during normal business hours and upon
reasonable notice to the properties, books, contracts, tax returns,
commitments, records and data processing files of the other and its
subsidiaries, for the purpose of conducting any review or
investigation reasonably related to the Merger, and Suncoast and
BankUnited and their respective Subsidiaries will cooperate fully with
all such reviews and investigations.
(b) During the period from the date of this Agreement
through the Effective Time, each party shall furnish to the other (i)
all reports referred to in Section 5.35 and 6.04 promptly upon the
filing thereof, (ii) a copy of each Tax Return filed by it and (iii)
monthly and other interim financial statements in the form prepared by
the party for its internal use. During this period, each party shall
also notify the other promptly of any material change in their
respective condition or the condition of any subsidiary.
(c) Notwithstanding the foregoing provisions of this
Section 8.01, no investigation by the parties hereto made heretofore
or hereafter shall affect the representations and warranties of the
parties which are contained herein and each such representation and
warranty shall survive such investigation. BankUnited agrees to notify
Suncoast promptly on any discovery by BankUnited of any breach of any
representation or warranty of Suncoast hereunder; provided however, no
such notification nor any failure of BankUnited to so notify Suncoast
shall result in BankUnited's waiving any such breach.
(d) Each party agrees that it will keep confidential any
information furnished to it in connection with the transactions
contemplated by this Agreement, except to the extent that such
information (i) was already known to the recipient and was received
from a source other than the other party or any of its Subsidiaries,
directors, officers, employees or agents, (ii) was lawfully obtained
from another source, or (iii) is required to be disclosed to the SEC,
the NASD, the OTS, the FDIC or any other governmental agency or
authority, or is otherwise required to be disclosed by law. Each party
agrees not to use such information, and to implement safeguards and
procedures that are reasonably designed to prevent such information
from being used, for any purpose other than in connection with the
transactions contemplated by this Agreement.
(e) Each party shall cooperate, and shall cause its
respective subsidiaries, accountants, counsel and other
representatives to cooperate with the other and its accountants,
counsel and other representatives, in connection with the preparation
by the other of any applications and documents required to obtain the
Approvals, which cooperation shall include
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promptly providing all information, documents and appropriate
representations as may be necessary in connection therewith.
(f) From and after the date of this Agreement, each of
BankUnited and Suncoast shall use its reasonable best efforts to
satisfy or cause to be satisfied all conditions to its respective
obligations under this Agreement. While this Agreement is in effect,
neither BankUnited nor Suncoast shall take any actions, or omit to
take any actions, which would cause this Agreement to become
unenforceable in accordance with its terms.
8.02 REGISTRATION STATEMENT; REGULATORY MATTERS.
(a) BankUnited shall (i) prepare and file the Joint Proxy
Statement/Registration Statement with the SEC, and shall use its best
reasonable efforts to cause the Joint Proxy Statement/Registration
Statement to be filed within thirty days of the date hereof, and (ii)
take any action required to be taken under any applicable state blue
sky or securities laws in connection therewith. Suncoast shall prepare
and file the Joint Proxy Statement with the OTS and shall use its best
reasonable efforts to cause the Joint Proxy Statement to be filed
within 30 days of the date hereof. BankUnited shall furnish Suncoast
with all information concerning BankUnited and its Subsidiaries and
the holders of BankUnited capital stock as Suncoast may reasonably
request in connection with the foregoing. Suncoast and Suncoast
Subsidiaries shall furnish BankUnited with all information concerning
Suncoast, Suncoast Subsidiaries and the holders of Suncoast Capital
Stock as BankUnited may reasonably request in connection with the
foregoing.
(b) BankUnited and Suncoast shall cooperate and use their
respective best reasonable efforts (i) to prepare all documentation,
to effect all filings and to obtain all permits, consents, approvals
and authorizations of all third parties, Regulatory Authorities and
other governmental authorities necessary to consummate the
transactions contemplated by this Agreement, including, without
limitation, any such approvals or authorizations required by the OTS
and (ii) to cause the Merger to be consummated as expeditiously as
reasonably practicable. The Parties agree to file the requisite
applications with the OTS within thirty days from the date hereof, and
BankUnited agrees that it shall be responsible for payment of the fee
for the filing of such application.
8.03 STOCKHOLDERS' APPROVALS.
(a) Subject to Section 8.03(b), Suncoast and BankUnited
shall call meetings of their respective stockholders to be held as
soon as practicable and in accordance with applicable law and its
charter and by-laws for the purpose of voting upon the Merger and
related matters. Suncoast and BankUnited shall use their respective
reasonable best efforts to hold the Stockholders' Meetings not later
than 120 days after the date of this Agreement. The respective Boards
of Directors of Suncoast and BankUnited shall submit for approval of
their respective stockholders the matters to be voted upon at their
respective Stockholders' Meetings, and shall recommend approval of
such matters and use their best reasonable efforts (including, without
limitation, with respect to Suncoast, soliciting proxies for such
approvals and retaining a professional proxy solicitation company) to
obtain such stockholder approvals.
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Suncoast shall consult with BankUnited as to the selection of such
professional proxy solicitation company. The covenants of Suncoast
under this Section 8.03 are subject to the exercise by the Board of
Directors of Suncoast of its fiduciary obligations and the receipt by
the Board of Directors of Suncoast from Raymond James & Associates,
Inc. of a written opinion, dated as of the date of this Agreement, in
form and substance reasonably satisfactory to the Board of Directors
of Suncoast, to the effect that the terms on which Suncoast Capital
Stock is converted into BankUnited capital stock in the Merger is fair
to the holders of Suncoast Capital Stock from a financial point of
view, which opinion shall have been confirmed in writing to Suncoast
as of the date the Proxy Statement is first mailed to the stockholders
of Suncoast and not subsequently withdrawn. The covenants of
BankUnited under this Section 8.03 are subject to the exercise by the
Board of Directors of BankUnited of its fiduciary obligations.
(b) The parties hereto agree that notwithstanding any
other provision of this Agreement, so long as all required approvals
of the stockholders of BankUnited as to the Merger are obtained prior
to the Effective Time as provided herein, BankUnited in its sole
discretion may obtain any such approval by a vote at a meeting of the
stockholders of BankUnited, through action by the stockholders of
BankUnited without a meeting, or otherwise in compliance with
applicable law.
8.04 PRESS RELEASES. Prior to the public dissemination of any press
release or other public disclosure of information about this Agreement, the
Merger or any other transaction contemplated hereby, the parties to this
Agreement shall mutually agree as to the form and substance of such release or
disclosure.
8.05 NOTICE OF DEFAULTS. Each party shall promptly notify the other
of (i) any material change in its business, operations or prospects, (ii) any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any Regulatory Authority, (iii) the institution or
the threat of material litigation involving such party, or (iv) any event or
condition that might be reasonably expected to cause any of its
representations, warranties or covenants set forth herein not to be true and
correct in all material respects as of the Effective Time.
8.06 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use its
respective best reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as reasonably
practicable, including, without limitation, using their respective best efforts
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby. BankUnited and Suncoast shall, and shall cause each of
their respective Subsidiaries to, use its best reasonable efforts to obtain
consents of all third parties and Regulatory Authorities necessary or, in the
reasonable opinion of BankUnited or Suncoast, desirable for the consummation of
the transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of BankUnited
shall be deemed to have been granted authority in the name of Suncoast to take
all such necessary or desirable action.
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8.07 AFFILIATE AGREEMENTS. Suncoast will deliver to BankUnited no
later than 30 days after the date of this Agreement, a letter identifying each
person whom it reasonably believes is an "affiliate" of Suncoast for purposes
of Rule 145 under the Securities Act. Suncoast will use its best reasonable
efforts to cause each person so identified to deliver to BankUnited within
forty-five (45) days after the date of this Agreement a written agreement
substantially in the form of Exhibit D hereto.
8.08 INDEMNIFICATION; INSURANCE.
(a) BankUnited (the "Indemnifying Party") shall
indemnify, defend and hold harmless the present and former officers,
directors, employees and agents of Suncoast and the Suncoast
Subsidiaries (each an "Indemnified Party") after the Effective Time
against all losses, expenses, claims, damages or liabilities
(collectively, "Costs") arising out of actions or omissions occurring
on or prior to the Effective Time (including without limitation, the
transactions contemplated by this Agreement) to the fullest extent
permitted by applicable OTS regulations and Suncoast's charter and
bylaws as in effect on the date hereof. In addition, BankUnited shall
advance expenses as incurred to the fullest extent permitted by the
OTS regulations and by Suncoast's charter and bylaws as in effect on
the date hereof, provided that the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification.
(b) The obligations of BankUnited under this Section 8.08
shall continue for six years following the Effective Time, provided
that all rights to indemnification and advancement of expenses in
respect of any claim made, asserted or commenced within such period
shall continue until the final disposition of such claim.
(c) All rights and obligations under this Section 8.08
shall be in addition to any rights an Indemnified Party may have under
the articles of incorporation or bylaws of BankUnited or any of its
Subsidiaries as in effect on the date hereof, or pursuant to any other
agreement, arrangement or document in effect prior to the Effective
Time.
(d) Any Indemnified Party wishing to claim
indemnification under Section 8.08(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly
notify the Indemnifying Party, but the failure to so notify shall not
relieve the Indemnifying Party of any liability it may have to such
Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time), (i) the Indemnifying Party shall have the right to
assume the defense thereof and the Indemnifying Party shall not be
liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except
that if the Indemnifying Party elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between the Indemnifying Party and
the Indemnified Parties, the Indemnified Parties may retain counsel
which is reasonably satisfactory to the Indemnifying Party, and the
Indemnifying Party shall pay, promptly as statements therefor are
received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction
unless the use of one counsel for such Indemnified Parties would
present such
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counsel with a conflict of interest), (ii) the Indemnified Parties
will cooperate in the defense of any such matter and (iii) the
Indemnifying Party shall not be liable for any settlement effected
without its prior written consent.
(e) At or prior to the Effective Time, BankUnited shall
purchase $5,000,000 of directors and officers liability insurance
coverage for the Indemnified Parties with respect to Costs that may be
incurred by the Indemnified Parties, which coverage shall be for a
term of three years commencing at the Effective Time and shall have a
deductible of $500,000; provided, however, that in no event shall
BankUnited expend in order to obtain such insurance, an amount in
excess of a total of $130,000 in premiums (the "Maximum Amount") for
coverage for such three year period. If the amount of the total
premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, BankUnited shall use its reasonable best
efforts to maintain the most advantageous policies (in terms of
coverage) of directors and officers insurance for a total three year
premium equal to the Maximum Amount.
(f) In the event that BankUnited or any of its respective
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then,
and in each such case, the successors and assigns of such entity shall
assume the obligations set forth in this Section 8.08, which
obligations are expressly intended to be for the irrevocable benefit
of, and shall be enforceable by, each director and officer covered
hereby.
8.09 STOCK OPTIONS.
(a) At the Effective Time, all rights with respect to any
Suncoast Common Stock pursuant to stock options granted by Suncoast
under the Suncoast Option Plan, including options granted under such
plan pursuant to employment or acquisition agreements, which are
outstanding at the Effective Time, whether or not then exercisable,
shall be converted into and become rights with respect to BankUnited
Common Stock and BankUnited shall assume each Suncoast Option, in
accordance with the terms of the Suncoast Option Plan. From and after
the Effective Time, each Suncoast Option shall be exercisable for the
number of shares of BankUnited Common Stock equal to the number of
shares of Suncoast Common Stock subject to such Suncoast Option
immediately prior to the Effective Time, and the per share exercise
price set forth in the Suncoast Option shall remain the same.
(b) At the Effective Time, the Suncoast Option Plan shall
be automatically and without further action assumed by BankUnited (and
thereupon become a stock option plan of BankUnited) as follows: (i)
BankUnited shall be substituted for Suncoast in administering the
Suncoast Option Plan, (ii) references to Suncoast shall be deemed to
be references to BankUnited, references to Suncoast's bylaws shall be
deemed to be references to the bylaws of BankUnited, and any similar
references shall be appropriately adjusted, and (iii) no additional
Suncoast Options shall be granted under the Suncoast Option Plan.
(c) BankUnited shall take all corporate action necessary
(i) to reserve for issuance a sufficient number of shares of
BankUnited Common Stock for delivery upon exercise of the
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options assumed by BankUnited hereunder, and (ii) to ensure that
shares of BankUnited Common Stock issued on exercise of such options
assumed by BankUnited hereunder are registered under the Securities
Act.
8.10 APPOINTMENTS TO BOARD OF DIRECTORS OF BANKUNITED AND
BANKUNITED, FSB. At the Effective Time, Albert Finch shall be appointed as a
Vice-Chairman of the Board of Directors of BankUnited and BankUnited, FSB. At
the Effective Time, the following persons shall be appointed to the Board of
Directors of BankUnited for the terms indicated: Albert Finch - three years;
Norman Mains and Irving Cohen - two years; and E. J. Giusti - one year. The
parties hereto recognize that according to BankUnited's bylaws, each such
person is required to stand for election at the annual shareholders meeting of
BankUnited next following the Effective Time. Accordingly, BankUnited's Board
of Directors, subject to applicable fiduciary obligations, shall (i) nominate
each such person to be elected as a director of BankUnited for the remainder of
such person's term on BankUnited's Board of Directors set forth above at the
annual shareholders meeting of BankUnited next following the Effective Time and
(ii) recommend that the shareholders of BankUnited elect such person to be a
director of BankUnited for such term. At the Effective Time each of the
foregoing persons shall be appointed to the Board of Directors of BankUnited,
FSB for a term of one year.
8.11 VALUATION OF SERVICING PORTFOLIO. At such time as BankUnited
shall reasonably request in connection with setting the Closing, Suncoast shall
provide BankUnited and/or its representatives with a magnetic tape updating the
tapes previously supplied for the purpose of valuing the Servicing Portfolio,
as well as a reconciliation of Suncoast's tape totals to Suncoast's accounting
and bookkeeping records.
8.12 CERTAIN CHANGE IN CONTROL MATTERS. The parties hereto agree
that prior to the Effective Time, Suncoast shall enter into and deliver (i)
certain severance and/or employment continuation agreements (collectively, such
severance and change-in-control agreements are referred to herein as the
"Change-in-Control Agreements") with each of Albert J. Finch, Richard L.
Browdy, and Wendy Mitchler regarding the payment of severance and
change-in-control benefits to them and (ii) a consulting agreement between
BankUnited and Albert J. Finch the term of which shall begin at the Effective
Time. The Change in Control Agreements and such consulting agreement shall be
in the form delivered to and agreed to and accepted by BankUnited in writing
prior to the date this Agreement is executed and delivered. BankUnited hereby
agrees, from and after the Effective Time, to provide the benefits and perform
the obligations of Suncoast set forth in the Change-in-Control Agreements in
accordance with the terms thereof.
8.13 STOCK EXCHANGE LISTING. BankUnited shall use its best efforts
to list, prior to the Effective Time, on the NASDAQ, upon official notice of
issuance, the shares of BankUnited Common Stock and New BankUnited Preferred
Stock to be issued to holders of Suncoast Capital Stock in the Merger.
8.14 EMPLOYEE BENEFITS.
(a) Suncoast shall provide BankUnited in Section 8.14 of the
Suncoast Disclosure Schedule the names of all Suncoast Employees
(including full and part-time employees) as of the date of the
Suncoast Disclosure Schedule (the "Current Employees"), and, as to
each
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Current Employee, such Current Employee's date of hire, current
compensation, and current severance benefits.
(b) BankUnited and Suncoast agree as follows:
(i) As soon as reasonably practicable after the
date of this Agreement BankUnited and Suncoast shall consult with each
other in order for BankUnited in its sole discretion to determine
which employees of Suncoast will become employees of BankUnited after
the Effective Time.
(ii) All employees who accept employment with
BankUnited as of the Effective Time ("Hired Employees") shall be
eligible to participate in the employee benefit plans and other fringe
benefits of BankUnited, including sickness benefit days and vacation
days, on the same terms and conditions as those provided from time to
time by BankUnited to its similarly situated officers and employees,
giving effect, for eligibility and vesting of benefits, to years of
service with Suncoast as if such service were with BankUnited.
(iii) In addition to providing for the Hired
Employee's participation in BankUnited's sickness and vacation plans,
BankUnited agrees to credit each Hired Employee that number of
sickness benefit days and vacation days (provided that in the case of
vacation time, such vacation time was accrued on the books of Suncoast
prior to the Effective Time), in each case accrued as an employee of
Suncoast and not taken by such Hired Employee as of the Effective
Time, which may be taken only in accordance with BankUnited's existing
policy for sickness benefit days and vacation days; provided, however,
that on or before July 1, 1997 BankUnited shall pay such Hired
Employee cash for such Hired Employee's accrued vacation days assumed
by BankUnited pursuant to the previous sentence, but not taken on or
before July 1, 1997. Suncoast employees and dependents participating
in Suncoast's medical plan will not be precluded from participating in
BankUnited's medical plan on account of a pre-existing medical
condition.
(iv) For one year following the Effective Time,
all Hired Employees shall be eligible for severance pay in accordance
with the severance terms set forth in writing by Suncoast to
BankUnited and agreed to and accepted by BankUnited in writing prior
to the date this Agreement is executed and delivered.
8.15 CERTAIN ACTIONS. No party shall take any action which would
adversely affect or delay the ability of either BankUnited or Suncoast to
obtain any necessary approvals of any Regulatory Authority or other
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement. No party shall take
any action that would prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code.
8.16 ACQUISITION PROPOSALS. Suncoast shall not, and shall use its
best reasonable efforts to cause its officers, directors and employees and any
investment banker, attorney, accountant, or other agent retained by it or any
of the Suncoast Subsidiaries not to (i) initiate, encourage or solicit,
directly or indirectly, the making of any proposal or offer (an "Acquisition
Proposal") to acquire all or any significant part of the business and
properties or capital stock of Suncoast or the Suncoast
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Subsidiaries, whether by merger, purchase of securities or assets, tender offer
or otherwise (an "Acquisition Transaction"), or initiate, directly or
indirectly, any contact with any person in an effort to or with a view towards
soliciting any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, an Acquisition Proposal. Notwithstanding the foregoing, Suncoast
may (i) furnish or cause to be furnished information subject to a
confidentiality agreement in a form substantially similar to that previously
executed by BankUnited, (ii) in response to an Acquisition Proposal, issue a
communication to its security holders of the type contemplated by Rule 14d-9(e)
under the Exchange Act, and (iii) participate in discussions and negotiations
directly and through its representatives with persons who have sought the same
if, in each instance, the Suncoast Board determines, based as to legal matters
on the written advice of outside legal counsel, that the failure to furnish
such information or to negotiate with such entity or group or to take and
disclose such position would be inconsistent with the proper exercise of the
fiduciary duties of the Suncoast Board. In the event Suncoast receives an
Acquisition Proposal or such discussions are sought to be initiated or
continued with Suncoast, it shall promptly inform BankUnited as to the material
terms thereof.
8.17 BANKUNITED TERMINATION FEE. To compensate BankUnited for
entering into this Agreement, taking action to consummate the transactions
hereunder and incurring the costs and expenses related thereto and other losses
and expenses, including the foregoing by BankUnited of other opportunities,
Suncoast and BankUnited agree as follows:
(a) Provided that BankUnited shall not be in material
breach of its obligations under this Agreement (which breach has not
been cured promptly following receipt of written notice thereof by
Suncoast specifying in reasonable detail the basis of such alleged
breach), Suncoast shall pay to BankUnited the sum (the "BankUnited
Termination Fee") of (i) $1.0 million if this Agreement is terminated
under the provisions of Section 10.01 (f) or (ii) $100,000 if this
Agreement is terminated under the provisions of Section 10.01(e). In
addition, Suncoast shall pay to BankUnited BankUnited's out-of-pocket
expenses not in excess of $300,000, if the BankUnited Termination Fee
is determined under clause (i) above or $10,000 if the BankUnited
Termination Fee is determined under clause (ii) above (including,
without limitation, amounts paid or payable to banks and investment
bankers, fees and expenses of counsel and printing expenses) (such
expenses are hereinafter referred to as the "BankUnited Expenses"),
incurred by BankUnited or any of its affiliates in connection with or
arising out of transactions contemplated by this Agreement, regardless
of when those expenses are incurred. In the event that this Agreement
is terminated under circumstances under which the BankUnited
Termination Fee is payable, BankUnited shall provide Suncoast with an
itemization of BankUnited Expenses.
(b) If this Agreement is terminated pursuant to (i)
Section 10.01(c) (if and only if (A) the breach by Suncoast giving
rise to BankUnited's right of termination under Section 10.01(c) is
for the specific purpose of inducing BankUnited to terminate this
Agreement in anticipation of an Acquisition Event (a "Wilful Breach")
and (B) pursuant to binding arbitration as defined below, a
determination has been made that (1) such Wilful Breach by Suncoast
has occurred and (2) that an Acquisition Event has occurred within 12
months of the date of such breach by Suncoast); or (ii) Section
10.01(e) (if an Acquisition Event shall occur after the date hereof
and prior to the date that is four months after the date of such
termination), Suncoast shall upon demand by BankUnited, pay or cause
to be paid,
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in same day funds (the "Acquisition Event Termination Fee") to
BankUnited, $1,000,000, or $900,000 if Suncoast shall have already
paid the BankUnited Termination Fee described in Section 8.17(a)(ii)
and the related BankUnited Expenses. "Acquisition Event" shall mean
any of the following: (i) any person or group (as defined in Section
13(d)(3) of the Exchange Act), other than BankUnited or any of its
Subsidiaries, shall have acquired, pursuant to a tender offer,
exchange offer or otherwise, beneficial ownership (including pursuant
to the acquisition of options) of 50% or more of any class of equity
securities of Suncoast or any of its Subsidiaries; (ii) any such
person or group shall have received approval from the OTS to acquire
ownership of 50% or more of any class of equity securities of
Suncoast; or (iii) Suncoast shall have authorized, recommended,
proposed or publicly announced an intention to authorize, recommend or
propose, or shall have entered into, an agreement with any person
(other than BankUnited or a Subsidiary thereof) to (w) effect a
merger, consolidation, business combination, sale of substantially all
the assets, or similar transaction involving Suncoast, (x) sell, lease
or otherwise dispose of assets of Suncoast representing 50% or more of
the consolidated assets of Suncoast, (y) issue, sell or otherwise
dispose of other than by means of a widely disbursed public offering
(including by way of merger, consolidation, share exchange, or any
similar transaction) securities representing 50% or more of any class
of equity securities of Suncoast in the aggregate, or (z) have such
person effect a tender offer or exchange offer that if consummated
would result in any person beneficially owning 50% or more of any
class of equity securities of Suncoast in the aggregate. BankUnited
agrees that any Acquisition Event Termination Fee paid pursuant to
this Section 8.17(b) shall be its exclusive remedy for a Wilful
Breach.
(c) For purposes of matters described in Section
8.17(b)(i) the parties hereto agree to resolve any dispute arising out
of or relating to such matters as follows:
(i) The parties agree to negotiate in good faith
for up to 30 days after written notice by one party to the other party
with respect to any dispute as to matters described in Section
8.17(b)(i) in order to attempt to resolve such dispute.
(ii) In the event that such dispute is not resolved
through mutual discussions within such 30 day period of time, such
dispute shall be submitted by any such party to, and if so submitted
shall be finally settled by, arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award may be entered in any court where the
arbitration takes place or any court having jurisdiction. Any such
arbitration shall take place in Miami, Florida. The arbitrator may
order specific performance or other equitable relief or remedies to
the extent the arbitrator deems appropriate, in any situation in which
a court could so order. All costs of such arbitration, including the
compensation of the arbitrator, shall be split evenly by the parties
hereto. The decision of the arbitrator shall be final and binding upon
the parties, their successors and assigns, and they shall comply with
such decision in good faith, and each party hereby submits itself to
the jurisdiction of the courts of the place where the arbitration is
held for the entry of judgment with respect to and to enforce the
decision of the arbitrator hereunder.
(d) Any payment required by paragraph (a) or (b) of this
Section shall become payable within two business days after
termination of the Agreement.
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<PAGE> 169
(e) Suncoast acknowledges that the agreements contained
in this Section 8.17 are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements,
BankUnited would not enter into this Agreement; accordingly, if
Suncoast fails to promptly pay the BankUnited Termination Fee, the
BankUnited Expenses, or the Acquisition Event Termination Fee, when
due, Suncoast shall in addition thereto pay to BankUnited all costs
and expenses (including fees and disbursements of counsel) incurred in
collecting the BankUnited Termination Fee, the BankUnited Expenses, or
the Acquisition Event Termination Fee, as the case may be, together
with interest on the amount thereof (or any unpaid portion thereof)
from the date such payment was required to be made until the date such
payment is received by BankUnited at the prime rate of Citibank New
York, National Association, as published in the Wall Street Journal
and as in effect from time to time during such period.
8.18 SUNCOAST TERMINATION FEE. To compensate Suncoast for entering
into this Agreement, taking action to consummate the transactions hereunder and
incurring the costs and expenses related thereto and other losses and expenses,
including the foregoing by Suncoast of other opportunities, Suncoast and
BankUnited agree as follows:
(a) Provided that Suncoast shall not be in material
breach of its obligations under this Agreement (which breach has not
been cured promptly following receipt of written notice thereof by
BankUnited specifying in reasonable detail the basis of such alleged
breach), BankUnited shall pay to Suncoast the sum (the "Suncoast
Termination Fee") of $100,000, if this Agreement is terminated under
the provisions of Section 10.01(b), plus out-of-pocket expenses not in
excess of $10,000 (including, without limitation, amounts paid or
payable to banks and investment bankers, fees and expenses of counsel
and printing expenses) (such expenses are hereinafter referred to as
the "Suncoast Expenses") incurred by Suncoast or any of its affiliates
in connection with or arising out of transactions contemplated by this
Agreement, regardless of when those expenses are incurred. In the
event that this Agreement is terminated under circumstances under
which the Suncoast Termination Fee is payable, Suncoast shall provide
BankUnited with an itemization of Suncoast Expenses.
(b) Any payment required by paragraph (a) of this Section
shall become payable within two business days after termination of the
Agreement.
(c) BankUnited acknowledges that the agreements contained
in this Section 8.19 are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements,
Suncoast would not enter into this Agreement; accordingly, if
BankUnited fails to promptly pay the Suncoast Termination Fee or the
Suncoast Expenses when due, BankUnited shall in addition thereto pay
to Suncoast all costs and expenses (including fees and disbursements
of counsel) incurred in collecting the Suncoast Termination Fee or the
Suncoast Expenses, as the case may be, together with interest on the
amount of the Suncoast Termination Fee or the Suncoast Expenses (or
any unpaid portion thereof) from the date such payment was required to
be made until the date such payment is received by Suncoast at the
prime rate of Citibank New York, National Association, as published in
the Wall Street Journal and as in effect from time to time during such
period.
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<PAGE> 170
8.19 SUNCOAST WARRANTS. In the Merger, holders of the Suncoast
Warrants shall have their Suncoast Warrants converted into warrants to acquire
BankUnited Common Stock and/or New BankUnited Preferred Stock as provided in
this Section 8.19. In the Merger, all rights with respect to Suncoast Common
Stock and/or Suncoast Preferred Stock pursuant to the Suncoast Warrants which
are outstanding at the Effective Time shall be converted into and become rights
with respect to BankUnited Common Stock and New BankUnited Preferred Stock,
respectively. In the Merger BankUnited shall assume each Suncoast Warrant, in
accordance with the terms of the Suncoast Warrants, such that (i) the right to
acquire Suncoast Common Stock and/or Suncoast Preferred Stock under the
Suncoast Warrants shall be converted to the right to acquire BankUnited Common
Stock and/or New BankUnited Preferred Stock respectively, on a one share for
one share basis, and on substantially the same terms as are set forth in the
Suncoast Warrants, and (ii) BankUnited shall assume Suncoast's other
obligations under the Suncoast Warrants on substantially the same terms as are
provided in the Suncoast Warrants. BankUnited will execute and deliver to each
registered holder of Suncoast Warrants a supplemental warrant agreement
providing for assumption of the Suncoast Warrant Agreement provided for in this
Section 8.19, subject to applicable law.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each of BankUnited and Suncoast to effect the
Merger and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) The respective stockholders of Suncoast and
BankUnited shall have approved all matters relating to the Merger
required under applicable law at the Stockholders' Meetings.
(b) This Agreement, the Merger and the other transactions
contemplated hereby shall have been approved by the OTS and any other
Regulatory Authorities whose approval is required for consummation of
the transactions contemplated hereby, which approvals are subject to
no conditions that in the reasonable judgment of BankUnited would
restrict it or its Subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective
Time.
(c) The Registration Statement shall have been declared
effective and shall not be subject to a stop order or any threatened
stop order.
(d) Neither BankUnited nor Suncoast shall be subject to
any active litigation which seeks any order, decree or injunction of a
court or agency of competent jurisdiction to enjoin or prohibit the
consummation of the Merger and there shall be in effect no order,
decree, or injunction of any court or agency of competent
jurisdiction, directing that the consummation of the transactions
contemplated by this Agreement be prohibited or enjoined.
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<PAGE> 171
(e) The shares of BankUnited Common Stock and New
BankUnited Preferred Stock issuable pursuant to the Merger shall have
been authorized for trading on the NASDAQ upon official notice of
issuance.
9.02 CONDITIONS TO OBLIGATIONS OF SUNCOAST TO EFFECT THE MERGER.
The obligations of Suncoast to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of BankUnited set
forth in Article VI hereof shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except to the extent
such representations and warranties are by their express provisions
made as of a specified date) and Suncoast shall have received a
certificate signed by the chairman and chief executive officer,
executive vice president or other duly authorized officer of
BankUnited to that effect.
(b) BankUnited shall have performed in all material
respects all obligations required to be performed by it under this
Agreement prior to the Effective Time, and Suncoast shall have
received a certificate signed by the chairman and chief executive
officer, executive vice president or other duly authorized officer of
BankUnited to that effect.
(c) As of the Effective Time the BankUnited Net Worth
shall be not less than $64,700,000.
(d) Suncoast shall have received an opinion of counsel
for BankUnited addressed to Suncoast and in form reasonably
satisfactory to it as to validity of the approval of the Merger by
BankUnited and Merger Sub.
(e) The Suncoast Board shall have received from Raymond
James & Associates, Inc. a written opinion, dated as of the date of
this Agreement, in form and substance reasonably satisfactory to the
Suncoast Board, to the effect that the terms on which Suncoast Capital
Stock is converted into BankUnited capital stock in the Merger is fair
to the holders of Suncoast Capital Stock from a financial point of
view, which opinion shall have been confirmed in writing to the
Suncoast Board as of the date the Joint Proxy Statement is first
mailed to the stockholders of Suncoast and not subsequently withdrawn.
(f) No event, occurrence, or circumstance shall have
occurred that would constitute a Material Adverse Effect as to
BankUnited.
(g) Suncoast shall have received an opinion of counsel
mutually agreed upon by Suncoast and BankUnited addressed to Suncoast
and/or BankUnited in form reasonably satisfactory to them that for
federal income tax purposes the Merger qualifies as a reorganization
under the provisions of Section 368 of the Code.
9.03 CONDITIONS TO OBLIGATIONS OF BANKUNITED TO EFFECT THE MERGER.
The obligations of BankUnited to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
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<PAGE> 172
(a) The representations and warranties of Suncoast set
forth in Article V hereof shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except to the extent
such representations and warranties are by their express provisions
made as of a specified date) and BankUnited shall have received a
certificate signed by the chairman or the chief executive officer or
other duly authorized officer of Suncoast to that effect.
(b) As of the Effective Time the Suncoast Net Worth shall
be not less than $22,000,000.
(c) Suncoast shall have performed in all material
respects all obligations required to be performed by it under this
Agreement prior to the Effective Time, and BankUnited shall have
received a certificate signed by the chairman or the chief executive
officer or other duly authorized officer of Suncoast to that effect.
(d) BankUnited shall have received an opinion of counsel
for Suncoast addressed to BankUnited and in form reasonably
satisfactory to it as to the validity of the approvals of the Merger
by Suncoast.
(e) No event, occurrence, or circumstance shall have
occurred that would constitute a Material Adverse Effect as to
Suncoast.
ARTICLE X
TERMINATION
10.01 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions contemplated hereby by the stockholders of BankUnited
and Suncoast or both, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) by mutual consent of BankUnited and Suncoast; or
(b) by BankUnited or Suncoast if (i) the OTS has denied
approval of the Merger and such denial has become final and
nonappealable or has approved the Merger subject to conditions that in
the judgment of BankUnited would restrict it or its Subsidiaries or
Affiliates in their respective spheres of operations and business
activities after the Effective Time or (ii) the Effective Time does
not occur by February 28, 1997; or
(c) by BankUnited (if it is not in material breach of any
of its obligations hereunder) pursuant to notice in the event of a
breach or failure by Suncoast that is material in the context of the
transactions contemplated hereby of any representation, warranty,
covenant or agreement by Suncoast contained herein which has not been,
or cannot be, cured within 30 days after written notice of such breach
is given to Suncoast; or
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<PAGE> 173
(d) by Suncoast (if it is not in material breach of any
of its obligations hereunder) pursuant to notice in the event of a
breach or failure by BankUnited that is material in the context of the
transactions contemplated hereby of any representation, warranty,
covenant or agreement by BankUnited contained herein which has not
been, or cannot be, cured within 30 days after written notice of such
breach is given to BankUnited; or
(e) by BankUnited or Suncoast if the stockholders of
BankUnited or Suncoast fail to approve the Merger at the Stockholders'
Meetings; or
(f) by Suncoast if (i) there shall not have been a
material breach of any covenant or agreement on the part of Suncoast
under this Agreement and (ii) prior to the Effective Time, a
corporation, partnership, person or other entity or group shall have
made a bona fide Acquisition Proposal that the Suncoast Board
determines in its good faith judgment and in the exercise of its
fiduciary duties, based as to legal matters on the written opinion of
legal counsel and as to financial matters on the written opinion of an
investment banking firm familiar with savings institutions, is more
favorable to the Suncoast Stockholders than the Merger and that the
failure to terminate this Agreement and accept such alternative
Acquisition Proposal would be inconsistent with the proper exercise of
such fiduciary duties; provided, however, that termination under this
clause (ii) shall not be deemed effective until payment of the
Termination Fee required by Section 8.17.
10.02 BANKUNITED SPECIAL TERMINATION RIGHTS. Notwithstanding any
investigation made by or information known to BankUnited prior to the date
hereof and notwithstanding anything to the contrary herein, and in recognition
of the fact that BankUnited, as of the date hereof, has not had an opportunity
to complete its due diligence review of Suncoast, in addition to the
termination rights set forth in Section 10.01, BankUnited shall have the
following rights (the "BankUnited Special Termination Rights"): at any time
after the date of this Agreement through 6:00 p.m. on the later of (i) 15
business days after the date hereof or (ii) seven business days after the date
on which the completed Suncoast Disclosure Schedule has been delivered to
BankUnited, if BankUnited shall identify any circumstance which in the
reasonable business judgement of its Board of Directors (including a Special
Committee thereof) (w) could materially and adversely impact the reasonably
expected financial and business benefits to BankUnited of the transactions
contemplated by this Agreement, (x) is inconsistent in any material and adverse
respect with the representations and warranties of Suncoast contained in this
Agreement, (y) could have a Material Adverse Effect as to Suncoast, or (z)
results in the net worth of Suncoast being less than $23.0 million, which net
worth shall be determined in accordance with GAAP, BankUnited may exercise the
BankUnited Special Termination Rights by written notice to Suncoast pursuant to
Section 11.06. BankUnited shall inform Suncoast by 6:00 p.m. on the last
business date determined under clause (i) or (ii) of this Section 10.02 if it
determines that as of such date any such circumstance has any of the effects
set forth above. Failure to exercise such right shall have no effect on
BankUnited's right to terminate pursuant to Section 10.01.
10.03 SUNCOAST SPECIAL TERMINATION RIGHTS. Notwithstanding any
investigation made by or information known to Suncoast prior to the date hereof
and notwithstanding anything to the contrary herein, and in recognition of the
fact that Suncoast, as of the date hereof, has not had an opportunity to
complete its due diligence review of BankUnited, in addition to the termination
rights set forth in Section 10.01, Suncoast shall have the following rights
(the "Suncoast Special
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<PAGE> 174
Termination Rights"): at any time after the date of this Agreement through 6:00
p.m. on the later of (i) 15 business days after the date hereof or (ii) seven
business days after the date on which the completed BankUnited Disclosure
Schedule has been delivered to Suncoast, if Suncoast shall identify any
circumstance which in the reasonable business judgement of its Board of
Directors (including a Special Committee thereof) (x) is inconsistent in any
material and adverse respect with the representations and warranties of
BankUnited contained in this Agreement, (y) could have a Material Adverse
Effect as to BankUnited, or (z) results in the net worth of BankUnited being
less than $64.7 million, which net worth shall be determined as of June 30,
1996, determined in accordance with GAAP, Suncoast may exercise the Suncoast
Special Termination Rights by written notice to BankUnited pursuant to Section
11.06. Suncoast shall inform BankUnited by 6:00 p.m. on the last business date
determined under clause (i) or (ii) of this Section 10.03 if it determines that
as of such date any such circumstance has any of the effects set forth above.
Failure to exercise such right shall have no effect on Suncoast's right to
terminate pursuant to Section 10.01.
10.04 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Article 10, this Agreement shall
become void and have no effect, except that (i) the provisions of Sections
8.01(d), 8.17, 8.18, 10.04, and Section 11.01 shall survive any such
termination, and (ii) no party shall be relieved or released from any liability
arising out of an intentional breach of any provision of this Agreement.
10.05 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
FOLLOWING THE EFFECTIVE TIME. Except for Articles III, and IV and Sections
8.08, 8.09, 8.10, 8.12, 8.14 and 8.19, none of the respective representations,
warranties, obligations, covenants and agreements of the parties shall survive
the Effective Time.
10.06 DELIVERY OF BANKUNITED AND SUNCOAST DISCLOSURE SCHEDULES. Each
of BankUnited and Suncoast will use their respective best reasonable efforts to
deliver their completed Disclosure Schedule to the other by 6:00 p.m. on the
seventh business day after the date hereof; provided that each such Disclosure
Schedule shall be delivered no later than the tenth business day after the date
hereof.
ARTICLE XI
GENERAL PROVISIONS
11.01 EXPENSES. Unless otherwise agreed by the parties in writing,
each party hereto shall bear its own expenses incident to preparing, entering
into and carrying out this Agreement and to consummating the Merger.
11.02 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereunder and thereunder, and
such agreements supersede all prior arrangements or understandings with respect
thereto, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors. Other than as expressly set forth in this Agreement,
nothing in this Agreement, expressed or implied, is intended to confer upon any
individual, corporation or other entity, other than BankUnited, Suncoast and
the
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<PAGE> 175
Merger Sub or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
11.03 AMENDMENTS. To the extent permitted by law, this Agreement may
be amended by a subsequent writing signed by each of BankUnited and Suncoast;
provided, however, that the provisions hereof relating to the manner or basis
in which shares of Suncoast Capital Stock will be exchanged for capital stock
of BankUnited shall not be amended after the Stockholders' Meetings without any
requisite approval of the holders of the issued and outstanding shares of
Suncoast Capital Stock entitled to vote thereon.
11.04 WAIVERS. Prior to or at the Effective Time, each of
BankUnited and Suncoast shall have the right to waive any default in the
performance of any term of this Agreement by the other, to waive or extend the
time for the compliance or fulfillment by the other of any and all of the
other's obligations under this Agreement and to waive any or all of the
conditions precedent to its obligations under this Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
11.05 NO ASSIGNMENT. None of the parties hereto may assign any of
its rights or delegate any of its obligations under this Agreement to any other
person or entity. Any such purported assignment or delegation that is made
without the prior written consent of the other parties to this Agreement shall
be void and of no effect.
11.06 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, or by registered or certified mail, postage
prepaid to the persons at the addresses set forth below (or at such other
address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Suncoast: Suncoast Savings and Loan Association, FSA
4000 Hollywood Boulevard - Suite 400N
Hollywood, Florida 33021
Attention: Albert J. Finch, Chairman of the Board and President
Copy to Counsel: Thompson Hine & Flory P.L.L.
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
Attention: Richard E. Streeter
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<PAGE> 176
BankUnited: BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Attention: Alfred R. Camner, Chairman of the
Board and President Samuel A.
Milne, Chief Financial Officer
Copy to Counsel: Stuzin and Camner, P.A.
1221 Brickell Avenue - 25th Floor
Miami, Florida 33131
Attention: Marsha D. Bilzin
11.07 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to take all such actions as are necessary on
its part to cause the consummation of the Merger, will cause irreparable injury
for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of the other party's
obligations or any arbitration award hereunder and to the granting by any such
court of the remedy of the specific performance hereunder.
11.08 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Florida.
11.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement, or in any other instrument referred to
herein, shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
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<PAGE> 177
IN WITNESS WHEREOF, BankUnited and Suncoast have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
BANKUNITED FINANCIAL CORPORATION
By: /s/ Alfred R. Camner
--------------------------------------
Alfred R. Camner
Chairman of the Board and President
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
By: /s/ Albert J. Finch
--------------------------------------
Albert J. Finch
Chairman of the Board and President
54
<PAGE> 178
EXHIBIT A
Board of Directors of
Surviving Corporation
<PAGE> 179
BOARD OF DIRECTORS
OF
SURVIVING CORPORATION
If BankUnited, FSB is not the Surviving Corporation then the following
individuals will be directors of the Surviving Corporation at the Effective
Time:
Name Home Address
- ---- -------------
Alfred R. Camner 6855 S.W. 101 Street
Miami, Florida 33156
James A. Dougherty 5331 S.W. 90 Avenue
Cooper City, Florida 33328
Earline G. Ford 20490 N.E. 22nd Court
N. Miami Beach, Florida 33180
<PAGE> 180
If BankUnited, FSB is the Surviving Corporation then the following
individuals will be directors of the Surviving Corporation at the Effective
Time:
Name Home Address
- ---- ------------
Alfred R. Camner 6855 S.W. 101 Street
Miami, Florida 33156
James A. Dougherty 5331 S.W. 90 Avenue
Cooper City, Florida 33328
Lawrence H. Blum 10100 Hidden Place
Miami, Florida 33156
Earline G. Ford 20490 N.E. 22nd Court
N. Miami Beach, Florida 33180
Marc D. Jacobson 115 E. Rivo Alto Drive
Miami Beach, Florida 33140
Allen M. Bernkrant 13643 Deering Bay Drive
Resident #125
Miami, Florida 33158
Patricia L. Frost 125 E. San Marino Drive
Miami Beach, Florida 33139
Anne W. Solloway 8124 S.W. 87 Terrace
Miami, Florida 33143
Sandra Goldstein 611 Ocean Drive - Apt. #2E
Key Biscayne, Florida 33149
Christina Cuervo Migoya 1600 S. Miami Avenue
Miami, Florida 33129
Albert J. Finch 15 Dogwood Road
Hollywood, Florida 33021
Norman E. Mains 1065 Fisher Lane
Winnetka, Illinois 60093
Irving P. Cohen 4832 Flower Valley Road
Rockville, Maryland 20853
E. J. Giusti 2500 E. Las Olas
Blvd., Ste. 1002 Fort
Lauderdale, Florida 33301
Mr. Bruce Friesner 5431 North 36th Court
Hollywood, Florida 33021
Dr. Neil Messinger 10801 S.W. 93rd Court
Miami, Florida 33176
<PAGE> 181
EXHIBIT B
Offices of Surviving Corporation
<PAGE> 182
OFFICES OF SURVIVING CORPORATION
If BankUnited, FSB is not the Surviving Corporation then the offices
of the Surviving Corporation at the Effective Time will be as follows:
Office Headquarters Mortgage Origination Offices
- ------------------- ----------------------------
255 Alhambra Circle Suite 550N
Coral Gables, Florida 33134 4000 Hollywood Boulevard
(305) 569-2000 Hollywood, Florida 33021
(305) 986-2030
Savings Branches 7700 N. Kendall Drive
- ---------------- Suite 506
4350 Sheridan Street Miami, Florida 33156
Hollywood, Florida 330221
(305) 963-2974
501 Golden Isles Drive
Hallandale, Florida 33009
(305) 458-5004
100 S. Flamingo Road
Pembroke Pines, Florida 33027
(305) 437-9458
1177 George Bush Boulevard, Suite 203
Delray Beach, Florida 33483
(407) 265-1332
227 Commercial Boulevard
Lauderdale-by-the-Sea, Florida 33308
(305) 776-6655
1313 North Ocean Boulevard
Pompano Beach, Florida 33062
(954) 784-4188
<PAGE> 183
OFFICES OF SURVIVING CORPORATION
If BankUnited, FSB is the Surviving Corporation then the offices of
the Surviving Corporation at the Effective Time will be as follows:
Office Headquarters 2201 West Hillsboro Boulevard
- ------------------- Deerfield Beach, Florida 33442
255 Alhambra Circle (954) 427-6390
Coral Gables, Florida 33134
(305) 569-2000 7431-39 West Atlantic Avenue
Delray Beach, Florida 33446
(407) 495-5020
Savings Branches
- ---------------- 6075 Sunset Drive
4350 Sheridan Street South Miami, Florida 33143
Hollywood, Florida 330221 (305) 663-8000
(305) 963-2974
5779 North University Drive
501 Golden Isles Drive Tamarac, Florida 33321
Hallandale, Florida 33009 (954) 722-4701
(305) 458-5004
117 N. Congress Avenue
100 S. Flamingo Road Boynton Beach, Florida 33426
Pembroke Pines, Florida 33027
(305) 437-9458 1313 North Ocean Boulevard
Pompano Beach, Florida 33062
1177 George Bush Boulevard, Suite 203 (954) 784-4188
Delray Beach, Florida 33483
(407) 265-1332
Mortgage Origination Offices
227 Commercial Boulevard ----------------------------
Lauderdale-by-the-Sea, Florida 33308 Suite 550N
(305) 776-6655 4000 Hollywood Boulevard
Hollywood, Florida 33021
21222 St. Andrews Blvd. (305) 986-2030
Boca Raton, Florida 33434
(407) 750-7710 7700 N. Kendall Drive
Suite 506
255 Alhambra Circle Miami, Florida 33156
Coral Gables, Florida 33134
(305) 569-2000
1307 University Drive
Coral Springs, Florida 33071
(954) 752-8572
<PAGE> 184
EXHIBIT C
Voting Agreement
Pursuant to Section 5.44
of the Agreement and Plan of Merger
<PAGE> 185
Name (please print):
-----------------------------------------
Number of Shares of Suncoast Common Stock:
---------------
Number of Shares of Suncoast Preferred Stock:
---------------
July 15, 1996
BANKUNITED FINANCIAL CORPORATION
255 Alhambra Circle
Coral Gables, Florida 33134
Dear Madam or Sir:
The undersigned has been informed that BankUnited Financial
Corporation ("BankUnited") has entered into an agreement and plan of merger
dated as of the date hereof (the "Agreement") with Suncoast Savings and Loan
Association, FSA ("Suncoast") pursuant to which BankUnited will acquire
Suncoast in a merger transaction (the "Transaction") in which shares of
BankUnited will be issued for shares of Suncoast. A copy of the Agreement, as
executed, has been provided to the undersigned and the undersigned has reviewed
and is familiar with the terms of the Agreement.
As a condition and inducement to BankUnited's willingness to enter
into the Agreement, the undersigned confirms the undersigned's agreement with
BankUnited as follows:
1. The undersigned represents and warrants that as of the date hereof the
undersigned owns or has the power to vote the number of shares of
Common Stock, par value $1.10 per share, of Suncoast (the "Common
Stock") set forth above, which includes shares of Common Stock held by
Suncoast's Stock Bonus/401(k) Plan which the undersigned is entitled
to vote. Except for shares of Suncoast's Series A Noncumulative
Convertible Preferred Stock ("Preferred Stock") and options to
purchase Common Stock outstanding under Suncoast's stock option
plan(s), if any, owned by the undersigned, the undersigned does not
own or hold any rights to acquire any additional shares of the Common
Stock (by conversion of convertible securities, exercise of stock
options or otherwise) or any interest therein or any voting rights
with respect thereto.
2. The undersigned will not contract to sell, sell or otherwise transfer
or dispose of any shares of Common Stock or Preferred Stock or any
additional shares of Common Stock or Preferred Stock that the
undersigned may subsequently acquire, or any interest therein or
securities convertible into Common Stock or any voting rights with
respect thereto, other than pursuant to the Transaction or with
BankUnited's prior written consent.
3. The undersigned agrees to vote all shares of the Common Stock
beneficially owned by the undersigned at the record date for the
special meeting of shareholders of Suncoast to be called to consider
and vote on the Transaction, or the undersigned shall cause such
shares to be voted, in favor of the Transaction pursuant to the
Agreement, with such modifications to the Agreement as the parties
thereto may make. At any meeting of shareholders held to consider any
other acquisition proposal with respect to Suncoast or to take action
to nullify or prevent
<PAGE> 186
the Transaction, all such shares owned or controlled by the
undersigned will be voted against such proposal.
4. The undersigned shall use his or her reasonable best efforts to
cooperate fully with BankUnited in connection with the Transaction and
to take promptly all such actions as may be necessary or appropriate
to consummate such Transaction.
5. The undersigned agrees that damages are an inadequate remedy for the
breach by the undersigned of any term or condition of this letter
agreement and that BankUnited shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief in
order to enforce the agreements herein.
6. The obligations of the parties hereunder shall terminate upon the
earlier to occur of termination of the Agreement in accordance with
its terms or consummation of the Transaction.
7. This agreement shall be fully binding upon and inure to the benefit of
the respective parties' successors, assigns, executors, trustees and
heirs.
8. This agreement shall be governed by and construed under the laws of
the State of Florida (without giving effect to the choice of law
provisions thereof). Any term or provision of this agreement which is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this agreement or affecting the
validity or enforceability of any of the terms or provisions of this
agreement in any other jurisdiction. If any provisions of this
agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
9. Notwithstanding the foregoing, this agreement shall have no effect on
the undersigned's conduct as a member of the Board of Directors of
Suncoast, or as an executive officer of Suncoast if the undersigned is
a member of the Board of Directors of Suncoast or is an executive
officer of Suncoast.
10. The undersigned consents to the jurisdiction of any state or federal
court located within the county of Dade, state of Florida, and
irrevocably agree that all actions or proceedings arising out of or
relating to this agreement shall be litigated in such courts. The
undersigned accepts individually and in connection with the
undersigned's properties, generally and unconditionally, the
jurisdiction of the aforesaid courts and waives any defense of forum
non conveniens, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this agreement.
11. The undersigned agrees that in the event of litigation between the
undersigned and BankUnited arising out of this Agreement, if
BankUnited prevails in such litigation, BankUnited shall be entitled
to recover reasonable attorneys' fees, trial and appellate court
costs, and all other costs or expenses associated with such
litigation.
<PAGE> 187
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of such counterparts together shall
constitute one and the same instrument.
Very truly yours,
--------------------------------
Signature
<PAGE> 188
EXHIBIT D
Voting Agreement
Pursuant to Section 6.15
of the Agreement and Plan of Merger
<PAGE> 189
Name (please print):
-------------------------------------------------
Number of Shares of BankUnited Class A Common Stock:
----------------
Number of Shares of BankUnited Class B Common Stock:
----------------
Number of Shares of BankUnited Preferred Stock (all series):
---------
July 15, 1996
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
4000 Hollywood Boulevard
Hollywood, FL 33021
Dear Madam or Sir:
The undersigned has been informed that BankUnited Financial
Corporation ("BankUnited") has entered into an agreement and plan of merger
dated as of the date hereof (the "Agreement") with Suncoast Savings and Loan
Association, FSA ("Suncoast") pursuant to which BankUnited will acquire
Suncoast in a merger transaction (the "Transaction") in which shares of
BankUnited will be issued for shares of Suncoast. A copy of the Agreement, as
executed, has been provided to the undersigned and the undersigned has reviewed
and is familiar with the terms of the Agreement.
As a condition and inducement to Suncoast's willingness to enter into
the Agreement, the undersigned confirms the undersigned's agreement with
Suncoast as follows:
1. The undersigned represents and warrants that as of the date hereof the
undersigned owns or has the power to vote the number of shares of
Class A and Class B Common Stock, par value $.01 per share, of
BankUnited (the "Common Stock") set forth above. Except for shares of
BankUnited's Preferred Stock (all series) ("Preferred Stock") and
options to purchase Common Stock outstanding under BankUnited's stock
option plan(s), if any, owned by the undersigned, the undersigned does
not own or hold any rights to acquire any additional shares of the
Common Stock (by conversion of convertible securities, exercise of
stock options or otherwise) or any interest therein or any voting
rights with respect thereto.
2. The undersigned agrees to vote all shares of Common Stock beneficially
owned by the undersigned at the meeting of the shareholders of
BankUnited next following the date of this Agreement at which
directors of BankUnited are elected, in favor of electing to the Board
of Directors of BankUnited the persons set forth in Section 8.10 of
the Agreement for the terms set forth therein.
3. The undersigned agrees to vote all shares of the Common Stock
beneficially owned by the undersigned at the record date for the
special meeting of shareholders of BankUnited to be called to consider
and vote on the Transaction, or the undersigned shall cause such
shares to be voted, in favor of the Transaction pursuant to the
Agreement, with such modifications to the Agreement as the parties
thereto may make.
<PAGE> 190
4. The undersigned shall use his or her reasonable best efforts to
cooperate fully with Suncoast in connection with the Transaction and
to take promptly all such actions as may be necessary or appropriate
to consummate such Transaction.
5. The undersigned agrees that damages are an inadequate remedy for the
breach by the undersigned of any term or condition of this letter
agreement and that Suncoast shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief in
order to enforce the agreements herein.
6. The obligations of the parties hereunder shall terminate upon the
earlier to occur of termination of the Agreement in accordance with
its terms or consummation of the Transaction.
7. This agreement shall be fully binding upon and inure to the benefit of
the respective parties' successors, assigns, executors, trustees and
heirs.
8. This agreement shall be governed by and construed under the laws of
the State of Florida (without giving effect to the choice of law
provisions thereof). Any term or provision of this agreement which is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this agreement or affecting the
validity or enforceability of any of the terms or provisions of this
agreement in any other jurisdiction. If any provision of this
agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
9. Notwithstanding the foregoing, this agreement shall have no effect on
the undersigned's conduct as a member of the Board of Directors of
BankUnited, or as an executive officer of BankUnited if the
undersigned is a member of the Board of Directors of BankUnited or is
an executive officer of BankUnited.
10. The undersigned consents to the jurisdiction of any state or federal
court located within the county of Dade, state of Florida, and
irrevocably agrees that all actions or proceedings arising out of or
relating to this agreement shall be litigated in such courts. The
undersigned accepts individually and in connection with the
undersigned's properties, generally and unconditionally, the
jurisdiction of the aforesaid courts and waives any defense of forum
non conveniens, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this agreement.
11. The undersigned agrees that in the event of litigation between the
undersigned and Suncoast arising out of this Agreement, if Suncoast
prevails in such litigation, Suncoast shall be entitled to recover
reasonable attorneys' fees, trial and appellate court costs, and all
other costs or expenses associated with such litigation.
<PAGE> 191
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of such counterparts together shall
constitute one and the same instrument.
Very truly yours,
------------------------------
Signature
<PAGE> 192
EXHIBIT E
Rule 145 Affiliate Agreement
Pursuant to Section 8.07
of the Agreement and Plan of Merger
<PAGE> 193
Name (please print)
-------------------
_____________ ___, 1996
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Dear Madam or Sir:
This letter is delivered to you in compliance with Section 8.07 of the
Agreement and Plan of Merger, dated July 15, 1996 (the "Agreement"), between
BankUnited Financial Corporation ("BankUnited") and Suncoast Savings and Loan
Association, FSA ("Suncoast"), providing for the merger (the "Merger") of
Suncoast with and into a newly formed, wholly-owned subsidiary of BankUnited.
1. The undersigned represents and warrants to you that the shares
of Class A Common Stock of BankUnited and the shares of the new series of
BankUnited Preferred Stock (collectively, the "BankUnited Stock"), which the
undersigned shall receive in exchange for shares of common stock or preferred
stock of Suncoast, are not being acquired by the undersigned with a view to
their distribution except to the extent and in the manner provided for in
paragraph (d) of Rule 145 under the Securities Act of 1933, as amended (the
"Act"). The undersigned agrees that the undersigned will not sell, transfer or
otherwise dispose of any shares of BankUnited Stock to be received by the
undersigned in connection with the Merger unless (i) such sale, transfer, or
other disposition has been registered under this Act, (ii) such sale, transfer,
or other disposition is made in conformity with the volume and other applicable
limitations of Rule 145 under the Act, or (iii) the undersigned at the
undersigned's expense delivers to BankUnited an opinion of counsel in form and
substance reasonably satisfactory to BankUnited to the effect that the proposed
transfer of BankUnited Stock does not violate the federal securities laws.
2. The undersigned acknowledges that to the extent the
undersigned believed necessary, the undersigned discussed this letter and any
applicable limitations upon the resale of BankUnited Stock with either counsel
for undersigned or counsel for Suncoast. The undersigned agrees that BankUnited
may place the legend set forth below on the certificate or certificates for any
or all BankUnited Stock to be received by the undersigned in connection with
the Merger and may file stop-transfer instructions with respect to such shares
with the transfer agent for such shares. The undersigned understands that the
legend set forth on the certificate or certificates for BankUnited Stock to be
received by the undersigned shall be removed as well as the related
stop-transfer instructions when such restrictions are no longer applicable to
such shares.
<PAGE> 194
3. Pursuant to the provisions of the preceding paragraph, the
certificate or certificates evidencing BankUnited Stock received by the
undersigned may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF SUCH RULE
HAVE BEEN FULFILLED."
Very truly yours,
----------------------------------
Signature
<PAGE> 195
EXHBIBIT B
B-1
<PAGE> 196
STATEMENT OF DESIGNATION
OF
8% NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1996
OF
BANKUNITED FINANCIAL CORPORATION
BankUnited Financial Corporation (the "Corporation"), a corporation
organized and existing under the Florida Business Corporation Act, in
accordance with the provisions of Section 607.0602 thereof and Article VI the
Corporation's Articles of Incorporation, DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors by
the Articles of Incorporation of the Corporation, said Board of Directors
acting at a meeting thereof adopted resolutions providing for the issuance of
1,000,000 shares of the Corporation's Preferred Stock, $.01 par value, "8%
Noncumulative Convertible Preferred Stock, Series 1996," which resolutions are
as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Articles of Incorporation, the Board of
Directors does hereby provide for and authorize the issuance of 1,000,000
shares of the Preferred Stock, $.01 par value, of the Corporation, of the
presently authorized but unissued shares of Preferred Stock (the "Preferred
Stock") to be designated "8% Noncumulative Convertible Preferred Stock, Series
1996" (the "Series 1996 Preferred Stock"). The number of shares constituting
the Series 1996 Preferred Stock may be increased or decreased from time to time
by a vote of not less than a majority of the Board of Directors of the
Corporation then in office; provided, that no decrease shall reduce the number
of shares of the Series 1996 Preferred Stock to a number less than the number
of shares then outstanding plus the number of shares reserved for issuance upon
the exercise of any outstanding options, rights or warrants to purchase Series
1996 Preferred Stock or upon the conversion of any outstanding securities
issued by the Corporation convertible into shares of the Series 1996 Preferred
Stock. The voting powers, designations, preferences, and relative,
participating, optional or other special rights of the Series 1996 Preferred
Stock authorized hereunder and the qualifications, limitations and restrictions
of such preferences and rights are as follows:
1. Dividends.
(a) The holders of the Series 1996 Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of
Directors out of funds of the Corporation legally available for
payment, noncumulative cash dividends, payable quarterly in arrears,
at the rate of $1.20 per share per annum. Dividends, when declared on
the Series 1996 Preferred Stock, shall have accrued from the date of
issuance or thereafter, from the most recent date on which dividends
were payable and be payable quarterly on March 31, June 30, September
30 and December 31 of each year (each a "Dividend Payment Date"),
commencing on _________ __, 199_; provided, however, that if any such
day is a non-business day, the Dividend Payment Date will be the next
business day. Each declared dividend shall be payable to holders of
record as they appear at the close of business on the stock books of
the Corporation on such record dates, not more than 30 calendar days
and not less than 10 calendar days preceding the Dividend Payment Date
therefor, as determined by the Board of Directors (each of such dates
a "Record Date"). Quarterly dividend periods (each a "Dividend
Period") shall commence on and include the first day of January,
April, July and October of each year and shall end on and include the
day next preceding the next following Dividend Payment Date. Dividends
payable on the Series 1996 Preferred Stock for any period greater or
less than a full Dividend Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months. Dividends payable on
the Series 1996 Preferred Stock for each full Dividend Period shall be
computed by dividing the annual dividend rate by four.
B-2
<PAGE> 197
(b) No full dividends shall be declared, paid or set
apart for payment on any series of Preferred Stock or other capital
stock of any series ranking, as to dividends or liquidation
preference, on a parity ("Parity Stock") with the Series 1996
Preferred Stock during any calendar quarter unless full dividends on
the Series 1996 Preferred Stock for the Dividend Period ending during
such calendar quarter have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof is set
apart for such payment. When dividends are not so paid in full (or a
sum sufficient for such full payment is not so set apart) upon the
Series 1996 Preferred Stock and any other Parity Stock, dividends upon
the Series 1996 Preferred Stock and dividends on such other Parity
Stock payable during such calendar quarter shall be declared pro rata
so that the amount of such dividends so payable per share on the
Series 1996 Preferred Stock and such other Parity Stock shall in all
cases bear to each other the same ratio that full dividends for the
then- current calendar quarter on the shares of Series 1996 Preferred
Stock (which shall not include any accumulation in respect of unpaid
dividends for prior Dividend Periods) and full dividends, including
required or permitted accumulations, if any, on shares of such other
Party Stock, bear to each other. The Corporation shall not declare,
pay or set apart funds for any dividend or other distribution, other
than in shares of capital stock ranking junior to the Series 1996
Preferred Stock as to dividends or liquidation preference ("Junior
Stock"), on any shares of Junior Stock or repurchase, redeem or
otherwise acquire through a sinking fund or otherwise, or set apart
funds for the repurchase, redemption or other acquisition of, any
shares of Junior Stock (except by conversion into or exchange for
Junior Stock), unless (i) all declared and unpaid dividends with
respect to the Series 1996 Preferred Stock have been paid, or funds
have been set apart for payment of such dividends and (ii) the
Corporation has declared a cash dividend on the Series 1996 Preferred
Stock at the annual dividend rate for the then-current Dividend Period
and sufficient funds have been set apart for payment of such
dividends. Holders of the Series 1996 Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or stock,
in excess of declared noncumulative dividends, as herein provided, on
the Series 1996 Preferred Stock. No interest or sum of money in lieu
of interest shall be payable in respect of any declared dividend
payment or payments on the Series 1996 Preferred Stock which may be in
arrears. As used herein, the phrase "set apart" in respect of the
payment of dividends shall require deposits of any funds in a bank or
trust company in a separate deposit account maintained for the benefit
of the holders of the Series 1996 Preferred Stock.
2. Redemption.
(a) The shares of Series 1996 Preferred Stock shall be
redeemable by the Corporation, in whole, or in part, at any time and
from time to time at a price of $15.00 per share, plus an amount equal
to declared but unpaid dividends, if any, with respect to Dividend
Periods preceding the date fixed for redemption (the "Redemption
Date"), if the Corporation's Series I Class A Common Stock, $.01 par
value (the "Class A Common Stock"), shall have a closing price which
is at least 120% of the Conversion Price (as defined below) for any 20
out of 30 consecutive trading days ending within five days of the
giving of notice of redemption as provided for below. In addition, the
Series 1996 Preferred Stock shall be redeemable by the Corporation in
whole or in part, at any time and from time to time on or after July
1, 1998 at the following per share prices during the twelve month
period beginning July 1:
YEAR REDEMPTION PRICE
---- ----------------
1998 $16.20
1999 15.96
2000 15.72
2001 15.48
2002 15.24
2003 and thereafter 15.00
plus, in each case, an amount equal to any declared but unpaid
dividends, if any, with respect to Dividend Periods preceding the
Redemption Date.
B-3
<PAGE> 198
(b) In the event that fewer than all the outstanding
shares of the Series 1996 Preferred Stock are to be redeemed as
permitted by this Section 2, the number of shares to be redeemed shall
be determined by the Board of Directors and the shares to be redeemed
shall be determined by lot or pro rata as may be determined by the
Board of Directors or by such other method as may be approved by the
Board of Directors that is required to conform to any rule or
regulation of any stock exchange or automated quotation system upon
which the shares of the Series 1996 Preferred Stock may at the time be
listed.
(c) Notice of redemption of the Series 1996 Preferred
Stock, specifying the Redemption Date, the redemption price and the
place of redemption, shall be given by first class mail to each holder
of record of the shares to be redeemed at his or her address of record
and by publication in The Wall Street Journal. In the case of a
redemption in whole, notice will be given once, not less than 30 nor
more than 60 calendar days prior to the Redemption Date. In the case
of a partial redemption, the notice shall also specify the aggregate
number of shares of the Series 1996 Preferred Stock to be redeemed and
the aggregate number of shares of the Series 1996 Preferred Stock that
shall be outstanding after such partial redemption and the mailed
notice shall specify the fact that a new certificate or certificates
representing any unredeemed shares shall be issued without cost to a
holder. The notice of partial redemption shall be given twice: the
first notice shall be given not more than 75 days nor less than 60
days prior to the Redemption Date; and the second notice shall be
given at least 20 days after the first notice but not less than 30
days prior to the Redemption Date.
(d) Notice of redemption of shares of the Series 1996
Preferred Stock having been given as provided in Section 2(c), then
unless the Corporation shall have defaulted in providing for the
payment of the redemption price and all declared and unpaid dividends
with respect to Dividend Periods preceding the Redemption Date, all
rights of the holders thereof (except the right to receive the
redemption price and all declared and unpaid dividends with respect to
Dividend Periods preceding the Redemption Date) shall cease with
respect to such shares and such shares shall not, after the Redemption
Date, be deemed to be outstanding and shall not have the status of
Preferred Stock. In case fewer than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(e) Any shares of Series 1996 Preferred Stock which shall
at any time have been redeemed or converted shall, after such
redemption or conversion, have the status of authorized but unissued
shares of Preferred Stock, without designation as to series until such
shares are once more designated as part of a particular series by the
Board of Directors.
(f) Shares of the Series 1996 Preferred Stock are not
subject or entitled to the benefit of a sinking fund.
3. Conversion.
(a) Subject to and upon compliance with the provisions of
this Section 3, the holder of any shares of the Series 1996 Preferred
Stock shall have the right, at his or her option, at any time and from
time to time prior to redemption, to convert the shares into a number
of fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of the Corporation's
Series I Class A Common Stock, $.01 par value (the "Class A Common
Stock"), equal to $15.00 for each share surrendered for conversion
divided by the Conversion Price (as defined in Section 3(d) below).
(b) (i) In order to exercise the conversion
privilege, the holder of each share of the Series 1996 Preferred Stock
to be converted shall surrender the certificate representing such
share to the Corporation's transfer agent for the Series 1996
Preferred Stock with the Notice of Election to Convert on the back of
said Certificate duly completed and signed. Unless the shares issuable
on conversion are to be issued in the same name as the name in which
the shares of the Series 1996 Preferred Stock are registered, each
share surrendered
B-4
<PAGE> 199
for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or
his or her duly authorized attorney and by funds in an amount
sufficient to pay any transfer or similar tax. The holders of shares
of the Series 1996 Preferred Stock at the close of business on a
Record Date shall be entitled to receive any dividend declared payable
on those shares for the corresponding Dividend Period on the
applicable Dividend Payment Date, notwithstanding the conversion of
the shares after the Record Date.
(ii) As promptly as practicable after the
surrender by a holder of the certificates for shares of the Series
1996 Preferred Stock in accordance with this Section 3, the
Corporation shall issue and shall deliver to the holder at the office
of the transfer agent, or otherwise upon such holder's written order,
a certificate or certificates for the number of full shares of Class A
Common Stock issuable upon the conversion of those shares in
accordance with the provisions of this Section 3, and any fractional
interest in respect of a share of Class A Common Stock arising upon
the conversion shall be settled as provided in Section 3(c) below. In
case less than all of the shares of the Series 1996 Preferred Stock
represented by a certificate are to be converted by a holder, upon
such conversion the Corporation shall issue and deliver to the holder
at the office of the transfer agent, or otherwise upon such holder's
written order, a certificate or certificates for the shares of Series
1996 Preferred Stock not converted.
(iii) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on
which all of the conditions specified in Section 3(b) hereof shall
have been satisfied, and, the person or persons in whose name or names
any certificate or certificates for shares of Class A Common Stock
shall be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares of Class A Common Stock
represented by those certificates at such time on such date and such
conversion shall be at the Conversion Price in effect at such time on
such date, unless the stock transfer books of the Corporation shall be
closed on that date, in which event such person or persons shall be
deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such stock transfer books
are open, but such conversion shall be at the Conversion Price in
effect on the date upon which all of the conditions specified in
Section 3(b) hereof shall have been satisfied. All shares of Class A
Common Stock delivered upon conversion of the Series 1996 Preferred
Stock will upon delivery be duly and validly issued and fully paid and
nonassessable, free of all liens and charges and not subject to any
preemptive rights. Upon the surrender of certificates representing
shares of the Series 1996 Preferred Stock to be converted, the shares
shall no longer be deemed to be outstanding and all rights of a holder
with respect to the shares surrendered for conversion shall
immediately terminate except the right to receive the Class A Common
Stock or other securities, cash or other assets as herein provided.
(c) No fractional shares or securities representing
fractional shares of Class A Common Stock shall be issued upon
conversion of the Series 1996 Preferred Stock. Any fractional interest
in a share of Class A Common Stock resulting from conversion of a
share of the Series 1996 Preferred Stock shall be paid in cash
(computed to the nearest cent) based on the Current Market Price (as
defined in Section 3(d)(iv) below) of the Class A Common Stock on the
Trading Day (as defined in Section 3(d)(iv) below) next preceding the
day of conversion. If more than one share shall be surrendered for
conversion at one time by the same holder, the number of whole shares
of Class A Common Stock issuable upon the conversion shall be computed
on the basis of the aggregate Liquidation Preference (as such term is
defined in Section 6 below) of the shares of the Series 1996 Preferred
Stock so surrendered.
(d) The "Conversion Price" per share of the Series 1996
Preferred Stock shall be $9.00, subject to adjustment from time to
time as follows:
(i) In case the Corporation shall (1) pay a
dividend or make a distribution on its Class A Common Stock in shares
of its Class A Common Stock, (2) subdivide its outstanding Class A
Common Stock into a greater number of shares, or (3) combine its
outstanding Class A Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such event shall be
proportionately adjusted so
B-5
<PAGE> 200
that the holder of any share of the Series 1996 Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number and kind of shares of capital stock of the Corporation which he
would have been entitled to receive had the share been converted
immediately prior to the record date for such action, or, if no record
date has been established in connection with such event, the effective
date for such action. An adjustment made pursuant to this Section
3(d)(i) shall become effective immediately after the record date in
the case of a dividend or distribution except as provided in Section
3(d)(vii) below, and shall become effective immediately after the
effective date in the case of a subdivision or combination. If, as a
result of an adjustment made pursuant to this Section 3(d)(i), the
holder of any shares of Series 1996 Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of
two or more classes of capital stock of the Corporation, the Board of
Directors of the Corporation (whose determination shall be conclusive
and shall be described in a resolution adopted thereto) shall
determine the allocation of the adjusted Conversion Price between or
among shares of such classes of capital stock. If any dividend or
distribution is not paid or made, the Conversion Price then in effect
shall be appropriately readjusted.
(ii) In case the Corporation shall issue rights or
warrants to all holders of its Class A Common Stock entitling them
(for a period expiring within 45 days after the record date mentioned
below) to subscribe for or purchase Class A Common Stock at a price
per share less than the Current Market Price (as defined in Section
3(d)(iv) below) of the Class A Common Stock at the record date for the
determination of stockholders entitled to receive the rights or
warrants, the Conversion Price in effect immediately prior to such
record date shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the record date by a fraction of which the numerator shall be
the number of shares of Class A Common Stock outstanding on the record
date plus the number of shares of Class A Common Stock which the
aggregate offering price of the total number of shares of Class A
Common Stock so offered for subscription or purchase would purchase at
the Current Market Price at that record date, and of which the
denominator shall be the number of shares of Class A Common Stock
outstanding on the record date plus the number of additional shares of
Class A Common Stock for subscription or purchase. The adjustment
provided for in this Section 3(d)(ii) shall be made successively
whenever any such rights or warrants are issued, and shall become
effective immediately, except as provided in Section 3(d)(vii) below,
after such record date. In determining whether any rights or warrants
entitle the holder of the Class A Common Stock to subscribe for or
purchase shares of Class A Common Stock at less than the Current
Market Price, and in determining the aggregate offering price of the
shares of Class A Common Stock so offered, there shall be taken into
account any consideration received by the Corporation for such rights
or warrants, the value of such consideration, if other than cash, to
be determined by the Board (whose determination, if made in good
faith, shall be conclusive). If any or all of such rights or warrants
are not so issued or expire or terminate without having been
exercised, the Conversion Price then in effect shall be appropriately
readjusted.
(iii) In case the Corporation shall distribute to
all holders of its Class A Common Stock any shares of capital stock of
the Corporation (other than Class A Common Stock) or evidences of
indebtedness or assets (excluding cash dividends or distributions paid
from retained earnings of the Corporation) or rights or warrants to
subscribe for or purchase any of its securities (excluding those
referred to in Section 3(d)(ii) above), then, in each such case, the
Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the date of the distribution by a fraction, the numerator of
which shall be the Current Market Price of the Class A Common Stock on
the record date mentioned below less the then fair market value (as
determined by the Board, whose determination, if made in good faith,
shall be conclusive) of that portion of the capital stock or assets or
evidences of indebtedness so distributed, or of the rights or warrants
so distributed, applicable to one share of Class A Common Stock, and
the denominator of which shall be the Current Market Price of the
Class A Common Stock on the record date. Such adjustment shall become
effective immediately, except as provided in Section 3(d)(vii) below,
after the record date for the determination of stockholders entitled
to receive such distribution. If any such distribution is not made or
if any or all of such rights or warrants expire or terminate without
having been exercised, the Conversion Price then in effect shall be
appropriately readjusted.
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(iv) For the purpose of any computation under this
Section 3, the "Current Market Price" of the Class A Common Stock at
any date shall be the average of the last reported sale prices per
share for the 30 consecutive Trading Days (as defined below)
commencing 35 Trading Days before date of such computation. The last
reported sale price for each day shall be (1) the last reported sale
price of the Class A Common Stock on the Nasdaq National Market, or
any similar system of automated dissemination of quotations of
securities prices then in common use, if so quoted, or (2) if not
quoted as described in clause (1), the closing bid notation for the
Class A Common Stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Class A Common Stock on at least five of
the ten preceding days, or (3) if the Class A Common Stock is listed
or admitted for trading on any national securities exchange, the last
sale price, or the closing bid price if no sale occurred, of the Class
A Common Stock on the principal securities exchange on which the Class
A Common Stock is listed. If the Class A Common Stock is quoted on a
national securities or central market system, in lieu of a market or
quotation system described above, the last reported sale price shall
be determined in the manner set forth in clause (2) of the preceding
sentence if bid and asked quotations are reported but actual
transactions are not, and in the manner set forth in clause (3) of the
preceding sentence if actual transactions are reported. If none of the
conditions set forth above is met, the last reported sale price of the
Class A Common Stock on any day or the average of such last reported
sale prices for any period shall be the fair market value of such
class of stock as determined by a member firm of the New York Stock
Exchange, Inc. selected by the Corporation. As used herein the term
"Trading Days" means (1) if the Class A Common Stock is quoted on the
Nasdaq National Market or any similar system of automated
dissemination of quotations of securities prices, days on which trades
may be made on such system, or (2) if not quoted as described in
clause (1), days on which quotations are reported by the National
Quotation Bureau, Incorporated, or (3) if the Class A Common Stock is
listed or admitted for trading on any national securities exchange,
days on which such national securities exchange is open for business.
(v) No adjustment in the Conversion Price shall
be required unless such adjustment would require a change of at least
one percent in the Conversion Price; provided, however, that any
adjustments which by reason of this Section 3(d)(v) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 3(d) shall
be made to the nearest cent or the nearest one hundredth of a share,
as the case may be.
(vi) Whenever the Conversion Price is adjusted, as
herein provided, the Corporation shall promptly file with its transfer
agent and with the principal securities exchange, if any, on which the
Series 1996 Preferred Stock is traded or, if traded over-the-counter,
with the Nasdaq National Market System an officers' certificate
setting forth the Conversion Price after the adjustment and setting
forth a brief statement of the facts requiring the adjustment, which
certificate shall be conclusive evidence of the correctness of the
adjustment. Promptly after delivery of the certificate, the
Corporation shall prepare a notice of the adjustment of the Conversion
Price setting forth the adjusted Conversion Price, the number of
additional shares of Class A Common Stock issuable upon conversion and
the type and amount, if any, of other property which would be received
upon conversion of the Series 1996 Preferred Stock, the facts upon
which the adjustment is based and the date on which the adjustment
becomes effective and shall mail the notice of such adjustment of the
Conversion Price to the holders of the Series 1996 Preferred Stock at
their addresses as shown on the stock books of the Corporation.
(vii) In any case in which this Section 3(d)
provides that an adjustment shall become effective immediately after a
record date for an event, the Corporation may defer until the
occurrence of the event (1) issuing to the holder of any share of the
Series 1996 Preferred Stock converted after the record date and before
the occurrence of the event, the additional shares of Class A Common
Stock issuable upon the conversion by reason of the adjustment
required by the event over and above the Class A Common Stock issuable
upon such conversion before giving effect to the adjustment and (2)
paying to the holder any amount in cash in lieu of any fractional
share pursuant to Section 3(c) above.
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(e) (i) The Corporation covenants that it will at all
times reserve and keep available, free from preemptive rights and all
liens and charges with respect to the issue or delivery thereof, out
of the aggregate of its authorized but unissued shares of Class A
Common Stock or its issued shares of Class A Common Stock held by its
treasury, or both, for the purpose of effective conversions of the
Series 1996 Preferred Stock the full number of shares of Class A
Common Stock deliverable upon the conversion of all outstanding shares
of the Series 1996 Preferred Stock not theretofore converted. For
purposes of this Section 3(e), the number of shares of Class A Common
Stock which shall be deliverable upon the conversion of all
outstanding shares of the Series 1996 Preferred Stock shall be
computed as if at the time of computation all of the outstanding
shares were held by a single holder.
(ii) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value (if
any) of the shares of Class A Common Stock deliverable upon conversion
of the Series 1996 Preferred Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Class A Common Stock at the
adjusted Conversion Price.
(f) The Corporation will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Class A Common Stock or other
securities on conversion of the Series 1996 Preferred Stock pursuant
hereto; provided, however, that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Class A Common Stock or
other securities in a name other than that of the holder of the Series
1996 Preferred Stock to be converted and no such issue or delivery
shall be made unless and until the person requesting the issue or
delivery has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that the tax has
been paid.
(g) In case of any reclassification or similar change of
outstanding shares of Class A Common Stock (other than a change in par
value, or as a result of a subdivision or combination), or in case of
any consolidation of the Corporation with, or merger of the
Corporation with or into, any other entity that results in a
reclassification, change, conversion, exchange or cancellation of
outstanding shares of Class A Common Stock or any sale or transfer of
all or substantially all of the assets of the Corporation, each holder
of shares of the Series 1996 Preferred Stock then outstanding shall
have the right thereafter to convert the shares of the Series 1996
Preferred Stock held by the holder into the kind and amount of
securities, cash and other property which the holder would have been
entitled to receive upon such reclassification, change, consolidation,
merger, sale or transfer if the holder had held the Class A Common
Stock issuable upon the conversion of the shares of the Series 1996
Preferred Stock immediately prior to the reclassification, change,
consolidation, merger, sale or transfer and had such holder elected to
receive the consideration in the form and manner elected by the
plurality of the persons entitled to vote thereon. These provisions
shall apply to successive reclassifications, changes, consolidations,
mergers, sales or conveyances.
4. Preemptive Rights. Shares of the Series 1996 Preferred Stock
are not entitled to any preemptive rights to acquire any unissued
shares of any capital stock of the Corporation, now or hereafter
authorized, or any other securities of the Corporation, whether or not
convertible into shares of capital stock of the Corporation or
carrying a right to subscribe to or acquire any such shares of capital
stock. To the extent preemptive rights are granted by the Corporation
to the Parity Stock, the Junior Stock or the Class A Common Stock, the
Series 1996 Preferred Stock shall be entitled to similar rights.
5. Voting. Except as required by law, the shares of the Series
1996 Preferred Stock shall not have any voting powers, either general
or special, except as follows:
(a) Unless the vote or consent of the holders of a
greater number of shares is required by law, the approval of the
holders of at least 66-2/3% of all of the shares of the Series 1996
Preferred Stock at the time outstanding given in person or by proxy,
either in writing or by a vote at a meeting called for that
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<PAGE> 203
purpose, on which matter the holders of shares of the Series 1996
Preferred Stock shall vote together as a separate class, shall be
necessary to (i) authorize, effect or validate any amendment,
alteration or repeal of or otherwise change any of the provisions of
the Articles of Incorporation of the Corporation or of any
certificate, amendatory or supplemental thereto, which amendment,
alteration or repeal would, if effected, materially and adversely
affect the powers, preferences, rights or privileges of the Series
1996 Preferred Stock or (ii) create, authorize, issue or increase the
authorized or issued amount of any class or series of any equity
securities of the Corporation, or any warrants, options or other
rights convertible or exchangeable into any class or series of any
equity securities of the Corporation, ranking senior to the Series
1996 Preferred Stock either as to payment of dividends or rights upon
liquidation, winding-up or dissolution of the Corporation.
(b) Notwithstanding anything to the contrary set forth
herein, the creation or issuance of Parity Stock or Junior Stock with
respect to the payment of dividends or distribution of assets upon
liquidation or an amendment that increases the number of authorized
shares of Series 1996 Preferred Stock or increases the number of
authorized shares of a series of Preferred Stock constituting Junior
Stock or Parity Stock shall not be considered to be a material and
adverse change to the terms of the Series 1996 Preferred Stock and
shall not require a vote or the consent of the holders of the Series
1996 Preferred Stock pursuant to Section 5(a) above. Amendments
considered to be an adverse change requiring a vote of the holders of
Series 1996 Preferred Stock pursuant to Section 5(a) above shall
include, but not be limited to, those: which reduce the dividend rate
on the Series 1996 Preferred Stock, cancel declared and unpaid
dividends or change the relative seniority rights of the holders of
the Series 1996 Preferred Stock as to the payment of dividends in
relation to the holders of any other capital stock of the Corporation;
which reduce the amount payable to the holders of Series 1996
Preferred Stock upon liquidation or change the relative seniority of
the liquidation preferences of the holders of the Series 1996
Preferred Stock to the rights upon liquidation of the holders of any
other capital stock of the Corporation; or which cancel or modify the
conversion rights of the Series 1996 Preferred Stock.
(c) The holders of Series 1996 Preferred Stock, if any
Series 1996 Preferred Stock shall be outstanding, shall be entitled to
vote with the holders of the shares of Class A Common Stock, and not
as a separate class, to the same extent as the holders of the shares
of Class A Common Stock on any consolidation, merger, sale of all or
substantially all of the assets of the Corporation, reclassification,
capital reorganization or liquidation; provided that each share of
Series 1996 Preferred Stock shall be entitled to the same number of
votes that the holder would have had if such holder had converted his
shares of Series 1996 Preferred Stock into shares of Class A Common
Stock as of the record date for such meeting or solicitation of
consents in lieu of a meeting.
6. Liquidation Rights.
(a) Upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the
shares of the Series 1996 Preferred Stock shall be entitled to receive
out of the assets of the Corporation available for distribution to
stockholders under applicable law, before any payment or distribution
of assets shall be made on the Class A Common Stock or on any other
class or series of capital stock of the Corporation ranking junior to
the Series 1996 Preferred Stock upon liquidation and subject to the
rights of the holders of any class or series of stock having
preference with respect to distributions upon liquidation (created
pursuant to Section 5(a) above) and the Corporation's general
creditors, the amount of $15.00 per share (the "Liquidation
Preference"), plus an amount equal to all dividends declared and
unpaid, without interest. The sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all
or substantially all of the property and assets of the Corporation
shall not be deemed a dissolution, liquidation or winding up of the
Corporation for the purposes of this Section 6, nor shall the merger
or consolidation of the Corporation into or with any other corporation
or association or the merger or consolidation of any other corporation
or association into or with the Corporation, be deemed to be a
dissolution, liquidation or winding up of the Corporation for the
purposes of this Section 6; provided, however, that if the aggregate
amount of cash that may be received in exchange for or upon conversion
of the Series 1996 Preferred Stock in connection with a cash merger or
other cash transaction would be less than the aggregate liquidation
preference of the
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<PAGE> 204
Series 1996 Preferred Stock, then the holders of the Series 1996
Preferred Stock shall be entitled to the Liquidation Preference in
place of the aggregate amount of cash that may be received in exchange
for or upon conversion of the Series 1996 Preferred Stock in
connection with the cash merger or other cash transaction; and
provided further, that such cash merger or transaction shall not be
considered a liquidation, dissolution or winding up of the Corporation
subject otherwise to this Section 6(a).
(b) After the payment in cash (in New York Clearing House
funds or its equivalent) to the holders of the shares of the Series
1996 Preferred Stock of the full preferential amounts for the shares
of the Series 1996 Preferred Stock, as set forth in Section 6(a)
above, the holders of the Series 1996 Preferred Stock as such shall
have no further right or claim to any of the remaining assets of the
Corporation.
(c) In the event the assets of the Corporation available
for distribution to the holders of shares of the Series 1996 Preferred
Stock upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be insufficient to pay in full all
amounts to which such holders are entitled pursuant to Section 6(a)
above, no distribution shall be made on account of any shares of any
other series of Preferred Stock or any other class of capital stock of
the Corporation ranking on a parity with the shares of the Series 1996
Preferred Stock upon such liquidation, dissolution or winding up
unless proportionate amounts shall be paid on account of the shares of
the Series 1996 Preferred Stock, ratably, in proportion to the full
amounts to which holders of all such shares which are on a parity with
the shares of the Series 1996 Preferred Stock are respectively
entitled upon such dissolution, liquidation or winding up.
(d) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the
Corporation shall, within 10 days after the date the Board of
Directors approves such action, at least 20 days prior to any
shareholders' meeting called to approve such action or within 20 days
after the commencement of any involuntary proceeding, whichever is
earliest, give each holder of the Series 1996 Preferred Stock written
notice of the proposed action. Such written notice shall describe the
material terms and conditions of the proposed action. The Corporation
shall not consummate any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation before the expiration of
30 days after the mailing of such written notice; provided, that any
such 30 day period may be shortened upon the written consent of the
holders of all of the outstanding shares of the Series 1996 Preferred
Stock.
(e) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation that will
involve the distribution of assets other than cash, the Corporation
shall promptly engage competent independent appraisers to determine
the value of the assets to be distributed to the holders of shares of
the Series 1996 Preferred Stock and the holders of Class A Common
Stock. The Corporation shall, upon receipt of such appraiser's
valuation, give prompt written notice to each holder of shares of the
Series 1996 Preferred Stock of the appraiser's valuation.
7. Rank. The Series 1996 Preferred Stock shall rank, with respect
to classes and series of capital stock of the Corporation outstanding
as of ________ __, 199_, on a parity with the 8% Noncumulative
Convertible Preferred Stock, Series 1993 and the 9% Noncumulative
Perpetual Preferred Stock and senior to the Class A Common Stock, the
Class B Common Stock, the Noncumulative Convertible Preferred Stock,
Series B, the Noncumulative Convertible Preferred Stock, Series C and
the Noncumulative Convertible Preferred Stock, Series C-II of the
Corporation as to payment of dividends and rights upon liquidation,
dissolution or winding up of the Corporation. Unless the Corporation
shall have obtained the consent of the holders as provided in Section
5 above, the Corporation shall not issue any other series of Preferred
Stock ranking senior to the Series 1996 Preferred Stock as to the
payment of dividends or rights upon liquidation, dissolution or
winding up of the Corporation or any other series of any equity
securities ranking senior to the Series 1996 Preferred Stock as to the
payment of dividends or rights upon liquidation, dissolution or
winding up of the Corporation. The Corporation may issue shares of
Preferred Stock or other capital stock ranking junior to or on a
parity with the Series 1996 Preferred Stock as to the payment of
dividends or rights upon liquidation, dissolution or winding up of the
Corporation. For purposes of this statement of designation, any
capital stock of any series or class of the Corporation shall be
deemed to rank:
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<PAGE> 205
(a) senior to the shares of the Series 1996 Preferred
Stock, as to dividends or upon liquidation, if the holders of such
series or class shall be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of
the Corporation, as the case may be, in preference or priority to the
holders of the shares of the Series 1996 Preferred Stock;
(b) on a parity with shares of the Series 1996 Preferred
Stock, as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption or liquidation
prices per share or sinking fund provisions, if any, be different from
those of the Series 1996 Preferred Stock, if the holders of such stock
shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective
dividend rates or liquidation prices, without preferences or priority,
one over the other, as between the holders of such stock and the
holders of shares of the Series 1996 Preferred Stock; and
(c) junior to shares of the Series 1996 Preferred Stock,
as to dividends or upon liquidation, if the holders of shares of the
Series 1996 Preferred Stock shall be entitled to receipt of dividends
or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority
to the holders of shares of such series or class.
8. Notice of Certain Events. If:
(a) the Corporation shall declare a dividend (other than
a cash dividend) or distribution on its Class A Common Stock or any
Junior Stock; or
(b) the Corporation shall authorize the issuance to the
holders of the Class A Common Stock or any Junior Stock of rights or
warrants to subscribe for or purchase any shares of Class A Common
Stock or of any other subscription rights or warrants; or
(c) there shall be any reclassification of the Class A
Common Stock or any consolidation or merger, to which the Corporation
is a party, or any sale or transfer of all or substantially all the
assets of the Corporation; or
(d) there shall be a voluntary or an involuntary
dissolution, liquidation or winding up of the Corporation; or
(e) there shall be a redemption of the Series 1996
Preferred Stock, in whole or in part, pursuant to Section 2 above;
then the Corporation shall cause to be filed with the transfer agent,
if any, and shall cause to be mailed to the holders of shares of the
Series 1996 Preferred Stock at their addresses as shown on the stock
books of the Corporation, except as otherwise provided in Section 2(c)
above or Section 6(d) above, at least 10 days prior to the applicable
date hereinafter specified, a notice stating (1) the date on which a
record is to be taken for the purpose of the dividend, distribution or
rights or warrants, or, if a record is not to be taken, the date as of
which the holders of Class A Common Stock of record to be entitled to
the dividend, distribution or rights or warrants are to be determined,
(2) the date on which the reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders
of Class A Common Stock of record shall be entitled to exchange their
shares of Class A Common Stock for cash, securities or other property
deliverable upon the reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up or (iii) the
Redemption Date and redemption price pursuant to Section 2 above.
Failure to give any such notice or any defect in the notice shall not
affect the legality or validity of the proceedings described in this
Section 8.
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<PAGE> 206
9. Reports and Notices. So long as any shares of the Series 1996
Preferred Stock shall be outstanding, the Corporation shall provide to the
holder or holders of such shares copies of all annual, quarterly and other
reports of the Corporation and copies of all stockholder notices of the
Corporation when and as furnished to the holders of the Class A Common Stock.
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<PAGE> 207
EXHIIBIT C
C-1
<PAGE> 208
, 1996 [printed on Raymond James & Associates, Inc.
letterhead]
The Board of Directors
Suncoast Savings and Loan Association FSA
4000 Hollywood Boulevard, Suite 500
North Hollywood, FL 33021-6733
Members of the Board:
You have requested our opinion as to the fairness from a financial
point of view to the shareholders of the outstanding common stock par value
$1.10 per share (the "Suncoast Common Stock") and the holders of the
outstanding 8% non-cumulative preferred convertible stock Series A (the
"Suncoast Preferred Stock") of Suncoast Savings and Loan Association FSA
("Suncoast") of the exchange ratio in the proposed merger (the "Merger") of
Suncoast with and into a newly formed, wholly-owned subsidiary of BankUnited
Financial Corporation ("BankUnited") pursuant to the Agreement and Plan of
Merger (the "Agreement") dated as of July 15, 1996. Under the terms of the
Agreement, each outstanding share of Suncoast Common Stock will be converted
into and become the right to receive one share of Series I Class A BankUnited
Common Stock (the "BankUnited Common Stock") and each share of Suncoast
Preferred Stock will be converted into and become the right to receive one
share of a new series of BankUnited Preferred Stock to be authorized by the
Board of Directors of BankUnited which shall have substantially similar rights
and preferences as the Suncoast Preferred Stock, all as described in Section
1.01 of the Agreement (the "New BankUnited Preferred Stock").
Raymond James and Associates, Inc. as part of its investment banking
business engages in the valuation of securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for corporations for
other purposes. In the ordinary course of our business as a broker/dealer we
may from time to time purchase securities from and sell securities to Suncoast
and/or BankUnited and as a market maker in securities we may from time to time
have a long or short position in and buy or sell equity securities of Suncoast
and/or BankUnited for our own account and for the accounts of our customers.
To the extent we have any such positions as of the date of this letter, it has
been disclosed to Suncoast. Raymond James & Associates, Inc. also acted as a
managing underwriter in BankUnited's public offerings and received customary
compensation for such services. Raymond James & Associates, Inc. also
currently publishes investment research on BankUnited. We have acted
exclusively for Suncoast in rendering this fairness opinion, and for our
services, including the rendering of this opinion, Suncoast will pay us fees
upon the issuance of this fairness opinion, the issuance of the fairness
opinion at the time the Suncoast Proxy Statement relating to the Merger is
first mailed to the stockholders of Suncoast, and the closing of the Merger.
In addition, Suncoast has agreed to indemnify us against certain liabilities
arising out of our engagement.
In arriving at our opinion, we have reviewed, analyzed and relied upon
material bearing upon the financial and operating condition of Suncoast and
BankUnited, including, among other things, the following: (i) the Agreement
dated July 15, 1996; (ii) Annual Reports to Shareholders for fiscal years 1994
and 1995, respectively of Suncoast and BankUnited; (iii) certain interim
reports to shareholders of Suncoast and BankUnited; (iv) other financial
information concerning the businesses and operations of Suncoast and BankUnited
furnished to us by Suncoast and BankUnited for purposes of our analysis,
including certain financial analyses for Suncoast and BankUnited prepared by
the senior management of
<PAGE> 209
The Board of Directors
Suncoast Savings & Loan Association FSA
, 1996
Suncoast and BankUnited respectively; (v) certain internal financial analyses
and forecasts of Suncoast prepared by the senior management of Suncoast; (vi)
estimates of cost savings to be achieved after the Merger furnished to us by
Suncoast and BankUnited for purposes of our analysis; (vii) plans for the
combined company and the strategic objectives of the Merger furnished to us by
with the senior executives of BankUnited and Suncoast; (viii) certain publicly
available information concerning trading of, and the trading market for, the
Suncoast Common Stock and BankUnited Common Stock; and (ix) certain publicly
available information with respect to banking companies and the nature and
terms of certain other transactions that we consider relevant to our inquiry.
In conducting our review and arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of all of the financial and
other information provided to us or publicly available, and we have not
attempted independently to verify such information. We have relied upon the
management of Suncoast and BankUnited as to the reasonableness and
achieveability of the financial and operating forecasts and projections (and
the assumptions and bases therefor) provided or discussed with us, and we have
assumed with your permission that such forecasts and projections reflect the
best currently available estimates and judgments of such managements and that
such forecasts and projections will be realized in the amounts and in the time
periods currently estimated by such managements. We have also relied upon each
party to advise us promptly if any information previously provided became
inaccurate or was required to be updated during the period of our review. We
have also assumed, with your permission and without independent verification,
that the aggregate allowances for loan losses for Suncoast and BankUnited are
adequate to cover losses in their respective loan portfolios. We have not made
or obtained any evaluations or appraisals of the property of Suncoast or
BankUnited, nor have we examined any individual loan credit files. You have
informed us and we have assumed that the Merger will be recorded as a purchase
under generally accepted accounting principles. Finally, we express no opinion
as to the underlying business decision of Suncoast to effect the Merger, the
availability or advisability of any alternatives to the Merger or the price at
which BankUnited Common Stock or New BankUnited Preferred Stock will trade
subsequent to the effective time of the Merger.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following:
(i) the historical, current and projected financial position and results of
operations of Suncoast and BankUnited, (ii) the assets and liabilities of
Suncoast and BankUnited, (iii) the historical market prices and trading
activity of the Suncoast Common Stock, and (iv) the nature and terms of certain
other merger transactions involving banks and bank holding companies. We have
also taken into account our assessment of general economic, market and
financial conditions and our experience in other transactions, as well as our
experience in securities valuation and our knowledge of the banking industry
generally. We have also assumed with your permission that Suncoast, its
subsidiaries and affiliates, are not party to any pending material transactions
including, but not limited to, any external financings, recapitalizations,
acquisitions or merger discussions, other than the Agreement. Our opinion is
necessarily based upon conditions as they exist and can be evaluated on the
date hereof and the information made available to us through the date hereof
and any change in such circumstances would require a re- evaluation of this
opinion.
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<PAGE> 210
The Board of Directors
Suncoast Savings & Loan Association FSA
It is understood that this letter is for the information of the Board
of Directors of Suncoast in evaluating the proposed Merger, does not constitute
a recommendation to any stockholder of Suncoast as to how such stockholder
should vote on the proposed Merger, and is not intended to confer rights or
remedies upon BankUnited or the stockholders of BankUnited or the Company.
This opinion is not to be quoted or referred to, in whole or in part in any
registration statement, prospectus or proxy statement, or any other document
used in connection with the offering or sale of securities, nor shall this
letter be used for any other purpose, without our prior written consent;
provided, however, that it is understood that the Company will request our
consent to include this opinion in the BankUnited Securities and Exchange
Commission Registration Statement on form S-4 and the BankUnited and Suncoast
joint proxy statement, in each case relating to the Merger, and that we will
not unreasonably withhold our consent to such inclusion.
Based upon and subject to the foregoing, and as of the date of this
letter, we are of the opinion that the exchange ratio in the proposed Merger is
fair, from a financial point of view, to the holders of Suncoast Common Stock
and to the holders of Suncoast Preferred Stock.
Sincerely,
/s/ Fred E. Whaley
- -------------------------------
Fred E. Whaley
Managing Director
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EXHIBIT D
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[Letterhead of KLW&H]
DRAFT
[Date of mailing of Joint
Proxy Statement-Prospectus]
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, FL 33134
Suncoast Savings and Loan Association, FSA
4000 Hollywood Boulevard
Hollywood, FL 33021
Ladies and Gentlemen:
We have acted as special tax counsel to BankUnited Financial
Corporation ("BankUnited") in connection with its acquisition of Suncoast
Savings and Loan Association, FSA ("Suncoast"), through the merger of Suncoast
into BankUnited, FSB ("BUFSB"), a controlled subsidiary of BankUnited (the
"Merger"), as described herein. BankUnited has requested our opinion
concerning certain federal income tax consequences of the Merger.
Facts
Suncoast is a federal stock savings and loan association.
BankUnited is a savings and loan holding company organized under the laws of
the State of Florida. BUFSB is a federal stock savings bank. All of the
capital stock of BUFSB is owned by BankUnited. BankUnited and BUFSB file
consolidated federal income tax returns.
The Boards of Directors of BankUnited and Suncoast believe
that the Merger will enable BankUnited to achieve economies associated with an
in-market merger and to compete more effectively with larger financial
institutions in South Florida.
Suncoast will be merged with and into BUFSB pursuant to an
Agreement and Plan of Merger between BankUnited and Suncoast dated as of July
15, 1996. BUFSB will survive the Merger, and the separate corporate existence
of Suncoast will cease. The
<PAGE> 213
BankUnited Financial Corporation
Suncoast Savings and Loan Association, FSA
_________, 1996
Page 2
banking business of Suncoast will be continued by BUFSB in a substantially
unchanged manner.
At the effective time of the Merger (the "Effective Time"),
each share of Suncoast common stock issued and outstanding immediately prior to
the Effective Time will be converted into one share of BankUnited Series I
Class A Common Stock, and each share of Suncoast Series A Noncumulative
Convertible Preferred Stock issued and outstanding immediately prior to the
Effective Time will be converted into one share of a new series of BankUnited
noncumulative convertible preferred stock.
The following representations have been made in connection
with the Merger:
(a) The fair market value of the BankUnited stock received by each
Suncoast shareholder will be approximately equal to the fair market
value of the Suncoast stock surrendered in exchange therefor.
(b) There is no plan or intention on the part of the shareholders of
Suncoast who own five percent or more of Suncoast's stock, and to the
best of the knowledge of the management of Suncoast there is no plan
or intention on the part of the remaining Suncoast shareholders, to
sell, exchange, or otherwise dispose of shares of BankUnited stock to
be received in the Merger that would reduce such shareholders'
ownership of such BankUnited stock to a number of shares having, in
the aggregate, a value as of the Effective Time of less than 50% of
the total value of all of the stock of Suncoast outstanding
immediately prior to the Merger. For purposes of this representation,
shares of Suncoast stock sold, redeemed, or otherwise disposed of
prior to the Merger in anticipation of the Merger are taken into
account as if such shares were shares of BankUnited stock received in
the Merger and then disposed of.
(c) BUFSB will acquire at least 90% of the fair market value of the net
assets and at least 70% of the fair market value of the gross assets
held by Suncoast immediately prior to the Merger. For purposes of
this representation, Suncoast assets used to pay Suncoast's
reorganization expenses and all redemptions and distributions (except
for regular, normal dividends) made preceding the transfer and which
are part of the plan of reorganization are considered assets held
immediately prior to the Merger.
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BankUnited Financial Corporation
Suncoast Savings and Loan Association, FSA
_________, 1996
Page 3
(d) Prior to the transaction, BankUnited will be in control of BUFSB
within the meaning of Section 368(c) of the Internal Revenue Code of
1986, as amended (the "Code").
(e) Following the transaction, BUFSB will not issue additional shares of
its stock that would result in BankUnited's losing control of BUFSB
within the meaning of Section 368(c) of the Code.
(f) BankUnited has no plan or intention to redeem or otherwise reacquire
any of its stock to be received by the shareholders of Suncoast.
(g) BankUnited has no plan or intention to liquidate BUFSB, to merge BUFSB
into another corporation, or to sell or otherwise dispose of the stock
of BUFSB.
(h) BankUnited has no plan or intention to cause BUFSB to sell or
otherwise dispose of any of the assets of Suncoast to be acquired in
the Merger, except for dispositions made in the ordinary course of
business and transfers described in Section 368(a)(2)(C) of the Code.
(i) The Suncoast shareholders will not, as a result of owning Suncoast
stock, own more than 50% of the value of BankUnited's stock
immediately after the Merger.
(j) The liabilities of Suncoast to be assumed by BUFSB and the liabilities
to which the transferred assets of Suncoast are subject were incurred
by Suncoast in the ordinary course of its business.
(k) Following the transaction, BUFSB will continue the historic business
of Suncoast or use a significant portion of Suncoast's business assets
in a business.
(l) BankUnited, BUFSB, Suncoast, and the shareholders of Suncoast will pay
their respective expenses, if any, incurred in connection with the
proposed transaction.
(m) There is no intercorporate indebtedness existing between BankUnited
and Suncoast or between BUFSB and Suncoast that was issued, acquired,
or will be settled at a discount.
(n) No two parties to the transaction are investment companies as defined
in Sections 368(a)(2)(F)(iii) and (iv) of the Code.
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BankUnited Financial Corporation
Suncoast Savings and Loan Association, FSA
_________, 1996
Page 4
(o) Suncoast is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(p) The fair market value of the assets of Suncoast transferred to BUFSB
will equal or exceed the sum of the liabilities assumed by BUFSB, plus
the liabilities, if any, to which the transferred assets are subject.
(q) No stock of BUFSB will be issued to any of the shareholders of
Suncoast in the Merger.
(r) None of the compensation received by any shareholder-employees of
Suncoast will be separate consideration for, or allocable to, any of
their shares of Suncoast stock, and none of the shares of BankUnited
stock received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement.
Opinion
Based upon the foregoing, and provided that the Merger
qualifies as a statutory merger under applicable law, it is our opinion that
the Merger will constitute a reorganization within the meaning of Section
368(a)(1)(A) and (a)(2)(D) of the Code, and that Suncoast, BUFSB, and
BankUnited will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code.
Accordingly, it is our opinion that:
(a) No gain or loss will be recognized by Suncoast on the transfer of
substantially all of its assets to BUFSB in exchange for BankUnited
stock and the assumption by BUFSB of Suncoast's liabilities (Code
Sections 361(a) and 357(a)).
(b) No gain or loss will be recognized by BankUnited or BUFSB on the
receipt by BUFSB of substantially all of the assets of Suncoast in
exchange for BankUnited stock and the assumption by BUFSB of
Suncoast's liabilities (Regulations Section 1.1032-2(b)).
(c) The basis of the assets of Suncoast received by BUFSB will be the same
as the basis of such assets in the hands of Suncoast immediately prior
to the Merger (Code Section 362(b)).
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BankUnited Financial Corporation
Suncoast Savings and Loan Association, FSA
_________, 1996
Page 5
(d) The holding period of the assets of Suncoast received by BUFSB will
include the period during which such assets were held by Suncoast
(Code Section 1223(2)).
(e) The basis of BUFSB's capital stock in the hands of BankUnited will be
increased by the basis of the assets acquired from Suncoast by BUFSB
and decreased by the sum of the amount of the liabilities of Suncoast
assumed by BUFSB and the amount of the liabilities, if any, to which
the assets of Suncoast are subject (Regulations Sections 1.358-6(c)(1)
and 1.1502-30(b)(1)).
(f) No gain or loss will be recognized by the Suncoast shareholders on the
exchange of their Suncoast stock for BankUnited stock (Code Section
354(a)(1)).
(g) The basis of the BankUnited stock received by the Suncoast
shareholders will be the same as the basis of the Suncoast stock
surrendered in exchange therefor (Code Section 358(a)(1)).
(h) The holding period of the BankUnited stock received by the Suncoast
shareholders will include the holding period of the Suncoast stock
surrendered in exchange therefor, provided such Suncoast stock is held
as a capital asset on the date of the exchange (Code Section 1223(a)).
Our conclusions as expressed in this letter have been reached
on the basis of the facts and representations described herein and such
analysis of the law as we have deemed necessary. Our views are based upon
existing law, which is subject to change or modification at any time. We
express no opinion as to any tax consequences of the Merger other than those
explicitly discussed herein.
Very truly yours,
Kronish, Lieb, Weiner & Hellman
<PAGE> 217
EXHIBIT E
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As amended Article VI of the Articles of Incorporation of BankUnited
shall provide in its entirety as follows:
"ARTICLE VI
Capital Stock
The total number of shares of all classes of stock that the
Corporation is authorized to issue is 43,000,000 shares, of which 30,000,000
shall be Class A Common Stock, $.01 par value (the "Class A Common Stock"),
3,000,000 shall be Class B Common Stock, $.01 par value (the "Class B Common
Stock"), and 10,000,000 shall be Preferred Stock, $.01 par value (the
"Preferred Stock"). No holder of the Corporation's stock shall have any
preemptive right to acquire the Corporation's securities.
Class A Common Stock. The maximum number of shares of Class A
Common Stock that the Corporation is authorized to have outstanding
is 30,000,000 shares at a par value of $.01 per share. The Class A
Common Stock shall be a special class of stock issuable from time
to time in one or more series as specified in Section 607.0602 of
the Florida Business Corporation Act (or in such other manner as may be
permitted by law), as determined from time to time by the Board of
Directors and stated in the resolution or resolutions providing for the
issuance of such series of Class A Common Stock adopted by the Board of
Directors pursuant to authority hereby vested in it, each such series
to be appropriately designated, prior to the issuance of any shares
thereof, by some distinguishing letter, number, or title. The Board of
Directors is hereby expressly granted authority to fix the authorized
number of shares of each series of common stock, and to fix the terms
of such series, including, but not limited to, the following:
(a) the rate or manner of payment of dividends;
(b) whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(c) the amount payable upon shares in the event of
voluntary or involuntary liquidation;
(d) sinking fund provisions, if any, for the redemption or
purchase of shares;
(e) the terms and conditions, if any, on which shares
may be converted;
(f) voting rights, if any; and
(g) the other special rights, if any, and the
qualifications, limitations or restrictions thereof, of the
shares of such series.
The designation of each particular series of Class A Common Stock and
its terms in respect of the foregoing particulars shall be fixed and
determined by the Board of Directors in any manner permitted by law and
stated in the resolution or resolutions providing for the issuance of
such shares adopted by the Board of Directors pursuant to authority
hereby vested in it, before any shares of such series are issued. The
Board of Directors may from time to time increase (but not above the
total number of authorized shares of the class) the number of shares of
any series of Class A Common Stock already created by providing
that any unissued Class A Common Stock
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shall constitute part of such series, or may decrease (but not
below the number of shares thereof then outstanding) the number of
shares of any series of Class A Common Stock already created by
providing that any unissued shares previously assigned to such series
shall no longer constitute part thereof. The Board of Directors is
hereby empowered to classify or reclassify any unissued Class A Common
Stock by fixing or altering the terms thereof in respect of the
above-mentioned particulars and by assigning the same to an existing or
newly created series from time to time before the issuance of such
shares.
For purposes of determining whether a non-voting series of
Class A Common Stock shall be entitled to vote as a class pursuant to
Section 607.1004 of the Florida Business Corporation Act (or any
successor section or statute hereinafter enacted) on an amendment to
the Corporation's Articles of Incorporation, an amendment that
increases the total number of authorized shares of Class A Common Stock
shall not be considered to be an adverse change to the terms of any
individual series of Class A Common Stock and shall not require a vote
or the consent of the holders of any such series of Class A Common
Stock.
Set forth in Appendix A hereto is the Statement of Designation
setting forth the terms of the Series I Class A Common Stock.
Class B Common Stock. The maximum number of shares of Class B
Common Stock that the Corporation is authorized to have outstanding is
3,000,000 shares at a par value of $.01 per share. Holders of Class B
Common Stock are entitled to vote on all questions required by law on
the basis of one vote per share and there shall be no cumulative
voting. The shares of Class B Common Stock shall be convertible into
shares of other classes of capital stock of the Corporation in such
manner as may be provided by the Board of Directors by resolution.
Set forth in Appendix A hereto is the Statement of Designation
setting forth the conversion rights of the Class B Common Stock.
Preferred Stock. The maximum number of shares of Preferred
Stock that the Corporation is authorized to have outstanding is
10,000,000 shares at a par value of $.01 per share. The Preferred Stock
may be issued from time to time in one or more series as specified in
Section 607.0602 of the Florida Business Corporation Act (or in such
other manner as may be permitted by law), as determined from time to
time by the Board of Directors and stated in the resolution or
resolutions providing for the issuance of such series of Preferred
Stock adopted by the Board of Directors pursuant to authority hereby
vested in it, each such series to be appropriately designated, prior to
the issuance of any shares thereof, by some distinguishing letter,
number, or title. The Board of Directors is hereby expressly granted
authority to fix the authorized number of shares of each series of
Preferred Stock, and to fix the terms of such series, including, but
not limited to, the following:
(a) the rate or manner of payment of dividends;
(b) whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(c) the amount payable upon shares in the event of
voluntary or involuntary liquidation;
(d) sinking fund provisions, if any, for the redemption or
purchase of shares;
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(e) the terms and conditions, if any, on which shares may
be converted;
(f) voting rights, if any; and
(g) the other special rights, if any, and the
qualifications, limitations or restrictions thereof, of the shares of
such series.
The designation of each particular series of Preferred Stock
and its terms in respect of the foregoing particulars shall be fixed
and determined by the Board of Directors in any manner permitted by law
and stated in the resolution or resolutions providing for the issuance
of such shares adopted by the Board of Directors pursuant to authority
hereby vested in it, before any shares of such series are issued. The
Board of Directors may from time to time increase (but not above the
total number of authorized shares of the class) the number of shares of
any series of Preferred Stock already created by providing that any
unissued Preferred Stock shall constitute part of such series, or may
decrease (but not below the number of shares thereof then outstanding)
the number of shares of any series of Preferred Stock already created
by providing that any unissued shares previously assigned to such
series shall no longer constitute part thereof. The Board of Directors
is hereby empowered to classify or reclassify any unissued Preferred
Stock by fixing or altering the terms thereof in respect of the
above-mentioned particulars and by assigning the same to an existing or
newly created series from time to time before the issuance of such
shares.
For purposes of determining whether a non-voting series of
Preferred Stock shall be entitled to a vote as a class pursuant
to Section 607.1004 of the Florida Business Corporation Act (or any
successor section or statute hereinafter enacted) on an amendment to
the Corporation's Articles of Incorporation, an amendment that
increases the total number of authorized shares of Preferred Stock
shall not be considered to be an adverse change to the terms of any
individual series of Preferred Stock and shall not require a vote or
the consent of the holders of any such series of Preferred Stock.
Set forth in Appendices B, C, D, E, F and G hereto are the
Statements of Designation setting forth the terms of the
Noncumulative Convertible Preferred Stock, Series A; Noncumulative
Convertible Preferred Stock, Series B; Noncumulative Convertible
Preferred Stock, Series C; Noncumulative Convertible Preferred Stock,
Series C-II; 8% Noncumulative Convertible Preferred Stock, Series 1993;
and 9% Noncumulative Perpetual Preferred Stock, respectively."
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles IX of the Articles of Incorporation of BankUnited provides
that BankUnited shall indemnify its officers and directors to the fullest
extent permitted by law.
The Bylaws of BankUnited provide that BankUnited will indemnify any
person against whom an action is brought or threatened because that person is
or was a director, officer or employee of BankUnited for any amount for which
that person becomes liable under a judgment in such action and reasonable costs
and expenses, including attorneys' fees. Such indemnification may only be
made, however, if (i) final judgment on the merits is in his or her favor or
(ii) in case of settlement, final judgment against him or her or final judgment
in his or her favor, other than on the merits, if a majority of the Board of
Directors of BankUnited determines that he or she was acting in good faith
within the scope of his or her duties and for a purpose he or she could have
reasonably believed under the circumstances was in the best interests of
BankUnited.
Section 607.0831 of the Florida Business Corporation Act provides,
among other things, that a director is not personally liable for monetary
damages to a company or any other person for any statement, vote, decision, or
failure to act, by the director, regarding corporate management or policy,
unless the director breached or failed to perform his or her duties as a
director and such breach or failure constitutes (a) a violation of criminal
law, unless the director had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(b) a transaction from which the director derived an improper personal benefit;
(c) a circumstance under which the liability provisions of Section 607.0834 of
the Florida Business Corporation Act (relating to the liability of the
directors for improper distributions) are applicable; (d) willful misconduct or
a conscious disregard for the best interest of the company in the case of a
proceeding by or in the right of the company to procure a judgment in its favor
or by or in the right of a shareholder; or (e) recklessness or an act or
omission in bad faith or with malicious purpose or with wanton and willful
disregard of human rights, safety or property, in a proceeding by or in the
right of someone other than such company or a shareholder.
Section 607.0850 of the Florida Business Corporation Act
authorizes, among other things, BankUnited to indemnify any person who was or
is a party to any proceeding (other than an action by or in the right of
BankUnited) by reason of the fact that he is or was a director, officer,
employee or agent of BankUnited (or is or was serving at the request of
BankUnited in such a position for any entity) against liability incurred in
connection with such proceeding, if he or she acted in good faith and in a
manner reasonably believed to be in the best interests of BankUnited and, with
respect to criminal proceedings, had no reasonable cause to believe his or her
conduct was unlawful.
Florida law requires that a director, officer or employee be
indemnified for expenses (including attorneys' fees) to the extent that he or
she has been successful on the merits or otherwise in the defense of any
proceeding. Florida law also allows expenses of defending a proceeding to be
advanced by a company before the final disposition of the proceedings, provided
that the officer,
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director or employee undertakes to repay such advance if it is ultimately
determined that indemnification is not permitted.
Florida law states that the indemnification and advancement of
expenses provided pursuant to Section 607.0850 is not exclusive and that
indemnification may be provided by a company pursuant to other means, including
agreements or bylaw provisions. Florida law prohibits indemnification or
advancement of expenses, however, if a judgment or other final adjudication
establishes that the actions of a director, officer or employee constitute (i)
a violation of criminal law, unless he or she had reasonable cause to believe
his or her conduct was lawful or had no reasonable cause to believe his or her
conduct was unlawful; (ii) a transaction from which such person derived an
improper personal benefit; (iii) willful misconduct or conscious disregard for
the best interests of the company in the case of a derivative action or a
proceeding by or in the right of a shareholder, or (iv) in the case of a
director, a circumstance under which the liability provisions of Section
607.0834 of the Florida Business Corporation Act (relating to the liability of
directors for improper distributions) are applicable.
BankUnited has purchased director and officer liability insurance that
insures directors and officers against liabilities in connection with the
performance of their duties.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following is a list of Exhibits to this
Registration Statement;
2.1 Agreement and Plan of Merger, dated July 15, 1996, between
BankUnited Financial Corporation (the "Company") and Suncoast
Savings and Loan Association, FSA ("Suncoast). (Included in
Part I of this Registration Statement as Exhibit A to the
Joint Proxy Statement-Prospectus).
3.1 Articles of Incorporation of BankUnited (Exhibit 3.1 to
BankUnited's Form S-4 Registration Statement, File No.
33-55232, as filed with the Securities and Exchange Commission
on December 2, 1992 [the "Reorganization Form S-4]).
3.2 Statement of Designation of Series I Class A Common Stock of
BankUnited, as amended (Exhibit 3.2 to the Company's Form S-2
Registration Statement, File No. 33-80791, as filed with the
Securities and Exchange Commission on December 22, 1995).
3.3 Certificate of Designation of 8% Noncumulative Convertible
Preferred Stock, Series 1993, of the Company (Exhibit 4.5 to
BankUnited's Form 10-K Report for the year ended September 30,
1993 [the "1993 10-K"]).
3.4 Certificate of Designation of 9% Noncumulative Perpetual
Preferred Stock (Exhibit 4.1 to Amendment No. 1 to
BankUnited's Form S-4 Registration Statement, File No.
33-69834, as filed with the Securities and Exchange Commission
on November 19, 1993 ["Amendment No. 1 to Form S-4"]).
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3.5 Bylaws of BankUnited (Exhibit 3.5 to BankUnited's Form S-2
Registration Statement, File No. 33-80791, as filed with the
Securities and Exchange Commission on December 22, 1995).
4.1 Agreement for Advances and Security Agreement with Blanket
Floating Lien dated as of September 25, 1992, between
BankUnited, FSB (the "Bank") and the Federal Home Loan Bank of
Atlanta (Exhibit 4.1 to the Bank's Form 10-K for the year
ended September 30, 1992, filed with the Securities and
Exchange Commission as an exhibit to BankUnited's Form 8-K
dated March 25, 1993).
4.2 Forms of Series 15A-F, Series 18E and Series 20A-F of
Subordinated Notes of the Bank (Exhibit 4.3 to the
Reorganization Form S-4).
5.1 Opinion of Stuzin and Camner, P.A. regarding the legality of
the securities being registered.
8.1 Opinion of Kronish, Lieb, Weiner & Hellman LLP regarding
federal income tax matters. (Included in Part I of this
Registration Statement as Exhibit D to the Joint Proxy
Statement-Prospectus).
10.1 Non-Statutory Stock Option Plan, as amended, (Exhibit 4.9 to
BankUnited's Form S-8 Registration Statement, File No.
33-76882, as filed with the Securities and Exchange Commission
on March 24, 1994).
10.2 1992 Stock Bonus Plan, as amended (Exhibit 10.2 to
BankUnited's Form 10-K Report for the year ended September 30,
1994 [the "1994 10-K"]).
10.3 1994 Incentive Stock Option Plan. (Exhibit 10.3 to
BankUnited's 1994 10-K).
10.4 The Bank's Profit Sharing Plan. (Exhibit 10.4 to BankUnited's
Form S-2 Registration Statement, File No. 33-80791, as filed
with the Securities and Exchange Commission on December 22,
1995).
11.1 Statement regarding calculation of earnings per common share.
(For the fiscal year, Exhibit 11.1 to the Company's Forms S-2
Registration Statement, File No. 33-80791, as filed with the
Securities and Exchange Commission on December 22, 1995 and
for the interim period, Exhibit 11.1 to BankUnited's Form 10-Q
Report for the quarter ended June 30, 1996).
12.1 Statement regarding calculation of earnings to combined fixed
charges and preferred stock dividends.
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21.1 Subsidiaries of Registrant.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Stuzin and Camner, P.A.
23.4 Consent of Raymond James & Associates, Inc.
23.5 Consent of Kronish, Lieb, Weiner & Hellman LLP.
24.1 Power of attorney (set forth on the signature page in Part II
of this Registration Statement.
99.1 Annual Report on Form 10-K of Suncoast Savings and Loan
Association, FSA.
_________________
(A) Exhibits containing a parenthetical reference in their description are
incorporated herein by reference from the documents described in the
parenthetical reference.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (Section
230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference in to the prospectus pursuant
to Item 4, 10(b), 11, or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to Item 20 of this
II-5
<PAGE> 226
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issued.
II-6
<PAGE> 227
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coral Gables, State of
Florida on September 30, 1996.
BANKUNITED FINANCIAL CORPORATION
By: /s/ Alfred R. Camner
-------------------------------------
Alfred R. Camner
Chairman of the Board, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Alfred R. Camner, Earline G. Ford and
Marc D. Jacobson and each of them, his true and lawful attorney-in-fact and
agent with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments (including
post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on September 30, 1996 by the following
persons in the capacities indicated.
/s/ Alfred R. Camner Chairman of the Board, Chief Executive
- ------------------------------ Officer, President and Director
Alfred R. Camner (Principal Executive Officer)
/s/ Lawrence H. Blum
- ------------------------------ Director
Lawrence H. Blum
/s/ James A. Dougherty
- ------------------------------ Chief Operating Officer, Executive Vice
James A. Dougherty President and Director
/s/ Earline G. Ford
- ------------------------------ Executive Vice President, Treasurer and
Earline G. Ford Director
II-7
<PAGE> 228
/s/ Samuel A. Milne
- ------------------------------ Senior Vice President and Chief Financial
Samuel A. Milne Officer (Principal Financial Officer and
Principal Accounting Officer)
- ------------------------------ Director
Marc D. Jacobson
- ------------------------------ Director
Allen M. Bernkrant
- ------------------------------ Director
Patricia L. Frost
- ------------------------------ Director
Bruce Friesner
- ------------------------------ Director
Sandra Goldstein
/s/ Robert D. Lurie
- ------------------------------ Director
Robert D. Lurie
/s/ Anne W. Solloway
- ------------------------------ Director
Anne W. Solloway
/s/ Christina Cuervo Migoya
- ------------------------------ Director
Christina Cuervo Migoya
- ------------------------------ Director
Neil Messinger
II-8
<PAGE> 229
Exhibit Index
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description of Document Number
- ----- ----------------------- ------
<S> <C>
2.1 Agreement and Plan of Merger, dated July 15, 1996, between
BankUnited Financial Corporation ("BankUnited") and Suncoast
Savings and Loan Association, FSA ("Suncoast). (Included in
Part I of this Registration Statement as Exhibit A to the
Joint Proxy Statement-Prospectus.)
5.1 Opinion of Stuzin and Camner, P.A. regarding the legality of
the securities being registered.
8.1 Opinion of Kronish, Lieb, Weiner & Hellman LLP regarding
federal income tax matters. (Included in Part I of this
Registration Statement as Exhibit D to the Joint Proxy
Statement-Prospectus).
12.1 Statement regarding calculation of earnings to combined
fixed charges and preferred stock dividends.
21.1 Subsidiaries of Registrant.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Stuzin and Camner, P.A.
23.4 Consent of Raymond James & Associates, Inc.
23.5 Consent of Kronish, Lieb, Weiner & Hellman LLP.
24.1 Power of attorney (set forth on the signature page in
Part II of this Registration Statement).
99.1 Annual Report on Form 10-K of Suncoast Savings and Loan
Association, FSA.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
STUZIN AND CAMNER
PROFESSIONAL ASSOCIATION
25TH FLOOR
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131-3258
(305) 577-0600
October 1, 1996
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Ladies and Gentlemen:
We are acting as your counsel with regard to the issuance by BankUnited
Financial Corporation (the "Company") of shares of its Series I Class A Common
Stock, $.01 par value (the "Class A Common Stock") and 8% Noncumulative
Convertible Preferred Stock, Series 1996 (the "Preferred Stock, Series 1996"),
pursuant to a Registration Statement on Form S-4 filed with the Securities and
Exchange Commission on September 30, 1996. The Class A Common Stock and the
Preferred Stock, Series 1996 will be issued and exchanged pursuant to the
Agreement and Plan of Merger dated July 15, 1996 between the Company and
Suncoast Savings and Loan Association, FSA which is described in the
Registration Statement.
We are familiar with the relevant documents and materials used in preparing
the Registration Statement. Based on our review of such relevant documents and
materials, and of such other documents and materials as we have deemed
necessary and appropriate, we are of the following opinion:
The Class A Common Stock and the Preferred Stock, Series 1996 when
issued and exchanged pursuant to the Agreement and Plan of Merger dated July
15, 1996 between the Company and Suncoast Savings and Loan Association, FSA
in the manner described in the Registration Statement will be legally issued,
fully paid and non-assessable.
Very truly yours,
STUZIN AND CAMNER,
PROFESSIONAL ASSOCIATION
<PAGE> 1
EXHIBIT 12.1
<PAGE> 2
BankUnited Financial Corporation
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
<TABLE>
<CAPTION>
For the year ended September 30
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Fixed Charges (excluding interest on deposits):
Interest on Borrowings 8,456 4,951 1,949 1,888 1,957
Percent (33%) 320 256 202 205 45
------ ------ ------ ------ ------
Total fixed charges 8,776 5,207 2,151 2,093 2,002
Income before income taxes and extraordinary items 9,981 3,607 6,356 4,248 2,046
------ ------ ------ ------ ------
Earnings 18,757 8,814 8,507 6,341 4,048]
====== ====== ====== ====== ======
Total fixed shares 8,776 5,207 2,151 2,093 2,002
Preferred stock dividends on a pretax basis 3,536 3,016 2,386 1,373 716
------ ------ ------ ------ ------
Combined fixed charges and preferred
stock dividends 12,312 8,223 4,537 3,466 2,719
====== ====== ====== ====== ======
Ratio of earnings to combined fixed charges and
preferred stock dividends 1.52:1 1.07:1 1.87:1 1.83:1 1.49:1
====== ====== ====== ====== ======
Fixed charges (including interest on deposits):
Interest on Deposits 17,849 11,344 10,261 12,134 14,350
Interest on Borrowings 8,456 4,951 1,949 1,888 1,957
Percent (33%) 320 256 202 205 45
------ ------ ------ ------ ------
Total fixed charges 26,625 16,551 12,412 14,227 16,352
Income before income taxes and extraordinary items 9,981 3,607 6,356 4,248 2,046
------ ------ ------ ------ ------
Earnings 36,606 20,158 18,768 18,475 18,398
====== ====== ====== ====== ======
Total fixed charges 26,625 16,551 12,412 14,227 16,352
Preferred stock dividends on a pretax basis 3,536 3,016 2,386 1,373 716
------ ------ ------ ------ ------
Combined fixed charges and preferred
stock dividends 30,161 19,567 14,798 15,600 17,069
====== ====== ====== ====== ======
Ratio of earnings to combined fixed charges and
preferred stock dividends 1.21:1 1.03:1 1.27:1 1.18:2 1.08:1
====== ====== ====== ====== ======
</TABLE>
<PAGE> 3
BankUnited Financial Corporation
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
<TABLE>
<CAPTION>
For the nine months
ended June 30
-------------------
1996 1995
---- ----
<S> <C> <C>
Fixed charges (excluding interest on deposits):
Interest on Borrowings $10,379 $ 5,197
Rent (33%) 214 257
------- -------
Total fixed charges 10,593 5,454
Income before income taxes and
extraordinary items 4,431 2,008
------- -------
Earnings $15,024 $ 7,462
======= =======
Total fixed charges $10,593 $ 5,454
Preferred stock dividends on a pretax basis 2,595 2,197
------- -------
Combined fixed charges and
preferred stock dividends $13,188 $ 7,651
======= =======
Ratio of earnings to combined fixed charges
and preferred stock dividends 1.14:1 .98:1
======= =======
Fixed charges (including interest on deposits):
Interest on Deposits $14,555 $13,380
Interest on Borrowings 10,379 5,197
Rent (33%) 214 257
------- -------
Total fixed charges 25,148 18,834
Income before income taxes and
extraordinary items 4,431 2,008
------- -------
Earnings $29,579 $20,842
======= =======
Total fixed charges $25,148 $18,834
Preferred stock dividends on a pretax basis 2,595 2,197
------- -------
Combined fixed charges and
preferred stock dividends $27,743 $21,031
======= =======
Ratio of earnings to combined fixed charges
and preferred stock dividends 1.07:1 .99:1
======= =======
</TABLE>
<PAGE> 1
EXHIBIT 21.1
<PAGE> 2
BANKUNITED FINANCIAL CORPORATION
---------------------------------------------------------------------------
BANKUNITED MORTGAGE
BANKUNITED, FSB BU VENTURES, INC. CORPORATION
------------------------------ ----------------- -------------------
T&D PROPERTIES
OF SOUTH BAY HOLDINGS,
FLORIDA, INC. INC.
-------------- -------------
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Joint Proxy Statement-Prospectus
constituting part of this Registration Statement on Form S-4 of our report
dated August 12, 1996 relating to the financial statements of SunCoast Savings
and Loan, FSA, which appears in such Joint Proxy Statement-Prospectus. We also
consent to the reference to us under the heading "Experts" in such Joint Proxy
Statement-Prospectus.
PRICE WATERHOUSE LLP
Miami, Florida
October 1, 1996
<PAGE> 3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Joint
Proxy Statement-Prospectus constituting part of this Registration Statement on
Form S-4 of BankUnited Financial Corporation of our report dated October 27,
1995 appearing on page F-2 of BankUnited Financial Corporation's Annual Report
on Form 10-K/A for the year ended September 30, 1995. We also consent to the
reference to us under the heading "Experts" in such Joint Proxy
Statement-Prospectus.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Miami, Florida
October 1, 1996
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
[LETTERHEAD] KPMG PEAT MARWICK
The Board of Directors
BankUnited Financial Corporation
We consent to the use of our reports included herein and incorporated herein by
reference in the Joint Proxy Statement-Prospectus.
Miami, Florida
October 1, 1996
<PAGE> 1
EXHIBIT 23.3
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our opinion as Exhibit 5.1 to this
Registration Statement on Form S-4 and to the use of our name under the caption
"Legal Matters" in the Prospectus that is a part of the Form S-4.
STUZIN AND CAMNER,
PROFESSIONAL ASSOCIATION
Miami, Florida
Date: October 1, 1996
<PAGE> 1
EXHIBIT 23.4
<PAGE> 2
RAYMOND JAMES & ASSOCIATES, INC.
880 Carillon Parkway
St. Petersburg, Florida 33716
The Board of Directors
BankUnited Financial Corporation:
We consent to the use of our opinion included herein and to use of our name
under the captions "Summary of Joint Proxy Statement-Prospectus" and "The
Merger" in the Joint Proxy Statement-Prospectus that is a part of the Form S-4.
RAYMOND JAMES & ASSOCIATES, INC.
St. Petersburg, Florida
October 1, 1996
<PAGE> 1
EXHIBIT 23.5
<PAGE> 2
KRONISH, LIEB, WEINER & HELLMAN, LLP
1114 Avenue of the Americas
New York, New York 10036-7798
The Board of Directors
BankUnited Financial Corporation:
We consent to the use of our opinion included herein and incorporated herein by
reference and to the references to our firm under the heading "Summary of Joint
Proxy Statement-Prospectus" and "The Merger" in the joint proxy statement-
prospectus.
KRONISH, LIEB, WEINER & HELLMAN, LLP
New York, New York
October 1, 1996
<PAGE> 1
EXHIBIT 99.1
<PAGE> 2
OFFICE OF THRIFT SUPERVISION
WASHINGTON, D.C. 20552
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal year ended: June 30, 1996
OTS file number: 8147
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Florida 59-2383531
- -------------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
4000 Hollywood Boulevard, Hollywood, Florida 33021
- -------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 981-6400
-----------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $1.10 Per Share
8% Noncumulative Preferred Stock, Series A, Par Value $5.00
Per Share
</TABLE>
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Registration S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting Common Stock held by non-affiliates of
the Registrant as of September 23, 1996, was approximately $11,982,000. (1)
The number of shares outstanding of the Registrant's Common Stock as of
September 23, 1996 was 2,195,930.
DOCUMENTS INCORPORATED BY REFERENCE
None.
(1) The aggregate market value of the voting stock set forth equals the
amount of Common Stock outstanding at September 23, 1996, reduced
by the amount of Common Stock held by all officers and directors of
the Registrant multiplied by the NASDAQ closing price for the
Common Stock on September 23, 1996.
<PAGE> 3
ITEM 1. BUSINESS
GENERAL
Suncoast Savings and Loan Association, FSA ("Suncoast" or "the
Association") is a federally chartered stock savings association headquartered
in Hollywood, Florida that engages principally in the business of community
banking and mortgage loan servicing. Community banking consists primarily of
attracting checking and savings deposits from the public and investing such
deposits, together with borrowings and other funds, in various types of loans
and other permitted investments. In connection with its community banking
activities, Suncoast originates and purchases, for its own portfolio, both
residential and commercial real estate loans.
Suncoast's mortgage loan servicing activities include processing loan
payments, remitting principal and interest to investors, administering escrow
funds and providing other services in the administration of mortgage loans.
Suncoast is an approved seller/servicer for the Government National Mortgage
Association ("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and
Fannie Mae ("FNMA"). Suncoast also services loans under contracts with the
Federal Deposit Insurance Corporation ("FDIC") and other financial
institutions.
Suncoast operates six savings branches in Broward and Palm Beach
County, Florida. It is regulated and examined by the Office of Thrift
Supervision ("OTS") and the FDIC and its deposit accounts are insured up to the
applicable limits by the FDIC.
PROPOSED MERGER
On July 15, 1996, Suncoast and BankUnited Financial Corporation, a
Florida corporation ("BankUnited"), entered into an Agreement and Plan of
Merger (the "Agreement and Plan of Merger"), providing for the merger (the
"Merger") of Suncoast into BankUnited, FSB, a wholly-owned subsidiary of
BankUnited. Pursuant to the terms of the Agreement and Plan of Merger,
BankUnited, FSB will be the surviving corporation in the Merger.
Upon completion of the Merger, (i) each issued and outstanding share
of Common Stock, par value $1.10 per share, of Suncoast (the "Suncoast Common
Stock") will be converted into the right to receive one share of Series I Class
A BankUnited Common Stock ("BankUnited Common Stock") and (ii) each issued and
outstanding share of Series A NonCumulative Convertible Preferred Stock of
Suncoast (the "Suncoast Preferred Stock") will be converted into the right to
receive one share of a new series of preferred stock of BankUnited to be
authorized by the Board of Directors of BankUnited and to have rights and
preferences substantially similar to those of the Suncoast Preferred Stock
("New BankUnited Preferred Stock").
Completion of the Merger is subject to certain conditions, including:
(a) approval by the shareholders of Suncoast and BankUnited, (b) approvals of
the Office of Thrift Supervision and other regulatory authorities, (c) the
effectiveness under the Securities Act of 1933, as amended of the Registration
Statement registering the BankUnited Common Stock and the New BankUnited
Preferred Stock to be issued in the Merger, (d) receipt by Suncoast of an
2
<PAGE> 4
opinion of counsel that the Merger constitutes a tax-free reorganization under
the provisions of Section 368 of the Internal Revenue Code of 1986, as amended,
(e) the absence of any event, occurrence or circumstance that would constitute a
Material Adverse Effect (as defined in the Agreement and Plan of Merger) on
either Suncoast or BankUnited and (f) other conditions to closing customary in
a transaction of this type.
In order to induce BankUnited to enter into the Agreement and Plan of
Merger, Suncoast has agreed in the Agreement and Plan of Merger to pay a
termination fee to BankUnited upon the occurrence of certain events. If the
Agreement and Plan of Merger is terminated by Suncoast in connection with an
Acquisition Proposal (as defined in the Agreement and Plan of Merger),
Suncoast has agreed to pay to BankUnited $1,000,000 plus BankUnited's
out-of-pocket expenses up to $300,000. If the Agreement and Plan of Merger is
terminated because the shareholders of Suncoast fail to approve the Merger,
Suncoast has agreed to pay to BankUnited $100,000 plus BankUnited's
out-of-pocket expenses up to $10,000.
In addition, if the Agreement and Plan of Merger is terminated (i) by
BankUnited pursuant to a willful breach by Suncoast and an Acquisition Event
(as defined in the Agreement and Plan of Merger) occurs within the twelve
months following the termination or (ii) because the shareholders of Suncoast
fail to approve the Merger and an Acquisition Event occurs within the four
months following the termination, Suncoast has agreed to pay BankUnited
$1,000,000 (or $900,000 if Suncoast has already paid the $100,000 termination
fee referred to above). One effect of the agreement by Suncoast to pay the
termination fees is to increase the likelihood that the Merger will be
completed by BankUnited by making it more difficult and more expensive for
another party to obtain control of or acquire Suncoast.
Under the terms of the Agreement and Plan of Merger, if the Agreement
and Plan of Merger is terminated (i) because the required regulatory approvals
have not been obtained, (ii) because the regulatory approvals contain
conditions that in the judgment of BankUnited would restrict the operations or
activities of BankUnited or (iii) because the Merger has not been consummated
by February 28, 1997, BankUnited has agreed to pay Suncoast $100,000 plus
Suncoast's out-of-pocket expenses up to $10,000.
BUSINESS SEGMENTS
Suncoast's operations consist of activities in three principal
business segments: banking, loan servicing and mortgage banking. Revenues in
the banking segment consist primarily of interest on mortgage loans and
investment securities. Loan servicing activities derive revenues primarily
from the collection of fees on loans serviced. During 1995, Suncoast shifted
its primary business emphasis from mortgage banking to banking. The following
is segment information for the fiscal years ended June 30 (in thousands):
3
<PAGE> 5
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
BANKING
<S> <C> <C> <C>
Revenues:
Interest income $ 23,949 $ 25,011 $ 9,358
Gains on the sale of
mortgage-backed securities 2,950 1,388 0
Other income 731 1,117 1,154
-------- -------- --------
27,630 27,516 10,512
-------- -------- --------
Expenses:
Interest expense 16,489 18,499 6,449
Employee compensation
and benefits 3,048 1,918 1,311
Depreciation 396 212 178
Provision for losses on real
estate 95 68 150
Provision for loan losses 153 95
Other expenses 2,700 2,318 1,557
-------- -------- --------
22,881 23,110 9,645
-------- -------- --------
Banking income before income
taxes $ 4,749 $ 4,406 $ 867
======== ======= ========
MORTGAGE BANKING
Revenues:
Interest income $ 1,654 $ 300 $ 5,526
Gains on the sale of loans and
loan servicing assets, net 304 560 14,963
Loan origination and other income 331 336 6,212
-------- ------- --------
2,289 1,196 26,701
-------- ------- --------
Expenses:
Interest expense 1,009 236 3,703
Employee compensation
and benefits 1,272 2,438 13,347
Depreciation 134 412 564
Other expenses 1,050 2,667 8,249
-------- ------- --------
3,465 5,753 25,863
-------- ------- --------
Mortgage banking income (loss)
before income taxes $ (1,176) $(4,557) $ 838
======== ======= ========
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
LOAN SERVICING
<S> <C> <C> <C>
Revenues:
Loan servicing fees $ 6,016 $ 7,450 $ 8,088
Amortization of loan
servicing assets (1,617) (1,175) (3,508)
-------- -------- --------
Loan servicing income 4,399 6,275 4,580
Interest income 2,355 2,544 3,727
Gain on sale of loans and
loan servicing assets, net 621
Other income 190 254 264
-------- -------- --------
7,565 9,073 8,571
-------- -------- --------
Expenses:
Interest expense 439 283 758
Employee compensation
and benefits 2,920 3,649 3,704
Depreciation 610 784 559
Other expenses 3,356 3,275 2,147
-------- -------- --------
7,325 7,991 7,168
-------- -------- --------
Loan servicing income (loss)
before income taxes $ 240 $ 1,082 $ 1,403
======== ======== ========
Assets:
Banking $372,861 $439,175 $297,926
Mortgage banking 8,844 6,356 43,827
Loan servicing 20,864 16,822 17,337
-------- -------- --------
$402,569 $462,353 $359,090
======== ======== ========
Capital dispositions
(expenditures), net:
Banking $ (447) $ 8 $ (81)
Mortgage banking (188) 64 (1,760)
Loan servicing (860) 8 (86)
-------- -------- --------
$ (1,495) $ 80 $ (1,927)
======== ======== ========
</TABLE>
References in this document to the fiscal years ended June 30, 1996,
1995 and 1994 are stated as "Fiscal 1996", "Fiscal 1995" and "Fiscal 1994",
respectively.
OPERATING STRATEGY
Suncoast's current operative strategy reflects a fundamental shift in
Suncoast's business from a mortgage bank to a community bank. Prior to 1994,
Suncoast was primarily engaged in the mortgage banking business. Historically
low interest rates in 1992 and 1993 generated record volumes of loan origination
and resale activity, primarily refinancings, leading Suncoast to expand its
lending operations nationally to fifteen loan production offices.
5
<PAGE> 7
Beginning in January 1994, rising interest rates halted refinancings making it
unprofitable for Suncoast to continue its mortgage banking operation. Suncoast
downsized its mortgage banking operation by closing all but one of its on
offices and by reducing related staff and overhead expenses.
During Fiscal 1994 and 1995, Suncoast changed its operating strategy
to that of community bank and focused on enhancing its net interest income and
servicing revenues. Suncoast initially replaced its mortgage banking assets,
primarily its inventory of loans available for sale, with investments in
mortgage-backed securities, repurchase agreements, and loans originated for
portfolio. Suncoast's strategy was to restructure its assets initially into
interest bearing assets with minimal credit risk until Suncoast could reinvest
funds previously used to finance its mortgage banking activities into portfolio
loans. In addition, this strategy allowed Suncoast to shift its assets to
those with lower risk weights under the risk based capital regulations enabling
Suncoast to increase both its assets and deposits and, accordingly, its net
interest income, while remaining well capitalized under such regulations.
During Fiscal 1995 and Fiscal 1996, Suncoast sold portions of its
mortgage-backed securities portfolio due to its ability to reinvest the
proceeds in the purchase and origination of high quality commercial and
residential real estate loans for investment. In completing this
restructuring, Suncoast not only reduced its interest rate risk, but increased
its net interest income by shifting from longer term fixed rate mortgage-backed
securities to higher yielding adjustable rate loans receivable. As its assets
were shifted into portfolio loans, Suncoast was required to reduce the overall
volume of both its interest-earning assets and its interest-bearing liabilities
in order to remain well capitalized under the applicable regulations, since its
asset mix shifted from mortgage-backed securities and short term liquid
investments, generally bearing 0 to 20% risk weights, to commercial and
residential loans bearing 50% and 100% risk weights, respectively, for purposes
of its risk-based capital ratio.
From the period January 1990 through June 1995, Suncoast did not
purchase or accumulate any servicing assets due in part to regulatory changes
which placed restrictions on the amount of servicing rights which could be
included in the calculation of regulatory capital. During this period,
Suncoast concentrated on expanding its subservicing activities, as subservicing
contracts, unlike servicing generally, are not considered an investment in loan
servicing rights for financial reporting or regulatory capital purposes.
During Fiscal 1996, however, Suncoast's operating strategy with respect to its
servicing business has been to increase its servicing portfolio through the
purchase of servicing rights and the retention of servicing rights on loans
which have been sold. Despite these efforts to increase the servicing
portfolio, loan servicing income declined during Fiscal 1996 primarily due to
declines in the volume of loans serviced under government contracts and the
repayment of loans in the servicing portfolio. Management intends to continue
to acquire and accumulate servicing rights within applicable regulatory
limitations as opportunities arise. Investments in servicing rights in excess
of $25,000, however, are subject to the consent of BankUnited while the
Agreement and Plan of Merger is pending. Loan servicing income may continue to
decline as loans in the servicing portfolio are repaid and subservicing
contracts are not renewed.
6
<PAGE> 8
LENDING ACTIVITIES
GENERAL. Prior to January 1994, it was Suncoast's policy, as a mortgage
banker, to sell in the secondary market substantially all residential first
mortgage loans it originated or purchased. With Suncoast's change in operating
strategy from mortgage banking to community banking, the Association has
concentrated on the purchase and origination, for its own portfolio of
residential first mortgage loans, commercial and multi-family real estate loans
and construction loans. During Fiscal 1995, Suncoast originated and purchased
for portfolio $7.3 million and $45.0 million of single family residential loans
and commercial and multi-family real estate loans, respectively. In
comparison, during Fiscal 1996, Suncoast originated and purchased for portfolio
$232.8 million and $48.0 million of single family residential loans and
commercial and multi-family real estate loans, respectively.
The following chart describes the composition of Suncoast's loans
receivable as of June 30, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
(in Thousands)
<S> <C> <C>
Loans in portfolio:
Real estate loans:
Commercial, collateralized by--
Undeveloped land $ 3,115 $ 5,256
Office buildings 8,287 7,625
Hotel property 21,692 9,082
Retail stores 21,552 17,245
Multi-family residential and other 43,836 34,099
-------- --------
Total commercial 98,482 73,307
Residential (one to four family) 215,044 55,449
Construction 8,491 7,085
Consumer loans 1,917 1,750
-------- --------
323,934 137,591
Allowance for loan losses (657) (504)
Deferred loan fees, net (617) (493)
Undisbursed portion of loans in process (4,354) (7,137)
Premiums paid on loans held in portfolio 2,522 329
-------- --------
$320,828 $129,786
======== ========
Loans held for sale:
Residential real estate loans $ 6,675 $ 2,962
Deferred loan fees, net (31) (19)
Premiums paid on loans held for sale 86 35
-------- --------
$ 6,730 $ 2,978
======== ========
Total loans receivable, net $327,558 $132,764
======== ========
</TABLE>
At June 30, 1996, 66.4% of Suncoast's loan portfolio consisted of
residential loans, and 33.6% consisted of commercial, construction and consumer
loans.
7
<PAGE> 9
COMMERCIAL REAL ESTATE LENDING. Suncoast's commercial real estate
and construction loan portfolio at June 30, 1996 is comprised of the following
percentages by loan type: 41.0% are permanent mortgage loans on multi-family
properties, 48.2% commercial property loans, 7.9% are construction loans
secured by residential or income producing properties and 2.9% are land loans.
Suncoast generally lends not more than 75% of the securing property's appraised
value for multi-family loans, 70% of the appraised value for all other
commercial real estate loans and 60% for land loans. Construction and
permanent commercial real estate lending is generally considered to have higher
credit risk than single-family residential lending because repayment typically
is dependent on the successful operation of the related real estate project and
thus may be subject, to a greater extent, to adverse conditions in the real
estate market or the economy. Construction loans involve additional risks
because loan funds are advanced based on the security of the project under
construction, which is of uncertain value prior to completion, and because it
is relatively difficult to evaluate accurately the total amount required to
complete a project. As a general rule, Suncoast also requires that all loans
be personally guaranteed by one or more individuals who have made a significant
equity investment in the property and that appropriate escrow accounts for the
payment of taxes and insurance be maintained at Suncoast. Suncoast's lending
area is primarily within the State of Florida, with 91% of its commercial real
estate loans collateralized by property located in the State of Florida at June
30, 1996. Suncoast also has originated commercial loans in Maryland, South
Carolina and California.
In making lending decisions, Suncoast generally considers, among
other things, the overall quality of the loan, the credit of the borrower, the
location of the real estate, the projected income stream of the property and
the reputation and quality of management constructing or administering the
property. No one factor is determinative and such factors may be accorded
different weights in any particular lending decision. Commercial real estate
loans generally have shorter terms, adjust more rapidly to interest rate
fluctuations and bear higher rates of interest than alternative investments.
Income from this type of loan is more responsive to changes in the general
level of interest rates.
SINGLE-FAMILY RESIDENTIAL REAL ESTATE LENDING. A substantial portion
of the loans originated and purchased by the Association are conventional
mortgage loans (i.e., not guaranteed or insured by agencies of the federal
government) which are secured by residential properties and which conform with
the requirements for sale to FNMA or FHLMC (i.e., conforming loans), or which
would otherwise conform, except that they exceed the maximum amount to qualify
for sale to FNMA or FHLMC or they are made to non-resident alien borrowers.
Loans which do not comply with FNMA or FHLMC underwriting requirements are
referred to as non-conforming loans.
The majority of loans originated by the Association have been derived
from a correspondent program. Participants in the correspondent program are
independent and unaffiliated mortgage brokers who must satisfy certain
requirements established by the Association pertaining to experience, size of
business and the holding of various licenses and approvals.
The Association also purchases mortgage loans on properties located
throughout the United States from other lenders. The Association's loan
origination activities have been funded from deposits, loan sales and
borrowings. Suncoast originates and purchases for
8
<PAGE> 10
portfolio primarily adjustable rate first mortgage loans and, to a lesser
extent, fixed rate loans, generally repayable over 30 years. Residential loans
typically remain outstanding for shorter periods than their contractual
maturities because borrowers prepay the loans in full upon sale of the mortgaged
property or upon refinancing of the original loan. Suncoast's adjustable-rate
mortgage loans ("ARMS") generally have interest rates that adjust semi-annually
or annually at a margin over the weekly average yield on U.S. Treasury
securities adjusted to a constant maturity or at a margin over the one year
weekly average of secondary market interest rates on six month negotiable
certificates of deposit. Both indices are published by the Federal Reserve.
The maximum interest rate adjustment of the Association's ARMs is generally 1%
semi-annually and 6% over the life of the loan, above or below the initial rate
of the loan for semi-annual adjustable loans, or 2% annually and 6% over the
life of the loan, above or below the initial rate on the loan for annual
adjustable loans. Suncoast's policy is to require private mortgage insurance
on all residential loans with a loan-to-value ratio in excess of 80%.
Generally, ARM loans pose credit risks somewhat greater than the
risks inherent in fixed rate loans primarily because as interest rates rise,
the underlying payments of the borrower rise, thereby increasing the potential
for default. At the same time, the marketability of the underlying property
may be adversely affected by higher interest rates. In order to minimize these
risks, borrowers of ARM loans are qualified at the fully indexed rate. The
Association does not originate ARM loans which provide for negative
amortization of deferred interest.
At June 30, 1996 and 1995, loans due after one year with fixed and
adjustable interest rates, including loans held for resale, totaled $305.1
million and $129.0 million, respectively. The average remaining term to
maturity of the Association's loan portfolio, including loans held for resale,
was 20.0 years at June 30, 1996.
The following table shows the scheduled principal payments of the
Association's loans receivable (including loans held for resale) prior to the
allowance for loan losses, deferred loan fees, premiums paid on loans and
undisbursed portion of loans in process, but without estimation of prepayment
expectations, at June 30, 1996:
9
<PAGE> 11
<TABLE>
<CAPTION>
For the Year(s) Ending June 30,
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
2000- 2002- 2007- After Due After
1997 1998 1999 2001 2006 2011 2011 Total One Year
---- ---- ---- ---- ---- ---- ---- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans held for sale (1):
Residential first mortgage
loans - adjustable $ 196 $ - $ - $ - $ - $ - $ - $ 196 $ -
Residential first mortgage
loans - fixed 6,479 - - - - - - 6,479 -
-------------------------------------------------------------------------------------------
6,675 - - - - - - 6,675 -
-------------------------------------------------------------------------------------------
Loans in portfolio:
Residential first mortgage
loans - adjustable 2,460 2,657 2,869 6,446 20,930 27,479 122,433 185,274 182,814
Residential first mortgage
loans - fixed 612 662 715 1,608 5,302 7,829 13,042 29,770 29,158
Commercial real estate
loans - adjustable 7,200 10,209 7,500 14,531 46,929 3,995 0 90,364 83,164
Commercial real estate
loans - fixed 1,592 1,680 1,805 1,453 1,588 8,118 6,526
Construction loans (2) 6,244 750 435 432 630 8,491 2,247
Consumer loans - adjustable 691 67 456 504 1,718 1,027
Consumer loans - fixed 18 181 0 199 181
-------------------------------------------------------------------------------------------
18,817 16,206 13,780 24,974 75,379 39,303 135,475 323,934 305,117
-------------------------------------------------------------------------------------------
Total loans receivable $ 25,492 $16,206 $13,780 $24,974 $75,379 $39,303 $135,475 $330,609 $305,117
===========================================================================================
</TABLE>
(1) Since loans held for sale are to be delivered within two months, they
are categorized within 1996 and not according to their contractual
maturities.
(2) All loans are adjustable rate.
10
<PAGE> 12
The table below shows Suncoast's mortgage and other loan originations
by geographic location for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
--------------------------------------------------
1996 1995 1994
----------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Florida $ 84,362 $ 57,889 $ 515,511
California 13,630 1,149,803
North Carolina 112,463
Massachusetts 340,339
Washington 18,531
Virginia 9,641
Nevada 1,958 117
---------- ---------- ----------
84,362 73,477 2,146,405
Streamlined refinances 34,258
Other loans originated 43,139 45,015 23,176
---------- ---------- ----------
$ 127,501 $ 118,492 $2,203,839
========== ========== ==========
</TABLE>
The table below shows Suncoast's conforming and non-conforming
mortgage loan originations for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------------
1996 1995 1994
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Residential one-to-four conforming $ 65,520 $ 25,519 $1,405,167
Non-conforming 18,842 47,958 775,496
---------- ---------- ----------
Mortgage loans originated $ 84,362 $ 73,477 $2,180,663
========== ========== ==========
</TABLE>
UNDERWRITING STANDARDS AND REVIEW. Suncoast's commercial and
residential real estate mortgage lending is subject to its written underwriting
standards and to loan origination procedures prescribed by its Board of
Directors. These procedures require that detailed loan applications be
obtained to determine the prospective borrower's ability to repay the loan, and
that the more significant items on the applications be verified through the use
of credit reports, financial statements and confirmations. Loan applications
are processed and reviewed for approval pursuant to such standards and
procedures as well as applicable state and federal laws and regulations.
Suncoast uses outside appraisers and requires title insurance with respect to
the security property. In addition, residential loans are generally originated
and underwritten in accordance with standards established by FNMA, FHLMC and
other third party investors in the secondary market. Applications for loans
originated by Suncoast are processed by its staff and reviewed by its
underwriting department based on the application package presented. Conforming
residential loans, those complying with the requirements for sale to FNMA or
FHLMC or conversion to mortgage-backed securities and thus readily saleable in
the secondary market, may be approved by the underwriting department.
Residential loans above prescribed lending limits are referred to Suncoast's
Loan Committee, consisting of the Chief Executive Officer, the Executive Vice
President-Lending and Servicing, Senior Vice President-Loan Servicing, and the
Vice President-Loan Production. All loans referred to Loan Committee must be
approved by the Chief Executive Officer and two other members of Loan
Committee. Purchases of residential loans that are newly
11
<PAGE> 13
originated are subject to the same documentation requirements and underwriting
review and standards as those originated by Suncoast. Purchases of residential
loans that are more than one year old are subject to more limited underwriting
review which includes a review of a current credit and payment history of the
borrower, a current market valuation of the collateral, as well as the original
underwriting decision and documentation.
Commercial and multi-family loans under $2,000,000 are referred to
Suncoast's Major Loan Committee consisting of the Chief Executive Officer,
General Counsel and the Executive Vice President-Lending and Servicing.
Commercial loans in excess of $2,000,000 are approved by the entire Board of
Directors. Loan approvals by all loan committees are ratified by the Board of
Directors. All approved loans are closed for Suncoast by approved closing
agents.
Suncoast requires title, fire and extended casualty insurance to be
obtained by the borrower and, where appropriate, flood insurance. The
Association typically requires builders' risk insurance on construction loans.
Mortgage loans originated by Suncoast generally include a "due-on-sale" clause
giving the Association the right to declare a loan immediately due and payable
in the event, among other things, that the borrower sells or otherwise disposes
of the real property subject to the mortgage and the loan is not repaid.
ASSET QUALITY
COLLECTION PROCEDURES. With respect to loans receivable as well as
loans in the servicing portfolio, when a borrower fails to make a required
payment on a loan, Suncoast attempts to cause the deficiency to be cured. In
most cases, deficiencies are cured promptly; however, if a residential loan
payment is contractually delinquent for more than 30 days, additional
collection procedures are implemented. If the delinquency is not cured,
Suncoast will institute appropriate legal action. If foreclosed, the property
may be sold at a public or private sale or purchased by Suncoast.
CLASSIFIED ASSETS. OTS regulations provide for a method of
classifying all assets and re-evaluation of real estate owned by the OTS
examination staff. Under the regulations, assets may be classified as (i)
"Substandard", (ii) "Doubtful" or (iii) "Loss". Assets classified as
Substandard or Doubtful may have allowances for loan losses of an appropriate
amount and assets classified as Loss must have either valuation allowances up
to 100% of the book value of the assets or be charged off. Any such valuation
allowance would be drawn from, and thereby lower, the institution's capital as
determined under generally accepted accounting principles ("GAAP") which is the
foundation for the institution's regulatory capital computation. Assets that do
not currently expose a savings association to a sufficient degree of risk to
warrant classification but possess credit deficiencies or potential weaknesses
deserving management's attention are designated as "special mention". At June
30, 1996, Suncoast had $208,000 in assets designated as "special mention",
compared to zero at June 30, 1995. Suncoast currently conducts weekly reviews
of (a) its real estate owned in order to determine whether to reduce the
carrying value of such real estate and (b) its residential mortgage loan
portfolio, its consumer loans and each of its commercial real estate and
construction loans, in order to determine whether to establish or increase any
allowance for loan losses or charge off loans or portions of loans that are
determined to be uncollectible.
12
<PAGE> 14
Set forth below is information on classified assets as of the dates
indicated:
<TABLE>
<CAPTION>
June 30,
-----------------------
1996 1995
---- ----
(Dollars in Thousands)
<S> <C> <C>
Substandard $1,182 $ 633
Doubtful - -
Loss - -
------ ------
Total classified assets $1,182 $ 633
====== ======
Percent of total assets 0.29% 0.14%
====== ======
</TABLE>
At June 30, 1996, substandard assets consisted of two residential
loans, one residential foreclosed property and one commercial real estate loan
in bankruptcy proceedings. At June 30, 1995, all substandard assets were
residential loans.
NON-PERFORMING ASSETS. Suncoast generally ceases accruing interest
when a loan is 90 or more days delinquent. The following table sets forth
information regarding the Association's non-performing assets as of the dates
indicated:
<TABLE>
<CAPTION>
% of % of % of
June 30, Total June 30, Total June 30, Total
1996 Assets 1995 Assets 1994 Assets
-------- ------ -------- ------ -------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-accrual loans $ 466 0.12% $ 36 0.01% $ 563 0.16%
Accruing loans
90 days or more
past due - - - - - -
Restructured loans 455 0.11 115 0.03 947 0.26
Real estate
acquired through
foreclosure 261 0.06 523 0.11 428 0.12
In-substance
foreclosure - - - - - -
------ ---- ------ ---- ------ ----
$1,182 0.29% $ 674 0.15% $1,938 0.54%
====== ==== ====== ==== ====== ====
</TABLE>
Non-performing assets are generally classified by Suncoast as
substandard. Information on classified assets is shown net of specific reserves
attributable to such assets while information on non-performing assets is shown
before allowances for specific reserves. During the years ended June 30, 1996,
1995 and 1994, interest income of $19,807, $6,700 and $5,100, respectively,
was recorded on non-accrual loans prior to their being placed on non-accrual
status. If non-accrual loans had been accruing interest, additional interest
income of $54,000, $10,000 and $42,000 would have been recorded during Fiscal
1996, 1995 and 1994, respectively.
ALLOWANCE FOR LOAN AND LEASE LOSSES. The allowance for loan and
lease losses is maintained at an amount management deems adequate to cover
estimated losses.
13
<PAGE> 15
The following table sets forth the breakdown of the allowance for
loan losses by loan category at the dates indicated.
<TABLE>
<CAPTION>
June 30,
-------------------
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Real estate mortgages:
One-to-four family residential loans $131 $ 48
Multi-family loans 68 38
Commercial real estate loans 410 304
Unimproved land loans 31 53
Consumer loans 16 14
Unallocated 1 47
---- ----
Total allowance for loan losses $657 $504
==== ====
</TABLE>
Suncoast provides for future losses based on management's assessment
of risk inherent in the portfolio and provides for losses on specific loans, if
necessary. Provisions for losses on specific loans are charged to earnings
when, in the opinion of management, it is probable that the loan has been
impaired and the amount of the loss can be reasonably estimated. Secondly, an
allowance for loan losses is established based upon loan type as well as the
classification of loans as substandard, doubtful or loss, or their designation
as special mention. Provisions for the allowance for loan losses are based on
a management analysis that incorporates a number of factors, including
historical loss experience, current economic conditions and management's
ongoing assessment of risk inherent in each type of loan and in the aggregate
portfolio.
The process of updating the allowance for loan losses begins with the
application of a formula developed by Suncoast that calls for a fixed percent
to be applied against each loan type as well as loans designated as
non-performing, classified or subject to special mention. The percent varies
based on the expected risk of loss for each type of loan and level of
classification or designation. The allowance for loan losses is increased or
decreased with an offsetting charge or credit to earnings when dictated by the
formula. When the formula requires less than a minimum allowance balance
established by Suncoast's Board of Directors, the difference is labeled as
"unallocated". Management reviews the results of this formula-driven approach
and where appropriate changes factors used in the formula and amounts produced
by the formula to result in an allowance for loan losses that is adequate.
While management uses the best information available to make evaluations,
future adjustments to the allowance may be necessary if economic conditions
differ substantially from the assumptions used in making the evaluations.
The following table sets forth the activity in the Association's
allowance for loan losses during the periods indicated:
14
<PAGE> 16
<TABLE>
<CAPTION>
June 30,
----------------------------------------
1996 1995 1994
---- ---- -----
(In thousands)
<S> <C> <C> <C>
Balance at beginning of period $504 $504 $521
---- ---- ----
Loans charged-off:
One-to-four family residential loans (0) (95) (17)
Multi-family loans - - -
Commercial real estate loans - - -
Unimproved land loans - - -
Consumer loans - - -
---- ---- ----
(0) (95) (17)
---- ---- ----
Recoveries:
One-to-four family residential loans - - -
Multi-family loans - - -
Commercial real estate loans - - -
Land loans - - -
Consumer loans - - -
---- ---- ----
- - -
---- ---- ----
Net charge-offs: (difference between
charge-offs and recoveries) (0) (95) (17)
---- ---- ----
Provision for loan losses(1) 153 95 -
---- ---- ----
Balance at end of period $657 $504 $504
==== ==== ====
Write-downs and reserves for Real Estate Owned:
Balance at beginning of period $ - $ - $ -
Net charge-offs (0) (68) (150)
Provision for REO losses 80 68 150
---- ---- ----
Balance at end of period $ 80 $ - $ -
==== ==== ====
</TABLE>
(1) The provision for loan losses is the amount required to maintain a
total reserve balance that is the result of the current level of
loans and classified assets and the percentage reserve factors
applied against each type of loan and classified asset as discussed
above.
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 114, ("FAS 114") "Accounting by Creditors for
Impairment of a Loan", subsequently amended by FAS 118. Loans within the scope
of FAS 114 are measured for impairment based on (a) the present value of
expected future cash flows discounted at the loan's effective interest rate,
(b) the market price, or (c) if collateral dependent, the fair value of the
collateral. If the value of the loan so determined is less than the loan's
recorded value, then the creditor must recognize a loss for the difference by
creating a valuation allowance or adjusting an existing valuation allowance
with a corresponding charge to bad debt expense. FAS 118 amended certain
income recognition and disclosure provisions of FAS 114. The adoption of FAS
114 and FAS 118 did not have a significant effect on Suncoast's financial
condition and results of operations due to the composition of its loan
portfolio and its policy for establishing its allowance for loan losses.
Notwithstanding FAS 114, effective March 31, 1995, OTS policy requires the
classification and valuation of troubled, collateral dependent loans for
purposes of regulatory reporting to be based on the fair value of the
collateral. This change in OTS policy has had an insignificant effect on
Suncoast.
15
<PAGE> 17
LOAN SERVICING ACTIVITIES
Prior to January 1990, Suncoast emphasized its mortgage servicing
activities and developed a substantial loan servicing portfolio by purchasing
from various originators the servicing rights to originated or purchased first
mortgage residential loans on properties located in all 50 states, although
predominantly in California, and retaining servicing rights to loans that it
sold in the secondary market. The Association continues to service the loans
from these prior years and also subservices loans for others.
From the period January 1990 through June 1995, Suncoast did not
purchase or accumulate any servicing assets due in part to regulatory changes
which placed restrictions on the amount of servicing rights which could be
included in the calculation of regulatory capital. During this period,
Suncoast concentrated on expanding its subservicing activities, as subservicing
contracts, unlike servicing generally are not considered an investment in loan
servicing rights for financial reporting or regulatory capital purposes.
During Fiscal 1996, however, Suncoast's operating strategy with respect to its
servicing business has been to increase its servicing portfolio through the
purchase of servicing rights and the retention of servicing rights on loans
which have been sold. The principal amount of loans for which Suncoast
performed servicing or subservicing as of June 30, 1996 was $1.5 billion.
Suncoast has the capacity to service up to $5.0 billion of loans without
significantly increasing its operational hardware and other equipment.
Suncoast's capitalized mortgage servicing rights ("MSRs") consist of
purchased mortgage servicing rights ("PMSRs"), originated mortgage servicing
rights ("OMSRs"), and premiums on the sale of loans. MSRs generate cash
revenues in the form of servicing fees, which are determined based on a
percentage of the declining principal amount of the loans serviced, and
collected from a portion of each mortgage loan payment received, plus any late
charges or other ancillary fees. Servicing income is reduced by the
amortization of premiums on the sale of loans and costs incurred to purchase
loan servicing rights. Retention or purchase of servicing rights creates a
stream of payments which lasts throughout the period during which a mortgage
loan remains outstanding. The value of servicing to the Association is
dependent upon the expected income stream associated with the underlying loans.
Factors which may affect this value include servicing fees, stated mortgage
interest rates, loan balances, loan types, estimated average loan life, escrow
balances, delinquency and foreclosure history, projected servicing costs and
existing or expected liabilities related to borrower delinquencies. See "Item
8. Financial Statements and Supplementary Data - Note A to the Consolidated
Financial Statements."
During the period from January 1990 through June 1995, Suncoast did
not accumulate or purchase MSRs resulting in a corresponding decrease in loan
principal balances and servicing revenue. To offset this decline in revenue,
starting in Fiscal 1992, Suncoast began to utilize its capacity to subservice
loans for other financial institutions for a mutually agreed monthly fee per
loan. The subservicing of loans utilizes the same operational capabilities as
are utilized with normal servicing, but does not require the capital investment
necessary for the purchase or retention of a normal servicing asset. It does,
however, generate a slightly lower yield than servicing loans directly because
an investor in servicing rights also has the ability to realize appreciation of
servicing assets and increased servicing income due to lower than expected loan
prepayments in periods of rising interest rates. At
16
<PAGE> 18
June 30, 1996, Suncoast was subservicing approximately 1,400 loans with a
principal value of $254.6 million for fifteen other financial institutions. At
June 30, 1995, Suncoast was subservicing approximately 3,100 loans with a
principal value of $370.2 million for ten other financial institutions. During
Fiscal 1996, 1995, and 1994, Suncoast recorded servicing fees related to these
contracts of $247,000, $412,000, and $333,000, respectively.
In addition, during Fiscal 1992, Suncoast expanded its subservicing
capabilities by entering into an agreement with the RTC to service residential
and commercial mortgage loans that came under the RTC's authority. Although
this agreement expired in October 1995, Suncoast entered into another agreement
with the RTC to service residential loans. As of December 31, 1995, the RTC
ceased operations, and the FDIC assumed responsibility for RTC functions,
including the administration of the contract with Suncoast ("the RTC
Contract"). Loans under the RTC Contract are serviced for a fixed monthly fee
for each loan plus any late charges or other ancillary fees collected. The
Association also receives fees under the RTC Contract to perform various other
services related to the loans. As of June 30, 1996 and 1995, Suncoast was
subservicing over 600 and 6,600 loans, respectively, with a principal value of
$43.9 million and $433.7 million, respectively, under the RTC Contract,
including $26.9 million and $127.0 million, respectively, under a master
subservicing coordination agreement for other FDIC servicers which obligates
Suncoast to review reports of other servicers for the FDIC and to consolidate
cash remittances to the FDIC.
In January and October 1995, respectively, Suncoast signed national
contracts with the FDIC to service residential real estate loans and consumer
loans, respectively. Under the residential contract, Suncoast receives monthly
fees based on the declining principal balance of loans which do not exceed
certain delinquency requirements. Under the consumer servicing contract,
Suncoast receives a fixed monthly fee for certain performing loans and a
percentage of amounts collected related to non-performing loans. As of June
30, 1996 and 1995, Suncoast was subservicing approximately 5,000 loans and
2,000 loans, respectively, with a principal value of $164.3 million and $78.1
million, respectively, for the FDIC.
Loan servicing fees related to RTC Contract and FDIC contracts for
the years ended June 30, 1996, 1995 and 1994 amounted to $1.8 million, $2.7
million, and $2.5 million, respectively. The amount of subservicing fees
generated by Suncoast from the RTC Contract and the FDIC contracts is dependent
upon the amount of assets which come under these entities' control, the length
of time which they are owned, and other factors. These factors are based upon
economic and other conditions which are generally beyond Suncoast's control.
Management anticipates that subservicing fees related to the RTC Contract will
continue to decrease as the FDIC continues to liquidate the inventory of loans
under its control.
During Fiscal 1996, in an effort to offset reduced servicing income
as a result of repayments of loans underlying the servicing assets and as a
result of decreased levels of loans subserviced, Suncoast resumed the purchase
and accumulation of servicing rights. Suncoast purchased $2.3 million of
PMSRs, representing approximately $286.8 million in principal loan balances.
On July 1, 1995, Suncoast adopted Statement of Financial Accounting Standards
No 122 ("FAS 122") "Accounting for Mortgage Servicing Rights", as discussed in
"Item 8. Financial Statements and Supplementary Data - Notes to the
Consolidated Financial Statements." With the adoption of FAS 122, Suncoast has
reinitiated its prior practice of retaining the servicing rights on most of the
loans it originates and sells
17
<PAGE> 19
and capitalizes as OMSRs the normal servicing fee to be received over the life
of each loan at its fair value. During Fiscal 1996, Suncoast capitalized
$860,000 of OMSRs representing $62.0 million in loan principal balances.
Management intends to continue to acquire PMSRs and generate OMSRs within
applicable regulatory guidelines as opportunities arise, subject, however, to
those restrictions contained in the Agreement and Plan of Merger.
The following table sets forth certain information regarding the loan
servicing portfolio of Suncoast for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
---------------------------------------------
1996 1995 1994
---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C>
Loan servicing portfolio (beginning of period) $1,639,069 $2,009,762 $ 2,688,629
Servicing for loans originated and purchased 178,511 118,492 2,203,839
Loan servicing rights purchased 286,827 7,027 -
Run-off (1) (186,043) (169,252) (398,744)
Sale of servicing rights (55,235) (90,812) (2,313,543)
Subservicing added (transferred out) during the year (318,841) (142,381) 305,825
Loans serviced under temporary subservicing
agreements, net (2) (55,235) (93,767) (476,244)
Loan servicing portfolio (end of period) $1,489,053 $1,639,069 $ 2,009,762
========== ========== ===========
Number of loans serviced (end of period) 22,822 22,524 22,421
Average loan balance (end of period) $ 65 $ 73 $ 90
Servicing fees (gross) $ 6,016 $ 7,450 $ 8,088
Servicing fees (net) (3) $ 4,399 $ 6,275 $ 4,580
</TABLE>
____________________________
(1) Run-off refers to normal amortization of loans and prepayments.
(2) Represents net change in servicing rights sold prior to fiscal year
end which rights were transferred to the purchasers subsequent to the
fiscal year end.
(3) Net of amortization of the carrying value of PMSRs, OMSRs and
premiums on the sale of loans and of any valuation adjustments due to
changes in prepayment assumptions.
The following table sets forth, by type of servicing rights, the loan
principal serviced and related asset balances as of the dates indicated:
18
<PAGE> 20
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
--------------------------- -----------------------------
(In thousands)
Loan Asset Loan Asset
Principal Balance Principal Balance
--------- ------- --------- -------
<S> <C> <C> <C> <C>
PMSRs $ 652,727 $ 9,525 $ 467,700 $ 8,572
Premiums on the sale of loans 55,692 1,359 65,393 1,533
OMSRs 46,148 834
FDIC, as successor to RTC 43,856 433,712
FDIC 164,299 78,112
Private 11,323 28,425
FHLMC/FNMA 16,772 54,952
Subservicing rights 199,355 370,222
Loans serviced under temporary
subservicing agreements 55,235
---------- ---------- ---------- ----------
Subtotal 1,245,407 11,718 1,498,516 10,105
Suncoast loans serviced 243,646 140,553
---------- ---------- ---------- ----------
Total $1,489,053 $ 11,718 $1,639,069 $ 10,105
========== ========== ========== ==========
</TABLE>
The following tables set forth, by category of investor, the
composition of the loan servicing portfolios of Suncoast as of the dates
indicated:
<TABLE>
<CAPTION>
June 30,
------------------------------
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
Investor:
FNMA $ 114,624 $ 79,256
GNMA 317,280 384,195
FHLMC 297,451 107,620
FDIC, as successor to RTC (1) 43,856 433,712
FDIC (1) 164,299 78,112
Private 53,307 45,399
Other financial institutions(1) 254,590 370,222
---------- ----------
Sub-total 1,245,407 1,498,516
Suncoast portfolio loans serviced 243,646 140,553
---------- ----------
Total loans serviced $1,489,053 $1,639,069
========== ==========
</TABLE>
(1) Consists of subservicing.
19
<PAGE> 21
The following table sets forth, by location of the underlying loans,
the composition of the servicing portfolio of Suncoast as of June 30, 1996
(principal amounts in thousands):
<TABLE>
<CAPTION>
State Number of Loans Principal Amounts
- ----- --------------- -----------------
<S> <C> <C>
Florida 4,493 $ 477,628
California 4,380 345,648
Texas 2,060 75,730
Massachusetts 1,563 68,894
Michigan 1,044 93,032
New Jersey 742 34,544
Pennsylvania 532 24,911
New York 498 25,918
Indiana 435 36,101
Missouri 386 28,661
Illinois 343 24,411
Kentucky 315 5,384
Arizona 280 18,295
Ohio 256 19,247
Maryland 241 17,658
Connecticut 238 10,699
Georgia 233 8,465
Louisiana 220 8,860
Washington 194 11,737
Minnesota 165 14,859
Nevada 157 8,502
Virginia 153 10,719
Kansas 152 12,514
Connecticut 127 8,227
Tennessee 105 3,803
New Hampshire 105 7,802
Oklahoma 85 3,101
North Carolina 82 5,235
Hawaii 82 6,004
Puerto Rico 74 976
Oregon 74 3,714
South Carolina 68 6,158
All others (1) 636 32,246
Master Servicing FDIC and others (2) 2,304 29,370
------ ----------
Total 22,822 $1,489,053
====== ==========
</TABLE>
____________________
(1) No other state accounted for more than 50 loans.
(2) Individual loans are serviced by others for FDIC, as successor to
RTC. Suncoast acts as coordinator of the servicing functions and
reports activity on these loans to FDIC on a combined basis based
upon reports from the various servicers.
Servicing agreements with FNMA, FHLMC and GNMA generally provide for
loan servicing fees ranging from 0.25% to 0.50% per annum of the declining
principal amount of the loans, plus any late charges or other ancillary fees.
Loan servicing fees for loans serviced under mortgage-backed securities
programs are either subject to negotiation with the sponsoring agency or in
certain instances set by the sponsoring agency. Servicing fees for loans sold
to private investors are determined by agreement with the investor, and also
range from 0.25% to 0.50% per annum. In addition to the contractual fee,
Suncoast also receives excess servicing fees equal to the excess of the stated
servicing fee (the difference between the yield paid to the purchaser of the
loan and the rate paid by the borrower) over the
20
<PAGE> 22
contractual servicing fee under the servicing agreement. Income from servicing
is calculated based upon the contractual servicing fee plus any excess servicing
fee, net of amortization of the carrying value of the acquired loan servicing
rights or the premiums on the sale of loans. See "Item 8. Financial Statements
and Supplementary Data - Note A of the Notes to the Consolidated Financial
Statements."
Suncoast is subject to certain costs and risks related to servicing
delinquent loans. Servicing agreements relating to the mortgage-backed security
programs of FNMA, FHLMC and GNMA require the servicer to advance funds to make
scheduled payments of interest, taxes and insurance, and in some instances
principal, if such payments have not been received from the borrowers.
However, Suncoast recovers almost all of the advanced funds related to FNMA and
FHLMC servicing agreements upon cure of default by the borrower, or through
foreclosure proceedings and claims against agencies or companies that have
insured or guaranteed the loans. During the years ended June 30, 1996, 1995,
and 1994, Suncoast incurred foreclosure losses related to primarily GNMA
servicing of $995,000, $614,000, and $487,000, respectively. The amount of
foreclosure losses increased in Fiscal 1996 as compared to 1995 and 1994 due to
a higher level of loan foreclosure actions. Certain servicing agreements for
loans sold directly to other investors require Suncoast to remit funds to the
loan purchaser only upon receipt of payments from the borrower and,
accordingly, the investor bears the risk of loss. Suncoast, however, is
subject to the risk that declines in the interest rates for mortgage loans or
other economic conditions will result in a revaluation of its servicing assets
as borrowers refinance or otherwise prepay higher rate loans.
The following table sets forth certain information for Suncoast by
interest rate range, regarding the principal balance and percentage of the
total servicing portfolio and the weighted average interest rate of residential
first mortgage loans serviced as of the dates indicated:
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
-------------------------------------- --------------------------------------
Percent of Percent of
Mortgage loan Principal total servicing Principal total servicing
interest rate Balance portfolio Balance portfolio
- ----------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Below 5.00% $ 3,456 0.2% $ 17,525 1.1%
5.0 to 5.99 11,333 0.8 39,679 2.4
6.0 to 6.99 132,227 8.9 122,525 7.5
7.0 to 7.99 352,879 23.7 226,115 13.8
8.0 to 8.99 458,280 30.8 397,861 24.3
9.0 to 9.99 264,071 17.7 382,088 23.3
10.0 to 10.99 169,090 11.3 237,342 14.5
11.0 to 11.99 37,004 2.5 46,269 2.8
12.0 to 12.99 16,572 1.1 20,610 1.3
13.0 and above 14,771 1.0 22,083 1.3
---------- ----- ---------- -----
1,459,683 98.0% 1,512,097 92.3%
Master servicing
coordinated for
the FDIC
and others 29,370 2.0% 126,972 7.7%
---------- ------ ---------- -----
$1,489,053 100.00% $1,639,069 100.0%
========== ====== ========== =====
Weighted average rate 8.63% 8.72%
========== ==========
</TABLE>
21
<PAGE> 23
At June 30, 1996 and 1995, 12.12% and 9.10%, respectively, of
mortgage loans in Suncoast's total servicing portfolio were 30 days or more
past due and 4.72% and 3.52%, respectively, were 90 days or more past due. At
such dates, 1.17% and 1.88% of mortgage loans, respectively, totaling $18.0
million and $30.9 million, respectively, were in foreclosure. The delinquency
ratios in the aggregate servicing portfolio include high delinquency rates on
FDIC loans serviced. Suncoast has no risk of loss on these delinquent loans.
The above percentages do not include the population of FDIC consumer loans
classified by the FDIC as charged-off assets on which Suncoast receives a fee
based on a percentage of amounts collected from the borrower. Suncoast's
overall loan servicing portfolio, exclusive of subserviced loans, reflected
that 2.61% and 1.18% of mortgage loans were 30 days or more past due at June
30, 1996 and 1995, respectively.
MORTGAGE BANKING ACTIVITIES
Suncoast's mortgage banking activities consist primarily of
originating, purchasing, warehousing and selling one-to-four family residential
first mortgage loans without recourse. The income derived from mortgage banking
activities includes gains on the sale of mortgage loans and servicing rights in
the secondary market. Until January 1994, it had been Suncoast's policy to
sell in the secondary market substantially all the residential first mortgage
loans that it originated or purchased. As previously discussed, Suncoast
changed its operating strategy, beginning in January 1994, to emphasize
community banking activities over mortgage banking activities.
Suncoast originates and purchases fixed-rate and adjustable-rate
residential first mortgage loans for sale in the secondary market primarily to
FHLMC and private investors. To a lesser extent, the Association also
periodically originates FHA-insured and VA-guaranteed mortgage loans for sale
in the form of pass-through mortgage-backed securities guaranteed by GNMA. The
Association and its subsidiary, SCG Mortgage Corporation ("SCG"), are approved
Federal Housing Authority ("FHA") and Veterans Administration ("VA") supervised
mortgagees and approved seller-servicers with GNMA, FNMA and FHLMC.
Suncoast sells on a non-recourse basis substantially all fixed rate
residential first mortgage loans which it originates or purchases for resale.
Loans are held pending their delivery in the secondary market, as discussed
below, and sold either in pools through FHLMC participation certificates, FNMA
mortgage-backed securities, GNMA-guaranteed mortgage-backed securities or on a
loan by loan basis to FHLMC, FNMA or private investors. During Fiscal 1996 and
1995, 82.5% and 34.7%, respectively, of the principal amount of the
Association's loan sales were made in pools through FHLMC, FNMA or Residential
Funding Corporation, a private investor.
Loans originated for sale, whether as whole loans or subject to the
creation of mortgage-backed securities held for sale, are sold pursuant to
agreements which are established while the loans are in the processing stage,
thus reducing market risk. Suncoast primarily sells loans under agreements
which are binding on the investor, but non-binding on Suncoast, which delivers
the loans on a "best efforts" basis.
In the ordinary course of business, the Association makes
representations and warranties to the purchasers and insurers of mortgage loans
and the purchasers of servicing rights. When the Association sells mortgage
loans to FNMA, FHLMC or independent
22
<PAGE> 24
institutional investors, it makes certain representations and warranties that
the mortgage loans comply with applicable eligibility guidelines. The
Association may become required to repurchase loans if there has been a breach
of representations or warranties. Flaws with respect to repurchased loans may
be corrected and, if possible, such loans are resold. In addition, the
Association has the right to require the correspondent mortgage broker or seller
of a loan for which a repurchase has been requested to repurchase such loan from
the Association. The Association attempts to limit its exposure to this risk
through appropriate underwriting of mortgages prior to origination.
The table below shows real estate and other loan origination,
purchase, sale and repayment data for Suncoast for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------------
1996 1995 1994
----------- ----------- ----------
(In thousands)
<S> <C> <C> <C>
Loans originated and purchased:
Held for sale:
Mortgage loans originated $ 62,962 $ 60,334 $2,084,145
Mortgage loans purchased 62,335 - -
---------- ---------- ----------
Total held for sale $ 125,297 60,334 2,084,145
---------- ---------- ----------
Portfolio:
Residential mortgage
loans originated 21,400 13,143 96,518
Other loans originated 43,139 45,015 23,176
Mortgage and other loans purchased 154,015 - -
---------- ---------- ----------
Total portfolio 218,554 58,158 119,694
---------- ---------- ----------
Total loans originated and purchased 343,851 118,492 2,203,839
---------- ---------- ----------
Mortgage loans, participations and mortgage-
backed securities sold:
Residential loans (one-to-four family units) 111,963 51,081 865,093
Mortgage-backed securities (1) - 28,232 1,301,587
Commercial loans participated 5,649 - -
---------- ---------- ----------
Total loans sold 117,612 79,313 2,166,680
---------- ---------- ----------
Portfolio loans securitized (2) - (16,596) (45,461)
Loan principal reductions (43,533) (8,982) (16,916)
GNMA early buyouts and transfers 7,350
Decrease (increase) in loans in process 2,783 (5,424) (865)
Accretion of deferred loan fees 223 178 88
Increase in deferred fees (347) (406) (264)
Increase (decrease) in premiums paid on
portfolio loans 2,193 (327) 656
Increase (decrease) in premiums paid on
loans held for sale, net of deferrals 39 (122) (1,799)
(Increase) decrease in provision
for loan losses (153) - 17
---------- ---------- ----------
Net increase (decrease) in loans receivable $ 194,794 $ 7,500 $ (27,385)
========== ========== ==========
</TABLE>
- ------------------------
(1) Securities were formed by utilizing loans in the held for sale
category originated and purchased by Suncoast.
(2) Securities were formed using loans originated for portfolio which
securities were transferred to the mortgage- backed securities asset
category.
23
<PAGE> 25
In connection with its mortgage banking and servicing operations, the
Association is subject to the rules and regulations of, and examinations by,
FNMA, FHLMC, FHA, VA and GNMA with respect to originating, processing, selling
and servicing mortgage loans. Those rules and regulations, among other things,
prohibit discrimination, provide for inspection and appraisals of properties,
require credit reports on prospective borrowers and in some cases establish
maximum interest rates, fees and loan amounts.
INVESTMENT ACTIVITIES
Suncoast also invests in mortgage-backed securities and, from time to
time, related Real Estate Mortgage Investment Conduit ("REMIC") securities,
which are derived by reallocating cash flows from mortgage-backed securities
held by a trust. Suncoast's REMIC investments were sold during Fiscal 1996.
As discussed in "Item 8. Financial Statements and Supplementary Data - Notes A
and E of the Notes to the Consolidated Financial Statements", mortgage- backed
securities are classified as either held to maturity, available for sale, or
held for trading purposes. At June 30, 1996, all of Suncoast's mortgage-backed
securities were adjustable rate instruments classified as available for sale.
Due to this classification, fluctuations in the interest rate environment and
other factors may cause significant changes in the unrealized gain or loss on
mortgage-backed securities which is recorded as an adjustment, net of deferred
tax, to stockholders' equity.
During Fiscal 1996 and 1995, Suncoast sold mortgage-backed securities
and REMICs with a book value of $355.7 million and $265.2 million,
respectively, and realized net gains of $3.0 million and $1.4 million,
respectively. During Fiscal 1995, Suncoast sold its $138.7 million portfolio
of fixed-rate mortgage-backed securities previously classified as held to
maturity, realizing a gain of approximately $486,000. Mortgage-backed
securities were sold due to favorable market conditions, and Suncoast's ability
to apply the proceeds to the purchase and origination of primarily adjustable
rate residential and commercial loans, increasing Suncoast's yield and reducing
its interest rate risk. Due to the dependence of such gains on changes in
interest rates, there is no assurance that market conditions will continue to
be favorable or that Suncoast will continue to generate such revenue in the
future.
Suncoast maintains an investment in stock of the Federal Home Loan
Bank of Atlanta ("FHLB Atlanta"), which is required for membership in the
Federal Home Loan Bank ("FHLB") system. Suncoast also periodically invests in
short term repurchase agreements to improve the yield on excess cash.
The following table shows the yields and maturity of Suncoast's
investments at June 30, 1996 and 1995:
<TABLE>
<CAPTION>
Maturity
-------------------------------------------
No Stated Within More Than
Type of Investment Yield Maturity One Month Ten Years Totals
- ------------------ ----- ---------- --------- --------- ----------
<S> <C> <C> <C> <C>
June 30, 1996:
FHLB stock 7.25% $3,875,000 $ 3,875,000
June 30, 1995:
FHLB stock 5.94% $3,758,400 $ 3,758,400
Repurchase Agreements 6.04% $75,000,000 75,000,000
</TABLE>
24
<PAGE> 26
DEPOSIT ACTIVITIES
Suncoast has several types of savings programs designed to attract
core checking and both short-term and long-term deposits from the general
public by providing an assortment of accounts, terms and rates. The
Association attempts to control its cost of funds by adjusting the rates and
terms of its accounts. The emphasis on specific accounts, which varies from
time-to-time, is intended to permit the Association to take advantage of
pre-selected investment opportunities. The Association utilizes newspaper and
direct mail advertising to targeted market groups to attract deposits. The
communities in which the Association's branch offices are located generally
contain a high concentration of retirees and others who have had a history of
maintaining substantial deposit balances. In addition, Suncoast is the
repository for mortgage escrow trust funds (non-interest-bearing or
low-interest-bearing custodial accounts) which relate to the servicing and
subservicing of mortgage loans by Suncoast.
The following table reflects the principal types of deposit accounts
offered by the Association, the rates of interest and effective yield as of
June 30, 1996:
<TABLE>
<CAPTION>
Minimum Effective
Type of Account Deposit Rate (1) Annual Yield
- --------------- ------- -------- ------------
<S> <C> <C> <C>
Non-interest bearing checking account $ 500 - % - %
NOW account 500 2.03 (2) 2.05
NOW account 5,000 3.93 (2) 4.00
Savings account 50 2.03 (2) 2.05
Savings account 5,000 5.35 (2) 5.50
Daily money market account 1,000 2.23 (2) 2.25
Preferred money market account 5,000 4.17 (2) 4.25
Preferred money market account 10,000 4.41 (2) 4.50
Preferred money market account 25,000 4.89 (3) 5.00
3 month certificate 1,000 5.02 5.15
6 month certificate 1,000 5.06 5.20
9 month certificate 1,000 5.11 5.25
12 month certificate 1,000 5.35 5.50
18 month certificate 1,000 5.35 5.50
24 month certificate 1,000 5.54 5.70
30 month certificate 1,000 5.63 5.80
36 month certificate 1,000 5.73 5.90
60 month certificate 1,000 5.82 6.00
Jumbo certificate (4) 100,000 (5) (5)
</TABLE>
- ------------------------
(1) Rates established by the Association based upon market conditions.
(2) Balances below minimum deposit earn no interest.
(3) Balances from $10,000 to $24,999.99 earn interest at $10,000 minimum
balance rate. Balances below $10,000 earn no interest.
(4) Term set by the Association.
(5) Rates on jumbo certificates correspond to rates on non-jumbo
certificates of a similar term.
25
<PAGE> 27
The following table sets forth the deposit activities of Suncoast
during the following periods:
<TABLE>
<CAPTION>
Year ended June 30,
----------------------------------------------
1996 1995 1994
---------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Deposits $ 701,442 $ 903,374 $1,268,439
Withdrawals 748,238 834,690 1,223,309
---------- ---------- ----------
Net (decrease) increase in deposits
before interest credits (46,796) 68,684 45,130
Interest credited 10,143 8,735 4,220
Beginning balance 337,854 260,435 211,085
---------- ---------- ----------
Ending balance $ 301,201 $ 337,854 $ 260,435
========== ========== ==========
</TABLE>
The following table sets forth Suncoast's certificates of deposit by
interest rate range at the dates indicated:
<TABLE>
<CAPTION>
June 30,
-----------------------------
1996 1995
-------- ---------
(In thousands)
Interest rate:
<S> <C> <C> <C>
2.00% - 2.99% $ 204 $ 0
3.00% - 3.99% 4 411
4.00% - 4.99% 29,464 11,212
5.00% - 5.99% 146,965 104,003
6.00% - 6.99% 26,194 108,712
7.00% - 7.99% 2,783 3,801
8.00% - 8.99% - 2
-------- --------
Total $205,614 $228,141
======== ========
</TABLE>
The following table sets forth the scheduled maturities of Suncoast's
certificates of deposit at June 30, 1996:
<TABLE>
<CAPTION>
Twelve Months Ended June 30, After
----------------------------------------- June 30,
1997 1998 1999 2000 Total
-------- -------- ------- -------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Interest rate:
2.00% - 2.99% $ 204 $ - $ - $ - $ 204
3.00% - 3.99% 4 - - 0 4
4.00% - 4.99% 28,488 625 318 33 29,464
5.00% - 5.99% 135,089 8,820 2,417 639 146,965
6.00% - 6.99% 11,317 10,016 220 4,641 26,194
7.00% - 7.99% 1,856 238 0 689 2,783
-------- ------- ------- -------- --------
Total certificates
of deposit $176,958 $19,699 $ 2,955 $ 6,002 $205,614
======== ======= ======= ======== ========
</TABLE>
26
<PAGE> 28
The following table sets forth the terms and weighted-average
interest rate of deposit accounts (excluding interest earned and not
credited) at the dates indicated:
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
------------------------------------ -----------------------------------
Contractual Contractual
Percent Weighted Percent Weighted
of Total Average of Total Average
Amount Deposits Rate Amount Deposits Rate
------- -------- ----- ------- -------- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
No minimum term:
Non-interest bearing
checking accounts $ 874 0.30% 0.00% $ 556 0.16% 0.00%
Custodial accounts 24,198 8.03 .01 37,275 11.03 0.01
NOW accounts 17,751 5.89 2.42 6,418 1.90 2.42
Passbook accounts 40,959 13.60 4.08 48,605 14.39 5.27
Money market accounts 11,805 3.92 3.19 16,859 4.99 3.57
-------- ------ ----- -------- ----- ----
Total 95,587 31.74 2.85 109,713 32.47 3.03
-------- ------ ----- -------- ----- ----
Fixed term:
Certificates maturing in:
Six months or less 116,214 38.58 5.36 134,680 39.86 5.61
More than six months
to one year 60,743 20.17 5.51 53,003 15.69 6.10
More than one year
to three years 22,654 7.52 6.14 33,304 9.86 6.13
More than three years
to five years 6,003 1.99 6.34 7,154 2.12 6.27
-------- ------ ----- -------- ------ ----
Total 205,614 68.26 5.52 228,141 67.53 5.83
-------- ------ ----- -------- ------ ----
Total deposits $301,201 100.00% 4.55% $337,854 100.00% 4.92%
======== ====== ===== ======== ====== ====
</TABLE>
The following table presents the dollar amounts of certificate
accounts with balances equal to or greater than $100,000 at June 30, 1996,
maturing during the periods listed:
<TABLE>
<CAPTION>
Weighted
Average
Maturity Amount Rate
- -------- -------------- ----------
(In thousands)
<S> <C> <C>
Three months or less $2,998 5.28%
Over three months through six months 1,599 5.59
Over six months through one year 2,792 5.60
Over one year 1,240 6.04
------ ----
Total $8,629 5.55%
====== ====
</TABLE>
Suncoast's deposits are obtained primarily from the communities
surrounding its branch offices. Suncoast does not advertise for deposits
outside of Florida and has used brokered deposits only to facilitate the
matching of asset and liability maturities. At the end of each reporting
period, deposits from out-of-state sources represented an insignificant portion
of the total deposit accounts. There were no deposits obtained through brokers
at either June 30, 1996 or June 30, 1995.
BORROWINGS
Suncoast borrows funds from the FHLB on the security of
mortgage-backed securities which are pledged as collateral and based upon the
security of a blanket floating lien on
27
<PAGE> 29
certain eligible residential mortgage loan collateral. The Association also
obtains funds through agreements to repurchase securities with broker/dealers,
which are considered secured borrowings and typically outstanding from seven to
thirty days. See "Item 8. Financial Statements and Supplementary Data - Note L
of the Notes to the Consolidated Financial Statements."
SUBSIDIARY ACTIVITIES
SFC and SCS Management are Delaware corporations formed in connection
with the sale of collateralized mortgage obligations. SCG Mortgage Corporation
is a Delaware subsidiary corporation through which title to GNMA servicing
rights is held. SCG Holdings, Inc., a Florida corporation, serves as the
holding company for SFC, SCS Management and SCG Mortgage Corporation.
SCS Ventures, is a Florida subsidiary corporation through which the
Association has participated as a limited partner or otherwise in real estate
ventures and through which the Association takes title to certain real estate
acquired by foreclosure. This corporation is presently inactive.
COMPETITION
Suncoast faces substantial competition in attracting and retaining
deposits as well as in its lending, servicing and mortgage banking operations.
The most direct competition for deposits comes from other savings
institutions, commercial banks, out-of-state financial institutions with
Florida offices located in the Association's market area and credit unions.
Additional competition for deposits comes from government and corporate
securities and money market funds. Suncoast competes for deposits through a
highly focused marketing program and by offering a wide variety of deposit
accounts and deposit incentives. However, the ability of the Association to
attract and retain deposits also depends on its ability to provide investment
opportunities meeting the requirements of depositors as to rate of return,
liquidity, risk and other factors. Generally, Suncoast's rates for both
deposits and mortgages and loans are in the mid-range for similar products in
its market area.
Competition for the purchase, origination, sale and servicing of real
estate loans continues to intensify and comes predominantly from other savings
institutions, commercial banks, mortgage bankers, insurance companies and
governmental agencies. Factors that affect competition in the mortgage banking
operation include, among other things, the general availability of funds and
credit to make real property related investments and the demand therefor;
general and local economic conditions; current long-term and short-term
interest rates; government regulations; volatility in the mortgage markets; and
rates of inflation.
Legislative developments related to interstate branching and banking
are expected to continue the consolidation of small thrifts and banks, and also
provide easier access to large financial institutions in the marketplace.
Accordingly, Suncoast expects increased competition in the immediate future.
28
<PAGE> 30
INSURANCE OF ACCOUNTS AND REGULATION BY THE FDIC
Suncoast is a member of the Savings Association Insurance Fund
("SAIF"), which is administered by the FDIC. Deposits are insured up to
applicable limits by the FDIC and such insurance is backed by the full faith
and credit of the United States Government. As insurer, the FDIC imposes
deposit insurance premiums and is authorized to conduct examinations of and to
require reporting by FDIC-insured institutions. It also may prohibit any
FDIC-insured institution from engaging in any activity the FDIC determines by
regulation or order to pose a serious risk to the FDIC. The FDIC also has the
authority to initiate enforcement actions against savings associations, after
giving the OTS an opportunity to take such action, and may terminate the
deposit insurance if it determines that the institution has engaged or is
engaging in unsafe or unsound practices, or is in an unsafe or unsound
condition.
Under the FDIC risk-based deposit insurance assessment system, all
insured depository institutions are placed into one of nine categories and
assessed insurance premiums based upon their level of capital and supervisory
evaluation. Under the system, institutions classified as well-capitalized and
requiring little supervision would pay the lowest premium while institutions
that are classified as undercapitalized and considered of substantial
supervisory concern would pay the highest premium. Risk classification of all
insured institutions is made by the FDIC for each semi-annual assessment
period.
With respect to the SAIF, the FDIC is authorized to increase
assessment rates, on a semi-annual basis, if it determines that the reserve
ratio of the SAIF will be less than the designated reserve ratio of 1.25% of
SAIF-insured deposits. In setting these increased assessments, the FDIC must
seek to restore the reserve ratio to that designated reserve level, or such
higher reserve ratio as established by the FDIC. In addition, the FDIC may
impose special assessments on SAIF members to repay amounts borrowed from the
United States Treasury or for any other reason deemed necessary by the FDIC.
Similarly, with respect to deposits insured by the Bank Insurance
Fund ("BIF"), the FDIC is authorized to adjust the assessment rates in order to
maintain the reserve ratio at 1.25% of BIF-insured deposits. The FDIC reported
that the BIF reached the required reserve ratio during May 1995 and as a
result, the FDIC reduced BIF assessment rates. The FDIC initially reduced the
BIF assessment rates, effective June 1, 1995 to rates ranging from 0.04% to
0.27% of deposits. Subsequently, having determined that the BIF had sufficient
reserves in excess of the required 1.25% ratio, the FDIC further reduced the
BIF assessment rates. Effective January 1, 1996, the FDIC reduced the
assessment rate for "well capitalized" institutions without any significant
supervisory concerns to the statutory minimum of $2,000 annually, and reduced
the rates for other BIF-insured institutions to a range from 0.03% to 0.27% of
deposits.
The FDIC has noted that the SAIF is not expected to attain the
designated reserve ratio until the year 2001. The SAIF rates were therefore
not adjusted. The FDIC has determined that SAIF-insured institutions should
continue to pay assessments at the current SAIF assessment rates, which range
from 0.23% of deposits to 0.31% of deposits. The Association's assessment rate
for Fiscal 1996 was 0.23% of deposits.
As a result of the revisions to the deposit insurance assessment
rates, BIF members will generally pay lower premiums. This disparity is likely
to provide institutions paying only the BIF assessments with certain
competitive advantages in the pricing of loans and deposits,
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<PAGE> 31
and in lowered operating costs. In order to eliminate this disparity, a number
of proposals to recapitalize the SAIF have been recently considered. The plan
under current consideration provides for a one-time assessment, anticipated to
range from .85% to .90%, to be imposed on all SAIF assessable deposits of each
insured depository institution as of March 31, 1995, and for BIF deposit
insurance premiums to be used to pay the FICO bond interest on a pro rata basis
together with SAIF premiums. The BIF and SAIF would be merged into one fund as
soon as practicable, but no later than January 1, 1998.
EMPLOYEES
As of June 30, 1996, the Association had 150 employees. Employees
are provided with various benefits, including a stock bonus/401(k) plan and
life, health and hospital insurance. The employees are not represented by a
collective bargaining group, and the Association considers its employee
relations to be good.
REGULATION AND SUPERVISION
Set forth below is a brief description of certain laws and
regulations which relate to the regulation of the Association. This
description does not purport to be complete and is qualified in its entirety by
reference to applicable laws and regulations.
GENERAL. The Association is a federally chartered stock savings
association with its deposits insured through the SAIF by the FDIC up to
applicable limits. The Association is also a member of the FHLB system. The
Association is subject to supervision, extensive regulation and periodic
examination by the OTS and to a lesser extent by the FDIC as the insurer of its
deposits. In addition, the Association is subject to certain of the
regulations of the Board of Governors of the Federal Reserve System ("FRB")
governing reserves to be maintained against deposits and certain other matters.
Suncoast must file reports with the OTS concerning its activities and financial
condition, in addition to obtaining regulatory approvals from the OTS and the
FDIC prior to entering into certain transactions. There are periodic
examinations by the OTS and the FDIC to examine Suncoast's compliance with
various regulatory requirements.
The Association's business, operations, financial condition and
results of operations are directly affected by the tax, fiscal and monetary
policies of the federal government and its agencies, particularly the FRB.
These policies affect all financial institutions, and any change in such
policies that primarily impacts savings institutions may affect their ability
to compete with other financial institutions. The Association is subject to
extensive supervision and regulation, which is intended primarily for the
protection of depositors rather than the Association's stockholders. As an
integral part of their supervisory role, the OTS and FDIC periodically review
the Association's policies and practices. As a result of these reviews, the
Association could be required to recognize changes in the valuation or
classification of its assets or liabilities. In addition, the Association is
subject to changes in federal and state law, as well as changes in regulations,
governmental policies and accounting principles. The effects of any such
potential changes cannot be accurately predicted at this time but could
materially adversely affect the Association and its operations.
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<PAGE> 32
REGULATORY CAPITAL. Federally insured savings associations are
required to maintain minimum levels of regulatory capital. The OTS has
established regulations setting forth three capital standards for savings
institutions--a risk-based capital requirement, a leverage or core capital
requirement and a tangible capital requirement. At June 30, 1996, Suncoast
exceeded all applicable capital requirements.
RISK- BASED CAPITAL REQUIREMENT. The risk-based standards of the OTS
currently require maintenance of core capital equal to at least 4% of
risk-weighted assets and total capital equal to at least 8% of risk-weighted
assets. Total capital includes core capital plus supplementary capital but
supplementary capital that may be included in computing total capital for this
purpose may not exceed core capital. Supplementary capital includes cumulative
perpetual preferred stock, allowable subordinated debt and general loan loss
allowances, within specified limits. Such general loss allowances may not
exceed 1.25% of risk-weighted assets. Additionally, since July 1, 1994,
investments in non-includable subsidiaries have been subject to a 100%
exclusion from risked-based capital.
In determining the required amount of risk-based capital, total
assets, including certain off-balance sheet items, are multiplied by a
risk-weight based on the risks inherent in the types of assets. The
risk-weights assigned by the OTS for principal categories of assets are (i) 0%
for cash and securities issued by the U.S. Government or unconditionally backed
by the full faith and credit of the U.S. Government; (ii) 20% for securities
(other than equity securities) issued by U.S. Government sponsored agencies and
mortgage-backed securities issued by, or fully guaranteed as to principal and
interest by the FNMA or the FHLMC, except for those classes with residual
characteristics or stripped mortgage-related securities; (iii) 50% for
prudently underwritten permanent one-to-four family first lien mortgage loans
and qualifying multi-family mortgage loans not more than 90 days delinquent and
having a loan-to-value ratio of not more than 80% at origination unless insured
to such ratio by an insurer approved by the FNMA or the FHLMC; and (iv) 100%
for all other loans and investments, including purchased and excess servicing
rights, foreclosed property, unsecured consumer loans, commercial loans, and
one-to-four family residential loans more than 90 days delinquent.
At June 30, 1996, the Association's risk-based requirement was $18.5
million and its actual risk-based capital was $25.6 million, or 11.09% of
risk-adjusted assets.
In August 1993, the OTS adopted a final rule incorporating an
interest rate risk ("IRR") component into the risk-based capital requirement.
Under the final rule, a savings association's risk-based capital requirement
would have two components: (i) a credit risk component, and (ii) an IRR
component. The credit risk component would remain at 8% and the IRR would be
measured in terms of the sensitivity of the market value of portfolio equity
("MVPE") to changes in interest rates. MVPE is defined as the net present
value of an association's assets, liabilities and off-balance sheet contracts.
Savings associations with "above normal" IRR would be required to have capital
in addition to their credit risk capital of 8%. An "above normal" IRR would
exist if the decline in the savings association's MVPE would exceed 2% of the
savings association's assets in the event of a 200 basis point change in
interest rates. The amount of additional capital required of an institution
with "above normal" IRR exposure would be equal to (i) one-half of the
difference between its measured interest rate risk ("MIRR") and 2%, multiplied
by (ii) the market value of its assets. For purposes of this calculation, MIRR
means the decline in the institution's MVPE resulting from the 200 basis point
change in interest rates, expressed as a percentage of the market value
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<PAGE> 33
of the assets. The OTS would calculate the MIRR for each institution, and
institutions with MIRR of 2% or less would not be required to maintain
additional capital for IRR. The rule also authorizes the director of the OTS,
or his designee, to waive or defer an institution's IRR component on a
case-by-case basis. In August 1995, the OTS again delayed the implementation of
an automatic IRR component capital deduction pending the testing of an OTS
appeals process for certain institutions subject to such deductions. The
appeals process is contained in OTS Thrift Bulletin 67, which describes how and
under what circumstances an institution may seek an adjustment to the IRR
component generated by the OTS model or, alternatively, may seek prior approval
to use its own internal IRR model to calculate its IRR component. At June 30,
1996, Suncoast's interest rate risk exposure was within normal levels as
calculated by the OTS model.
LEVERAGE OR CORE CAPITAL REQUIREMENT. The leverage or core capital
requirement mandates that a savings institution maintain "core capital" of not
less than 3% of adjusted total assets. "Core capital" generally includes
common stockholders' equity, noncumulative perpetual preferred stock and
related surplus, less specified intangible assets (a percentage of MSRs in
excess of applicable limits). Generally, a portion of MSRs may be included in
core capital equal to the lower of (i) 90% of the fair market value of readily
marketable MSRs or (ii) the current amortized book value as determined under
GAAP. However, the amount of MSRs included in core capital is limited to a
maximum of 50% of core capital. At June 30, 1996, Suncoast's carrying value
totaled $10.4 million, and based upon a market valuation of MSR's at that date,
Suncoast was required to deduct $720,000 from assets and capital for regulatory
capital purposes. At June 30, 1996, the Association's core capital requirement
was $12.0 million and its actual core capital was $25.0 million, or 6.22% of
its adjusted total assets.
Additionally, the Office of the Comptroller of the Currency (the
"OCC"), which is the primary regulator for national banks, has adopted a final
rule increasing the leverage ratio requirements for all but the most highly
rated national banks. Pursuant to FIRREA, the OTS is required to issue capital
standards for savings institutions that are no less stringent than those
applicable to national banks. Accordingly, savings institutions must maintain
a leverage ratio (defined as the ratio of core capital to adjusted total
assets) of between 4% and 5%.
TANGIBLE CAPITAL REQUIREMENT. FIRREA requires a savings association
to maintain "tangible capital" in an amount not less than 1.5% of adjusted
total assets. Tangible capital is defined in the same manner as core capital
except that all intangible assets, except MSRs, must be deducted. The
percentage of MSRs which may be included in tangible capital is equal to the
lesser of i) 100% of the amount of tangible capital that exists before the
deduction of any disallowed MSRs or (ii) the amount of MSRs allowed to be
included in core capital. At June 30, 1996, the Association's tangible capital
requirement was $6.0 million and its actual tangible capital was $25.0 million,
or 6.22% of its adjusted total assets.
PROMPT REGULATORY ACTION. The OTS and other federal banking
regulators have established capital levels for institutions to implement the
"prompt regulatory action" provisions of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"). Capital levels have been
established for which an insured institution will be categorized as well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized or critically undercapitalized. The FDICIA requires federal
banking regulators, including the OTS, to take prompt corrective action to
solve the problems of those institutions that fail to satisfy their
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<PAGE> 34
applicable minimum capital requirements. The level of regulatory scrutiny and
restrictions imposed become increasingly severe as an institution's capital
level falls.
A "well capitalized" institution must have risk-based capital of 10%
or more, core capital of 5% or more and Tier 1 risk-based capital (based on the
ratio of core capital to risk-weighted assets) of 6% or more and may not be
subject to any written agreement, order, capital directive or prompt corrective
action directive issued by the OTS to meet and maintain a specific capital
measure. An institution will be categorized as "adequately capitalized" if it
has a total risk-based capital of 8% or more, Tier 1 risk-based capital of 4%
or more and core capital of 4% or more; "undercapitalized" if it has total
risk-based capital of less than 8%, Tier 1 risk-based capital of less than 4%
or core capital of less 4%; "significantly undercapitalized" if it has total
risk-based capital of less than 6%, Tier 1 risk-based capital of less than 3%
or core capital of less than 3%; and "critically undercapitalized" if it has
tangible capital of less than 2%. Any savings institution that fails its
regulatory capital requirement is subject to enforcement action by the OTS or
the FDIC. At June 30, 1996, Suncoast meets the definition of a "well
capitalized" institution.
At each successive downward level of capital, institutions are
subject to more restrictions and regulators are given less flexibility in
deciding how to deal with the bank or thrift. For example, undercapitalized
institutions will be subject to asset growth restrictions and will be required
to obtain prior approval for acquisitions, branching and engaging in new lines
of business. As to significantly undercapitalized institutions, the
appropriate agency must require the institution to sell shares in order to
raise capital, must restrict interest rates, and must restrict transactions
with affiliates unless the agency determines that such actions would not
further the purposes of the prompt corrective action system. In addition, the
agency may require prior agency approval for any transaction outside the
ordinary course of business. Critically undercapitalized institutions must
obtain prior agency approval for transactions outside the ordinary course of
business, and must be placed in receivership or conservatorship unless the OTS
and the FDIC make certain affirmative findings regarding the viability of the
institution, which findings must be reviewed every 90 days.
FDICIA prohibits any insured institution (regardless of its
capitalization category) from making capital distributions to anyone or paying
management fees to any persons having control of the institution if after such
transaction the institution would be undercapitalized. Any undercapitalized
institution must submit an acceptable capital restoration plan to the
appropriate agency within 45 days of becoming undercapitalized.
A capital restoration plan will be acceptable only if each company
having control over an undercapitalized institution guarantees that the
institution will comply with the capital restoration plan until the institution
has been adequately capitalized for four consecutive calendar quarters and
provides adequate assurances of performance. The aggregate liability of such
guarantee is limited to the lesser of (i) an amount equal to 5% of the
institution's total assets at the time the institution became undercapitalized
or (ii) the amount which is necessary to bring the institution into compliance
with all capital standards applicable with respect to such institution as of
the time the institution fails to comply with its capital restoration plan.
INDIVIDUAL CAPITAL REQUIREMENTS. In addition to the capital
requirements set forth in the OTS regulations, the OTS has delegated to its
Regional Directors the authority to establish higher individual minimum capital
requirements for savings institutions based upon a
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determination that the institution's capital is or may become inadequate in view
of its circumstances. For example, circumstances which may be considered by the
Regional Directors include situations where the institution needs special
supervisory attention, has or is expected to have losses resulting in capital
inadequacy, has a high degree of interest rate risk, prepayment risk,
off-balance sheet risk, or has poor liquidity, excessive growth or a portfolio
with weak credit quality. No such individual capital requirement has been
established for the Association.
REGULATORY RESTRICTIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS.
Current regulations applicable to the payment of cash dividends and other
capital distributions by savings institutions impose limits on capital
distributions based on an institution's regulatory capital levels and net
income. An institution that meets or exceeds all of its fully phased-in
capital requirements (both before and after giving effect to the distribution)
and is not in need of more than normal supervision would be a "Tier 1
Association." A Tier 1 association may make capital distributions during a
calendar year up to the greater of (i) 100% of net income for the current
calendar year plus 50% of its capital surplus or (ii) 75% of its net income
over the most recent four quarters. Any additional capital distributions would
require prior regulatory approval.
An institution that meets the minimum regulatory capital requirements
but does not meet the fully phased-in capital requirements would be a "Tier 2
association," which may make capital distributions of between 25% and 75% of
its net income over the most recent four-quarter period, depending on the
institution's risk-based capital level. A "Tier 3 association" is defined as
an institution that does not meet all of the minimum regulatory capital
requirements and therefore may not make any capital distributions without the
prior approval of the OTS.
Savings institutions must provide the OTS with at least 30 days
written notice before making any capital distributions. All capital
distributions are subject to the OTS' right to object to a distribution on
safety and soundness grounds.
The OTS has proposed amendments to its capital distribution
regulations to conform the regulations to the "prompt corrective action"
provisions of FDICIA. As proposed, adequately or well capitalized savings
associations that (i) are not held by savings and loan holding companies; (ii)
have a composite rating of "1" or "2"; (iii) are not deemed to be in "troubled
condition"; and (iv) will remain at least adequately capitalized after the
proposed capital distribution, will not be required to provide notice to the
OTS before making capital distributions.
LIQUIDITY. OTS regulations currently require a savings institution
to maintain for each calendar month an average daily balance of liquid assets
(including cash, certain time deposits, bankers' acceptances and specified
United States government, state and federal agency obligations) equal to at
least 5% of the average daily balance of net withdrawable accounts plus
short-term borrowings during the preceding calendar month. This liquidity
requirement varies from time to time (between 4% to 10%) by OTS regulation
depending upon economic conditions and the deposit flows of savings
institutions. OTS regulations also require each member institution to maintain
for each calendar month an average daily balance of short-term liquid assets
(generally those having maturities of 12 months or less) equal to at least 1%
of the average daily balance of net withdrawable accounts plus short-term
borrowings during the preceding calendar month. Monetary penalties may be
imposed for failure to meet liquidity
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ratio quirements. The liquidity and short-term liquidity ratios of the
Association at June 30, 1996 were each 5.42%, exceeding the applicable
requirements.
QUALIFIED THRIFT LENDER TEST. All savings associations, including
the Association, are required to meet a qualified thrift lender ("QTL") test to
avoid certain restrictions on their operations.
The QTL test requires a savings association to have at least 65% of
its portfolio assets (which consist of total assets less intangibles,
properties used to conduct the savings association's business and liquid assets
not exceeding 20% of total assets) in qualified thrift investments and continue
to meet that test on a monthly average basis in nine out of every twelve
months. Loans and mortgage-backed securities secured by domestic residential
housing, as well as certain obligations of the FDIC and certain other related
entities, may be included in qualifying thrift investments without limit.
Certain other housing-related and non-residential real estate loans
and investments, including loans to purchase or develop churches, nursing
homes, hospitals and schools, and consumer loans and investments in
subsidiaries engaged in housing-related activities may also be included, in
varying amounts, up to 20% of portfolio assets. The Association was in
compliance with the QTL test as of June 30, 1996.
COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act ("CRA")
requires each savings institution, as well as other lenders, to identify the
communities served by the institution's offices and to identify the types of
credit the institution is prepared to extend within such communities. The CRA
also requires the OTS to assess, as part of its examination of a savings
institution, the performance of the institution in meeting the credit needs of
its community and to take such assessments into consideration in reviewing
applications for mergers, acquisitions and other transactions. A
less-than-satisfactory CRA rating may be the basis for denying such an
application. In connection with the assessment of a savings institution's CRA
performance, the OTS will assign a rating of "outstanding," "satisfactory,"
"needs to improve" or "substantial noncompliance." Based on an examination
conducted as of June 1995, the Association was rated "satisfactory."
Effective July 1, 1995, the OTS together with the other federal
banking agencies, adopted a joint rule amending each of their regulations
concerning the CRA. Subject to certain exceptions and elections, the new
regulations prescribe three tests for the evaluation of a savings association's
performance. The lending test evaluates a savings association's record of
helping to meet the credit needs of its assessment area through its lending
activities by considering an association's home mortgage, small business, small
farm, and community development lending. The investment test evaluates a
savings association's record of helping to meet the credit needs of its
assessment area through qualified investments that benefit its assessment area
or a broader statewide or regional area including the assessment area.
Finally, the service test evaluates a savings association by analyzing both the
availability and the effectiveness of the association's systems for delivering
retail banking services and the extent and innovativeness of its community
development services. Based upon the savings association's performance under
the lending, investment, and service tests, and any other tests which may be
applicable to the association under the new regulations, the OTS will assign
the savings association one of the same four ratings prescribed under current
regulations. Additionally, under the new regulations, the OTS will continue to
consider an
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association's record of performance under the CRA in the same manner and for
the same purposes as required under current regulations.
These new regulations, while effective July 1, 1995, will be
implemented over a two-year time frame. A savings association may elect to be
evaluated under the revised performance tests beginning January 1, 1996.
Absent such an election, these revised performance tests will not become
mandatory and will not be deemed to replace the current regulations described
above until July 1, 1997.
LOANS TO ONE BORROWER LIMITATIONS. Savings associations are subject
to the same loans to one borrower limitations that are applicable to national
banks. Savings associations generally are not permitted to make loans to a
single borrower in excess of 15% of the association's unimpaired capital and
unimpaired surplus (depending upon the type of loan), plus an additional 10%
for loans fully secured by readily marketable collateral. A savings
association which meets its fully phased-in capital requirements may make loans
to one borrower to develop domestic residential housing units, up to the lesser
of $30 million or 30% of the savings association's unimpaired capital and
unimpaired surplus, if certain other conditions are satisfied. At June 30,
1996, the Association was in compliance with the loans to one borrower
limitations. At that same date, its loan to one borrower limit was $3.9
million.
LIMITATION ON COMMERCIAL REAL ESTATE LOANS. FIRREA provides that,
absent an exemption, loans by a federal savings association that are secured by
non-residential real property may not exceed 400% of the Association's capital.
Such a restriction is not considered to materially affect the Association's
operations due to the availability of other loan products.
CERTAIN INVESTMENTS. In general, savings associations may not invest
directly in equity securities, noninvestment grade debt securities, or real
estate. Federal savings associations may invest in the stock of subsidiaries
that engage in activities reasonably related to the activities of federal
associations, including real estate development, subject to limitations based
generally on the institution's asset size. Investments in subsidiaries engaged
as principals in activities that are not permissible for national banks, such
as real estate development, must be deducted from regulatory capital.
A savings institution seeking to establish a new subsidiary, acquire
control of an existing company or conduct a new activity through an existing
subsidiary must provide 30 days prior notice to the FDIC and the OTS and must
conduct any activities of the subsidiary in accordance with regulations and
orders of the OTS. The OTS has the power to require a savings institution to
divest any subsidiary or terminate any activity conducted by a subsidiary that
the OTS determines to be a serious threat to the financial safety, soundness or
stability of the savings institution or to be otherwise inconsistent with sound
banking practices. See "Item 1. Business--Subsidiary Activities" for a
description of the Association's subsidiaries.
GENERAL LENDING POLICIES. The Association's lending activities are
subject to federal and state regulation, including the Equal Credit Opportunity
Act, the Truth in Lending Act, the Real Estate Settlement Procedures Act, the
Community Reinvestment Act and the laws of California, Florida and other
jurisdictions governing discrimination, lender disclosure to borrowers,
foreclosure procedures and anti-deficiency judgments, among other matters.
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TAXATION
FEDERAL. For federal income tax purposes, Suncoast reports its
income and expenses on the accrual basis of accounting on a fiscal year basis
ending June 30. Suncoast files consolidated federal income tax returns.
Suncoast is subject to the rules of federal income taxation
applicable to corporations in general, and savings institutions, in particular,
under the Internal Revenue Code of 1986 (the "Code"). The Code reduced the
maximum tax rate from 46% to 34%. Except as specifically noted, the discussion
below relates to taxable years beginning after June 30, 1987. The Code
provides that net operating losses of a thrift institution incurred in taxable
years beginning after 1981 and before 1986 may be carried back ten years and
forward eight years. Other net operating losses of thrift institutions now
come under the general three year carryback and the 15-year carryover rules.
Under the Code, savings associations that meet certain conditions may
qualify for a bad debt reserve deduction to reduce taxable income. For the year
ended June 30, 1996, Suncoast did not qualify for this deduction.
Suncoast is subject to the corporate alternative minimum tax which is
imposed to the extent it exceeds Suncoast's regular income tax for the year.
The alternative minimum tax will be imposed at the rate of 20% of a specially
computed tax base. Included in this base will be a number of preference items
including the following: (i) 100% of the excess of a thrift institution's bad
debt deduction over the amount that would have been allowable on the basis of
actual experience; and (ii) interest on certain tax-exempt bonds issued after
August 7, 1986. In addition, for purposes of the new alternative minimum tax,
the amount of alternative minimum taxable income that may be offset by net
operating losses is limited to 90% of alternative minimum taxable income.
Suncoast accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
109"). FAS 109 utilizes an asset and liability approach for financial
accounting and reporting for income taxes and requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of other
assets and liabilities. Suncoast adopted FAS 109 as of July 1, 1991 on a
prospective basis. See "Item 8. Financial Statements and Supplementary
Data-Notes A and O to the Consolidated Financial Statements" for a discussion
of the effect of SFAS 109 on the Association.
Legislation provisions was recently passed which eliminate the
preferential tax treatment for deducting additions to the tax bad debt reserves
previously available to thrifts in tax years beginning prior to December 31,
1995. These provisions require that all thrift institutions recapture all or a
portion of their tax bad debt reserves added since the last taxable year
beginning before January 1, 1988. This legislation has no impact on Suncoast
since it utilizes the direct write-off method for deducting bad debts for tax
purposes.
STATE. Florida has a corporate income tax which subjects Suncoast's
Florida taxable income to a 5.5% tax. This tax is deductible in determining
federal taxable income. For purposes of the Florida corporate income tax, tax
benefits from net operating losses may not be carried back to prior years, but
may be carried forward.
No tax returns of Suncoast have been audited by federal or state
authorities since inception.
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ITEM 2. PROPERTIES
The following schedule sets forth the location of the current offices of the
Association as well as certain additional information relating to these offices
and/or leases at June 30, 1996.
<TABLE>
<CAPTION>
NET BOOK VALUE OF
PREMISES OR LEASEHOLD
LEASE SQUARE IMPROVEMENTS &
OFFICE DESCRIPTION EXPIRES (1) FOOTAGE EQUIPMENT
- ------------------ ----------- ------- ---------------------
<S> <C> <C> <C>
CORPORATE HEADQUARTERS AND
MORTGAGE ORIGINATION OFFICE
Presidential Circle 2/28/00 32,850 $2,089,356
4000 Hollywood Boulevard
Hollywood, Florida
SAVINGS BRANCHES
4350 Sheridan Street - (2)(3) 12,200 1,436,041
Hollywood, Florida
501 Golden Isles Drive - (2)(4) 4,500 656,816
Hallandale, Florida
227 Commercial Boulevard - (2) 5,000 784,737
Lauderdale-by-the-Sea, Florida
100 South Flamingo Road 12/31/96 3,500 49,687
Pembroke Pines, Florida
1177 George Bush Boulevard, #102 12/31/01 (5) 4,059 197,454
Delray Beach, Florida
1313 North Ocean Boulevard - (2)(6) 7,600 624,354
Pompano Beach, Florida
MORTGAGE ORIGINATION OFFICE
7700 North Kendall Drive, #506 9/30/98 1,129 14,011
Miami, Florida
STORAGE WAREHOUSES
1009 South 21st Avenue 3/31/98 1,500 --
Hollywood, Florida
1017 South 21st Avenue 12/31/96 2,322 --
Hollywood, Florida
OTHER
1177 George Bush Boulevard, #200 1/31/98 (7) 5,371 185,040
Delray Beach, Florida
4340 Sheridan Street - (2)(8) 4,764 602,203
Hollywood, Florida
- ---------------------
</TABLE>
(1) Certain of these leases have an option to renew.
(2) The Association owns the facility.
(3) A savings branch occupies 3,100 square feet. The remainder of the building
is leased by unrelated parties.
(4) The Association leases 1,400 square feet to unrelated parties.
(5) The Association is currently renovating this space to accommodate its
savings branch which is temporarily located in another suite at this
location (see note 6 below). The Association plans to relocate its savings
branch to this space in September, 1996.
(6) The Association opened this savings branch in August, 1996.
(7) The Association's savings branch at this location temporarily occupies
approximately 300 square feet (see note 5 above). The remainder of the
space is sub-leased to an unrelated party.
(8) The entire space is currently sub-leased to an unrelated party.
For further information regarding lease payments as of June 30, 1995, see "Item
8. - Financial Statements and Supplementary Data - Note M of Notes to
Consolidated Financial Statements."
38
<PAGE> 40
ITEM 3. LEGAL PROCEEDINGS
The Association and its subsidiaries are parties to routine legal
proceedings which arise in the normal course of the Association's business.
There are no material pending legal proceedings to which the Association or any
subsidiary is a party or to which any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of
Suncoast during the three months ended June 30, 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Suncoast's Common Stock is traded over-the-counter and is quoted
on NASDAQ/NMS under the symbol SCSL. The table reflects the actual high and
low closing prices for the quarters of the fiscal years ended June 30, 1995 and
1996.
<TABLE>
<CAPTION>
Quarter Ended Common Stock
High Low
- --------------------------------------------------------
<S> <C> <C>
September 30, 1994 $7.63 $6.50
December 31, 1994 $7.88 $5.50
March 31, 1995 $9.06 $6.44
June 30, 1995 $6.75 $5.50
September 30, 1995 $7.19 $6.25
December 31, 1995 $7.00 $5.88
March 31, 1996 $6.88 $6.25
June 30, 1996 $6.50 $5.75
</TABLE>
No cash dividends have been paid on Suncoast's Common Stock since the fiscal
year ended June 30, 1990. Any cash dividend on the Common Stock will be
determined by future income and regulatory requirements. Suncoast has no
current plans to pay dividends on the Common Stock.
At September 23, 1996, 2,195,930 shares of Common Stock were
outstanding, held by approximately 700 beneficial stockholders of record.
39
<PAGE> 41
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial and other data
provides information for the five year period ended June 30, 1996.
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data) As of and for the years ended June 30,
-----------------------------------------------------------
1996 1995 1994 1993 1992
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Interest income $ 27,958 $ 27,855 $ 18,611 $ 12,892 $ 15,979
Interest expense 17,937 19,018 10,910 7,799 11,688
-----------------------------------------------------------
Net interest income before provision for loan losses 10,021 8,837 7,701 5,093 4,291
Provision for loan losses 153 95 - 537 55
Loan servicing income before valuation adjustments 4,399 6,275 4,580 3,768 3,510
Valuation adjustments - - - 6,021 5,514
Gains on the sale of loans and loan servicing assets, net 925 560 14,963 22,458 15,131
Gains on the sale of mortgage-backed securities, net 2,950 1,388 - - -
Other non-interest income 1,252 1,707 7,630 9,619 4,573
Non-interest expenses 15,581 17,741 31,766 31,167 20,564
Provision for income taxes 1,411 330 1,005 928 141
-----------------------------------------------------------
Net income $ 2,402 $ 601 $ 2,103 $ 2,285 $ 1,231
-----------------------------------------------------------
Earnings (loss) per share, primary $ 0.61 $ (0.26) $ 0.63 $ 1.11 $ 0.66
Earnings (loss) per share, fully diluted $ 0.61 * $ 0.59 $ 1.10 $ 0.66
Common Stock cash dividends per share $ - $ - $ - $ - -
Preferred Stock cash dividends per share $ 1.20 $ 1.20 $ 0.85 $ - -
Weighted average common and common
equivalent shares, fully diluted 3,675 3,652 3,589 2,079 1,853
- -----------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA:
Total assets $ 402,569 $ 462,353 $ 359,090 $ 226,931 $ 187,529
Loans receivable in portfolio 320,828 129,786 101,783 36,480 42,931
Loans receivable held for sale 6,730 2,978 23,481 116,169 36,296
Mortgage-backed securities 18,391 136,856 162,149 - -
Loan servicing assets 11,718 10,105 11,248 14,999 30,422
Real estate owned 261 523 428 533 1,852
Total liabilities 377,031 437,569 334,524 216,020 179,056
Deposits 301,201 337,854 260,435 211,085 173,296
Borrowings 68,500 88,623 69,000 - -
Stockholders' equity 25,538 24,784 24,566 10,911 8,473
- -----------------------------------------------------------------------------------------------------------------------
REGULATORY CAPITAL RATIOS:
Tangible 6.22% 5.12% 6.57% 4.81% 4.04%
Core 6.22% 5.12% 6.57% 4.81% 4.04%
Risk-based 11.09% 13.43% 16.06% 11.01% 8.68%
- -----------------------------------------------------------------------------------------------------------------------
OTHER:
Return on average assets 0.56% 0.15% 0.72% 1.10% 0.58%
Return on average equity 9.55% 2.44% 11.85% 23.58% 15.67%
Interest rate spread 2.66% 2.13% 2.69% 3.25% 2.77%
Loan servicing portfolio $1,489,053 $1,639,069 $2,009,762 $2,688,629 $2,402,915
Mortgages originated $ 127,504 $ 118,492 $2,203,839 $2,684,251 $1,659,336
Mortgages sold $ 117,615 $ 79,313 $2,166,937 $2,615,188 $1,691,410
Number of:
Savings branches 6 4 4 4 4
Mortgage origination offices 2 1 4 14 10
</TABLE>
*Omitted due to anti-dilution.
40
<PAGE> 42
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Suncoast is engaged primarily in community banking and loan
servicing activities. Suncoast provides community banking services primarily
in Dade, Broward and Palm Beach counties in Florida. Community banking
consists primarily of attracting checking and savings deposits from the public
in a localized market area and investing such deposits, together with
borrowings and other funds, in various types of loans and other permitted
investments. In connection with its community banking activities. Suncoast
originates and purchases, for its own portfolio, both residential and
commercial real estate loans. Suncoast services loans secured by real property
located throughout the United States. Suncoast's results of operations and
financial condition over the past three fiscal years reflect a fundamental
shift in Suncoast's business from a mortgage bank to a community bank. Prior
to 1994, Suncoast was engaged primarily in the mortgage banking business, which
involves the origination or purchase of single family residential loans for
resale in the secondary mortgage market. Historically low interest rates in
1992 and 1993 generated record volumes of loan origination and resale activity,
primarily refinancings, leading Suncoast to expand its lending operations
nationally to 15 loan production offices. Beginning in January 1994, however,
rising interest rates halted refinancings, making it unprofitable for Suncoast
to continue its mortgage banking operation. Suncoast downsized its mortgage
banking operations by closing all but one of its loan production offices, and
by reducing related staff and overhead expenses.
During fiscal 1994 and 1995, Suncoast changed its operating
strategy to that of a community bank and focused on enhancing its net interest
income and servicing revenues. As a result of this change in strategy,
Suncoast's net interest income and loan servicing income have grown in relation
to mortgage banking income in the years ended June 30, 1995 and 1996. Suncoast
initially replaced its mortgage banking assets, primarily its inventory of
loans available for sale, with investments in mortgage-backed securities,
repurchase agreements, and loans originated for portfolio. Suncoast's
strategy was to restructure its assets initially into interest bearing assets
with minimal credit risk until Suncoast could reinvest funds previously used to
finance its mortgage banking activities into portfolio loans. In addition,
this strategy allowed Suncoast to shift its assets to those with lower risk
weights under the risk based capital regulations enabling Suncoast to increase
both its assets and deposits and, accordingly, its net interest income, while
remaining well capitalized under such regulations.
During fiscal 1995 and fiscal 1996, Suncoast sold portions of its
mortgage-backed securities portfolio due to favorable market conditions and its
ability to apply the proceeds to the purchase and origination of high quality
residential and commercial real estate loans for investment. At June 30, 1996,
$18.4 million of mortgage-backed securities remained available for sale. In
completing this restructuring, Suncoast not only reduced its interest rate
risk, but increased its net interest income by shifting from longer term fixed
rate mortgage-backed securities to higher yielding adjustable rate loans
receivable. As its assets were shifted into portfolio loans, Suncoast was
required to reduce the overall levels of both its interest-earning assets and
its interest-bearing liabilities in order to remain well capitalized under the
applicable regulations, since its asset mix shifted from mortgage-backed
securities and short term liquid investments, generally bearing 0 to 20% risk
weights, to residential and commercial loans bearing 50% and 100% risk weights,
respectively, for purposes of its risk-based capital ratio.
41
<PAGE> 43
The following table sets forth for the periods indicated the
amounts and percentages of Suncoast's total income represented by each source
(dollars in thousands):
<TABLE>
<CAPTION>
Year Ended June 30,
---- ----- ---- ---
1996 1995 1994
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Net interest
income before
provision for
loan losses . . . . . . . . $ 10,021 51.3% $ 8,837 47.1% $ 7,701 22.1%
Loan servicing
income . . . . . . . . . . . 4,399 22.5 6,275 33.4 4,580 13.1
Gains on the sale
of loans and
loan servicing
assets, net . . . . . . . . 925 4.7 560 3.0 14,963 42.9
Gains on the sale
of mortgage-backed
securities . . . . . . . . 2,950 15.1 1,388 7.4 -- --
Loan origination
income . . . . . . . . . . . 435 2.2 391 2.1 6,075 17.4
Other . . . . . . . . . . . . 817 4.2 1,316 7.0 1,555 4.5
-------- ----- ------- ----- ------- -----
Total . . . . . . . . . . . . $ 19,547 100.0% $18,767 100.0% $34,874 100.0%
======== ===== ======= ===== ======= =====
</TABLE>
Net interest income is the difference between interest income received
on Suncoast's interest-earning assets (principally loans, investments,
mortgage-backed securities, and premiums on the sales of loans) and interest
expense paid on its interest-bearing liabilities (principally deposits, FHLB
advances, and other borrowings). Loan servicing income includes fees received
for servicing loans, less amortization or valuation adjustments of loan
servicing assets. Mortgage banking income includes gains on the sale of loans
and loan servicing assets, interest on loans held in inventory for sale, and
loan origination income. Loan origination income includes fees collected for
document preparation and the processing of loans originated for sale in the
secondary market. Suncoast has also periodically realized other income from
its other mortgage-related and real estate activities, which is included in the
"Other" category in the table above.
FACTORS AFFECTING EARNINGS
ASSET/LIABILITY MANAGEMENT. The assets and liabilities of Suncoast
are managed to provide an optimum and stable net interest margin, after-tax
return on assets and return on equity capital. Management, in implementing
Suncoast's asset/liability management policy, attempts to minimize the interest
rate risk, credit risk, solvency risk and liquidity risk to Suncoast.
Suncoast's Asset/Liability Committee, which meets on a weekly basis and
conducts scheduled reviews of various indicators and other risk criteria, has
the responsibility to monitor
42
<PAGE> 44
interest rate risk, devise strategies to adjust interest rate risk and enhance
capital and operational effectiveness, monitor and set targets for loan
originations, purchases and sales and securities purchases, and establish
pricing on all deposit products. Suncoast's asset and liability strategy seeks
to achieve an optimum return on assets while assuming acceptable amounts of
credit and interest rate risk with the goal of reasonable returns on investments
relative to the risks assumed. Management balances these goals by minimizing
credit risk through strict underwriting standards and policies while accepting
moderate interest rate risk. While Suncoast accepts moderate levels of interest
rate risk in its loan and investment portfolio, it generally seeks to limit
interest rate risk by maintaining adjustable-rate assets and, in its mortgage
banking operation, through the ongoing sale into the secondary mortgage market
of all loans originated or purchased for sale.
The Suncoast Board of Directors has established an interest rate risk
policy to monitor the effect of interest rate risk in accordance with rules
issued by the OTS. Management has implemented this policy with quarterly
measurements. Management considers these measurements in its strategies to
enhance capital and operational effectiveness. See "Item 8. Financial
Statements and Supplementary Data - Note B of the Notes to Consolidated
Financial Statements" for additional discussion of OTS rules regarding interest
rate risk.
GAP TABLE. The interest rate sensitivity of Suncoast can also be
measured by matching its assets and liabilities, analyzing the extent to which
such assets and liabilities are interest rate sensitive and by monitoring the
resulting "gap" position. An asset or liability is rate sensitive within a
specific time period if it will mature or reprice within that period. The
interest sensitivity gap is defined as the difference between the amount of
interest-earning assets anticipated, based upon certain assumptions, to mature
or reprice within a specific time period and the amount of interest-bearing
liabilities anticipated to mature within that time period. A gap is considered
positive when the amount of interest rate sensitive assets maturing within a
specific time frame exceeds the amount of interest rate sensitive liabilities
maturing within that same time frame. Accordingly, in a rising interest rate
environment, an institution with a positive gap would generally be expected,
absent the effects of other factors, to experience a greater increase in the
yield of its assets relative to the cost of its liabilities. Conversely, the
cost of funds for an institution with a positive gap would generally be
expected to decline less quickly than the yield on its assets in a falling
interest rate environment. Changes in interest rates generally have the
opposite effect on an institution with a "negative" gap. As of June 30, 1996,
Suncoast had a negative cumulative one-year gap of $21.5 million or 5.3% of
total assets. During a rising interest rate environment, Suncoast's negative
gap position would generally be expected, absent the effect of other factors,
to result in decreased net interest income as the increase in the cost of its
liabilities would exceed the increase in the yield on its assets.
The following table sets forth the amounts of interest-earning assets
and interest-bearing liabilities outstanding at June 30, 1996, which are
anticipated, based upon certain assumptions described in the following
paragraph, to reprice or mature in each of the future time periods shown.
Certain weaknesses are inherent in this method of analysis. As an example,
certain assets and liabilities may have similar maturity and repricing periods,
but may react in different degrees to changes in market interest rates.
Prepayment and early withdrawal penalties would likely deviate significantly
from those assumed in calculating the table in the event of a change in
interest rates.
43
<PAGE> 45
<TABLE>
<CAPTION>
(Dollars in thousands)
Over Over Over Over
one three five seven
Within year to years to years to years to Non-
one three five seven thirty Sub- interest
year(1) years years years years total sensitive Total
------- ----- ----- ----- ----- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets
First mortgage loans:
Adjustable-rate......................... $211,992 $63,990 $9,522 $ -- $ $285,504 $ -- $285,504
Fixed-rate and balloon.................. 12,239 3,995 6,044 4,052 13,189 39,519 -- 39,519
Second mortgage loans.................... 48 33 67 34 22 204 -- 204
Consumer loans........................... 1,545 -- -- -- - 1,545 -- 1,545
Non-performing loans..................... 786 786
-------- ------- ------- ------- ------- -------- ------ --------
Loans receivable......................... 225,824 68,018 15,633 4,086 13,211 326,772 786 327,558
-------- ------- ------- ------- ------- -------- ------ --------
Mortgage-backed securities:
Adjustable.............................. 18,391 -- -- -- -- 18,391 -- 18,391
Unrealized gain on assets
available for sale..................... -- -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- ------ --------
Total mortgage-backed securities:........ 18,391 -- -- -- -- 18,391 -- 18,391
-------- ------- ------- ------- ------- -------- ------ --------
Amounts due from purchasers of loans,
MBS, and loan servicing assets:
Loans.................................. -- -- -- -- -- -- -- --
Mortgage-backed securities & REMICS.... -- -- -- -- -- -- -- --
Loan servicing assets.................. -- -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- ------ --------
-- -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- ------ --------
PMSRs -- -- -- -- -- -- 9,525 9,525
Originated Servicing Rights - FAS 122.... -- -- -- -- -- -- 834 834
Premiums on the sale of loans............ 1,359 -- -- -- -- 1,359 -- 1,359
FHLB stock and
interest-earning deposits............... 4,497 -- -- -- -- 4,497 -- 4,497
-------- ------- ------- ------- ------- -------- ------ --------
5,856 -- -- -- -- 5,856 10,359 16,215
-------- ------- ------- ------- ------- -------- ------ --------
Total interest-earning assets............. 250,071 68,018 15,633 4,086 13,211 351,019 11,145 362,164
Non-interest earning assets............... -- -- -- -- -- -- 40,405 40,405
-------- ------- ------- ------- ------- -------- ------ --------
Total assets.............................. 250,071 68,018 15,633 4,086 13,211 351,019 51,550 402,569
======== ======= ======= ======= ======= ======== ====== ========
Interest-bearing liabilities
Fixed-maturity deposit accounts.......... 176,991 22,653 5,970 -- -- 205,614 -- 205,614
NOW accounts............................. 6,568 6,012 1,609 1,108 2,454 17,751 -- 17,751
Money market accounts.................... 4,723 4,533 1,632 587 330 11,805 -- 11,805
Passbook accounts........................ 6,963 10,576 6,895 4,303 12,222 40,959 -- 40,959
Custodial and business accounts.......... 9,277 8,492 2,272 1,565 3,466 25,072 -- 25,072
-------- ------- ------- ------- ------- -------- ----- --------
Deposits.................................. 204,522 52,266 18,378 7,563 18,472 301,201 -- 301,201
-------- ------- ------- ------- ------- -------- ----- --------
FHLB advances............................. 67,000 -- -- -- 1,500 68,500 -- 68,500
Other borrowings..........................
-- -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- ------ --------
Total interest-bearing liabilities........ 271,522 52,266 18,378 7,563 19,972 369,701 -- 369,701
Non-interest bearing liabilities.......... -- -- -- -- -- -- 7,330 7,330
Stockholders' equity...................... -- -- -- -- -- -- 25,538 25,538
-------- ------- ------- ------- ------- -------- ------ --------
Total liabilities and
Stockholders' equity..................... 271,522 52,266 18,378 7,563 19,972 369,701 32,868 402,569
======== ======= ======= ======= ======= ======== ====== ========
Excess (deficit) of interest-earning
assets over interest-bearing
liabilities.............................. (21,451) 15,752 (2,745) (3,477) (6,761) (18,682)
======== ======= ======= ======= ======= ========
Cumulative excess (deficit)............... (21,451) (5,699) (8,444) (11,921) (18,682) (18,682)
======== ======= ======= ======= ======= ========
Cumulative excess (deficit) as a
percent of total assets.................. -5.32% -1.41% -2.09% -2.96% -4.64% -4.64%
</TABLE>
44
<PAGE> 46
(1) Loans held for sale are included in this category because they are
held by Suncoast for less than six months. The maturity dates of the
loans range from seven to 30 years.
On June 30, 1996 and 1995, respectively, approximately 68.9% and
59.3%, respectively, of Suncoast's total loans receivable were loans which
mature or reprice within one year.
Within the preceding table, interest-earning assets and
interest-bearing liabilities with no contractual maturities are included in the
"within one year" category. Premiums on the sales of loans are recorded as an
interest earning asset in the gap table, but do not have a stated contractual
yield. The investment in PMSRs and OMSRs which yield servicing fee income, and
escrow and custodial accounts deposited with Suncoast, are included in the
non-interest sensitive column.
In preparing the preceding table, certain assumptions have been made
with regard to prepayments on first mortgage loans and mortgage-backed
securities. The prepayment assumptions used were obtained from publicly
available mortgage prepayment rate tables. These sources provide assumptions
which correlate to recent actual repricings experienced in the marketplace.
These assumptions are that fixed-rate, single-family residential loans will
reprice according to their scheduled amortization and that Suncoast will
experience average annual prepayments of approximately the following
percentages on fixed-rate loans according to the original term to maturity as
follows: 30-year maturity, 8%; 15-year maturity, 10%; and seven and five year
balloon, 15%. The assumptions provided by the mortgage prepayment rate tables
should not be regarded as indicative of the actual repricings that may be
experienced by Suncoast. Decay rates are assumed to indicate the annual rate
at which an interest-bearing liability will be withdrawn in favor of an account
with a more favorable interest rate. Decay rates have been assumed by Suncoast
for NOW accounts, passbook and money market deposits and are the most recent
national assumptions published by the OTS. The assumptions used at the dates
indicated, although standardized, may not be indicative of actual withdrawals
and repricing experienced by Suncoast. Annual percentage decay rate
assumptions used in the table are as follows:
<TABLE>
<CAPTION>
More
Within 1-3 3-5 5-7 Than
1 Year Years Years Years 7 Years
------ ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Passbook . . . . . . . . . . . 17% 17% 16% 16% 14%
NOW . . . . . . . . . . . . . . 37 32 17 17 17
Money market . . . . . . . . . 40 40 40 40 40
</TABLE>
All other assets and liabilities have been repriced based on the
earlier of repricing or contractual maturity.
YIELDS EARNED AND RATES PAID. The following table provides
information relating to the categories of Suncoast's interest-earning assets
and interest-bearing liabilities for the periods indicated. All yield and rate
information is calculated on an annualized basis. Yield and rate information
for a period is average information for the period calculated by dividing the
income
45
<PAGE> 47
or expense item for the period by the average balances during the period of the
appropriate balance sheet item. Net interest margin is net interest income
divided by average interest-earning assets. Non-accrual loans are included in
asset balances for the appropriate periods, whereas recognition of interest on
such loans is discontinued and any remaining accrued interest receivable is
reversed in conformity with federal regulations. The yields and net interest
margins appearing in the following table have been calculated on a pre-tax
basis.
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
---- ----
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
--------- -------- ------ -------- -------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
FHLB stock and interest-earning deposits . . $ 25,426 $ 1,488 5.85% $ 8,892 $ 558 6.28%
Overnight investments and repurchase
agreements . . . . . . . . . . . . . . . 20,366 1,165 5.72% 18,361 1,062 5.78%
--------- -------- ---------- --------
Sub-total . . . . . . . . . . . . . . . . . 45,792 2,653 5.79% 27,253 1,620 5.94%
--------- -------- ---------- --------
Loans receivable . . . . . . . . . . . . . . 242,063 19,902 8.22% 117,401 9,359 7.97%
Mortgage-backed securities . . . . . . . . . 77,096 5,276 6.84% 260,924 16,731 6.41%
Other interest-earning assets. . . . . . . . 1,405 127 9.00% 1,611 145 9.00%
--------- -------- ---------- --------
Total interest-earning assets. . . . . . . . $ 366,356 $ 27,958 7.63% $ 407,189 $ 27,855 6.84%
========= ======== ========== ========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . . . $ 308,768 $ 14,891 4.82% $ 316,979 $ 14,087 4.44%
--------- -------- ---------- --------
Advances from FHLB . . . . . . . . . . . . . 47,330 2,772 5.86% 57,065 3,155 5.53%
Other borrowings . . . . . . . . . . . . . . 4,611 274 5.95% 29,672 1,776 5.99%
--------- -------- ---------- --------
Sub-total. . . . . . . . . . . . . . . . . . 51,941 3,046 5.86% 86,737 4,931 5.69%
--------- -------- ---------- --------
Total interest-bearing liabilities . . . . . $ 360,709 $ 17,937 4.97% $ 403,716 $ 19,018 4.71%
========= ======== ========== ========
Net interest income/interest rate spread . . $ 10,021 2.66% $ 8,837 2.13%
======== ========
Net interest-earning assets/net
interest margin. . . . . . . . . . . . . . . $ 366,356 $ 10,021 2.74% $ 407,189 $ 8,837 2.17%
========= ======== ========== ========
<CAPTION>
(Dollars in thousands)
1994
----
Average Yield/
Balance Interest Rate
--------- -------- -----
<S> <C> <C> <C>
Interest-earning assets:
FHLB stock and interest-earning deposits . . $ 25,061 $ 839 3.35%
Overnight investments and repurchase
agreements . . . . . . . . . . . . . . . 22,621 822 3.63%
--------- -------
Sub-total . . . . . . . . . . . . . . . . . 47,682 1,661 3.47%
--------- -------
Loans receivable . . . . . . . . . . . . . . 223,764 15,220 6.80%
Mortgage-backed securities . . . . . . . . . 23,894 1,575 6.59
Other interest-earning assets. . . . . . . . 1,727 155 8.98%
--------- -------
Total interest-earning assets. . . . . . . . $ 297,067 $18,611 6.26%
========= =======
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . . . $ 277,185 $ 9,406 3.39%
--------- -------
Advances from FHLB . . . . . . . . . . . . . 8,898 349 3.92%
Other borrowings . . . . . . . . . . . . . . 19,158 1,155 6.03%
--------- --------
Sub-total. . . . . . . . . . . . . . . . . . 28,056 1,504 5.36%
--------- --------
Total interest-bearing liabilities . . . . . $ 305,241 $10,910 3.57%
========= =======
Net interest income/interest rate spread . . $ 7,701 2.69%
=======
Net interest-earning assets/net
interest margin. . . . . . . . . . . . . . . $ 297,067 $ 7,701 2.59%
========= =======
- ----------------------------
</TABLE>
The increase in the interest rate spread for fiscal 1996 from that of
fiscal 1995 is primarily attributable to a change in Suncoast's asset mix as
funds previously invested in mortgage-backed securities were reinvested in
higher yielding primary adjustable rate residential and commercial mortgages.
Suncoast's yields and costs, however, have generally followed the financial
markets.
RATE/VOLUME ANALYSIS. The following table describes the extent to
which changes in interest rates and changes in volume of interest-related
assets and liabilities have affected Suncoast's interest income and expense
during Fiscal 1996, 1995 and 1994. For each category of interest-earning asset
and interest-bearing liability, information is provided on changes attributable
to changes in volume (changes in volume multiplied by prior year rates) and
changes in rate (changes in rate multiplied by prior year volume). Rate-volume
variances
46
<PAGE> 48
(change in rate multiplied by the change in volume) have been allocated to the
change in volume. All amounts are in thousands.
<TABLE>
<CAPTION>
Year ended June 30, 1996 Year ended June 30, 1995
vs. year ended June 30, 1995 vs year ended June 30, 1994
increase (decrease) due to increase (decrease) due to
Volume Rate Total Volume Rate Total
------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans . . . . . . . . . . . . . . . . $10,249 $ 294 $10,543 $(8,479) $2,618 $(5,861)
Mortgage-backed securities . . . . . . (12,580) 1,125 (11,455) 15,199 ( 43) 15,156
Premiums on the sale of loans . . . . . (18) -- (18) (10) -- (10)
FHLB stock and interest-earning
deposits . . . . . . . . . . . . . . 1,074 (41) 1,033 (1,214) 1,173 (41)
------- ------- ------- ------- ------ -------
Net increase (decrease) in interest on
interest-earning assets . . . . . . . (1,275) 1,378 103 5,496 3,748 9,244
------- ------- ------- ------- ------ -------
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . (396) 1,200 804 1,769 2,912 4,681
Borrowings and FHLB advances . . . . . (2,041) 156 (1,885) 3,336 91 3,427
------- ------- ------- ------- ------ -------
Net increase(decrease) in interest
on interest-bearing liabilities . . . (2,437) 1,356 (1,081) 5,105 3,003 8,108
------- ------- ------- ------- ------ -------
Net increase (decrease) in net
interest income before provision
for loan losses . . . . . . . . . . . $ 1,162 $ 22 $ 1,184 $ 391 $ 745 $ 1,136
======= ======= ======= ======= ====== =======
</TABLE>
LOAN SERVICING INCOME. Loan servicing income includes fees received
for servicing loans less amortization and valuation adjustments of loan
servicing assets. Loan servicing assets consist of PMSRs, OMSRs and premiums
on the sale of loans. Premiums on the sales of loans represent the present
value of the future cash flows to be received in excess of the normal servicing
fee, which are recorded as gains on the sale of loans at the time the sales
occur.
The value of loan servicing assets can be materially affected by
economic forces not within the control of Suncoast. For example, Suncoast is
subject to the risk that declines in the interest rates for mortgage loans will
diminish its servicing portfolio as borrowers refinance or otherwise prepay
higher rate loans. Management, however, seeks to reduce the risk of declining
interest rates on its loan servicing portfolio by implementing various
asset/liability management techniques and amortizing the assets. See "Asset
and Liability Management," above.
For the period from January 1990 through June 1995, Suncoast did not
purchase or accumulate any servicing assets due in part to regulatory changes
which placed restrictions on the value and amount of PMSRs that could be
included in the calculation of regulatory capital. PMSRs and premiums on the
sale of loans remaining from prior years, however, have continued to be
amortized over the remaining anticipated life of the loans. In amortizing its
loan servicing assets, and determining the carrying value of these assets,
Suncoast uses certain assumptions, including the estimated prepayment rate on
the mortgage loans being serviced. These estimates are reviewed in connection
with the preparation of quarterly and year-end financial statements, and, if
the estimated prepayment rates are too low, the values of the assets are
adjusted downward and the adjustments are recorded as an expense. On
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<PAGE> 49
an annual basis, PMSRs and OMSRs are also valued by an independent firm with the
necessary expertise to perform such valuation and, if required by the
valuation, the carrying value of the PMSRs and OMSRs is reduced to fair market
value. No adjustments of PMSRs, OMSRs or premiums on the sale of loans were
required in fiscal 1996, 1995 or 1994.
On July 1, 1995, Suncoast adopted FAS 122, as discussed in "Item 8.
Financial Statements and Supplementary Data - Notes to Suncoast's Consolidated
Financial Statements." With its adoption of FAS 122, Suncoast has reinitiated
its prior practice of retaining the servicing rights on most of the loans that
it originates and sells, and capitalizes as OMSRs the normal servicing fee to
be received over the life of each loan at its fair value. The adoption of FAS
122 resulted in aggregate additional realized net gains of approximately
$600,000 ($380,000, net of tax) on the sale of loans during the year ended June
30, 1996.
Suncoast's loan servicing portfolio (including subservicing, but
excluding loans owned by Suncoast) at June 30, 1996 decreased to $1.2 billion
as compared to $1.5 billion at June 30, 1995, primarily due to a decrease in
the amount of loans subserviced for the FDIC and other entities. Unlike
servicing generally, subservicing contracts are not considered an investment in
loan servicing rights for financial reporting purposes. Subservicing contracts
allow Suncoast to utilize existing operational capabilities without incurring
additional capital investment in servicing rights or the interest rate risk
associated with these rights.
The amount of subservicing fees generated by Suncoast from the FDIC is
dependent upon the amount of assets which come under its control, the length of
time such assets are owned by the FDIC and other factors generally beyond the
control of Suncoast. The amount of subservicing fees from the FDIC declined
due to the sale by the Resolution Trust Corporation, the FDIC's predecessor, of
the majority of the loans under its control prior to the phase out of the RTC's
operations in December 1995. At June 30, 1996, the subservicing portfolio
declined to approximately $462.7 million from $881.0 million at June 30, 1995,
with FDIC loans serviced declining from $511.8 million to $208.2 million.
Included in the subservicing portfolio at June 30, 1996 is approximately $55.2
million of loans serviced under a sales agreement the servicing rights of which
will be transferred to the purchaser in the first quarter of fiscal 1997.
The portfolio of Suncoast owned servicing rights increased from $467.7
million at June 30, 1995 to $698.9 million at June 30, 1996 primarily as a
result of servicing purchases. During the year ended June 30, 1996, Suncoast
purchased approximately $2.3 million of loan servicing rights, representing
approximately $286.8 million in principal loan balances, and capitalized
approximately $860,000 in OMSRs, representing $62.0 million in principal loan
balances. During fiscal 1996, Suncoast also recorded $107,000 in premiums on
the sales of loans in connection with the sale of participation interests in
certain commercial real estate loans.
Repayments of loans underlying the servicing assets increased from
$72.7 million in fiscal 1995 to $95.5 million in fiscal 1996 due to declining
interest rates between the two periods. Suncoast intends to continue to
generate loan servicing fees in connection with its existing portfolio of loan
servicing rights and subservicing contracts, but loan servicing income may
continue to decrease as loans in the existing portfolio are repaid and
subservicing contracts are not renewed.
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<PAGE> 50
RESULTS OF OPERATIONS
YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995
NET INCOME. Suncoast's net income for fiscal 1996 was $2.4 million,
representing earnings per common share of $.61, as compared to net income of
$601,000, representing a loss per common share of $.26, for fiscal 1995. The
increase in net income and earnings per share available to common stockholders
during fiscal 1996 is primarily attributable to the $1.1 million increase in
Suncoast's net interest income after provision for loan losses, combined with
the $2.2 million decrease in non-interest expenses primarily from downsizing of
Suncoast's mortgage banking operations and offices. The fiscal 1995 financial
results were materially impacted by the costs of closing these unprofitable
offices. These non-recurring costs, including employee separation and office
lease termination expenses, totalled $1.6 million before income tax during
fiscal 1995. Results of operations in fiscal 1996 and 1995 were favorably
impacted by gains on the sale of mortgage-backed securities of $3.0 and $1.4
million, respectively.
NET INTEREST INCOME. Net interest income before provision for loan
losses increased to $10.0 million in fiscal 1996, as compared to $8.8 million
in fiscal 1995, an increase of 13.4%. Although average interest earning assets
were reduced by 10.0% from fiscal 1995 to fiscal 1996, interest income
remained unchanged due to the shift in the asset mix from mortgage backed
securities into higher yielding loans. During fiscal 1996, Suncoast originated
or purchased for portfolio approximately $232.8 million of primarily
adjustable rate single family residential loans, and $48.0 million of
commercial and multi-family real estate loans. Interest expense decreased 5.7%
in fiscal 1996, as compared to the prior fiscal years, primarily as a result of
a decrease in the average balances of other borrowings and deposits. The
average balance of such items decreased during fiscal 1996 as Suncoast repaid
higher cost borrowings and reduced higher cost deposits. Both assets and
liabilities were reduced during fiscal 1996 in order for Suncoast to remain in
the well capitalized category.
PROVISION FOR LOAN LOSSES. A provision for loan losses is recorded
when available information indicates that it is probable that an asset has been
impaired and the amount of the loss can be reasonably estimated. The adequacy
of the allowance for loan losses is evaluated monthly by application of a
formula developed by Suncoast that applies to outstanding loan balances
percentages that vary based on the expected risk of loss for each type of loan
and the designation of specific loans as classified assets, as well as
management's further consideration of the inherent risk in the portfolio. The
allowance is further based upon management's systematic and detailed evaluation
of the potential loss exposure in Suncoast's loan portfolio considering such
factors as historical loss experience, the borrower's ability to repay,
repayment performance, estimated collateral value and mortgage insurance
coverage. The evaluation process resulted in a provision for loan losses of
$153,000 during fiscal 1996 as compared to $95,000 for fiscal 1995, due to the
247.2% increase in portfolio loan balances from June 30, 1995 to June 30, 1996.
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 114 ("FAS 114") "Accounting by Creditors or Impairment
of a Loan," subsequently amended by FAS 118, as discussed in Notes to
Suncoast's Consolidated Financial Statements. FAS 114 did not have any
significant effect on Suncoast's financial condition and results of operations.
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<PAGE> 51
LOAN SERVICING INCOME. Loan servicing fees decreased from $7.5
million for fiscal 1995 to $6.0 million for fiscal 1996 primarily as a result
of a decline in the number of loans subserviced and the reduction of loan
balances in Suncoast's servicing portfolio due to loan repayments and pay offs.
The amount of subservicing fees generated by Suncoast from the FDIC
depends upon the amount of assets which come under its control, the length of
time such assets are owned by the FDIC and other factors generally beyond the
control of Suncoast.
Amortization of loan servicing assets increased $440,000 from fiscal
1995 to fiscal 1996 primarily as a result of lower interest rates which
increased loan prepayment activity during fiscal 1996. As a result, Suncoast's
loan servicing income during fiscal 1996 was $4.4 million, compared to $6.3
million in the prior fiscal year.
GAINS ON THE SALE OF LOANS AND LOAN SERVICING ASSETS, NET. Gains on
sale of loans and loan servicing assets for fiscal 1996 amounted to $925,000
compared to $560,000 in the prior year. During fiscal 1996 and fiscal 1995,
Suncoast sold the servicing rights to $54.9 million and $14.0 million of
conventional loans, respectively, and recorded gains of $591,000 and $150,000,
respectively. These servicing rights, which had no carrying value for Suncoast
, were sold to take advantage of favorable market conditions. Also included in
other income in fiscal 1996 is $151,000 of gains on the sale of participation
interests in certain commercial loans. Suncoast's loan sales amounted to
$117.6 million and $79.3 million during fiscal 1996 and 1995, respectively.
GAINS ON THE SALE OF MORTGAGE-BACKED SECURITIES. During the years
ended June 30, 1996 and 1995, Suncoast sold mortgage-backed securities with a
book value of $355.7 million and $265.2 million, respectively, and realized
gains of $3.0 million and $1.4 million, respectively. Suncoast sold these
securities in order to restructure its assets, reduce its interest rate
sensitivity and take advantage of market opportunities. Due to the dependence
of such gains on changes in interest rates, there is no assurance that market
conditions will continue to be favorable for such sales or that Suncoast will
be able to continue generating such revenue in the future. As of June 30,
1996, Suncoast had $18.4 million in available for sale securities.
LOAN ORIGINATION INCOME. In fiscal 1996, loan origination income was
$435,000 as compared to $391,000 in fiscal 1995 due to an increase in the
number of loans originated in fiscal 1996 as compared to fiscal 1995. Total
loan originations were $127.5 million and $118.5 million during fiscal 1996 and
1995, respectively.
OTHER INCOME. Suncoast earned other income of $817 thousand and $1.3
million in fiscal 1996 and fiscal 1995, respectively. During fiscal 1995, the
principal component of other income was fees earned from contracts with the RTC
to underwrite, process and close certain loans that the RTC made in connection
with the resale of properties acquired by the RTC. These fees declined and
ultimately stopped as the RTC liquidated its inventory of acquired properties
and phased out its operations. No further revenue is expected from this
source. During fiscal 1996, other income was principally comprised of $306,000
in rental income from branch office properties owned by Suncoast.
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<PAGE> 52
NON-INTEREST EXPENSES. Non-interest expenses for fiscal 1996 were
$15.6 million as compared to $17.7 million for fiscal 1995, a 12.2% decrease.
This overall decrease was principally due to the reduction in compensation,
benefit, overhead and occupancy expenses resulting from the closing of loan
production offices. In fiscal 1995, $1.6 million of these expenses were a
one-time expense incurred in connection with office closings, including
employee separation and office lease termination expenses.
Employee compensation and benefits is the largest component of
non-interest expenses and decreased from $8.0 million in fiscal 1995 to $7.2
million in fiscal 1996, a 9.6% decrease. Occupancy and equipment expenses
decreased 29.4% in fiscal 1996 as compared to fiscal 1995.
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
NET INCOME. Suncoast's net income for fiscal 1995 was $601,000,
representing a loss per common share of $.26, as compared to net income of $2.1
million, or earnings of $.59 per share, for fiscal 1994. The decrease in net
income and earnings per share available to common stockholders was primarily
attributable to $1.6 million in non-recurring costs of closing unprofitable
loan origination offices during fiscal 1995. Loan sales amounted to $79.3
million and $2.2 billion during fiscal 1995 and 1994, respectively.
NET INTEREST INCOME. Net interest income before provision for loan
losses increased to $8.8 million in fiscal 1995, as compared to $7.7 million in
fiscal 1994, an increase of 14.8%. Interest income increased 49.7% primarily
due to the increase in the outstanding balances of mortgage-backed securities
and other interest earning assets. The average balance of total interest
earning assets increased as a part of Suncoast's strategy to shift its focus
from the generation of mortgage banking income to the enhancement of net
interest income. Interest expense increased 74.3% in fiscal 1995, as compared
to the prior fiscal year primarily as a result of higher deposits and
borrowings which were used to finance the increase in assets discussed above.
PROVISION FOR LOAN LOSSES. During fiscal 1995, Suncoast recorded a
provision for loan losses of $95,000 compared to no such provision during
fiscal 1994. The increased provision during fiscal 1995 was a result of
management's systematic and detailed evaluation of the potential loss exposure
in Suncoast's loan portfolio.
LOAN SERVICING INCOME. Loan servicing fees decreased from $8.1
million for fiscal 1994 to $7.5 million for fiscal 1995. Fees earned on the
servicing portfolio owned by Suncoast decreased due to the repayment and pay
off of the underlying loans. Fees earned on originated servicing rights
pending delivery under servicing sale agreements declined due to significantly
reduced loan origination activity in fiscal 1995 as compared to Fiscal 1994.
Amortization of loan servicing assets decreased $2.3 million between Fiscal
1995 and 1994 primarily as a result of higher interest rates which reduced loan
prepayment activity during Fiscal 1995. As a result, Suncoast's loan servicing
income during Fiscal 1995 was $6.3 million, compared to income of $4.6 million
in the prior fiscal year.
GAINS ON THE SALE OF LOANS AND LOAN SERVICING ASSETS, NET. Gains on
sale of loans and loan servicing assets for Fiscal 1995 amounted to $560,000
compared to $15.0 million in the
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<PAGE> 53
prior year. This decrease was attributable to the significant decline in
mortgage banking activity.
GAINS ON THE SALE OF MORTGAGE-BACKED SECURITIES. During the year
ended June 30, 1995, Suncoast sold mortgage-backed securities with a book
value of $265.2 million and realized gains of $1.4 million. No similar
transactions were recorded in Fiscal 1994. Included in these sales was the
sale of the $138.7 million portfolio of fixed-rate mortgage backed securities
consisting of $56.6 million of seven-year balloon, $59.0 million of five-year
balloon, $13.3 million of fifteen-year and $9.8 million of thirty-year
securities. Suncoast sold these securities in order to restructure its assets,
reduce its interest rate sensitivity and take advantage of market conditions.
LOAN ORIGINATION INCOME. In Fiscal 1995, loan origination income
declined to $391,000 as compared to $6.1 million in Fiscal 1994, due to the
significant decrease in the number of originated loans. Total loan
originations were $118.5 million and $2.2 billion during fiscal 1995 and 1994,
respectively.
OTHER INCOME. Suncoast derived other income of $1.3 million and $1.6
million in Fiscal 1995 and Fiscal 1994, respectively, principally consisting of
fees earned from contracts previously made with the RTC to underwrite, process
and close certain loans that the RTC made in connection with the resale of
properties acquired by the RTC. These fees stopped as a result of the phase
out of the RTC's operations in December 1995.
NON-INTEREST EXPENSES. Non-interest expenses for Fiscal 1995 and 1994
were $17.7 million and $31.8 million, respectively, a 44.2% decrease. The
overall decrease was principally due to closing of the loan production offices
and the scale back of the mortgage banking operation. Employee compensation and
benefits, the largest component of non-interest expenses, decreased from $18.4
million in Fiscal 1994 to $8.0 million in Fiscal 1995, a 56.4% decrease.
Occupancy and equipment expenses decreased 3.6% in Fiscal 1995 as compared to
Fiscal 1994.
Other expenses decreased from $9.0 million in Fiscal 1994 to $5.6
million in Fiscal 1995. This decrease was primarily attributable to operating
efficiencies, including decreased foreclosure losses experienced in the loan
servicing operations and lower real estate owned maintenance expenses, as well
as the loan production office closings.
FINANCIAL CONDITION
Suncoast's total assets decreased by $59.8 million to $402.6 million
at June 30, 1996 from $462.4 million at June 30, 1995, or 12.9%, primarily due
to changes in asset mix. The decrease in assets was part of Suncoast's
strategy to shift its assets from lower yielding assets with lower risk weights
under the capital regulations to higher yielding assets with higher risk
weights and still remain well capitalized. Interest earning deposits,
mortgage-backed securities and amounts due from purchasers of loans, loan
servicing rights and mortgage-backed securities decreased in the aggregate
$185.5 million from June 30, 1995 to June 30, 1996 as funds previously invested
in these assets were used to originate or acquire loans receivable, reduce
deposits and repay borrowings. Loans receivable increased $194.8 million as
Suncoast continued to implement its strategy of replacing lower yielding
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<PAGE> 54
mortgage-backed securities with higher yielding loans receivable. Deposits and
advances from the FHLB and other borrowings decreased $36.7 and $20.1 million,
respectively, between June 30, 1995 and June 30, 1996 as Suncoast reduced
deposits and repaid borrowings with higher costs and reduced its total assets.
Other assets increased by $2.1 million primarily as a result of increased
foreclosure advances related to loans serviced for others, primarily GNMA.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity management requires that funds be available to meet the
daily financial commitments of Suncoast. These commitments consist primarily
of loan originations, savings deposit withdrawals, and repayments of borrowed
funds. Suncoast is required by federal regulations to maintain a minimum
average daily balance of cash and qualifying liquid assets equal to 5.0% of the
aggregate of the prior month's daily average savings deposits and short-term
borrowings. Suncoast's average liquidity ratio decreased from 22.9% at June
30, 1995 to 5.42% at June 30, 1996, as liquid assets were redeployed into
residential loan investments. Suncoast must also maintain an average daily
balance of short-term liquid assets equal to at least 1% of its prior month's
average daily balance of net withdrawable accounts plus short-term debt. At
June 30, 1996 and June 30, 1995, Suncoast's short-term liquidity percentage was
5.42% and 22.9%, respectively. Suncoast maintains minimum levels of liquid
assets in order to maximize net interest income.
Suncoast's primary sources of funds consist of retail savings deposits
bearing market rates of interest. Suncoast also obtains funds through interest
and principal repayments on loans and from FHLB advances and other borrowings,
including reverse repurchase and dollar reverse repurchase agreements with
brokerage firms.
Under the regulatory capital regulations of the OTS, Suncoast is
required to maintain minimum levels of capital as measured by three ratios.
Savings institutions are currently required to maintain tangible capital of at
least 1.5% of tangible assets, core capital of at least 3.0% of adjusted
tangible assets and risk based capital of at least 8.0% of risk-weighted assets
(at least half of which must be comprised of core capital). Each of the
capital requirements of the OTS that are applicable to Suncoast were exceeded
at June 30, 1996. The tangible and core capital ratios were 6.22% and the
risk-based capital ratio was 11.09%. The minimum capital requirements are $6.0
million for tangible capital, $12.1 million for core capital and $18.6 million
for risk-based capital. At June 30, 1996, Suncoast's regulatory capital
exceeded minimum requirements by $18.9 million for tangible capital, $12.9
million for core capital and $7.1 million for risk-based capital. Details of
the computation of regulatory capital are provided in Note B of the Notes to
Suncoast's Consolidated Financial Statements.
IMPACT OF INFLATION
The Consolidated Statements of Financial Condition and related
consolidated financial data presented herein have been prepared in accordance
with generally accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money over time due to
inflation. The primary impact of inflation and changing prices on the
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<PAGE> 55
operations of Suncoast is reflected in increased operating costs. Unlike most
industrial companies, virtually all of the assets and liabilities of a
financial institution are monetary in nature. As a result, interest rates have
a more significant impact on a financial institution's performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or change in the same magnitude as the price of goods and
services, although periods of increased inflation may accompany a rising
interest rate environment.
NEW ACCOUNTING STANDARDS
In October 1995, the Financial Accounting Standards Board (" FASB")
issued Statement of Financial Accounting Standards No. 123 ("FAS 123"),
"Accounting for Stock-Based Compensation." This statement requires certain
disclosures about stock-based employee compensation arrangements, regardless of
the method used to account for them, and defines a fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to
continue to measure compensation cost for stock based compensation plans using
the intrinsic value method of accounting prescribed by existing principles.
Suncoast has elected to remain with the existing principles and will make pro
forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in FAS 123 had been applied. Under the fair value
method, compensation cost is measured at the grant date based on the value of
the award and is recognized over the service period, which is usually the
vesting period. Under the intrinsic value based method, compensation cost is
the excess, if any, of the quoted market price of the stock at grant date or
other measurement date over the amount an employee must pay to acquire the
stock. The disclosure requirements of FAS 123 are effective for financial
statements for Suncoast's fiscal years beginning after June 30, 1996.
In June 1996, the FASB issued Statement of Financial Accounting
Standards No. 125 ("FAS 125"), "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." FAS 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial-components
approach that focuses on control. FAS 125 is effective for transfers and
servicing of financial assets and extinguishment of liabilities occurring after
December 31, 1996 and is to be prospectively applied. Management is currently
evaluating the impact of adoption of FAS 125 on its financial position and
results of operations.
CONTINGENCY RELATING TO RECAPITALIZATION OF THE SAVINGS ASSOCIATION INSURANCE
FUND
Suncoast pays deposit insurance premiums to the Savings Association
Insurance Fund ("SAIF"). SAIF and its counterpart for commercial banks, the
Bank Insurance Fund ("BIF"), were previously assessed deposit insurance
premiums at the same rate. However, in 1995, the FDIC has twice reduced
deposit insurance premiums for most BIF-insured banks so the minimum annual
assessment applicable to BIF deposits effective January 1, 1996 is $2,000 as
compared to a 23 basis point assessment rate for SAIF deposits. This disparity
between BIF and SAIF in assessment rates may place Suncoast at a competitive
disadvantage to
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<PAGE> 56
institutions whose deposits are exclusively or primarily BIF-insured (such as
most commercial banks).
Several alternatives to mitigate the effect of the BIF/SAIF premium
disparity have been proposed by the U.S. Congress, federal regulators,
industry lobbyists and the Clinton Administration. One plan to recapitalize
the SAIF that has gained support of several sponsors would require all SAIF
member institutions, including Suncoast, to pay a one-time fee of approximately
85 basis points on the amount of deposits held by the member institution at
March 31, 1995. This fee would amount to approximately $1.9 million on an
after tax basis to Suncoast and, if this proposal is enacted into law, the
effect would be to immediately reduce the capital of the SAIF-member
institutions by the amount of the fee, and such amount would be an immediate
charge to earnings.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Suncoast Savings and Loan Association, FSA
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of income, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial position
of Suncoast Savings and Loan Association, FSA and its subsidiaries ("Suncoast")
at June 30, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Suncoast's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note A to the consolidated financial statements, Suncoast
changed its method of accounting for mortgage servicing rights during 1996.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Miami, Florida
August 12, 1996
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<TABLE>
<CAPTION>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Financial Condition June 30,
------------------------------
1996 1995
---------- -----------
<S> <C>
ASSETS (In thousands)
Cash and cash equivalents:
Cash and amounts due from depository institutions $ 1,260 $ 157
Interest-earning deposits 622 43,613
---------- -----------
Total cash and cash equivalents 1,882 43,770
---------- -----------
Repurchase agreements 75,000
Federal Home Loan Bank Stock 3,875 3,758
Loans receivable:
In portfolio 320,828 129,786
Held for sale, sold under commitments 6,730 2,978
---------- -----------
Total loans receivable, net 327,558 132,764
---------- -----------
Mortgage-backed securities available for sale 18,391 136,856
Loan servicing assets:
Purchased mortgage servicing rights 9,525 8,572
Originated mortgage servicing rights 834
Premiums on the sale of loans 1,359 1,533
---------- -----------
Total loan servicing assets 11,718 10,105
---------- -----------
Accrued interest and dividends receivable 3,042 2,123
Real estate owned, net 261 523
Amounts due from purchasers of loans, loan
servicing rights and mortgage-backed securities 19,883 43,941
Office properties and equipment 6,640 6,285
Other assets 9,319 7,228
---------- -----------
$ 402,569 $ 462,353
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 301,201 $ 337,854
Advances by borrowers for taxes and insurance 3,138 1,642
Advances from Federal Home Loan Bank and other borrowings 68,500 88,623
Deferred income taxes 107 115
Principal and interest payable on loans serviced for others 274 576
Other liabilities 3,811 8,759
---------- -----------
Total liabilities 377,031 437,569
---------- -----------
Commitments and contingencies (Notes D, M and N)
Stockholders' equity:
Preferred stock - $5.00 par value; 1,000,000 shares authorized;
920,000 shares issued and outstanding 4,600 4,600
Common stock - $1.10 par value; 5,000,000 shares authorized; 1,996,930 shares
and 1,982,530 shares, respectively, issued and outstanding 2,197 2,181
Additional paid-in capital 17,295 17,252
Retained earnings 1,642 344
---------- -----------
25,734 24,377
Unrealized gain (loss) on mortgage-backed securities available
for sale, net of deferred income taxes (196) 407
---------- -----------
Total stockholders' equity 25,538 24,784
---------- -----------
$ 402,569 $ 462,353
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
57
<PAGE> 59
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Income Year Ended June 30,
------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income: (In thousands, except per share data)
Loans $ 19,902 $ 9,359 $ 15,220
Mortgage-backed securities 5,276 16,731 1,575
Premiums on the sale of loans 127 145 155
Repurchase agreements and investments 1,463 1,344 941
Other 1,190 276 720
--------- --------- ---------
27,958 27,855 18,611
--------- --------- ---------
Interest expense:
Deposits 14,891 14,087 9,406
Short-term borrowings 2,982 4,931 1,504
Long-term borrowings 64
--------- --------- ---------
17,937 19,018 10,910
--------- --------- ---------
Net interest income before provision for loan losses 10,021 8,837 7,701
Provision for loan losses 153 95
--------- --------- ---------
Net interest income after provision for loan losses 9,868 8,742 7,701
--------- --------- ---------
Other income (expense):
Loan servicing fees 6,016 7,450 8,088
Amortization of loan servicing assets (1,617) (1,175) (3,508)
--------- --------- ---------
Loan servicing income 4,399 6,275 4,580
Gains on the sale of loans and loan servicing assets, net 925 560 14,963
Gains on the sale of mortgage-backed securities, net 2,950 1,388
Loan origination income 435 391 6,075
Other 817 1,316 1,555
--------- --------- ---------
9,526 9,930 27,173
--------- --------- ---------
Non-interest expenses:
Employee compensation and benefits 7,240 8,005 18,362
Occupancy and equipment 2,866 4,057 4,209
Provision for losses on real estate 95 68 150
Other 5,380 5,611 9,045
--------- --------- ---------
15,581 17,741 31,766
--------- --------- ---------
Income before taxes 3,813 931 3,108
Provision for income taxes 1,411 330 1,005
--------- --------- ---------
Net income $ 2,402 $ 601 $ 2,103
========= ========= =========
Net income $ 2,402 $ 601 $ 2,103
Preferred stock dividends 1,104 1,104 780
--------- --------- ---------
Earnings (loss) available to common stockholders $ 1,298 $ (503) $ 1,323
========= ========= =========
Earnings (loss) per common share:
Primary $ 0.61 $ (0.26) $ 0.63
Fully diluted (omitted in 1995 due to anti-dilution) $ 0.61 $ 0.59
Weighted-average common and common equivalent shares:
Primary 2,137,327 1,940,275 2,105,358
Fully diluted 3,674,730 3,652,457 3,588,620
</TABLE>
The accompanying notes are an integral part of these financial statements.
58
<PAGE> 60
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Unrealized
gain (loss)
on mortgage-
backed
Additional securities Total
Preferred Common paid-in Retained available Stockholders'
stock stock capital earnings for sale, net equity
---------- --------- ------------ --------- ------------- --------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993 $ -- $ 2,085 $ 9,302 $ (476) $ -- $ 10,911
Issuance of common stock 27 42 69
Issuance of preferred stock 4,600 7,628 12,228
Tax benefit on disqualification of
stock options 35 35
Net income 2,103 2,103
Cash dividends on preferred stock (780) (780)
------- ------- --------- ------- --------- ---------
Balance, June 30, 1994 4,600 2,112 17,007 847 -- 24,566
Common stock issued in acquisition 33 143 176
Issuance of common stock 36 47 83
Tax benefit on disqualification of
stock options 55 55
Net income 601 601
Cash dividends on preferred stock (1,104) (1,104)
Net change in unrealized gain (loss) on
mortgage-backed securities available
for sale 407 407
------- ------- --------- ------- --------- ---------
Balance, June 30, 1995 4,600 2,181 17,252 344 407 24,784
Issuance of common stock 16 25 41
Tax benefit on disqualification of
stock options 18 18
Net income 2,402 2,402
Cash dividends on preferred stock (1,104) (1,104)
Net change in unrealized gain (loss) on
mortgage-backed securities available
for sale (603) (603)
------- ------- --------- ------- --------- ---------
Balance, June 30, 1996 $ 4,600 $ 2,197 $ 17,295 $ 1,642 $ (196) $ 25,538
======= ======= ========= ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
59
<PAGE> 61
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flow Year Ended June 30,
-------------------------------------
1996 1995 1994
----------- --------- ----------
<S> <C> <C> <C>
(In thousands)
Cash flows from operating activities:
Net income $ 2,402 $ 601 $ 2,103
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization of office properties and equipment 1,140 1,409 1,330
Provision for income taxes 1,411 330 1,005
Accretion of deferred loan fees (223) (178) (88)
Amortization of purchased and originated mortgage servicing rights 1,336 990 3,090
Amortization of premiums on the sale of loans 281 185 418
Amortization of discounts and premiums, net (488) (1,419) (18)
Net (increase) decrease in loans receivable held for sale (3,002) 21,039 98,494
Provision for loan losses 153 95
Provision for losses on real estate 95 68 150
Net decrease (increase) in amounts due from purchasers of loans,
loan servicing rights and mortgage-backed securities 24,058 (35,441) 8,329
Federal Home Loan Bank stock dividends (64)
Gains on the sale of loans and loan servicing assets, net (925) (560) (14,963)
Gains on the sale of mortgage-backed securities (2,950) (1,388)
Increase in accrued interest and dividends receivable (919) (460) (918)
(Increase) decrease in other assets (2,122) 4,627 (2,463)
(Decrease) increase in other liabilities (6,314) 5,121 (890)
Other 31 33
----------- -------- ----------
Net cash provided by (used in) operating activities 13,964 (4,948) 95,515
----------- -------- ----------
Cash flows from investing activities:
Net increase in loans receivable in portfolio (191,821) (29,089) (65,905)
Principal repayments of mortgage-backed securities 7,016 18,897 715
Purchase of mortgage-backed securities (244,701) (256,711) (162,846)
Proceeds from sales of mortgage-backed securities 358,630 266,560
Purchase of repurchase agreements (2,110,000) (307,000) (2,968,000)
Proceeds from maturities of repurchase agreements 2,185,000 252,000 2,948,000
Capital (expenditures) dispositions, net (1,495) 80 (1,927)
Increase in originated mortgage servicing rights (863)
Payments for purchased mortgage servicing rights (2,260) (51)
Proceeds from sales of purchased servicing rights and premiums on the
sale of loans 621 380 9,576
Proceeds from sale of real estate owned 463 650 469
Purchase of Federal Home Loan Bank stock (3,417) (3,075) (3,840)
Proceeds from redemption of Federal Home Loan Bank stock 3,300 2,867 1,731
----------- -------- ----------
Net cash provided by (used in) investing activities 473 (54,492) (242,027)
----------- -------- ----------
Cash flows from financing activities:
Net (decrease) increase in deposits (36,653) 77,419 49,350
Increase in advances by borrowers for taxes and insurance 1,496 335 39
Advances from Federal Home Loan Bank 43,500 69,000
Repayments of advances and other borrowings from Federal Home Loan Bank, net (44,000)
(Repayments of) proceeds from other borrowings, net (63,623) 63,623
Proceeds from issuance of common stock 59 138 104
Proceeds from issuance of preferred stock 12,228
Cash dividends paid on preferred stock (1,104) (1,104) (780)
----------- -------- ----------
Net cash (used in) provided by financing activities (56,325) 96,411 129,941
----------- -------- ----------
Net (decrease) increase in cash and cash equivalents (41,888) 36,971 (16,571)
Cash and cash equivalents at beginning of year 43,770 6,799 23,370
----------- -------- ----------
Cash and cash equivalents at end of year $ 1,882 $ 43,770 $ 6,799
=========== ======== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 18,088 $ 18,683 $ 10,782
Cash paid for income taxes, net of refunds received 1,208 120 841
Supplemental non-cash activities:
REO obtained through foreclosure $ 199 $ 1,133 $ 537
</TABLE>
The accompanying notes are an integral part of these financial statements.
60
<PAGE> 62
Suncoast Savings and Loan Association, FSA and
Subsidiaries Notes To Consolidated Financial Statements
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Suncoast Savings and Loan Association, FSA
("Suncoast") conform to generally accepted accounting principles ("GAAP") and
to general practices within the savings and loan industry. The following
summarizes the most significant of those policies and procedures.
1. Principles of Consolidation--The consolidated financial
statements include the accounts of Suncoast and its wholly-owned subsidiaries.
All significant intercompany transactions and balances are eliminated in
consolidation.
In April, 1995, Suncoast issued common stock to acquire Intra-Coastal
Mortgage Company, Inc., a licensed lender/broker. The acquisition was
accounted for using the purchase method of accounting, and the effect of the
acquisition on the financial statements for the year ended June 30, 1995 was
not significant.
2. Cash and cash equivalents--Cash and amounts due from banks and
interest-earning deposits with original maturities of three months or less are
considered cash and cash equivalents for cash flow reporting purposes.
3. Repurchase Agreements, Mortgage-Backed Securities and
Investment Securities--On July 1, 1994, Suncoast adopted Statement of Financial
Accounting Standards No. 115 ("FAS 115"), "Accounting for Certain Investments
in Debt and Equity Securities". Under FAS 115, investments in debt and equity
securities which Suncoast has a positive intent and ability to hold to maturity
are classified as "securities held to maturity" and are carried at cost,
adjusted for discounts and premiums which are accreted or amortized to
estimated maturity under the interest method. In accordance with FAS 115, a
security cannot be classified as held to maturity if it might be sold in
response to changes in market interest rates, related changes in the security's
prepayment risk, liquidity needs, changes in the availability of and the yield
on alternative investments, and changes in funding sources and terms. Debt and
equity securities purchased or sold for the purpose of a short-term profit are
classified as "trading account securities" and are recorded at fair value, with
unrealized gains and losses reflected in operations. Suncoast does not have
trading account securities. Debt and equity securities not classified as held
to maturity or trading account securities are classified as "available for
sale". Debt and equity securities available for sale are carried at fair
value, with the related unrealized appreciation or depreciation, net of
deferred income taxes, reported as a separate component of stockholders'
equity. Realized gain or loss on sales of securities is based on the specific
identification method.
At June 30, 1996 and 1995, the portfolio of mortgage-backed securities
was classified as available for sale with an unrealized loss (net of taxes) of
$196,000 and an unrealized gain (net of taxes) of $407,000, respectively,
recorded as a separate component of stockholders' equity.
61
<PAGE> 63
The portfolio was classified as such because management restructured Suncoast's
assets in fiscal 1995 and sold its entire $138.7 million portfolio of fixed
rate securities, previously classified as held to maturity, realizing a gain of
approximately $486,000.
4. Mortgage Banking Activities--Suncoast originates mortgage
loans for portfolio investment or sale in the secondary market. Mortgage loans
are designated as either available for sale or held in portfolio. Mortgage
loans held in the portfolio are stated at unpaid principal balances, less the
allowance for loan losses, and net deferred loan origination fees and
discounts. Mortgage loans available for sale are carried at the lower of cost
or fair market value, determined on an aggregate basis, and net unrealized
losses, if any, are recognized in a valuation allowance with a corresponding
charge to income. Suncoast recognizes gains or losses on the sales of
servicing rights when the related sales contract has been executed and legal
title and substantially all risks and rewards of ownership of the servicing
asset has passed to the buyer. Gains or losses are computed by deducting any
associated deferred excess servicing rights, mortgage servicing rights, and
other related expenses from the sales proceeds.
Suncoast minimizes its interest rate risk on loan commitments
expected to close and the inventory of mortgage loans held for sale through
commitments to permanent investors.
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 114, ("FAS 114") "Accounting by Creditors for
Impairment of a Loan", subsequently amended by FAS 118. Loans within the scope
of FAS 114 are measured for impairment based on (a) the present value of
expected future cash flows discounted at the loan's effective interest rate,
(b) the market price, or (c) if collateral dependent, the fair value of the
collateral. If the value of the loan so determined is less than the loan's
recorded value, Suncoast recognizes a loss for the difference by creating a
valuation allowance or adjusting an existing valuation allowance with a
corresponding charge to operations. FAS 118 amended certain income recognition
and disclosure provisions of FAS 114. The adoption of FAS 114 and FAS 118 did
not have any significant effect on Suncoast's financial condition and results
of operations, due to the composition of the loan portfolio and its policy for
establishing its allowance for loan losses.
At June 30, 1996, 1995 and 1994, Suncoast was servicing loans
amounting to approximately $1.5 billion, $1.6 billion and $2.0 billion,
respectively. Servicing loans generally consists of collecting mortgage
payments, maintaining custodial accounts, disbursing payments to investors and
foreclosure processing. Loan servicing income is recorded on the accrual basis
and includes servicing fees from investors and certain charges collected from
borrowers, such as late payment fees. In connection with loans serviced for
others, Suncoast held in non-interest or low-interest bearing deposit accounts
borrowers' custodial balances of approximately $24.2 million and $37.3 million
at June 30, 1996 and 1995, respectively. Suncoast makes a provision for
expected unreimbursed costs, which are incurred as a result of Suncoast's
responsibility as servicer of Federal Housing Administration (FHA) insured,
Veterans Administration (VA) guaranteed, and other loans for investors. The
provision is determined based on a number of variables, including the amount of
delinquent loans serviced for other investors, the length of delinquency, and
the amounts previously advanced on behalf of the borrower that Suncoast does
not expect to recover. Actual cost incurred may vary from Suncoast's estimate
due to a number of factors beyond Suncoast's control.
62
<PAGE> 64
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 122 ("FAS 122") "Accounting for Mortgage Servicing
Rights." FAS 122 requires that rights to service mortgage loans for others
acquired through either purchase or origination of mortgage loans be recognized
as separate assets if the related mortgage loan is intended to be sold with
servicing retained. The adoption of FAS 122 resulted in aggregate realized net
gains of approximately $600,000 ($380,000, net of income taxes) on the sale of
loans during the year ended June 30, 1996. Purchased mortgage servicing rights
("PMSRs") represent the cost of acquiring the rights to service mortgage loans,
and such cost is capitalized and amortized in proportion to, and over the
period of, estimated net servicing income.
Premiums on the sale of loans represent the present value of the cash
flows associated with the portion of estimated future interest income retained
on loans sold (based upon certain prepayment rate and interest rate assumptions
and net of a normal servicing fee), which are recognized as gains on the sale
of loans at the time the sales occur. As the cash flows are collected, Suncoast
amortizes the premiums and recognizes a normal servicing fee and interest
income on the premiums at the rate assumed in determining the present value of
the premiums. Such premiums are amortized in proportion to and over the
estimated period such cash flows will be collected.
Suncoast periodically makes an assessment of capitalized mortgage
servicing rights for impairment based on the fair value of those rights. The
carrying values of Suncoast's servicing assets, and the amortization thereon,
are evaluated in relation to estimated future net servicing cash flows
(discounted) to be received and retained. Such carrying values are adjusted
for indicated impairments based on management's best estimate of remaining cash
flows. Such estimates may vary from the actual remaining cash flows due to
prepayments of the underlying mortgage loans and increases in servicing costs.
Changes in open market values do not directly affect the expected cash flows
used in determining the carrying values.
5. Office Properties and Equipment--Land is carried at cost.
Office properties and equipment are carried at cost less accumulated
depreciation. Depreciation and amortization are computed on the straight-line
method over the estimated useful lives of the related assets, which range from
3 to 30 years; amortization of leasehold improvements is computed over the
terms of the respective leases (including renewal periods which management
intends to exercise) or their estimated useful lives, whichever is shorter.
6. Loan Fees--Suncoast defers loan origination fees (after
offsetting certain direct costs of originating the loans) and recognizes these
fees using the interest method over the life of the loans as an adjustment of
the loans' yield. Loan origination fees received on loans sold are recorded as
income upon the sale of the loans. Loan commitment fees received are deferred
and recognized similarly over the life of the loan or at the expiration of the
commitment if the commitment expires unexercised.
7. Provisions for Losses--Provisions for loan losses and losses
on real estate owned (included in non- interest expenses) include charges to
adjust the recorded balances of loans receivable and real estate owned to their
estimated net realizable value, as applicable. Such provisions are
63
<PAGE> 65
based on management's estimate of fair market value of the collateral,
considering the current and anticipated future operating or sales conditions.
Recovery of the carrying value of such loans and real estate owned is dependent
to a great extent on economic, operating and other conditions that may be
beyond Suncoast's control. Suncoast also provides an allowance for loan losses
based upon historical loss experience, delinquency trends, the value of
underlying collateral, known and inherent risks in the assets, prepayment rates
and the general state of the real estate market.
8. Provision for Uncollected Interest--When a loan becomes ninety
days or more delinquent, Suncoast stops the accrual of interest income and
reverses any interest previously accrued but uncollected. Such interest, if
ultimately collected, is credited to income in the period of recovery.
9. Real Estate Owned--Real estate owned represents property
acquired by foreclosure or deed in lieu of foreclosure. Real estate owned is
initially recorded at the fair market value less estimated selling expenses of
the property at date of foreclosure. Subsequent adjustments to the fair market
value at date of foreclosure are recorded as an expense. Sales of real estate
are recorded under the accrual method of accounting. Under this method, a sale
is not recognized until payments received aggregate a specific required
percentage of the contract sales price. Until a contract qualifies as a sale,
all collections are recorded as deposits.
The ability of Suncoast to recover the carrying value of its
investment in real estate owned is based upon future sales. The ability to
complete such sales is subject to market conditions and other factors, all of
which are beyond Suncoast's control.
10. Income Taxes--Suncoast uses the asset and liability approach
to account for income taxes. Deferred tax assets and liabilities are
recognized for the expected future tax consequences attributable to differences
between the financial statement carrying amounts and the tax bases of assets
and liabilities.
11. Earnings (Loss) Per Share--Earnings (loss) per share is
computed on the basis of the weighted average number of shares of common stock
outstanding during the period plus common stock equivalents applicable to stock
options. When dilutive, fully diluted earnings per common share is derived as
follows: Earnings (loss) available to common stockholders are increased by
preferred dividends paid eliminated upon conversion of preferred shares to
common shares. This remainder is divided by the sum of the average number of
common shares outstanding for the period plus the added common shares that
would have been outstanding if: (a) all of the outstanding preferred shares
had been converted into common shares at the beginning of the period and (b)
all stock options granted that have economic value were exercised at the
beginning of the period, and the related funds that would have been received by
Suncoast upon such exercise were used to repurchase outstanding common shares.
12. Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
64
<PAGE> 66
expenses during the reporting period. Actual results could differ from those
estimates. Estimates that are particularly susceptible to significant change
in the near term are the adequacy of reserves available for loan losses and the
present value of the estimated future cash flows utilized to calculate loan
servicing assets.
13. New Accounting Standards--In October 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 123 ("FAS 123"), "Accounting for Stock-Based Compensation." This
statement requires certain disclosures about stock-based employee compensation
arrangements, regardless of the method used to account for them, and defines a
fair value based method of accounting for an employee stock option or similar
equity instrument and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it
also allows an entity to continue to measure compensation cost for stock based
compensation plans using the intrinsic value method of accounting prescribed by
existing principles. Suncoast has elected to remain with the existing
principles and will make pro forma disclosures of net income and earnings per
share, as if the fair value method of accounting defined in FAS 123 had been
applied. Under the fair value method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. Under the intrinsic value based
method, compensation cost is the excess, if any, of the quoted market price of
the stock at grant date or other measurement date over the amount an employee
must pay to acquire the stock. The disclosure requirements of FAS 123 are
effective for financial statements for Suncoast's fiscal years beginning after
June 30, 1996.
In June 1996, the FASB issued Statement of Financial Accounting
Standards No. 125 ("FAS 125"), "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." FAS 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial-components
approach that focuses on control. FAS 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996 and is to be prospectively applied. Management is
currently evaluating the impact of adoption of FAS 125 on its financial
position and results of operations.
14. Reclassifications--Certain amounts reported in prior periods'
financial statements have been reclassified to conform to current
classifications.
B. REGULATORY CAPITAL REQUIREMENTS
Under the regulatory capital regulations of the Office of Thrift
Supervision ("OTS"), Suncoast is required to maintain minimum levels of capital
as measured by three ratios. Savings institutions are currently required to
maintain tangible capital of at least 1.5% of tangible assets, core capital of
at least 3.0% of adjusted tangible assets and risk based capital of at least
8.0% of risk-weighted assets.
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<PAGE> 67
At June 30, 1996 Suncoast exceeded all three of its current capital
requirements. The status of the capital requirements of Suncoast at June 30,
1996 is as follows (dollars are in thousands and are unaudited):
<TABLE>
<CAPTION>
Percentage Percentage Risk- Percentage of
Tangible of Core of based risk-based
capital assets(1) capital assets(1) capital assets (1)
-------- ---------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity before adjustments $ 25,538 6.36% $ 25,538 6.36% $ 25,538 11.05%
Regulatory adjustments:
General valuation reserves 657 .28
Non-qualifying PMSRs (720) (.18) (720) (.18) (720) (.30)
Goodwill (47) (.01) (47) (.01) (47) (.02)
Unrealized loss on mortgage-backed
securities available for sale, net 196 .05 196 .05 196 .08
--------- ---- --------- ---- ---------- ----
Regulatory capital 24,967 6.22 24,967 6.22 25,624 11.09
Minimum capital requirement 6,024 1.50 12,048 3.00 18,486 8.00
--------- ---- --------- ---- ---------- ----
Regulatory capital excess $ 18,943 4.72% $ 12,919 3.22% $ 7,138 3.09%
========= ==== ========= ==== ========== ====
Assets for capital calculation $ 401,605 $ 401,605 $ 231,069
========= ========= ==========
</TABLE>
- -------------------------------
(1) Tangible and core capital percentages are computed as a percentage of
tangible and adjusted tangible assets, respectively. The risk-based
capital percentage is computed as a percentage of risk-adjusted
assets.
Under current OTS capital rules, PMSRs and OMSRs (collectively,
"MSRs") may be included in regulatory capital only to the extent that, in the
aggregate, they do not exceed 50% of core capital. For purposes of calculating
core capital, MSRs are valued at the lesser of 90 percent of fair market value
or 100 percent of their book value (net of any valuation allowance). Any
excess amounts are deducted from assets and core capital. The estimated fair
market value of MSRs must be determined at least quarterly. Suncoast also uses
the services of an independent expert to perform an annual market valuation in
accordance with guidance issued by the OTS. The amount of MSRs that may be
included in tangible capital is the same as that permitted in core capital.
At June 30, 1996, Suncoast's book value of MSRs was $10.4 million, and based
upon a market valuation of MSRs at that date, a deduction from assets and
capital for regulatory capital purposes in the amount of $720,000 was
necessary.
The OTS amended risk-based capital rules to incorporate interest-rate
risk ("IRR") requirements which require a savings association to hold
additional capital if it is projected to experience an excessive decline in net
portfolio value in the event interest rates increase or decrease by two
percentage points. The additional capital required is equal to one-half of the
amount by which any decline in net portfolio value exceeds 2 percent of the
savings association's total net portfolio value. Suncoast does not expect the
interest-rate risk requirements to have a material impact on its required
capital levels at the present time.
The OTS rules establish the capital levels for which an insured
institution will be categorized as: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized or critically
undercapitalized. A well capitalized institution must have risk-based capital
of 10% or more, core capital of 5% or more and Tier 1 risk- based capital
(based on the ratio of core capital to risk-weighted assets ) of 6% or more and
may not be subject to any written agreement, order, capital directive or prompt
corrective action directive issued by the OTS. The
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<PAGE> 68
OTS and other federal banking agencies are required to take prompt corrective
action to resolve the problems of critically undercapitalized financial
institutions. Suncoast is a well capitalized institution under the definitions
as adopted.
C. REPURCHASE AGREEMENTS AND FEDERAL HOME LOAN BANK STOCK
During the years ended June 30, 1996 and 1995, Suncoast invested in
repurchase agreements but had no such investment at June 30, 1996. These
investments were collateralized by U.S. Government securities through agency
agreements with a national brokerage firm (the "counter-party"). The
securities underlying the agreements are book- entry securities. The
securities were delivered by appropriate entry with a third-party custodian as
per agreement between Suncoast and the counter-party. Based on month-end
balances for the years ended June 30, 1996 and 1995 repurchase agreements
averaged $16.7 million and $21.3 million, respectively, the maximum amount
outstanding at any month-end in each year was $75.0 million, and the maximum
amount outstanding in each year with any single counter-party was $75.0
million. The market values of these agreements approximated their carrying
value.
Federal Home Loan Bank ("FHLB") stock ownership is required for
membership in the bank system. Its carrying value approximates market value.
D. LOANS RECEIVABLE
Loans receivable at June 30 are comprised of (in thousands):
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Loans in portfolio:
Real estate loans:
Commercial, collateralized by--
Undeveloped land $ 3,115 $ 5,256
Office buildings 8,287 7,625
Hotel property 21,692 9,082
Retail stores 21,552 17,245
Multi-family residential and other 43,836 34,099
------------ -------------
Total commercial 98,482 73,307
Residential (one to four family) 215,044 55,449
Construction 8,491 7,085
Consumer loans 1,917 1,750
------------ -------------
323,934 137,591
Allowance for loan losses (657) (504)
Deferred loan fees, net (617) (493)
Undisbursed portion of loans in process (4,354) (7,137)
Premiums paid on loans held in portfolio 2,522 329
------------ -------------
$ 320,828 $ 129,786
============ =============
</TABLE>
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<PAGE> 69
<TABLE>
<S> <C> <C>
Loans held for sale:
Residential real estate loans $ 6,675 $ 2,962
Deferred loan fees, net (31) (19)
Premiums paid on loans held for sale 86 35
------------ -------------
$ 6,730 $ 2,978
============ =============
Total loans receivable, net $ 327,558 $ 132,764
============ =============
</TABLE>
At June 30, 1996, Suncoast had pledged approximately $163.5 million of
first mortgage loans as collateral for FHLB advances (see Note L).
The commercial real estate loans are primarily in the State of Florida
and are considered by management to be of somewhat greater risk of
uncollectibility due to the dependency on income production or future
development of real estate. Loans not accruing interest were $853,000 and
$151,000 at June 30, 1996 and 1995, respectively. If non-accrual loans had been
accruing interest, interest income of $54,000, $10,000 and $42,000 would have
been recorded during the years ended June 30, 1996, 1995 and 1994,
respectively.
The OTS regulatory capital regulations require that the portion of
nonresidential construction and land loans in excess of 80% loan-to-value ratio
be deducted from total capital for purposes of the risk-based capital standard.
At June 30, 1996, Suncoast had no loans subject to this regulation.
Suncoast originates and purchases both adjustable and fixed interest
rate loans. At June 30, 1996, the composition of these loans was approximately
as follows (in thousands):
<TABLE>
<CAPTION>
Fixed-rate Adjustable-rate
- ------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
Term to Term to
maturity Carrying value rate adjustment Carrying value
- -------- -------------- --------------- --------------
1mo.-1 yr. $ 353 1 mo.-1 yr. $ 217,509
1 yr.-3 yr. 3,138 1 yr.-3 yr. 65,967
3 yr.-5 yr. 4,261 3 yr.-5 yr 8,542
5 yr.-10 yr. 3,016
10 yr.-20 yr. 7,204
Over 20 years 13,944
----------- -----------
Total loans
in portfolio 31,916 292,018
Total loans held
for sale 6,480 195
----------- -----------
$ 38,396 $ 292,213
=========== ===========
</TABLE>
The adjustable-rate loans have interest rate adjustment limitations
and are generally indexed to U.S. Treasury Bill rates. Future market factors
may affect the correlation of the interest rate adjustment with the rates
Suncoast pays on the short-term deposits that have been primarily utilized to
fund these loans.
68
<PAGE> 70
The following summarizes the activity in the allowance for loan losses
for the years ended June 30 (in thousands):
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
------ ----- ------
Balance, at beginning of year $504 $504 $521
Provision for loan losses 153 95
Chargeoffs and recoveries, net (95) (17)
------ ------ ------
Balance, at end of year $ 657 $ 504 $ 504
====== ====== ======
</TABLE>
At June 30, 1996, Suncoast had commitments to originate and purchase
loans, excluding the undisbursed portion of loans in process, of approximately
$3.7 million. These commitments are scheduled to be disbursed within one year.
Suncoast had also entered into commitments to sell loans of approximately $7.6
million at June 30, 1996 of which approximately $1.0 million are binding on the
investor but not on Suncoast. At June 30, 1996, Suncoast had no floating
market rate commitments outstanding.
Loans to executive officers, directors and principal holders of equity
securities were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other customers (unless they were in effect under regulations prior to
1989) and do not involve more than the normal risk of collectibility. The
activity regarding these loans is as follows (in thousands):
<TABLE>
<CAPTION>
Beginning New Ending
Year Ended June 30, Balance Loans Repayments Balance
- ------------------- --------- ----- ---------- -------
<S> <C> <C> <C> <C>
1996 $2,199 $ 328 $ 336 $2,191
1995 1,083 1,365 249 2,199
1994 2,693 1,610 1,083
</TABLE>
E. MORTGAGE-BACKED SECURITIES
At June 30, 1996, mortgage-backed securities with an aggregate book
value of $11.8 million were pledged as collateral for FHLB advances (see Note
L). Summarized below are the amortized costs and market value of
mortgage-backed securities at June 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
costs gains losses value
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
June 30, 1996:
Adjustable rate:
GNMA $ 14,659 $ - $ (312) $ 14,347
Private Issue 4,044 4,044
-------- --------- ------- --------
Total mortgage-backed
securities $ 18,703 $ - $ (312) $ 18,391
======== ========= ======= ========
</TABLE>
69
<PAGE> 71
<TABLE>
<CAPTION>
June 30, 1995:
<S> <C> <C> <C> <C>
FHLMC $ 59,015 $ 414 $ (80) $ 59,349
FNMA 51,069 363 (51) 51,381
FNMA Real Estate Mortgage
Investment Conduit 26,126 26,126
-------- -------- ------ --------
Total mortgage-backed
securities $136,210 $ 777 $ (131) $136,856
======== ======== ====== ========
</TABLE>
Mortgage-backed securities as of June 30, 1996 and 1995 were
adjustable-rate securities with a term to rate adjustment not exceeding one
year.
F. LOAN SERVICING ASSETS
1. Purchased mortgage servicing rights--The following table sets
forth the activities of Suncoast's PMSRs for the years ended June 30 (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -------------
<S> <C> <C> <C>
Balance, at beginning of year $ 8,572 $ 9,511 $ 12,830
Cost of acquiring servicing rights 2,260 51
Sales of servicing rights (229)
Amortization charged against loan
servicing fee income (1,307) (990) (3,090)
----------- ------------ -------------
Balance, at end of year $ 9,525 $ 8,572 $ 9,511
=========== ============ =============
</TABLE>
2. Originated mortgage servicing rights ("OMSR")--The following
table sets forth the activities of Suncoast's OMSR's for the years ended June
30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Balance, at beginning of year $ - $ - $ -
Servicing rights originated 863
Amortization charged against loan
servicing fee income ( 29)
----------- ----------- ----------
Balance, at end of year 834 $ - $ -
=========== =========== ==========
</TABLE>
The fair value of Suncoast's PMSRs and OMSRs is determined annually by
an independent firm which has the necessary expertise to perform such valuation
studies. At June 30, 1996, the fair value of Suncoast's PMSRs and OMSRs was
approximately $10.0 million and $949,000, respectively.
70
<PAGE> 72
Fair value has been estimated by using a discounted cash flow model,
the most significant assumptions of which are as follows:
Prepayment Rate--The average "Dealer Prepayment Estimates" as of July
8, 1996 as published by Bloomberg Financial Markets.
Discount Rate--A base rate of 10.5%, adjusted for loan type, size and
remaining term. Cost of Service--$45 incremental per loan per year.
Ancillary Income--Suncoast's actual ancillary income was utilized for
the portfolio purchased prior to 1995 and $10 annually per loan was
utilized on the portfolio purchased subsequent to 1995.
Escrow Balances--Determined using a twelve month weighted average
multiple calculated by state.
For purposes of evaluating and measuring PMSRs and OMSRs for
impairment, Suncoast stratifies the population by product type, investor type
and interest rate. No valuation allowance for the impairment of PMSRs or OMSRs
was required at June 30, 1996.
The ability of Suncoast to recover the carrying value of the PMSRs and
OMSRs is dependent upon certain factors including future prepayment experience,
which is influenced by economic and other conditions that may be beyond
Suncoast's control. If actual future prepayment experience exceeds the rate
anticipated in the valuation study, a reduction in the carrying value of the
PMSRs and OMSRs may be required.
3. Premiums on the sale of loans--The following table sets forth
the activities of Suncoast's premiums on the sale of loans for the years ended
June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Balance, at beginning of year $ 1,533 $ 1,737 $ 2,169
Premium on sales 107 14
Sales of servicing rights (19) (28)
Amortization charged against loan
servicing fee income (281) (185) (418)
----------- ----------- ----------
Balance, at end of year $ 1,359 $ 1,533 $ 1,737
=========== =========== ==========
</TABLE>
Management has estimated the future constant prepayment rates ("CPRs")
used to determine the above premiums based upon an analysis of the actual
historical CPRs, comparative industry CPRs and market conditions. Suncoast
calculates premiums using the present value model, which calculates present
values based upon estimated annual cash inflows.
71
<PAGE> 73
G. ACCRUED INTEREST AND DIVIDENDS RECEIVABLE
Interest and dividends receivable at June 30 are accrued for (in
thousands):
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Loans receivable $ 2,782 $ 885
Mortgage-backed securities 164 1,041
Federal Home Loan Bank Stock 88 68
Repurchase agreements 121
Interest-earning deposits 8 8
----------- -----------
$ 3,042 $ 2,123
=========== ===========
</TABLE>
H. REAL ESTATE OWNED
At June 30, 1996, real estate owned consisted of one single-family
residence. The following summarizes the activity in the allowance for losses on
real estate owned for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Balance, at beginning of year $ - $ - $ -
Provision for losses on real estate 95 68 150
Chargeoffs and recoveries, net (15) (68) (150)
------- ------- --------
Balance, at end of year 80 $ - $ -
======= ======= ========
</TABLE>
I. OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment at June 30 are as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Land $ 1,204 $ 827
Buildings 3,971 3,630
Leasehold improvements 839 669
Furniture, fixtures and equipment 6,890 7,341
--------- ---------
12,904 12,467
Less accumulated depreciation and
amortization 6,264 6,182
--------- ---------
$ 6,640 $ 6,285
========= =========
</TABLE>
72
<PAGE> 74
J. OTHER ASSETS
Other assets at June 30 are comprised of (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Foreclosure advances $ 3,821 $ 1,633
Other receivables 2,978 1,404
Escrow advances on serviced loans 1,036 1,580
Prepaid income taxes 1,145 302
All other 339 2,309
--------- ---------
$ 9,319 $ 7,228
========= =========
</TABLE>
K. DEPOSITS
The nominal interest rates paid on deposits and related balances are as
follows (amounts in thousands):
<TABLE>
<CAPTION>
Weighted June 30, 1996 June 30, 1995
Average Rate at ------------------------ -----------------------
June 30, 1996 Amount Percent Amount Percent
--------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Negotiable
order of
withdrawal
("NOW")
accounts 2.42% $ 17,751 5.9% $ 6,418 1.9%
Non-interest
bearing 874 0.3% 556 0.2
Money market 3.19% 11,805 3.9% 16,859 5.0
Passbook 4.08% 40,959 13.6% 48,605 14.3
-------- ------ -------- ------
71,389 23.7% 72,438 21.4
-------- ------ -------- ------
Custodial
accounts 0% 24,198 8.0% 37,275 11.0
-------- ------ -------- ------
Certificates of
deposit:
2.00%-2.99% 204 0.1%
3.00%-3.99% 4 411 0.1
4.00%-4.99% 29,464 9.8% 11,212 3.3
5.00%-5.99% 146,965 48.8% 104,003 30.8
6.00%-6.99% 26,194 8.7% 108,712 32.2
7.00%-7.99% 2,783 0.9% 3,801 1.1
8.00%-8.99% 2 0.1
--------- ------ -------- -----
Total certificates
of deposit 5.46% 205,614 68.3% 228,141 67.6%
--------- ------ -------- -----
4.55% $ 301,201 100.0% $337,854 100.0%
========= ====== ======== =====
</TABLE>
73
<PAGE> 75
The amounts of scheduled maturities of certificate accounts, including
those with balances exceeding $100,000, at June 30, 1996 for future fiscal
years ending June 30 are summarized below (in thousands):
<TABLE>
<CAPTION>
Certificates
Exceeding Total
$100,000 Certificates
----------- ------------
<S> <C> <C>
1997 $7,389 $176,957
1998 824 19,699
1999 209 2,955
2000 106 4,430
2001 101 1,573
------- --------
$8,629 $205,614
====== ========
</TABLE>
Interest on deposits for the years ended June 30 is summarized below
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Certificate accounts $ 12,537 $ 11,893 $ 7,849
Money market accounts 565 420 748
NOW accounts 272 451 92
Passbook accounts 1,368 1,226 27
----------- ----------- ----------
Deposit accounts 14,742 13,990 8,716
----------- ----------- ----------
Interest on custodial accounts:
Escrow accounts 82 78 105
Serviced loans paid off 67 19 585
----------- ----------- ----------
149 97 690
----------- ----------- ----------
Total interest on deposits $ 14,891 $ 14,087 $ 9,406
=========== =========== ==========
</TABLE>
L. ADVANCES FROM FEDERAL HOME LOAN BANK AND OTHER BORROWINGS
Advances from the Federal Home Loan Bank and other borrowings at June
30 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
At June 30, 1996 During Year Ended June 30, 1996
--------------------------------------------------- -------------------------------
Average Maximum
Balance Weighted
Outstanding Average Rate Maturity Outstanding Outstanding
----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Advances from FHLB
Short term $67,000 5.30% 7/96-2/97 $50,963 $117,000
Long term 1,500 6.65 12/05 1,000 1,500
Borrowings under reverse
repurchase agreements 850 10,199
Borrowings under fixed coupon
dollar reverse repurchase0
agreements 2,631 31,572
-------- ----
$ 68,500 5.30%
======== ====
</TABLE>
74
<PAGE> 76
<TABLE>
<CAPTION>
At June 30, 1995 During Year Ended June 30, 1995
----------------------------------------------------- --------------------------------
Average Maximum
Balance Weighted Balance Balance
Outstanding Average Rate Maturity Outstanding Outstanding
----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Advances from
FHLB - short term $ 25,000 6.13% 5/96 $ 61,371 $ 108,000
Borrowings under
reverse
repurchase
agreements 32,051 6.09 7/95-8/95 20,821 62,766
Borrowings under
fixed coupon
dollar reverse
repurchase
agreements 31,572 5.77 7/95 10,025 35,148
-------- ----
$ 88,623 5.99%
======== ====
</TABLE>
At June 30, 1996, Suncoast is a party to two advance agreements with
the FHLB whereby the FHLB will provide borrowings as requested by Suncoast when
such borrowings are secured by specific collateral. Under the first agreement,
advances are secured by government securities and U.S. government agency
securities with a market value of 103% of the advance amount. Under the second
agreement, advances are secured by a blanket floating loan on eligible single
family residential mortgage loan collateral. In determining the amount of
advances available under the second agreement, the unpaid principal balance of
eligible collateral is discounted to 75% (see note D). The stock of the FHLB
owned by Suncoast is also pledged as collateral for advances under this
agreement. After meeting all of its collateral requirements, Suncoast had
excess qualifying assets eligible as collateral for additional borrowings under
this agreement of approximately $54.1 million at June 30, 1996.
Suncoast enters into sales of securities under agreements to
repurchase, which are treated as financings. The obligations to repurchase
securities sold are reflected as a liability and the carrying amount of the
securities underlying the agreements is included in mortgage-backed securities
available for sale in the Consolidated Statements of Financial Condition.
Mortgage-backed securities sold under reverse repurchase agreements are
delivered to the broker- dealers who arrange the transactions. The
broker-dealers may sell, loan, or otherwise dispose of such securities to other
parties in the normal course of their operation, and agree to resell to
Suncoast the identical securities at the maturities of the agreements. As of
June 30, 1996, no such financings were outstanding.
Suncoast also enters into fixed coupon dollar reverse repurchase
agreements, which are treated as financings. Under a fixed coupon dollar
reverse repurchase agreement, Suncoast sells a security and agrees to
repurchase another security which is substantially the same as the one sold.
These agreements are accounted for in the same manner as reverse repurchase
agreements. As of June 30, 1996, no such financings were outstanding.
During the period from July 1, 1993 to February 28, 1995, RFC, a
lender, provided Suncoast with a revolving warehouse credit facility for as
much as $100.0 million which bore interest either at the prime rate or at
tiered rates over the U.S. Dollar London Interbank Offered Rate. Suncoast drew
advances on this line of credit to fund its mortgage originations and the
advances were collateralized by specific mortgages originated and awaiting sale
by Suncoast.
75
<PAGE> 77
Commitment fees of $41,666 and $58,800 were paid during Fiscal 1995 and 1994,
respectively, to RFC by Suncoast to use the credit line. Upon expiration, this
credit line was not renewed by Suncoast.
Interest expense on borrowed funds for the years ended June 30 is
summarized below (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
Advances from:
FHLB $ 2,772 $ 3,155 $ 349
RFC 1,155
Reverse repurchase agreements 159 1,283
Dollar reverse repurchase agreements 115 493
--------- -------- --------
$ 3,046 $ 4,931 $ 1,504
========= ======== ========
</TABLE>
M. LEASES
Suncoast leases space for its administrative offices, two savings
branch offices, storage facilities and certain equipment. All office leases
have escalation clauses tied either to a fixed schedule or to increases in the
Consumer Price Index. The following is a schedule of approximate future minimum
payments required under these operating leases at June 30, 1996 for future
fiscal years ending June 30 (in thousands):
1997 $1,078
1998 906
1999 881
2000 610
2001 66
Thereafter -
------
3,541
Less:
Income from subleases 147
------
$3,394
======
Rent expense was $1.2 million, $2.0 million and $2.1 million for the
years ended June 30, 1996, 1995, and 1994, respectively.
N. STOCKHOLDERS' EQUITY
Suncoast has an incentive stock option plan approved by its Board of
Directors and stockholders. There are 467,500 total shares in the plan, and a
total of 349,760 shares of common stock are reserved and authorized for
issuance under this plan. Transactions relating to this stock option plan for
the three year period ended June 30, 1996 are as follows:
76
<PAGE> 78
<TABLE>
<CAPTION>
Options Option Price
Outstanding Per Share
----------- ------------
<S> <C> <C>
Balance, June 30, 1993 349,400 $ 2.00-3.00
Exercised (24,400) 2.00-3.00
Cancelled (8,200) 2.00-3.00
---------- ------------
Balance, June 30, 1994 316,800 2.00-3.00
Granted 84,000 7.19-7.38
Exercised (33,000) 2.00-3.00
Cancelled (11,600) 2.00-7.38
---------- ------------
Balance, June 30, 1995 356,200 2.00-7.38
Granted 7,000 6.94
Exercised (14,400) 2.00-3.00
Cancelled (26,800) 2.00-7.38
---------- ------------
Balance, June 30, 1996 322,000 $ 2.00-7.38
========== ============
</TABLE>
At June 30, 1996 and 1995, options for 284,600 and 274,800 shares were
exercisable at an average price per share of $3.26 and $3.12, respectively.
Suncoast has an Employee Stock Bonus/401K Plan (Stock Bonus Plan) for
the benefit of certain eligible employees of Suncoast. Contributions to the
Stock Bonus Plan by Suncoast are at the discretion of Suncoast's Board of
Directors. No contributions were made to the Stock Bonus Plan for the years
ended June 30, 1996 and 1995. Suncoast expensed $224,400 for contributions made
to the Stock Bonus Plan for the year ended June 30, 1994.
There are various regulatory limitations on the extent to which
Suncoast can pay dividends. Suncoast is required to comply with the OTS capital
distribution regulations, which condition Suncoast's ability to make certain
dividend distributions on Suncoast's capital level and supervisory condition.
The OTS has established a three-tiered qualification system, and gives savings
associations meeting their fully phased-in capital requirements greater
flexibility to pay dividends than associations that must build their capital
levels to reach the fully phased-in capital requirement. Even though Suncoast
presently meets its fully phased-in capital requirements, dividends cannot be
paid if Suncoast does not meet its capital requirements at a future date or if
payment of dividends would cause Suncoast not to meet its capital requirements.
The payment of dividends is also prohibited if after such payment Suncoast
would be considered undercapitalized. Moreover, the OTS has the authority to
prohibit the payment of dividends even if Suncoast meets its capital
requirements if such payments would affect the safety and soundness of the
institution.
On July 9, 1993, Suncoast issued 920,000 shares of its 8%
Noncumulative Convertible Preferred Stock, Series A (the "Preferred Stock") in
a public offering which added net proceeds of approximately $12.2 million to
stockholders' equity. The Preferred Stock is convertible by the holder into
Suncoast Common Stock at any time, unless previously redeemed by Suncoast, at a
conversion price of $9.00 per share of Common Stock. Suncoast can redeem the
Preferred Stock after July 1, 1995, at a redemption price of $15.00 per share
if the Common Stock is trading at a minimum price of $10.80 per share for 20 to
30 trading days prior to redemption.
77
<PAGE> 79
The Preferred Stock is otherwise redeemable from July 1, 1998 to June 30, 1999
at $16.20 per share and at declining premiums thereafter. Dividends on the
Preferred Stock are payable at an annual rate of $1.20 per share if, when and
as declared by Suncoast's Board of Directors. Dividends are not cumulative and
are payable quarterly in arrears. Dividends on the Preferred Stock were paid
each quarter after the issuance of the stock and amounted to $1.1 million in
each of the years ended June 30, 1996 and 1995. In connection with this stock
offering, Suncoast issued warrants to the offering underwriters to purchase an
aggregate of 80,000 shares of Preferred Stock. These warrants are exercisable
at a price per share of $18.00 in the case of Preferred Stock or at $10.80 in
the case of Common Stock for a period of four years after July 9, 1994. At
June 30, 1996, none of these warrants had been exercised and none of the
Preferred Stock had been converted or redeemed.
Suncoast has a deferred compensation plan to provide its President
with a supplemental retirement benefit. Under this plan, Suncoast funded an
irrevocable trust with a lump sum of $213,000, which has been invested in
corporate- owned life insurance. The President will be fully vested in the
plan in 1997. Suncoast recorded an expense of $49,000 and $108,000 under this
Plan in Fiscal 1996 and Fiscal 1995, respectively.
O. INCOME TAXES
The provision for income taxes for the years ended June 30 differs
from the amount of income tax determined by applying the applicable U.S.
statutory federal income tax rate to pretax income as a result of the following
differences (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- -------------------- ---------------------
% Amount % Amount % Amount
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S.
tax rates 35.0 $1,335 35.0 $326 35.0 $1,088
Increase (decrease)
in rates resulting
from:
Benefit of Federal
surtax exemption (1.0) (31)
State tax (net of
Federal benefit) 3.7 141 3.7 34 3.2 100
Other (1.7) (65) (3.3) (30) (4.9) (152)
---- ------ ---- ---- ---- -------
37.0 $1,411 35.4 $330 32.3 $ 1,005
==== ====== ==== ==== ==== =======
</TABLE>
The components of the provision for income taxes for the years ended
June 30, 1996, 1995 and 1994 consist of (in thousands):
78
<PAGE> 80
<TABLE>
<CAPTION>
1996 1995 1994
---------- ----------- ----------
<S> <C> <C> <C>
Current:
Federal $ 950 $ 24 $ 555
State 95 61 153
----------- ----------- ----------
Total current 1,045 85 708
----------- ----------- ----------
Deferred:
Federal 326 209 267
State 22 (19) (5)
----------- ----------- ----------
Total deferred 348 190 262
----------- ----------- ----------
Tax benefit for disqualification of
stock options credited to stockholders'
equity 18 55 35
----------- ----------- ----------
Total provision 1,411 $ 330 $ 1,005
=========== =========== ==========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities as of June 30, 1996 and 1995
are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred tax asset:
Capitalized servicing costs $ 375 $ 442
Deferred loan fees 243 191
Deferred gain on sale of servicing 38
Accrued vacation 76 81
Reserves 278 189
Unrealized loss on mortgage-backed
securities available for sale 117
Alternative minimum tax credit carryover 66
Other 87 40
-------- --------
Gross deferred tax asset 1,176 1,047
-------- --------
Deferred tax liability:
Deferred premium on loans sold 468 573
Deferred premium on loans in portfolio 230 123
Fixed assets 199 137
Book over tax basis for originated
mortgage servicing rights 312
Unrealized gain on mortgage-backed
securities available for sale 239
Other 74 90
-------- --------
Gross deferred tax liability 1,283 1,162
-------- --------
Deferred tax asset valuation allowance -- ---
-------- --------
Net deferred tax (liability) asset $ (107) $ (115)
======== ========
</TABLE>
79
<PAGE> 81
Management believes, based on Suncoast's earnings history and its
future expectations, that Suncoast will have sufficient taxable income in
future years to realize the net deferred income tax asset. In evaluating the
expectation of sufficient future taxable income, management considered future
reversal of temporary differences and available tax planning strategies that
could be implemented, if required. A valuation allowance was not required as of
June 30, 1996 and 1995 as it was management's assessment that, based on
available information, it is more likely than not that the deferred tax asset
will be realized. A valuation will be established if there is a change in
management's assessment of the amount of the net deferred tax asset that is
expected to be realized.
P. OTHER INCOME
The following is a computation of Suncoast's gains on the sale of
loans and loan servicing rights for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
Proceeds from sales of loans
and loan servicing rights $ 117,818 $ 79,873 $ 2,181,886
Carrying value of loans sold (117,000) (79,313) (2,166,937)
----------- ---------- -----------
Cash before premiums
on the sale of loans 818 560 14,949
Premiums on the sale of loans 107 14
----------- ---------- -----------
$ 925 $ 560 $ 14,963
=========== ========== ===========
</TABLE>
Other income for the years ended June 30 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Loan processing and other
fees from RTC contracts $ 169 $ 573 $1,004
Rental income 306 310 180
Other 342 433 371
------ ------ ------
$ 817 $1,316 $1,555
====== ====== ======
</TABLE>
Q. OTHER EXPENSES
Other expenses for the years ended June 30 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- --------
<S> <C> <C> <C>
Loan expenses $ 375 $ 824 $ 2,162
Federal deposit insurance 859 773 772
Foreclosure expenses on servicing
portfolio 995 614 487
Data processing 645 535 634
Telephone 329 469 1,247
Business insurance 421 463 640
</TABLE>
80
<PAGE> 82
<TABLE>
<S> <C> <C> <C>
Professional and legal 356 381 294
Postage and overnight delivery 172 240 736
Stationery and supplies 240 210 502
Bank service charges and fees 109 95 207
Other 879 1,007 1,364
------- --------- --------
$ 5,380 $ 5,611 $ 9,045
======= ========= ========
</TABLE>
R. BUSINESS SEGMENTS
Suncoast's operations consist of activities in three principal
business segments: banking, mortgage banking and loan servicing. Revenues in
the banking segment consist primarily of interest on mortgage loans and
investment securities. Mortgage banking activities derive revenues primarily
from the interest on loans held for sale, sales of loans in the secondary
mortgage market, sale of loan servicing rights and loan origination income.
Loan servicing activities derive revenues primarily from the collection of fees
on loans serviced. During 1995, Suncoast shifted its primary business emphasis
from mortgage banking to banking. The following is segment information for the
fiscal years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
BANKING
Revenues:
Interest income $ 23,949 $ 25,011 $ 9,358
Gains on the sale of
mortgage-backed securities 2,950 1,388
Other income 731 1,117 1,154
-------- -------- --------
27,630 27,516 10,512
-------- -------- --------
Expenses:
Interest expense 16,489 18,499 6,449
Employee compensation
and benefits 3,048 1,918 1,311
Depreciation 396 212 178
Provision for losses on real
estate 95 68 150
Provision for loan losses 153 95
Other expenses 2,700 2,318 1,557
-------- -------- --------
22,881 23,110 9,645
-------- -------- --------
Banking income before income
taxes $ 4,749 $ 4,406 $ 867
======== ======== ========
MORTGAGE BANKING
Revenues:
Interest income $ 1,654 $ 300 $ 5,526
Gains on the sale of loans and
loan servicing assets, net 304 560 14,963
Loan origination and other income 331 336 6,212
-------- -------- --------
2,289 1,196 26,701
-------- -------- --------
</TABLE>
81
<PAGE> 83
<TABLE>
<S> <C> <C> <C>
Expenses:
Interest expense 1,009 236 3,703
Employee compensation
and benefits 1,272 2,438 13,347
Depreciation 134 412 564
Other expenses 1,050 2,667 8,249
-------- -------- --------
3,465 5,753 25,863
-------- -------- --------
Mortgage banking income (loss)
before income taxes $ (1,176) $ (4,557) $ 838
======== ======== ========
LOAN SERVICING
Revenues:
Loan servicing fees $ 6,016 $ 7,450 $ 8,088
Amortization of loan
servicing assets (1,617) (1,175) (3,508)
-------- -------- --------
Loan servicing income 4,399 6,275 4,580
Interest income 2,355 2,544 3,727
Gain on sale of loans and
loan servicing assets, net 621
Other income 190 254 264
-------- -------- --------
7,565 9,073 8,571
-------- -------- --------
Expenses:
Interest expense 439 283 758
Employee compensation
and benefits 2,920 3,649 3,704
Depreciation 610 784 559
Other expenses 3,356 3,275 2,147
-------- -------- --------
7,325 7,991 7,168
-------- -------- --------
Loan servicing income (loss)
before income taxes $ 240 $ 1,082 $ 1,403
======== ======== ========
Assets:
Banking $372,861 $439,175 $297,926
Mortgage banking 8,844 6,356 43,827
Loan servicing 20,864 16,822 17,337
-------- -------- --------
$402,569 $462,353 $359,090
======== ======== ========
Capital dispositions
(expenditures), net:
Banking $ (447) $ 8 $ (81)
Mortgage banking (188) 64 (1,760)
Loan servicing (860) 8 (86)
-------- -------- --------
$ (1,495) $ 80 $ (1,927)
======== ======== ========
</TABLE>
82
<PAGE> 84
S. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate fair value:
-- The book value was used as a reasonable estimate of fair value for
cash and amounts due from depository institutions, interest-bearing
deposits, variable rate loans and fixed rate loans with maturities
less than one year, demand and savings deposits, and short-term time
deposits.
-- The book value was used as a reasonable estimate of fair value for
stock issued by the Federal Home Loan Bank and short-term repurchase
agreements maturing within one month.
-- Fair values of fixed rate loans and certificates of deposit with
maturities greater than one year are estimated by discounting the
future cash flows using the current rates at which similar instruments
would be issued with comparable credit ratings and terms.
-- The fair values of commitments, letters of credit and guarantees are
equal to their contractual amount based on the assumptions that
Suncoast will be required to perform on all such instruments existing.
-- The fair value of loan servicing assets is determined by independent
valuation or discounted cash flow analysis as discussed in Note F.
Since the reported fair values of financial instruments are based on a
variety of factors, they may not represent actual values that could have been
realized or that will be realized in the future.
The estimated fair values of Suncoast's financial instruments for
which fair value differed from book value are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
---------------------------- ----------------------------
Book Value Fair Value Book Value Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Loans receivable in portfolio $ 31,563 $ 31,635 $ 16,568 $ 16,634
Loan servicing assets $ 11,718 $ 12,140 $ 10,105 $ 10,186
Certificates of deposit $ 28,657 $ 29,103 $ 40,458 $ 40,758
</TABLE>
T. CONTINGENCIES
In order to increase the Savings Association Insurance Fund ("SAIF")
of the Federal Deposit Insurance Corporation to its minimum required reserve
ratio of 1.25%, a proposal has been made to impose a special one-time
assessment of 65 to 90 basis points on all SAIF-insured deposits as of March
31, 1995. This one-time assessment may be payable in 1997 at which point the
Association's annual premium would thereafter be reduced. If the assessment is
made at the currently proposed rate, the effect on the Bank would be an
after-tax charge of approximately $1.9 million.
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<PAGE> 85
U. SUBSEQUENT EVENT
On July 15, 1996, Suncoast entered into a definitive agreement to be
acquired by BankUnited Financial Corporation ("BankUnited"). Under terms of
the agreement one share of BankUnited Class A Common Stock will be issued for
each share of Suncoast Common Stock. Each share of Suncoast Preferred Stock
will be exchanged for a new issue of BankUnited Preferred Stock having
substantially similar terms as the Suncoast Preferred Stock. The transaction
is subject to stockholder and regulatory approvals and other conditions and is
expected to close by December 1996.
84
<PAGE> 86
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Consolidated Quarterly Results (Unaudited)
- --------------------------------------------------------------------------------
The following table summarizes the quarterly results of operations for the
fiscal years ended June 30, 1996 and 1995 (in thousands, except per share data):
<TABLE>
<CAPTION>
First Quarter Second Quarter
Ended September 30, Ended December 31,
--------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ -------
<S> <C> <C> <C> <C>
Income $9,510 $8,502 $9,333 $9,371
Expense 8,804 8,201 8,613 9,170
------ ------ ------ ------
Net income 706 301 720 201
Preferred stock dividends 276 276 276 276
------ ------ ------ ------
Earnings (loss) available to common stockholders $ 430 $ 25 $ 444 $ (75)
====== ====== ====== ======
Earnings (loss) per share - primary $ 0.20 $ 0.01 $ 0.21 $(0.04)
Earnings per share - fully diluted $ 0.19 * $ 0.20 *
====== ====== ====== ======
<CAPTION>
Third Quarter Fourth Quarter
Ended March 31, Ended June 30,
---------------------- ---------------------
1996 1995 1996 1995
------ ------- ------ -------
<S> <C> <C> <C> <C>
Income $9,136 $9,755 $9,505 $10,157
Expense 8,633 9,926 9,032 9,887
------ ------ ------ -------
Net income (loss) 503 (171) 473 270
Preferred stock dividends 276 276 276 276
------ ------ ------ -------
Earnings (loss) available to common stockholders $ 227 $ (447) $ 197 $ (6)
====== ====== ====== =======
Earnings (loss) per share - primary $ 0.10 $(0.23) $ 0.10 $ -
Earnings per share - fully diluted $ 0.10 * $ 0.10 *
====== ====== ====== =======
</TABLE>
* Omitted due to anti-dilution.
85
<PAGE> 87
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Age at Year
September 12, Positions held Director office
1995 with Association since expires
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Albert J. Finch 59 Chairman of the 1985 1998
Board, Chief
Executive Officer,
President and Chief
Operating Officer
Paul B. Fay, Jr. 78 Director 1985 1998
Norman E. Mains 53 Director 1985 1998
William E. Hammonds 45 Vice Chairman 1985 1997
of the Board
Irving P. Cohen 55 Director 1988 1997
Sumner G. Kaye 57 Director 1986 1996
Elia J. Giusti 62 Director 1990 1996
Walter Sweeting 44 Director 1996 1996
</TABLE>
The following provides the principal occupation or employment of each
Director and executive officer for the past five years and, as to each
Director, directorships in companies having securities registered pursuant to
the Securities Exchange Act of 1934, as amended.
Albert J. Finch has served as Chairman of the Board of Directors and
Chief Executive Officer of the Association since its founding in May 1985 and
as Chief Operating Officer and President since July 1992. Mr. Finch is
Chairman of the Executive Committee.
Paul B. Fay, Jr. has served as President and Chief Executive Officer
of The Fay Improvement Co., a financial consulting firm located in San
Francisco, California since 1975. He also serves as a director of Vestaur
Securities, Inc., First American Financial, Inc., and Compensation Resource
Group, Inc. Mr. Fay is also a trustee emeritus for the Naval War College
Foundation. Mr. Fay is the father-in-law of Mr. Hammonds. Mr. Fay has served
as a Director of the Association since it opened for business in May 1985 and
is a member of the Compensation, Deferred Compensation and Audit Committees.
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<PAGE> 88
Norman E. Mains has served as the Chief Economist and Director of
Research for the Chicago Mercantile Exchange since October 1994. From January
1994 to October 1994, he was self-employed as an economic consultant. He
previously served as President and Chief Operating Officer of Rodman & Renshaw
Capital Group, Inc., the holding company for a securities broker/dealer firm
located in Chicago, Illinois, from February 1991 to January 1994. Mr. Mains has
served as a Director of the Association since its founding in May 1985 and is a
member of the Audit Committee.
William E. Hammonds has served as Chairman of the Board and Chief
Executive Officer of the Hammonds Ranch, Inc., an agricultural concern located
in Firebaugh, California, since June 1991. He also served as President of SCS
Mortgage Corporation, the Association's wholly-owned California subsidiary,
from September 1990 to June 1994. From May 1985 to June 1992, he was Chief
Operating Officer of the Association and from December 1988 to June 1992, its
President. Mr. Hammonds is a member of the California Bar and the son-in-law
of Mr. Fay. Since July 1992, Mr. Hammonds has served as Vice Chairman of the
Board of Directors and since May 1985, as a member of the Board of Directors.
Mr. Hammonds is a member of the Executive Committee.
Irving P. Cohen is an attorney in private practice. Since May 1995,
he has been a partner in the Washington, D.C. office of the law firm of
Thompson Hine and Flory. From June 1990 to May 1995, he was a partner in the
Washington, D.C. office of the firm of Semmes, Bowen & Semmes, Baltimore,
Maryland. Mr. Cohen joined the Association as a Director in July 1988 and is
Chairman of the Audit Committee.
Sumner G. Kaye has served as Director of the Southeast Region for the
American Committee for the Shaare-Zedek Medical Center of Jerusalem, Israel,
since September 1992. From 1974 to June, 1992, he served as executive director
of the Jewish Federation of South Broward located in Hollywood, Florida. Mr.
Kaye has served as Director of the Association since May 1986. He is Chairman
of the Compensation, Deferred Compensation and Fair Lending Committees.
Elia J. Giusti has served as President of Lee Giusti Realty, Inc., a
real estate and mortgage brokerage firm located in Fort Lauderdale, Florida
since 1982. Mr. Giusti joined the Association as a Director in July 1990 and
is a member of the Compensation, Deferred Compensation, Fair Lending and
Executive Committees.
Walter Sweeting, since 1980 has served as President and Chief
Operating Officer of Nadia Homes, Inc. the Sweeting Group, LTD., Sweet-Flick,
Inc. and Walter Sweeting & Associates, companies involved in real estate
construction and development located in Miami, Florida. Mr. Sweeting has
served as a Director of the Association since March 1996 and is a member of the
Fair Lending and Audit Committees.
Richard L. Browdy, 44, is Executive Vice President and Chief
Financial Officer of the Association. He joined the Association in 1985 as
Vice President and Controller of the Association. In 1988, he was appointed a
Senior Vice President and Chief Financial Officer, and in August 1994,
Executive Vice President.
87
<PAGE> 89
Thomas L. Clark, 50, is Executive Vice President of the Association.
He joined the Association in January 1994 as a Senior Vice President, and in
August 1994, was appointed Executive Vice President. Prior to his service with
the Association, from February 1993 to December 1993, he was Executive Vice
President of America's Lending Network, Inc., a mortgage banking subsidiary of
Standard Federal Savings Bank, a Federal savings bank located in Gaithersburg,
Maryland.
Wendy M. Mitchler, 42, is Senior Vice President, General Counsel and
Secretary of the Association. She joined the Association in September 1989 as
a Vice President and Corporate Counsel and was appointed Senior Vice President,
General Counsel and Secretary in July 1990.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require the Association's Directors, certain
of its officers, and persons owning beneficially more than ten percent of a
registered class of the Association's equity securities, to file initial
reports of ownership and reports of changes in ownership with OTS and NASDAQ.
The Association is required to disclose in this 10-K any failure of persons,
who, at any time during the fiscal year, were Directors, officers required to
report, or more than ten-percent beneficial owners, to file timely those
reports during the year ended June 30, 1996 or prior years. To the
Association's knowledge, based solely upon information furnished to the
Association by its Directors and certain of its officers, during the fiscal
year ended June 30, 1996, all of the Association's Directors, officers required
to report, and greater than 10% beneficial owners made all such filings timely,
except for the following: (1) One report for each of the Association's officers
required to report relating to the reallocation of both common and preferred
shares under the Association's Employee Stock Bonus/401(k) Plan due to employee
forfeitures and terminations was filed late; (2) One report relating to one
transaction and one report relating to three transactions were filed late on
behalf of Director Irving Cohen; and (3) One report relating to three
transactions was filed late on behalf of Director Elia Giusti.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid for services
rendered to the Association in all capacities during the fiscal years ended
June 30, 1994, 1995 and 1996 (i) to the chief executive officer of the
Association, and (ii) to the other most highly compensated executive officers
whose Fiscal 1996 salary and bonuses exceeded $100,000 (collectively
hereinafter referred to as the "named executive officers").
88
<PAGE> 90
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------ ------------
Long Term
Compensation All Other
Year Salary Bonus Option Awards (#) Compensation(1)
---- ------ ----- ------ ------ --- ------------
<S> <C> <C> <C> <C> <C>
Albert J. Finch, 1996 $300,000 $35,000 -0- $ 50,448
Chairman of the Board 1995 300,000 -0- 10,000 106,538
Chief Executive Officer, 1994 300,000 43,100 -0- 16,631
Chief Operating Officer
and President
Richard L. Browdy, 1996 $137,500 $30,000 -0- $ 1,346
Chief Financial Officer 1995 132,500 -0- 5,000 7,773
and Exec. Vice President 1994 130,000 9,000 -0- 8,119
Thomas L. Clark, 1996 $140,000 $15,000 -0- $ 1,346
Executive Vice President 1995 137,500 -0- 10,000 -0-
1994 65,131 -0- -0- -0-
Wendy M. Mitchler, 1996 $118,000 $ 5,000 -0- $ 1,042
General Counsel, Secretary 1995 114,000 -0- -0- 6,276
and Senior Vice President 1994 110,000 4,700 -0- 6,242
Thomas A. Dean, (2) 1996 $136,897 $15,000 -0- $ -0-
Executive Vice President 1995 69,013 -0- 20,000 -0-
</TABLE>
__________________________
(1) For Messrs. Browdy and Clark, and Ms. Mitchler, amounts consist of
employer allocations to the executive officer under the Association's
Employee Stock Bonus/401(k) Plan. For Mr. Finch, $1,346, $8,975 and
$13,516 of the amounts for 1996, 1995 and 1994, respectively, consist
of allocations to Mr. Finch under the Association's Employee Stock
Bonus/401(k) Plan. For 1996, 1995 and 1994, $49,102, $97,563 and
$3,115, respectively, of the amounts set forth for Mr. Finch reflect
vested amounts credited by the Association to Mr. Finch's account
under his deferred compensation plan.
(2) Mr. Dean's employment as Executive Vice President with Suncoast ended
in May 1996.
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning stock options
exercised by the named executive officers during the 1996 fiscal year,
including the value realized upon exercise. This table also describes the
number of unexercised options and the value of unexercised in-the-money options
at the end of the 1996 fiscal year held by the named executive officers.
89
<PAGE> 91
<TABLE>
<CAPTION>
Value of
Shares Number of Unexercised Unexercised in-the-Money
Acquired Value Options at 6/30/96 (#) Options at 6/30/96 ($) (1)
on Exercise Realized ---------------------- --------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
--- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Albert J. Finch - - 104,000 6,000 $293,750 $ -0-
Richard L. Browdy - - 15,000 3,000 $ 41,188 $ -0-
Thomas L. Clark - - 4,000 6,000 -0- -0-
Wendy M. Mitchler - - 15,000 -0- $ 49,063 $ -0-
</TABLE>
(1) Based on a fair market value of the Common Stock which was $5.9375
per share on June 30, 1996, minus the exercise price.
COMPENSATION OF DIRECTORS
Each outside director receives a fee of $500 for each month of
service, as well as a fee of $500 for each Board meeting attended and $200 for
each Board committee meeting attended. Those directors who are salaried
employees of the Association receive no additional compensation for serving as
a director. Pursuant to the Association's Stock Option Plan, each non-employee
director serving on May 1, 1991, received an option to purchase 22,000 shares
of the Association's Common Stock at an option price of $3.00 per share but
voluntarily surrendered the option to purchase 7,000 of those shares. Any newly
elected member of the Board after May 1, 1991 will receive an option to
purchase 22,000 shares as of the January 1st following his or her election to
the Board at a share price not less than the fair market value of a share of
Common Stock at the date of the grant, provided, however, that sufficient
shares are available for grant under the Option Plan.
The Bylaws of Suncoast Savings provide for a Board of Directors with
seven members serving staggered terms of three years each, resulting in the
election of approximately one-third of the Board of Directors each year. A
Director who is appointed to fill a vacancy on the Board of Directors serves
only until the next election of Directors by the shareholders.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
In January 1991, the Association entered into a Split-Dollar Life
Insurance Agreement (the "Insurance Agreement") with Mr. Finch. Under the
Insurance Agreement, as amended, the Association has purchased for Mr. Finch a
life insurance policy with a one-time premium of $690,000 and a death benefit
of $2,362,482. Mr. Finch vests 20% annually in the cash surrender value of the
policy in excess of $690,000 (the "excess policy interest"), except upon the
acquisition generally by any person of 20% of the combined voting power of the
Association's then outstanding stock, in which case he vests immediately in
100% of the excess policy interest. On November 15, 1995, Mr. Finch vested
fully in the excess policy interest. The Insurance Agreement will terminate on
the first to occur of the following events: (i) after ten years; (ii) surrender
of the policy by Mr. Finch, which may be made only with Suncoast's consent;
(iii) termination of Mr. Finch's employment for cause or in connection with a
conservatorship or receivership by federal or state regulators; or (iv)
voluntary
90
<PAGE> 92
termination of Mr. Finch's employment by Mr. Finch, except as a result of
disability. In the event of such termination, the policy is to be split into two
policies--one owned by Suncoast and having a cash surrender value equal to the
amount of premium paid by Suncoast and any non-vested excess policy interest and
one owned by Mr. Finch and having a cash surrender value equal to the vested
excess policy interest. The death benefit value of each separate policy is equal
to an amount that bears the same proportional relationship to the cash surrender
value of that policy on the date of the split as the death benefit value of the
undivided policy bears to the cash surrender value of the undivided policy on
the date of the split. Upon the death of Mr. Finch, prior to the termination of
the Insurance Agreement, his beneficiary receives the entire death benefit less
$690,000, which is paid to Suncoast to reimburse the premium payment.
In September 1993 the Association entered into a nonqualified
deferred compensation plan ("DCP") with Mr. Finch, which is intended to
provide Mr. Finch with a supplemental retirement benefit. Under the DCP,
Suncoast has funded an irrevocable trust with a lump sum of $213,000 which has
been invested in corporate-owned life insurance. In November 1994, Mr. Finch
vested 40% in the account balance, and will vest an additional 20% on each
November 1st thereafter so that he will be fully vested in the DCP in November
1997 at age 59. The account balance includes interest credited annually at a
rate which is determined by the Deferred Compensation Committee, but which
generally equals 130% of the Moody's Corporate Bond rate. In the event of Mr.
Finch's termination of employment due to disability, the acquisition generally
by any person of 20% of the combined voting power of the Association's then
outstanding stock, or termination of Mr. Finch's employment without cause, Mr.
Finch would vest immediately in the DCP and receive his entire account balance
within sixty (60) days. Notwithstanding the above, the following events would
trigger a termination of Mr. Finch's account vesting and a sixty (60) day
payout of his vested account balance: (i) termination of Mr. Finch's
employment for cause or in connection with a conservatorship or receivership by
federal or state regulators; or (ii) voluntary termination of Mr. Finch's
employment by Mr. Finch, except as a result of disability.
As part of the Merger, the Suncoast Board approved an amendment to
the DCP in which Mr. Finch is the participant, to clarify the original intent
of the DCP that a participant becomes 100% vested upon a change in control.
The amendment further provides that, after a change in control or upon
termination of employment, benefits under the DCP are not paid in a lump sum
but rather are paid in accordance with the election made by the participant
with respect to the payment of retirement benefits under the DCP, which, in the
case of Mr. Finch, was for equal monthly payments over a period of 60 months.
In addition, the amendment provides that the crediting rate for earnings on the
participant's account balance for the three-year period following a change in
control shall be 9% per annum, with benefits determined by applying this rate
without reduction for present value. After the three-year period following the
change in control, the amendment provides that the crediting rate shall be
zero. The amendment also provides that, prior to the change in control,
Suncoast will make a contribution to the trust maintained pursuant to the DCP
to the extent necessary to fully fund the trust to provide the benefits to
which participants are entitled under the DCP.
The Merger Agreement provides that at the Effective Time of the
merger, Albert J. Finch, Chairman of the Board, Chief Executive Officer, and
President of Suncoast, will be
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<PAGE> 93
appointed as a Vice-Chairman of the Board of Directors of BankUnited and
BankUnited, FSB and as a member of the BankUnited Board for three years.
Suncoast has entered into severance and/or employment continuation
agreements (the "Change in Control Agreements") with each of Albert J. Finch,
Richard L. Browdy, and Wendy M. Mitchler, each of whom is an executive officer
of Suncoast. The benefits payable to them under the Change in Control
Agreements include a severance payment to Mr. Finch in the amount of $150,000,
a payment to Mr. Finch in an amount equal to the amount of compensation that
Suncoast otherwise would have paid to Mr. Finch for the period from the
Effective Time through the end of the month in which the Effective Time occurs
(but only in the event the Effective Time is prior to November 30, 1996) and an
employment continuation payment to Mr. Finch in the amount of $150,000 at the
Effective Time, and employment continuation payments to Mr. Browdy in the
amount of $280,000 and to Ms. Mitchler in the amount of $110,000, on the
Effective Time or the later of January 2, 1997. The severance payment to Mr.
Finch is in lieu of the payment to which he would otherwise be entitled under
Suncoast's senior officer severance policy. The employment continuation
payments to Mr. Finch and Ms. Mitchler are to be made for their remaining in
the employ of Suncoast through the Effective Time, or in the event of
Suncoast's prior termination of their employment other than for cause. The
employment continuation payment to Mr. Browdy is to be made for his remaining
in the employ of Suncoast through the Effective Time and for two subsequent
three-month periods (terminable by either upon thirty days' notice during the
second three-month period), or in the event of Suncoast's prior termination of
his employment other than for cause. For these purposes, "cause" includes any
action or inaction of the executive involving personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform his or her duties, willful violation of
any law, rule or regulation (other than traffic violation or similar offenses),
or final cease-and-desist order, or material breach of any provision of the
Change in Control Agreements. Under the Merger Agreement, BankUnited has
agreed to provide after the Effective Time the benefits and perform the
obligations of Suncoast set forth in the Change in Control Agreements in
accordance with the terms thereof.
In addition, under the Merger Agreement, BankUnited has agreed to
enter into a consulting agreement with Albert J. Finch, effective as of the
Effective Time. The terms of such consulting agreement include payment of a
monthly consultant fee at the rate of $100,000 per year for a three-year period
for consulting services of up to 600 hours per year. In addition, BankUnited
will pay all out-of-pocket expenses incurred by Mr. Finch in performance of his
consulting duties, and will, through April 1998, make the lease payments on a
leased automobile to be used by Mr. Finch. In addition, BankUnited will
provide health insurance coverage to Mr. Finch to the same extent and on the
same terms and conditions as that provided for BankUnited employees for the
greater of three years or as long as he remains a director of BankUnited, with
continuation coverage for 18 months thereafter. The consulting agreement
further provides that, as long as Mr. Finch remains willing to stand for
election as a director, whether or not he is elected, the Split Dollar
Agreement between Suncoast and Mr. Finch, dated January 28, 1991, as amended,
shall remain in full force and effect in accordance with its terms. BankUnited
has the right to terminate the consulting agreement only for cause, as defined
above.
92
<PAGE> 94
Options granted under Suncoast Savings' stock option plan will
generally become fully and automatically exercisable, to the extent not already
exercisable, upon the acquisition by any person of 20% or more of the combined
voting power of the Association's then outstanding stock.
Under the Stock Bonus/401(k) Plan, in the event the Plan is
terminated in connection with a merger, plan participants shall become 100%
vested as to employer contribution amounts.
REPORT OF THE COMPENSATION COMMITTEE
Suncoast's Compensation Committee (the "Compensation Committee")
reviews and recommends to the full Board of Directors all aspects of the
compensation program for the executive officers of Suncoast. The Compensation
Committee is comprised of three outside, independent directors: Sumner G. Kaye
(Committee Chairman), Paul B. Fay, Jr. and Elia J. Giusti.
The goal of the compensation program is to attract, motivate, reward
and retain the management talent required to achieve corporate objectives and
increase shareholder value. Toward that end, the program attempts to provide
competitive levels of total compensation, incentive compensation that varies
with the financial performance of Suncoast, and incentive compensation that
effectively rewards individual performance.
Each year, the Compensation Committee conducts a thorough review of
its executive officer compensation program. This review includes a market
survey provided by the Wyatt Company, an independent, internationally
recognized compensation and benefits consulting firm. Suncoast's executive
compensation program is analyzed by component of pay (i.e., base salary and
bonus), and in the aggregate, to measure its competitiveness with other
comparable financial institutions. Each year, the Compensation Committee
reviews the criteria used for the selection of peer companies included in the
market survey data.
The three key components of Suncoast's executive officer compensation
program are generally base salaries, incentive bonuses, and long term incentive
stock options. Each component of executive compensation is discussed below.
BASE SALARIES
The base salaries of executive management are set annually based on a
consideration of survey group data provided by the Cole Survey published by the
Wyatt company, Mortgage Bankers Association and/or other in-house surveys.
Consideration is also given to the individual achievements of each officer over
the past year, the financial performance of Suncoast and, with the exception of
the Chief Executive Officer's salary, the recommendations of the Chief
Executive Officer. The executive officers' base salaries established for the
1996 fiscal year, on average, were substantially equivalent to the average
salaries of Suncoast's peer group contained in the survey group data. The
Compensation Committee has established a goal of providing base salaries for
executive management that
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<PAGE> 95
are comparable to the average salaries of Suncoast's peer group as company
performance warrants.
INCENTIVE BONUSES
Discretionary incentive bonuses may be paid from time to time to
executive officers based on the Chief Executive Officer's recommendation (with
the exception of the Chief Executive Officer's bonus, which will be based on
the Compensation Committee's recommendation). Any such recommendations will be
based on a discretionary evaluation of the individual's contribution to the
financial performance of the Association, his or her level of responsibility,
the financial performance of Suncoast and survey group data. All incentive
bonus payments are payable at the discretion of the Compensation Committee and
the Board of Directors.
STOCK OPTION PLAN
Suncoast has included stock options as a key element in its total
compensation package. The stock option awards are intended to offer the
executive officers significant incentives to increase their efforts on behalf
of Suncoast and to focus managerial efforts on enhancing long-term shareholder
value. Each year the Compensation Committee determines the level of stock
option awards to be granted to executive officers. The awards take into
account the following factors:
- total aggregate grants to officers and directors as a
percentage of the total outstanding common stock;
- individual level of responsibility and current performance;
and
- prior grants of awards to each individual
Stock options are granted with an exercise price equal to the market
price of Suncoast's common stock on the date of grant, generally vest over five
years and expire ten years from the date of grant. Benefits to an executive
officer from stock options will be realized only in the event of an increase in
the market value of Suncoast's Common Stock. The Stock Option Plan currently
has minimal options available for issuance; accordingly, no current grants are
contemplated by the Compensation Committee until additional options become
available either through forfeitures or an increase in the number of shares
reserved for issuance under the Stock Option Plan.
BASES FOR CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Finch's base salary and annual incentive bonus were determined
using the criteria described above which were applied to all executive officers.
Mr. Finch's base salary for Fiscal 1996 remained the same as his base salary
for the prior fiscal year and 11% less than the average salary of his peer
group as determined by a Financial Institutions Compensation
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<PAGE> 96
Survey performed by Watson Wyatt Data for the Association's Compensation
Committee. No salary adjustment was recommended in recognition of the need to
contain administrative expenses during the transition of Suncoast from a
national mortgage banking operation to a community bank. In maintaining Mr.
Finch's base salary at its previous level, the Committee also considered Mr.
Finch's leadership role in completing the restructuring of the assets and
operations during the year. Mr. Finch received an incentive bonus during Fiscal
1996 based on a review of the contribution that he made to the financial
performance of Suncoast during such fiscal year.
The Compensation Committee
Sumner G. Kaye, Chairman
Paul B. Fay, Jr.
Elia J. Giusti
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<PAGE> 97
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Association's Common Stock with the
NASDAQ Stock Market Index and the NASDAQ Financial Index for the five year
period beginning July 1, 1991 and ending June 30, 1996. This graph assumes
that $100 was invested on July 1, 1990 in the Association's Common Stock and in
the other indices, and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA,
NASDAQ STOCK MARKET INDEX AND NASDAQ FINANCIAL INDEX
<TABLE>
<CAPTION>
Indicies as of June 30, 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Suncoast 100 123 304 267 246 232
NASDAQ Stock Market Index 100 120 151 153 204 261
NASDAQ Financial Index 100 139 183 206 236 307
</TABLE>
96
<PAGE> 98
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of September 23, 1996
with respect to the ownership of shares of Common Stock by (i) such persons who
are believed by management to be beneficial owners of more than five percent of
the Association's outstanding Common Stock, which includes certain Directors,
(ii) all other Directors of the Association, (iii) all named executive
officers, and (iv) all Directors and officers as a group:
97
<PAGE> 99
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent of
Outstanding Ownership of Total
Beneficial Owner Common Stock (1) Common Stock (2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Albert J. Finch, Chairman 153,634 (3)(4) 6.98%
4000 Hollywood Blvd.
Hollywood, FL 33021
Suncoast Savings Employee 136,198 (5) 6.14
Stock Bonus/401(k) Plan
and Trust
4000 Hollywood Blvd.
Hollywood, FL 33021
Paul B. Fay, Jr., Director 135,257 (3)(6) 6.07
3766 Clay Street
San Francisco, CA 94118
E. J. Giusti, Director 113,198 (3)(7) 5.12
3101 N. Federal Hwy. #503
Fort Lauderdale, FL 33306
William E. Hammonds, Vice Chairman 101,604 (3) 4.63
47375 West Dakota Avenue
Firebaugh, CA 93622
Norman E. Mains, Director 44,833 (3) 2.02
Irving P. Cohen, Director 46,370 (3)(8) 2.09
Sumner G. Kaye, Director 2,110 (3) *
Richard L. Browdy, 23,483 (3) 1.07
Chief Financial Officer and
Executive Vice President
Thomas L. Clark 6,148 (3) *
Executive Vice President
Wendy M. Mitchler, 20,954 (9) *
General Counsel, Secretary
and Senior Vice President
All directors and 707,948 (10) 30.63
officers as a group
(16 persons)
</TABLE>
- --------------------
* Less than one percent of outstanding Common Stock
(1) Includes shares of Common Stock held of record individually by such
persons as well as jointly with their spouses. In accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a
person is deemed to be the beneficial owner of a security for purposes
of the Rule if that person has or shares voting power or
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<PAGE> 100
investment power with respect to such security or has the right to
acquire such ownership within 60 days. Each individual, for purposes
of the regulations under the Securities Exchange Act of 1934, as
amended, and for all other purposes, disclaims beneficial ownership of
any shares owned by any other person or entity, including immediate
family members, unless otherwise noted below, and disclaims being a
member of any "group", as that term is defined in regulations issued
under that statute.
(2) Percentage based upon (a) 2,195,930 outstanding shares of Common
Stock; plus (b) the number of shares of Common Stock considered
potentially outstanding based on (i) options currently exercisable
(within 60 days of September 23, 1996) by such individual or group
under the Association's Stock Option Plan, and (ii) the conversion of
the Association's Noncumulative Convertible Preferred Stock
("Preferred Stock") into Common Stock by such individual or group;
plus (c) the number of shares of Common Stock and the number of
shares of Common Stock convertible from Preferred Stock allocated to
such individual or group under the Association's Employee Stock
Bonus/401(k) Plan.
(3) For Messrs. Finch, Hammonds, Browdy and Clark, and Ms. Mitchler,
includes 4,000, -0-, 2,000, 4,000 and -0- shares, respectively,
subject to options under the Association's Stock Option Plan which
are presently exercisable, and 18,659, 11,745, 8,483, 148 and 5,621
shares, allocated under the Association's Employee Stock Bonus/401(k)
Plan. For Messrs. Cohen, Fay, Kaye, Mains, Giusti and Sweeting
includes 8,000, 15,000, 1,000, 15,000, 15,000 shares and -0- shares,
respectively, subject to options under the Association's Stock Option
Plan which are presently exercisable and 10,970, 18,417, 1,110,
8,333, -0- and -0- shares, respectively, which such persons or their
immediate family members have the right to acquire through the
conversion of their Preferred Stock into Common Stock.
(4) Includes 165 shares held by Mr. Finch's son, as to which shares Mr.
Finch does not disclaim beneficial ownership.
(5) Includes 21,291 shares which the Employee Stock Bonus/401(k) Plan has
the right to acquire through the conversion of Preferred Stock into
Common Stock, and 26,720 shares held in the 401(k) portion of the
Plan as to which the employee participants have sole voting and
investment power.
(6) Includes 59,640 shares of Common Stock held by a pension plan of a
company controlled by Mr. Fay and 6,666 shares which such pension
plan has the right to acquire through the conversion of Preferred
Stock into Common Stock.
(7) Includes 49,581 shares held by an individual retirement account for
the benefit of Mr. Giusti's wife.
(8) Includes 1,100 shares held by an individual retirement account for
the benefit of Mr. Cohen's wife, and 1,110 shares and 555 shares
which Mr. Cohen's wife and Mr. Cohen's wife and son, respectively,
have the right to acquire through the conversion of Preferred Stock
into Common Stock.
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<PAGE> 101
(9) Includes 333 shares which Ms. Mitchler has the right to acquire
through the conversion of Preferred Stock into Common Stock.
(10) Includes 76,200 shares subject to options under the Association's
Stock Option Plan which are presently exercisable; 55,611 shares, and
7,960 shares convertible from Preferred Stock, allocated under the
Association's Employee Stock Bonus/401(k) Plan; and 39,330 shares
which officers and Directors have the right to acquire through the
conversion of Preferred Stock into Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Elia Giusti is a director and principal stockholder of the
Association and a member of the Compensation Committee. In the ordinary course
of its business, the Association has made loans secured by real estate to Mr.
Giusti and members of his immediate family on the same basis as comparable
transactions with non-affiliated persons, including interest rates and
collateral. At June 30, 1996, Mr. Giusti and members of his immediate family
were indebted to the Association in the aggregate amount of $2,096,305.
Under its former director and employee lending program, the
Association made a preferential rate $920,000 first mortgage home loan to Mr.
Fay. As part of its asset restructuring, the Association sold this loan to a
third party investor in the fiscal year ended June 30, 1991 and agreed with Mr.
Fay to pay the investor, on a monthly basis, an amount equal to the interest
differential between the preferential rate paid by Mr. Fay (currently at 6
7/8%) and the stated note rate, which was a market rate at the time the loan
was originated. The amount paid in the fiscal year ended June 30, 1996 by the
Association to the third party investor for Mr. Fay was $13,326.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Irving P. Cohen, a director of the Association, is a partner in the
law firm of Thompson Hine & Flory P.L.L. Thompson Hine & Flory has performed
legal services for the Association during the fiscal year ended June 30, 1996
for which the law firm received $975.
Under its former director and employee lending program, the
Association made a $791,200 first mortgage home loan at a preferential rate to
Norman E. Mains, a Director of the Association. As part of its asset
restructuring, the Association sold this loan to a third party investor in the
fiscal year ended June 30, 1991, and agreed with Mr. Mains to pay the investor,
on a monthly basis, an amount equal to the interest differential between the
preferential rate paid by Mr. Mains (currently at 6-7/8%) and the stated note
rate, which was a market rate at the time the loan was originated. The amount
paid in the fiscal year ended June 30, 1996 by Suncoast to a third party
investor for Mr. Mains was $10,614.
For information relating to certain transactions with members of the
Compensation Committee, see "Compensation Committee Interlocks and Insider
Participation".
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<PAGE> 102
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of
this report:
1. Consolidated Financial Statements, including notes in
Item 8:
Consolidated Statements of Financial Condition
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Supplementary Data
2. Financial Statement Schedules
None
3. Exhibits:
2.1 Federal Home Loan Bank of Atlanta (the "Bank")
Agreement for Advances and Security Agreement
with Blanket Floating Lien between Suncoast and
the Bank dated January 18, 1996
3.1 Federal Stock Charter (1)
3.1.1 First Supplemental Section to Section 5.B of
Federal Stock Charter (7)
3.2.1 By-laws, as amended
3.2.2 Amendment to By-laws dated February 5, 1996
4.1 Specimen Preferred Stock Certificate (6)
4.2 Suncoast Underwriters' Warrant Agreement, dated
July 9, 1993, between Josephthal Lyon &
Ross Incorporated, Southeast Research Partners,
Inc., Rodman & Renshaw Inc., and Suncoast (7)
10.2 Lease between Hollywood Corporate Circle
Associates and Suncoast dated June 19, 1989 (2)
10.3 Fourth Addendum to Lease between Hollywood
Corporate Circle Associates and Suncoast dated
September 20, 1994 (8)
10.3.1 Fifth Addendum to Lease between Hollywood
Corporate Circle Associates and Suncoast dated
December 5, 1994 (9)
10.3.2 Sixth Amendment to Lease between Hollywood
Corporate Circle Associates and Suncoast dated
April 1, 1996
10.4 Electronic Data Processing Agreement for Remote
Processing Services between Computer Power, Inc.
and SCG Mortgage Corporation dated December 12,
1989 (4)
10.4.1 Microcomputer Software Maintenance and Support
Agreement between Computer Power, Inc. and SCG
Mortgage Corporation dated December 12, 1989 (4)
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<PAGE> 103
10.4.2 Microcomputer Software License Agreement between
Computer Power, Inc. and Mortgage Corporation
dated December 12, 1989 (4)
10.4.3 Master Agreement for Hardware Purchase between
Computer Power, Inc. and SCG Mortgage
Corporation dated December 12, 1989 (4)
10.5 Master Agreement between Data-Link Systems,
L.L.C. d/b/a Fiserv Mortgage Products Division
and Suncoast, dated June 17, 1996
10.5.1 Master Software System License Agreement,
between Servantis Systems Inc. and Suncoast,
dated June 26, 1996
10.6 Deferred Compensation Plan Agreement between
Suncoast and Albert J. Finch dated September 30,
1993 (8)
10.7 Trust Agreement between Suncoast and Imperial
Trust Company dated September 30, 1993 for
Albert J. Finch Deferred Compensation Plan (8)
10.7.1 Life Insurance Policy on Albert J. Finch issued
by Connecticut Mutual Life Insurance Company
dated July 1, 1994 (9)
10.7.2 Amendment to Deferred Compensation Plan
Agreement for Albert J. Finch dated July 15,
1996
10.8 Restated Stock Option Plan (5)
10.8.1 Amendment Number One to Complete Restatement of
Stock Option Plan dated June 4, 1993 (7)
10.9 Employee Stock Bonus/401(k) Plan (8)
10.9.1 First Amendment to Employee Stock Bonus/401(k)
Plan dated December 20, 1994 (9)
10.10 Split Dollar Insurance Plan between Suncoast and
Albert J. Finch dated January 8, 1991 (5)
10.10.1 Life Insurance Policy on Albert J. Finch issued
by General American Life Insurance Company on
November 15, 1990 (5)
10.10.2 Amendment to Split Dollar Insurance Plan between
Suncoast and Albert J. Finch dated January 28,
1992 (3)
10.11 Supplemental Health Benefit Plan for Senior
Officers (5)
10.12 Residential Loan Servicing Agreement between
Federal Deposit Insurance Corporation ("FDIC")
and Suncoast effective February 1, 1995, as
amended (9)
10.13 Employment Continuation and Severance Agreement
between Suncoast and Albert J. Finch dated
August 28, 1996
10.13.1 Employment Continuation Agreement between
Suncoast and Richard L. Browdy dated August 28,
1996
10.13.2 Employment Continuation Agreement between
Suncoast and Wendy Mitchler dated August 28,
1996
10.13.3 Amendment to Employment Continuation and
Severance Agreement between Suncoast and Albert
J. Finch dated September 26, 1996
10.14 Residential Mortgage Loan Servicing Agreement
between Federal Deposit Insurance Corporation
and Suncoast dated January 30, 1995 (9)
10.14.1 Modification Number One of Residential Mortgage
Loan Servicing Agreement between FDIC and
Suncoast dated March 14, 1995 (9)
10.14.2 Modification Number Two of Residential Mortgage
Loan Servicing Agreement between FDIC and
Suncoast dated June 15, 1995 (9)
10.14.3 Modification Number Three of Residential
Mortgage Loan Servicing Agreement between FDIC
and Suncoast dated June 27, 1995 (9)
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<PAGE> 104
10.15 Agreement and Plan of Merger, as Amended,
between BankUnited Financial Corporation and
Suncoast Savings and Loan Association, FSA,
dated July 15, 1996
11.1 Computation of Shares Used for Earnings Per
Share Calculation
21.1 Statement of Subsidiaries of the Association
- ----------------------
(1) Previously filed in the Exhibits to
Pre-Effective Form OC (Docket Number 8147) filed
May 20, 1993.
(2) Previously filed in the Exhibits to Form 10-K
for the Fiscal Year ended June 30, 1989 (Docket
Number 8147) on September 28, 1989.
(3) Previously filed in the Exhibits to the Form
10-K for the Fiscal Year ended June 1992 (Docket
Number 8147) on September 28, 1992.
(4) Previously filed in the Exhibits to Form 10-K
for the Fiscal Year ended June 30, 1989 (Docket
Number 8147) on October 30, 1990.
(5) Previously filed in the Exhibits to the Form
10-K for the Fiscal Year ended June 30, 1991
(Docket Number 8147) on October 4, 1991.
(6) Previously filed in the Exhibits to
Pre-Effective Amendment No. 1 (Docket Number
8147) to Form OC on June 22, 1993.
(7) Previously filed in the Exhibits to the Form
10-K for the Fiscal Year Ended June 30, 1993
(Docket Number 8147) on September 28, 1993.
(8) Previously filed in the Exhibits to the Form
10-K for the Fiscal Year Ended June 30, 1994
(Docket Number 8147) on September 28, 1994.
(9) Previously filed in the Exhibits to the Form
10-K for the Fiscal Year Ended June 30, 1995
(Docket Number 8147) on September 28, 1995.
(b) The Association filed one report on Form 8-K during the
quarter ended September 30, 1996. The Form 8-K was filed on
July 19, 1996 to report the execution by Suncoast and
BankUnited of a Merger Agreement dated July 15, 1996.
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<PAGE> 105
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ Albert J. Finch Date: September 26, 1996
---------------------------------- -----------------------
Albert J. Finch
President
Chairman of the Board of Directors
and Chief Executive Officer
By: /s/ Richard L. Browdy Date: September 26, 1996
---------------------------------- -----------------------
Richard L. Browdy
Senior Vice President,
Chief Financial Officer and
Chief Accounting Officer
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<PAGE> 106
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ Albert J. Finch Date: September 26, 1996
----------------------------------- -----------------------
Albert J. Finch
President
Chairman of the Board of Directors
and Chief Executive Officer
By: /s/ Elia J. Giusti Date: September 26, 1996
----------------------------------- -----------------------
Elia J. Giusti
Director
By: /s/ Sumner G. Kaye Date: September 26, 1996
----------------------------------- -----------------------
Sumner G. Kaye
Director
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<PAGE> 107
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ William E. Hammonds Date: September 26, 1996
----------------------------- -----------------------
William E. Hammonds
Vice Chairman
106
<PAGE> 108
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ Irving P. Cohen Date: September 26, 1996
----------------------- -----------------------
Irving P. Cohen
Director
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ Paul B. Fay, Jr. Date: September 26, 1996
-------------------------- -----------------------
Paul B. Fay, Jr.
Director
108
<PAGE> 110
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ Norman E. Mains Date: September 26, 1996
---------------------------- -----------------------
Norman E. Mains
Director
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<PAGE> 111
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Suncoast Savings and Loan Association, FSA
By: /s/ Walter Sweeting Date: September 26, 1996
------------------------------ -----------------------
Walter Sweeting
Director
110
<PAGE> 112
EXHIBIT INDEX
Page
2.1 Agreement and Plan of Merger, as Amended, between BankUnited
Financial Corporation and Suncoast Savings and Loan Association,
FSA, dated July 15, 1996
3.2.1 By-laws, as amended
3.2.2 Amendment to By-Laws dated February 5, 1996
10.3.2 Sixth Addendum to Lease between Hollywood Corporate Circle
Associates and Suncoast dated December 5, 1994
10.5 Master Agreement between Data-Link, L.L.C. d/b/a Fiserv Mortgage
Products Division and Suncoast dated June 17, 1996
10.5.1 Master Software System License Agreement, between Servantis
Systems Inc. and Suncoast, dated June 26, 1996
10.7.2 Amendment to Deferred Compensation Plan Agreement for Albert J.
Finch dated July 15, 1996
10.13 Employment Continuation and Severance Agreement between Suncoast
and Albert J. Finch dated August 28, 1996
10.13.1 Employment Continuation Agreement between Suncoast and Richard J.
Browdy dated August 28, 1996
10.13.2 Employment Continuation Agreement between Suncoast and Wendy
Mitchler dated August 28, 1996
10.13.3 Amendment to Employment Continuation and Severance Agreement
between Suncoast and Albert J. Finch dated September 26, 1996
10.15 Federal Home Loan Bank of Atlanta (the "Bank") Agreement for
Advances and Security Agreement with Blanket Floating Lien
between Suncoast and the Bank dated January 18, 1996
11.1 Computation of Shares Used for Earnings Per Share Calculation
21.1 Statement of Subsidiaries of the Association
111
<PAGE> 113
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER, AS AMENDED, BETWEEN BANK UNITED
FINANCIAL CORPORATION AND SUNCOAST SAVINGS AND LOAN
ASSOCIATION, FSA, DATED JULY 15, 1996
<PAGE> 114
Exhibit 2.1
<PAGE> 115
AGREEMENT AND PLAN OF MERGER, AS AMENDED
BETWEEN
BANKUNITED FINANCIAL CORPORATION
AND
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
July 15, 1996
<PAGE> 116
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.02 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.03 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.04 Reservation of Right to Revise Transaction; Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.02 Voting and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUNCOAST
5.01 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.02 Suncoast Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.03 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.04 Authorization of Merger and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.06 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.07 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.08 Allowance for Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.09 Servicing Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Title to Certain Mortgage Loans; Mortgage Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Mortgage Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Custodial Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Physical Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.17 Suncoast Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.18 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.19 Investor Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.20 Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.21 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.22 Pool Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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5.23 Loan Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.24 Payment of Taxes, Insurance Premiums, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.25 Tax Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.26 Payoff Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.27 Other Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.28 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.29 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.30 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.31 Commitments and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.32 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.33 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.34 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.35 Securities Reporting Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.36 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.37 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.38 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.39 Material Interests of Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.40 Registration Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.41 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.42 Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.43 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.44 Support of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.45 Retail Securities Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.46 Derivatives Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.47 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
6.01 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.02 BankUnited Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.03 Authorization of Merger and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.04 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.05 Securities Reporting Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.06 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.07 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.08 Tax and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.09 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.14 Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.15 Support of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.16 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Suncoast Business Prior to the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.02 Forbearances of Suncoast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.02 Registration Statement; Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.03 Stockholders' Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.04 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.06 Miscellaneous Agreements and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.07 Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.08 Indemnification; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.09 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.10 Appointments to Board of Directors of BankUnited and BankUnited, FSB . . . . . . . . . . . . . . . . . . . . 42
8.11 Valuation of Servicing Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.12 Certain Change in Control Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.13 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.14 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.15 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.16 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.17 BankUnited Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.18 Suncoast Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.19 Suncoast Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.02 Conditions to Obligations of Suncoast to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.03 Conditions to Obligations of BankUnited to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE X
TERMINATION
10.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.02 BankUnited Special Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.03 Suncoast Special Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.04 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.05 Non-Survival of Representations, Warranties and Covenants Following the Effective Time . . . . . . . . . 51
10.06 Delivery of BankUnited and Suncoast Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . 51
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ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.02 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.03 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.04 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.05 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.07 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.10 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
LIST OF EXHIBITS
Exhibit A Board of Directors of Surviving Corporation
Exhibit B Offices of Surviving Corporation
Exhibit C Voting Agreement Pursuant to Section 5.44
Exhibit D Voting Agreement Pursuant to Section 6.15
Exhibit E Rule 145 Affiliate Agreement Pursuant to Section 8.07
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of July
15, 1996, between BANKUNITED FINANCIAL CORPORATION ("BankUnited"), a Florida
corporation and SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a federal stock
savings association ("Suncoast"),
WITNESSETH:
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, BankUnited will acquire Suncoast through the merger of Suncoast into
a federally chartered savings bank ("Merger Sub") and a wholly-owned subsidiary
of BankUnited or by such other means as provided for herein (the "Merger"); and
WHEREAS, the respective Boards of Directors of BankUnited and Suncoast
have resolved that the transactions described herein are in the best interests
of the parties and their respective stockholders and have approved the
transactions described herein; and
WHEREAS, BankUnited and Suncoast desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below. Capitalized terms not otherwise
defined herein shall have the meanings ascribed in this Article I.
(a) "Acquisition Event" shall have the meaning set forth
in Section 8.17.
(b) "Acquisition Event Termination Fee" shall have the
meaning set forth in Section 8.17.
(c) "Acquisition Proposal" shall have the meaning set
forth in Section 8.16.
(d) "Acquisition Transaction" shall have the meaning set
forth in Section 8.16.
(e) "Advances" shall have the meaning set forth in
Section 5.14.
(f) "Affiliate" shall mean, with respect to any Person,
any Person that, directly or indirectly, controls or is controlled by
or is under common control with such Person.
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(g) "Agreement" shall have the meaning set forth in the
introduction to this Agreement.
(h) "Allowance" shall have the meaning set forth in
Section 5.08.
(i) "Approvals" shall mean any and all permits, consents,
authorizations and approvals of any governmental or regulatory
authority or of any other third person necessary to give effect to the
arrangement contemplated by this Agreement or necessary to consummate
the Merger.
(j) "Authorizations" shall have the meaning set forth in
Section 5.01.
(k) "BankUnited" shall have the meaning set forth in the
introduction to this Agreement.
(l) "BankUnited Benefit Plans" shall have the meaning
set forth in Section 6.12(a).
(m) "BankUnited Common Stock" shall mean the Series I
Class A Common Stock of BankUnited.
(n) "BankUnited Disclosure Schedule" shall mean that
document containing the written detailed information prepared by
BankUnited and delivered by BankUnited to Suncoast which appropriately
cross-references each Section of the Agreement to which that Section
of the BankUnited Disclosure Schedule applies.
(o) "BankUnited Expenses" shall have the meaning set
forth in Section 8.17(a).
(p) "BankUnited Financial Statements" shall have the
meaning set forth in Section 6.04.
(q) "BankUnited Net Worth" shall mean the net worth of
BankUnited determined in accordance with GAAP, as of the month end
prior to the Effective Time and as adjusted for events occurring
between such month end and the Effective Time which either
individually or in the aggregate have had or immediately will have a
Material Adverse Effect on BankUnited; provided, however, that for
purposes of this definition, the calculation of BankUnited Net Worth
shall not include the effects of (i) any special assessment to
recapitalize the SAIF, or (ii) any changes due to any repurchase by
BankUnited of the BankUnited Preferred Stock or any exchange of
subordinated debt for BankUnited Preferred Stock.
(r) "BankUnited Option" shall mean an option to purchase
BankUnited Common Stock.
(s) "BankUnited Preferred Stock" shall mean BankUnited's
existing classes of Noncumulative Convertible Preferred Stock, Series
B, Noncumulative Convertible Preferred
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Stock, Series C, Noncumulative Convertible Preferred Stock, Series
C-II, 8% Noncumulative Convertible Preferred Stock, Series 1993 and 9%
Noncumulative Perpetual Preferred Stock.
(t) "BankUnited Reporting Document" shall have the
meaning set forth in Section 6.04.
(u) "BankUnited Special Termination Rights" shall have
the meaning set forth in Section 10.02.
(v) "BankUnited Termination Fee" shall have the meaning
set forth in Section 8.17(a).
(w) "Change in Control Agreements" shall have the meaning
set forth in Section 8.12.
(x) "Closing" shall have the meaning set forth in Section
2.02.
(y) "Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
(z) "Conforming Loan" shall have the meaning set forth in
Section 5.09.
(aa) "Costs" shall have the meaning set forth in Section
8.08(a).
(ab) "Current Employee" shall have the meaning set forth
in Section 8.14.
(ac) "Custodial Accounts" shall have the meaning set forth
in Section 5.13.
(ad) "Derivatives Contract" shall have the meaning set
forth in Section 5.46.
(ae) "Effective Time" shall have the meaning set forth in
Section 2.03.
(af) "Employee" shall mean any current or former employee,
officer or director, or retiree of Suncoast or the Suncoast
Subsidiaries.
(ag) "Encumbrance" shall have the meaning set forth in
Section 5.03.
(ah) "Environmental Law" shall have the meaning set forth
in Section 5.43.
(ai) "ERISA" shall have the meaning set forth in Section
5.30(a).
(aj) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(ak) "Exchange Agent" shall have the meaning set forth in
Section 3.01(b).
(al) "FDIA" shall mean the Federal Deposit Insurance Act.
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<PAGE> 123
(am) "FDIC" shall mean the Federal Deposit Insurance
Corporation.
(an) "FHA" shall mean the Federal Housing Administration.
(ao) "FNMA" shall mean Fannie Mae.
(ap) "FHLMC" shall mean the Federal Home Loan Mortgage
Corporation.
(aq) "GNMA" shall mean the Government National Mortgage
Association.
(ar) "GAAP" shall mean generally accepted accounting
principles in the United States.
(as) "HOLA" shall mean the Home Owners Loan Act of 1933,
as amended.
(at) "Hired Employees" shall have the meaning set forth in
Section 8.14.
(au) "HUD" shall mean the Department of Housing and Urban
Development.
(av) "Indemnified Parties" shall have the meaning set
forth in Section 8.08(a).
(aw) "Indemnifying Parties" shall have the meaning set
forth in Section 8.08(a).
(ax) "In the Ordinary Course" shall have the meaning set
forth in Section 7.02(a).
(ay) "Investor Commitment" shall have the meaning set
forth in Section 5.09.
(az) "Joint Proxy Statement" shall have the meaning set
forth in Section 5.36.
(ba) "Material Adverse Effect" shall mean any event,
occurrence or circumstance which (a) has or is reasonably likely to
have a material adverse effect on the financial condition, results of
operations, business or prospects of Suncoast and the Suncoast
Subsidiaries, taken as a whole, or BankUnited and its Subsidiaries,
taken as a whole, as applicable, or (b) would materially impair such
party's ability to perform its obligations under this Agreement or the
consummation of any of the transactions contemplated hereby, provided,
that Material Adverse Effect shall not be deemed to include any effect
resulting from (i) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental
authorities, (ii) changes in GAAP or regulatory accounting principles
or requirements, (iii) the contemplated special assessment on deposits
of SAIF insured institutions to recapitalize the SAIF, or (iv) fees
and expenses of counsel, accountants, and advisors, and costs related
to this Agreement.
(bb) "Maximum Amount" shall have the meaning set forth in
Section 8.08(c).
(bc) "Merger" shall have the meaning set forth in the
recitals to this Agreement.
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<PAGE> 124
(bd) "Merger Sub" shall have the meaning set forth in the
recitals to this Agreement.
(be) "Mortgage Loan" shall mean a closed mortgage loan,
whether or not such mortgage is included in a securitized portfolio.
(bf) "Mortgage Servicing Agreements" shall have the
meaning set forth in Section 5.10(b).
(bg) "NASD" shall mean the National Association of
Securities Dealers, Inc.
(bh) "Nasdaq" shall mean the Nasdaq Stock Market, Inc.
(bi) "New BankUnited Preferred Stock" shall mean the new
series of preferred stock of BankUnited to be authorized by the Board
of Directors of BankUnited and which shall have rights and preferences
substantially similar to those of the Suncoast Preferred Stock and
shall rank on a parity with shares of BankUnited's 8% Noncumulative
Convertible Preferred Stock, Series 1993 (the "Series 1993 Preferred
Stock") and 9% Noncumulative Perpetual Preferred Stock (the "Perpetual
Preferred Stock") as to dividends and upon liquidation, as parity is
determined pursuant to the terms of each of the Series 1993 Preferred
Stock and the Perpetual Preferred Stock; provided, however, and in
accordance with the foregoing to attain parity in no event shall the
terms of such new series of preferred stock of BankUnited include
without limitation, terms that would (i) reduce the dividend rate to a
rate less than that currently payable on the Suncoast Preferred Stock,
(ii) cancel declared and unpaid dividends, (iii) change the seniority
rights of the holders of Suncoast Preferred Stock as to the payment of
dividends, (iv) reduce the amount payable upon liquidation to an
amount less than that currently payable to the holders of the Suncoast
Preferred Stock, (v) change the seniority of the liquidation
preferences of the holders of the Suncoast Preferred Stock, (vi)
cancel or modify the conversion rights currently available to the
holders of the Suncoast Preferred Stock, or (vii) reduce the amount
payable on redemption.
(bj) "OTS" shall mean the Office of Thrift Supervision.
(bk) "Person" or "person" shall mean any individual,
corporation, association, partnership, group (as defined in Section
13(d)(3) of the Exchange Act), joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision
thereof.
(bl) "Registration Statement" shall have the meaning set
forth in Section 5.36.
(bm) "Regulatory Agreements" shall have the meaning set
forth in Section 5.29(b).
(bn) "Regulatory Authorities" shall have the meaning set
forth in Section 5.29(b).
(bo) "REO" shall have the meaning set forth in Section
5.15.
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(bp) "SAIF" shall mean the Savings Association Insurance
Fund of the FDIC.
(bq) "SEC" shall mean the United States Securities and
Exchange Commission.
(br) "Securities Act" shall mean the Securities Act of
1933, as amended.
(bs) "Securities Laws" shall have the meaning set forth in
Section 5.04(c).
(bt) "Securities Reporting Documents" shall have the
meaning set forth in Section 5.35.
(bu) "Servicing Portfolio" shall mean the portfolio of all
mortgage loans subserviced, serviced or master serviced by Suncoast or
the Suncoast Subsidiaries.
(bv) "Servicing Released Loans" shall have the meaning set
forth in Section 5.11.
(bw) "Stockholders' Meetings" shall have the meaning set
forth in Section 5.36.
(bx) "Subsidiary" shall mean, in the case of either
BankUnited or Suncoast, any corporation, association or other entity
in which it owns or controls, directly or indirectly, 25% or more of
the outstanding voting securities or 25% or more of the total equity
interest; provided, however, that the term shall not include any such
entity in which such voting securities or equity interest is owned or
controlled in a fiduciary capacity, without sole voting power, or was
acquired in securing or collecting a debt previously contracted in
good faith.
(by) "Suncoast" shall have the meaning set forth in the
introduction to this Agreement.
(bz) "Suncoast Benefit Plan" shall have the meaning set
forth in Section 5.30(a).
(ca) "Suncoast Board" shall mean the Board of Directors of
Suncoast.
(cb) "Suncoast Capital Stock" shall have the meaning set
forth in Section 4.01.
(cc) "Suncoast Common Stock" shall mean the common stock,
par value $1.10 per share, of Suncoast.
(cd) "Suncoast Disclosure Schedule" shall mean that
document containing the written detailed information prepared by
Suncoast and delivered by Suncoast to BankUnited which appropriately
cross-references each Section of the Agreement to which that Section
of the Suncoast Disclosure Schedule applies.
(ce) "Suncoast ERISA Plan" shall have the meaning set
forth in Section 5.30(a).
(cf) "Suncoast Expenses" shall have the meaning set forth
in Section 8.18(a).
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(cg) "Suncoast Financial Statements" shall have the
meaning set forth in Section 5.05.
(ch) "Suncoast Net Worth" shall mean the net worth of
Suncoast determined in accordance with GAAP, as of the month end prior
to the Effective Time and as adjusted for events occurring between
such month end and the Effective Time which either individually or in
the aggregate have had or immediately will have a Material Adverse
Effect on Suncoast; provided, however, that for purposes of this
definition, the calculation of Suncoast Net Worth (i) shall not
include the effects of (A) any special assessment to recapitalize the
SAIF, (B) any employee severance or change in control payments
described in Section 8.12, or (C) any fees and expenses of counsel,
accountants, and advisors, and costs related to the Agreement; and
(ii) shall be adjusted as of the month end before the Effective Time
to reflect the tax adjusted current market value of the capitalized
portion of the Servicing Portfolio, the market value of which at such
date for purposes of this section shall be the amount specified by,
or, if a range is specified, the mean of the range contained in a
valuation conducted by Bayview Financial Trading Group.
(ci) "Suncoast Options" shall mean options granted under
the Suncoast Option Plan, which are outstanding at the Effective Time.
(cj) "Suncoast Option Plan" shall mean the existing
Suncoast Savings and Loan Association Complete Restatement of Stock
Option Plan.
(ck) "Suncoast Preferred Stock" shall mean the Series A
Noncumulative Convertible Preferred Stock, of Suncoast.
(cl) "Suncoast Reporting Document" shall have the meaning
set forth in Section 5.05.
(cm) "Suncoast Special Termination Rights" shall have the
meaning set forth in Section 10.03.
(cn) "Suncoast Stockholders" shall have the meaning set
forth in Section 2.04(a).
(co) "Suncoast Stock Plan" shall have the meaning set
forth in Section 5.30(a).
(cp) "Suncoast Subsidiary" shall have the meaning set
forth in Section 5.03.
(cq) "Suncoast Termination Fee" shall have the meaning set
forth in Section 8.18(a).
(cr) "Suncoast Warrants" shall have the meaning set forth
in Section 5.02.
(cs) "Surviving Corporation" shall have the meaning set
forth in Section 2.01(a).
(ct) "Tax" or "Taxes" shall mean all federal, state, local
and foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including, without limitation, income, gross
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receipts, excise, intangible, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs
duties, capital stock, paid up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative
or add-on minimum, estimated, or other tax or governmental fee of any
kind whatsoever, imposed or required to be withheld by or for the
United States or any state, local, or foreign government or
subdivision or agency thereof, including, without limitation, any
interest, penalties or additions thereto.
(cu) "Taxable Period" shall mean any period prescribed by
any governmental authority, including, but not limited to, the United
States or any state, local, or foreign government or subdivision or
agency thereof for which a Tax Return is required to be filed or a Tax
is required to be paid.
(cv) "Tax Return" shall mean any report, return,
information return or other information required to be supplied to a
taxing authority in connection with Taxes, including, without
limitation, any return of an affiliated or combined or unitary group
that includes Suncoast or the Suncoast Subsidiaries.
(cw) "Wilful Breach" shall have the meaning set forth in
Section 8.17(b).
(cw) "Warehouse Loan" shall have the meaning set forth in
Section 5.09.
(cx) "VA" shall mean the Veterans Administration.
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 MERGER.
(a) Subject to the terms and conditions of this
Agreement, at the Effective Time of the Merger, Suncoast shall be
merged with and into Merger Sub in accordance with applicable law and
with the effect provided therein. The separate corporate existence of
Suncoast shall thereupon cease, and Merger Sub shall be the surviving
corporation in the Merger (the "Surviving Corporation").
(b) The charter of Merger Sub as in effect at the
Effective Time shall be the charter of the Surviving Corporation after
the Effective Time.
(c) The bylaws of Merger Sub as in effect at the
Effective Time shall be the bylaws of the Surviving Corporation.
(d) The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation and
the officers of Merger Sub immediately prior
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to the Effective Time shall be the officers of the Surviving
Corporation, in each case, until their respective successors are duly
elected and qualified. The Surviving Corporation shall have directors
whose terms shall be for 3 years. The directors of the Surviving
Corporation and their home addresses are set forth in Exhibit A
hereto.
(e) All assets of Suncoast as they exist at the Effective
Time shall pass to and vest in the Surviving Corporation without any
conveyance or other transfer. The Surviving Corporation shall be
responsible and liable for all of the liabilities of every kind and
description of Suncoast as of the Effective Time of the Merger.
(f) The name of the Surviving Corporation shall be
Suncoast Savings and Loan Association or BankUnited, FSB, if the
Merger Sub is BankUnited, FSB. The location of the office of the
Surviving Corporation shall be 255 Alhambra Circle, Coral Gables,
Florida 33134. The Surviving Corporation shall have offices at the
locations set forth in Exhibit B hereto.
(g) Upon the consummation of the Merger, the savings
account holders of Suncoast shall be issued savings accounts of the
Surviving Corporation containing substantially the same terms and
conditions as those issued by Suncoast.
2.02 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at the offices of Stuzin
and Camner, P. A. in Miami, Florida at 10:00 A.M. on the date that the
Effective Time occurs, or at such other time, and at such other place, as may
be mutually agreed upon by BankUnited and Suncoast.
2.03 EFFECTIVE TIME. The Effective Time shall be set by mutual
agreement of the parties, but shall occur no later than ten (10) business days
following the last to occur of (i) the date that is 30 days after the date of
the order of the OTS approving the Merger, (ii) the effective date of the last
order, approval, or exemption of any other federal or state regulatory agency
approving or exempting the Merger if such action is required, (iii) the
expiration of all required waiting periods after the filing of all notices to
all federal or state regulatory agencies required for consummation of the
Merger, and (iv) the date on which the respective stockholders of Suncoast and
BankUnited approve this Agreement, in each case as contemplated hereby. The
Effective Time may occur at such other date and time as the parties hereto
shall agree to in writing.
2.04 RESERVATION OF RIGHT TO REVISE TRANSACTION; FURTHER ACTIONS.
(a) BankUnited in its sole discretion may at any time
change the method of effecting the acquisition of Suncoast by
BankUnited (including, without limitation, the selection of
BankUnited, FSB as the Merger Sub and the provisions as set forth in
Article III) if and to the extent that it deems such a change to be
desirable; provided, however, that no such change shall (A) alter or
change the amount or the kind of the consideration to be received by
the holders of Suncoast Capital Stock ("Suncoast Stockholders") as
provided for in this Agreement; (B) adversely affect the tax treatment
to Suncoast Stockholders as a result of receiving the consideration
(in the opinion of tax counsel mutually agreed upon by BankUnited and
Suncoast) to be delivered in the Merger; or (C) materially and
adversely
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affect any agreement between Suncoast and its employees, including
agreements contemplating a change in control of Suncoast.
(b) To facilitate the Merger and the acquisition of
Suncoast by BankUnited, each of the parties will execute or will cause
to be executed such additional agreements and documents and take such
other actions as BankUnited determines necessary or appropriate.
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 CONVERSION.
(a) Subject to the provisions of this Article III and of
Article I, at the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, the shares of the
constituent corporations shall be converted as follows:
(i) Each share of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall
remain outstanding as one share of capital stock of the Surviving
Corporation.
(ii) Each share of Suncoast Common Stock issued
and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive one share of BankUnited
Common Stock. If BankUnited splits, combines, reclassifies, or pays a
stock dividend on the BankUnited Common Stock during the period from
the date of this Agreement to the Effective Time, then the number of
shares of BankUnited Common Stock into which each share of Suncoast
Common Stock is convertible at the Effective Time shall be adjusted so
that in the Merger each share of Suncoast Common Stock shall be
converted into that number of shares of BankUnited Common Stock equal
to one share of BankUnited Common Stock times a fraction the numerator
of which is the number of shares of BankUnited Common Stock issued and
outstanding immediately after such split, combination,
reclassification or dividend and the denominator of which is the
number of shares of BankUnited Common Stock issued and outstanding on
the date of this Agreement.
(iii) Each Suncoast Option outstanding as of the
Effective Time shall be treated in accordance with the provisions of
Section 8.09.
(iv) Each share of Suncoast Preferred Stock issued
and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive one share of New
BankUnited Preferred Stock.
(v) The Suncoast Warrants outstanding as of the
Effective Time shall be treated in accordance with the provisions of
Section 8.19.
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(b) At the Effective Time, the stock transfer books
of Suncoast shall be closed as to holders of Suncoast Capital
Stock immediately prior to the Effective Time and no transfer
of Suncoast Capital Stock by any such holder shall thereafter
be made or recognized. If, after the Effective Time,
certificates are properly presented in accordance with Article
IV of this Agreement to the exchange agent, which shall be
selected by BankUnited (the "Exchange Agent"), such
certificates shall be canceled and exchanged for certificates
representing the appropriate number of shares of BankUnited
Common Stock and New BankUnited Preferred Stock determined
under this Section 3.01. Any other provision of this Agreement
notwithstanding, neither BankUnited, the Surviving Corporation
nor the Exchange Agent shall be liable to a holder of Suncoast
Capital Stock for any amount paid or property delivered in
good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV
EXCHANGE OF SHARES
4.01 EXCHANGE PROCEDURES. Promptly after the Effective Time,
BankUnited and Suncoast shall cause the Exchange Agent to mail appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
capital stock of Suncoast ("Suncoast Capital Stock") shall pass, only upon
proper delivery of such certificates to the Exchange Agent) to the former
Suncoast Stockholders. After the Effective Time, each holder of shares of
Suncoast Capital Stock issued and outstanding immediately prior to the
Effective Time shall surrender the certificate or certificates theretofore
representing such shares, together with such transmittal materials properly
executed, to the Exchange Agent and promptly upon surrender shall receive in
exchange therefor the consideration provided in Section 3.01 of this Agreement.
The certificate or certificates for Suncoast Capital Stock so surrendered shall
be duly endorsed as the Exchange Agent may require. BankUnited shall not be
obligated to deliver the consideration to which any former Suncoast Stockholder
is entitled as a result of the Merger until such holder surrenders his
certificate or certificates representing shares of Suncoast Capital Stock for
exchange as provided in this Article IV. Certificates representing BankUnited
Common Stock or New BankUnited Preferred Stock issued in the Merger to any
person constituting an "affiliate" of Suncoast or BankUnited for purposes of
Rule 145(c) under the Securities Act shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF SUCH RULE
HAVE BEEN FULFILLED."
If any certificate for shares of BankUnited Common Stock or New BankUnited
Preferred Stock is to be issued in a name other than that in which a
certificate surrendered for exchange is issued, the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and the
person requesting such exchange shall affix any requisite stock transfer tax
stamps to the
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certificate surrendered or provide funds for their purchase or establish to the
satisfaction of the Exchange Agent that such taxes are not payable.
4.02 VOTING AND DIVIDENDS. Former Suncoast Stockholders of record
shall be entitled to vote after the Effective Time at any meeting of BankUnited
stockholders the number of whole shares of BankUnited Common Stock and New
BankUnited Preferred Stock into which their respective shares of Suncoast
Capital Stock are converted, regardless of whether such holders have exchanged
their certificates representing Suncoast Capital Stock for certificates
representing BankUnited Common Stock and New BankUnited Preferred Stock, as
applicable, in accordance with the provisions of this Agreement. Until
surrendered for exchange in accordance with the provisions of Section 4.01,
each certificate theretofore representing shares of Suncoast Capital Stock
shall from and after the Effective Time represent for all purposes only the
right to receive shares of BankUnited Common Stock and New BankUnited Preferred
Stock, as set forth in this Agreement. Whenever a dividend is declared by
BankUnited, the record date for which is at or after the Effective Time, the
declaration shall include dividends on all shares issuable pursuant to this
Agreement; provided, however, no dividend or other distribution payable to the
holders of record of BankUnited Common Stock, at or as of any time after the
Effective Time, shall be paid to the holder of any certificate representing
shares of Suncoast Capital Stock issued and outstanding at the Effective Time
until such holder physically surrenders such certificate for exchange as
provided in Section 4.01, promptly after which time all such dividends or
distributions shall be paid (without interest).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SUNCOAST
Suncoast represents and warrants to BankUnited, subject to such
exceptions and limitations as are set forth below or in the Suncoast Disclosure
Schedule, as follows:
5.01 ORGANIZATION, STANDING, AND AUTHORITY. Suncoast is a duly
organized, validly existing federally- chartered stock savings association.
Suncoast is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified would have a Material
Adverse Effect. Suncoast has all requisite corporate power and authority to
carry on its business as now conducted and to own, lease and operate its
assets, properties and business, except where the failure to have such power
and authority would not have a Material Adverse Effect, and to execute and
deliver this Agreement and perform the terms of this Agreement. Suncoast has in
effect all federal, state, local and foreign governmental, regulatory and other
authorizations, permits and licenses (collectively, "Authorizations") necessary
for it to own or lease its properties and assets and to carry on its business
as now conducted, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect.
5.02 SUNCOAST CAPITAL STOCK.
(a) The authorized Suncoast Capital Stock consists of
5,000,000 shares of Suncoast Common Stock and 1,000,000 shares of
Suncoast Preferred Stock. At April 30,
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1996, there were issued and outstanding 1,996,930 shares of Suncoast
Common Stock and 920,000 shares of Suncoast Preferred Stock. All of
the issued and outstanding shares of Suncoast Capital Stock are duly
and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of the Suncoast Capital
Stock has been issued in the violation of any preemptive rights or any
provision of Suncoast's charter. As of April 30, 1996, Suncoast had
reserved 2,020,784 shares of Suncoast Common Stock and 80,000 shares
of Suncoast Preferred Stock for issuance under the Suncoast Options
and the Suncoast Warrants and no other shares of capital stock have
been reserved for any purpose. Suncoast has outstanding warrants
pursuant to that certain Underwriters' Warrant Agreement dated as of
July 9, 1993 between Suncoast and Josephthan Lyon & Ross Incorporated,
Southeast Research Partners, Inc., and Rodman & Renshaw, Inc. (the
"Suncoast Warrants"), under which holders thereof have the right to
purchase up to 134,624 shares of Suncoast Common Stock or up to 80,000
shares of Suncoast Preferred Stock at an exercise price of $10.70 per
share and $18.00 per share, respectively. The representations and
warranties set forth in the preceding sentence shall be materially
true and correct at the Effective Time and shall not be altered
materially by the completion of the Merger.
(b) Except as set forth in Section 5.02(b) of the
Suncoast Disclosure Schedule, there are no shares of capital stock, or
other equity securities of Suncoast issued or outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of Suncoast
Capital Stock or contracts, commitments, understandings or
arrangements by which Suncoast is or may be bound to issue any equity
security of Suncoast including any additional shares of Suncoast
Capital Stock or options, warrants or rights to purchase or acquire
any additional shares of Suncoast Capital Stock. There are no
contracts, commitments, understandings or arrangements by which
Suncoast or the Suncoast Subsidiaries are or may be bound to transfer
any shares of the capital stock of any Suncoast Subsidiary, except for
a transfer to Suncoast or any of its wholly-owned Subsidiaries and
except as set forth in Section 5.02(b) of the Suncoast Disclosure
Schedule, and there are no agreements, understandings or commitments
relating to the right of Suncoast to vote or to dispose of such
shares, other than such as are held in a fiduciary capacity.
(c) Except as set forth in Section 5.02(c) of the
Suncoast Disclosure Schedule, there are no securities required to be
issued by Suncoast under the Suncoast Stock Plan, any dividend
reinvestment plan or similar plan.
5.03 SUBSIDIARIES. Section 5.03 of the Suncoast Disclosure Schedule
contains a complete list of each subsidiary of Suncoast (a "Suncoast
Subsidiary"). All of the issued and outstanding shares of each Suncoast
Subsidiary are owned by Suncoast and no equity securities are or may become
required to be issued by reason of any options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
Suncoast Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Suncoast Subsidiary is bound to issue additional
shares of its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. All of the shares of
capital stock of each Suncoast Subsidiary are fully paid and nonassessable and
are owned by Suncoast free and clear of any Encumbrance. For purposes of this
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Agreement, the term "Encumbrance" means any lien, pledge, security interest,
claim, charge, easement, limitation, commitment, restriction or encumbrance of
any kind or nature whatsoever. Each Suncoast Subsidiary (i) is duly organized,
validly existing, and in good standing under the laws of the jurisdiction in
which it is incorporated or organized, (ii) is duly qualified to do business
and in good standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect, (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted and (iv) has in effect all
Authorizations necessary for it to own or lease its properties and assets and
to carry on its business as now conducted, the absence of which Authorizations,
individually or in the aggregate, would have a Material Adverse Effect.
5.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action in respect
thereof on the part of Suncoast, including approval of the Merger by
its Board of Directors, subject to the approval of the stockholders of
Suncoast with respect to the Merger to the extent required by the
applicable law. This Agreement, subject to any requisite regulatory
and stockholder approval hereof with respect to the Merger, represents
a valid and legally binding obligation of Suncoast, enforceable
against Suncoast in accordance with its terms except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting
creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
(b) Except as set forth in Section 5.04(b) of the
Suncoast Disclosure Schedule, neither the execution and delivery of
this Agreement by Suncoast, nor the consummation by Suncoast of the
transactions contemplated hereby nor compliance by Suncoast with any
of the provisions hereof will (i) conflict with or result in a breach
of any provision of Suncoast's charter or bylaws or (ii) constitute or
result in a breach of any term, condition or provision of, or
constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result
in the creation of any Encumbrance upon, any property or assets of any
of Suncoast or the Suncoast Subsidiaries pursuant to any note, bond,
mortgage, indenture, license, agreement, lease or other instrument or
obligation to which any of them is a party or by which any of them or
any of their properties or assets may be subject and that would
individually or in the aggregate have a Material Adverse Effect, or
(iii) subject to receipt of the requisite approvals referred to in
Sections 9.01(a) and 9.01(b) of this Agreement, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to
Suncoast or the Suncoast Subsidiaries or any of their properties or
assets.
(c) Other than (i) in connection with complying with the
provisions of applicable state corporate and securities laws, the
Securities Act, the Exchange Act, and the rules and regulations of the
SEC or the OTS promulgated thereunder (the "Securities Laws"), (ii)
consents, authorizations, approvals or exemptions required from the
OTS, and (iii) as set
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forth on Section 5.04(c) of the Suncoast Disclosure Schedule, no
notice to, filing with, authorization of, exemption by, or consent or
approval of any public body or authority is necessary for the
consummation by Suncoast of the Merger and the other transactions
contemplated in this Agreement.
5.05 FINANCIAL STATEMENTS. Suncoast (i) has delivered to BankUnited
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders'
equity and consolidated statements of cash flows (including related notes and
schedules) of Suncoast and its consolidated Subsidiaries as of and for the
periods ended March 31, 1996, December 31, 1995, September 30, 1995 and June
30, 1995 included in a quarterly report on Form 10-Q or an annual report on
Form 10-K, as the case may be, filed by Suncoast pursuant to the Securities
Laws (a "Suncoast Reporting Document") and (ii) until the Closing will deliver
to BankUnited promptly upon the filing thereof with the OTS copies of the
consolidated balance sheets and related consolidated statements of income,
consolidated statements of changes in shareholders' equity and consolidated
statements of cash flows (including related notes and schedules) included in
any Suncoast Reporting Document filed subsequent to the execution of this
Agreement (the financial statements and related notes and schedules referred to
in clauses (i) and (ii) above are collectively referred to herein as the
"Suncoast Financial Statements"). The Suncoast Financial Statements (as of the
dates thereof and for the periods covered thereby) (A) are or will be in
accordance with the books and records of Suncoast and the Suncoast
Subsidiaries, which are or will be complete and accurate in all material
respects and which have been or will have been maintained in accordance with
good business practices and (B) present or will present fairly the consolidated
financial position and the consolidated results of operations, changes in
stockholders' equity and cash flows of Suncoast and the Suncoast Subsidiaries
as of the dates and for the periods indicated, in accordance with GAAP
consistently applied, except as disclosed, subject in the case of interim
financial statements to normal recurring year-end adjustments and except for
the absence of certain footnote information in the unaudited statements.
Suncoast has delivered to BankUnited (i) copies of all management letters
prepared by Price Waterhouse LLP (and any predecessor thereto) delivered to
Suncoast since July 1, 1992 and (ii) copies of audited balance sheets and
related statements of income, changes in stockholders' equity and cash flows
for any Suncoast Subsidiary since July 1, 1992 for which a separate audit has
been performed.
5.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 5.06 of the Suncoast Disclosure Schedule, neither Suncoast nor any
Suncoast Subsidiary has any obligations or liabilities (contingent or
otherwise) in the amount of $50,000 or more, except obligations and liabilities
(i) which are fully accrued or reserved against in the consolidated balance
sheet of Suncoast and the Suncoast Subsidiaries as of June 30, 1995 included in
the Suncoast Financial Statements or reflected in the notes thereto, or (ii)
which were incurred after June 30, 1995 in the ordinary course of business
consistent with past practice. Except as set forth in Section 5.06 of the
Suncoast Disclosure Schedule, since June 30, 1995 neither Suncoast nor any
Suncoast Subsidiary has incurred or paid any obligations or liabilities which
individually or in the aggregate would have a Material Adverse Effect.
5.07 TAX MATTERS. Except as set forth in Section 5.07 of the
Suncoast Disclosure Schedule:
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(a) All Tax Returns required to be filed by or on behalf
of Suncoast or the Suncoast Subsidiaries have been timely filed, or
requests for extensions have been timely filed, granted and have not
expired, for periods ending on or before March 31, 1996, and all such
returns filed are complete and accurate in all material respects.
(b) There are no audits, examinations, deficiencies or
refund litigation or matters in controversy with respect to any Taxes
that might reasonably be expected individually or in the aggregate to
result in a determination the effect of which would have a Material
Adverse Effect. All Taxes due with respect to completed and settled
examinations or concluded litigation have been paid or adequately
reserved for.
(c) Suncoast has not executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax
due that is currently in effect.
(d) Adequate provision for any Taxes due or to become due
for Suncoast and the Suncoast Subsidiaries for any period or periods
through and including March 31, 1996, has been made and is reflected
on the March 31, 1996 financial statements included in the Suncoast
Financial Statements. Deferred Taxes of Suncoast and the Suncoast
Subsidiaries have been provided for in the Suncoast Financial
Statements in accordance with GAAP, applied on a consistent basis.
(e) Suncoast and the Suncoast Subsidiaries have collected
and withheld all Taxes which they have been required to collect or
withhold and have timely submitted all such collected and withheld
amounts to the appropriate authorities. Suncoast and the Suncoast
Subsidiaries are in compliance with the back-up withholding and
information reporting requirements under (1) the Code, and (2) any
state, local or foreign laws, and the rules and regulations,
thereunder.
(f) Neither Suncoast nor any Suncoast Subsidiary has made
any payments, is obligated to make any payments, or is a party to any
contract, agreement or other arrangement that could obligate it to
make any payments that would not be deductible under Section 28OG of
the Code.
5.08 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statement of condition of Suncoast and
the Suncoast Subsidiaries as of March 31, 1996 included in the Suncoast
Financial Statements and the Allowance shown on the consolidated statement of
condition of Suncoast and the Suncoast Subsidiaries, as of dates subsequent to
the execution of this Agreement included in the Suncoast Financial Statements
will be, in each case as of the dates thereof, adequate as determined in
accordance with GAAP.
5.09 SERVICING PORTFOLIO. Suncoast has previously delivered to
BankUnited a tape (magnetic media) on which certain information regarding the
Servicing Portfolio as of March 31, 1996 is recorded. The information so
provided is true, correct and complete, except as disclosed to BankUnited in
Section 5.09 of the Suncoast Disclosure Schedule. Except as disclosed in
Section 5.09 of the Suncoast Disclosure Schedule, each Mortgage Loan (i) is
evidenced by a note with such terms as are customary in the business, (ii) is
duly secured by a mortgage or deed of trust with such terms
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as are customary in the business and which grants the holder thereof a first or
second lien on the subject property (including any improvements thereon), each
such mortgage or deed of trust constituting a security interest that has been
duly perfected and maintained (or is in the process of perfection in due
course) and is in full force and effect, (iii) is accompanied by an insurance
policy covering improvements on the premises subject to such mortgage or deed
of trust, with a loss payee clause in favor of Suncoast, one of its
Subsidiaries or its assignee, such insurance policy covering such risks as are
customarily insured against in accordance with industry practice and in
accordance with investor requirements, and (iv) has been serviced in accordance
with the note and mortgage or deed of trust applicable to such Mortgage Loan.
Suncoast and each Suncoast Subsidiary has complied with all of its obligations
under the insurance policies described in the previous sentence. Except as
disclosed in Section 5.09 of the Suncoast Disclosure Schedule, each Warehouse
Loan is a Conforming Loan or is subject to an Investor Commitment. As used in
this Agreement, the term "Warehouse Loan" means a Mortgage Loan owned by
Suncoast or a Suncoast Subsidiary and held for sale. As used in this Agreement,
the term "Conforming Loan" means a Mortgage Loan which is or is eligible to be
an FHA loan or a VA loan or which is a loan eligible to be sold to FNMA or
FHLMC without recourse. As used in this Agreement, the term "Investor
Commitment" means the optional or mandatory commitment of a person to purchase
a Mortgage Loan owned by Suncoast or a Suncoast Subsidiary or securities based
on and backed by such Mortgage Loans.
5.10 TITLE TO CERTAIN MORTGAGE LOANS; MORTGAGE SERVICING
AGREEMENTS.
(a) All Mortgage Loans held for Suncoast's
account (whether or not for future sale or delivery to an investor)
are owned by Suncoast free and clear of Encumbrances other than
Encumbrances in favor of Suncoast's lender banks. Such Mortgage Loans
have been duly recorded or submitted for recordation in due course in
the appropriate filing office in the name of Suncoast or a Suncoast
Subsidiary as mortgagee. Neither Suncoast nor any Suncoast Subsidiary
has, with respect to any such Mortgage Loan, released any security
therefor, except upon receipt of reasonable consideration for such
release, or accepted prepayment of any such Mortgage Loan which has
not been promptly applied to such Mortgage Loan.
(b) All of the mortgage servicing agreements
between Suncoast and an investor pursuant to which Suncoast (or a
Suncoast Subsidiary) subservices, services or master services Mortgage
Loans for such investor (the "Mortgage Servicing Agreements") and the
rights created thereunder are owned by Suncoast free and clear of any
Encumbrances.
5.11 NO RECOURSE. Except as set forth in Section 5.11 of the
Suncoast Disclosure Schedule, Suncoast is not a party to (i) any agreement or
arrangement with (or otherwise obligated to) any individual, corporation or
other entity to repurchase from any such individual, corporation or other
entity any Mortgage Loan, mortgaged property serviced for others or Mortgage
Loans sold by Suncoast with servicing released ("Servicing Released Loans") or
(ii) any agreement, arrangement or understanding to reimburse, indemnify or
hold harmless any individual, corporation or other entity or otherwise assume
any liability with respect to any loss suffered or incurred as a result of any
default under or the foreclosure or sale of any such Mortgage Loans, mortgaged
property serviced for others or Servicing Released Loans described in clauses
(i) and (ii) above, except insofar as (A) such recourse is based upon breach by
Suncoast of a customary representation, warranty or undertaking,
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including, without limitation, as specified in standard FNMA and FHLMC
agreements, or the misfeasance or malfeasance of Suncoast, and not based solely
upon the default under or foreclosure or sale of any such Mortgage Loan,
mortgaged property or Servicing Released Loan without regard to the occurrence
of any such breach, misfeasance or malfeasance, or (B) Suncoast incurs expenses
such as legal fees in excess of the customary reimbursement limits, if any, set
forth in the applicable Mortgage Servicing Agreement.
5.12 MORTGAGE SERVICING AGREEMENTS. A list and description of
Mortgage Servicing Agreements is included in Section 5.12 of the Suncoast
Disclosure Schedule. All of the Mortgage Servicing Agreements to which Suncoast
is a party, are valid and binding obligations of Suncoast, and to the best
knowledge of Suncoast, of all the other parties thereto, and are in full force
and effect and are enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding in equity or at law).
Except as set forth in Section 5.12 of the Suncoast Disclosure Schedule, there
are no defaults or claims of default by any party under any such Mortgage
Servicing Agreement, and, except for the consummation of the transactions
contemplated by this Agreement, no events have occurred which with the passage
of time or the giving of notice or both would constitute a default by any party
under any such Mortgage Servicing Agreement or would result in any such
Mortgage Servicing Agreement being terminable by any party thereto. As of the
date of this Agreement, there is no pending or, to the best knowledge of
Suncoast, threatened cancellation of any Mortgage Servicing Agreement. Except
as set forth in Section 5.12 of the Suncoast Disclosure Schedule, no sanctions
or penalties which have had a Material Adverse Effect on Suncoast have been
imposed upon Suncoast or Suncoast Subsidiaries under any Mortgage Servicing
Agreement or under any applicable rule or regulation.
5.13 CUSTODIAL ACCOUNTS. Suncoast has full power and authority to
maintain escrow accounts ("Custodial Accounts") for certain serviced loans.
Such Custodial Accounts comply in all respects with (i) all federal, state and
other applicable laws and regulations and (ii) any terms of the Mortgage Loans
(and Mortgage Servicing Agreements) relating thereto. The Custodial Accounts
contain the amounts shown in the records of Suncoast, which amounts represent
all monies received or advanced by Suncoast as required by the applicable
Mortgage Servicing Agreements, less amounts remitted by or on behalf of
Suncoast pursuant to applicable Mortgage Servicing Agreements, except for
checks in process.
5.14 ADVANCES. Except as set forth in Section 5.14 of the Suncoast
Disclosure Schedule, there are no pooling, participation, servicing or other
agreements to which Suncoast is a party which obligate it to make servicing
advances for principal and interest payments with respect to defaulted or
delinquent Mortgage Loans other than as provided in FNMA, FHLMC or GNMA or
other pooling and servicing agreements. The Advances are valid and subsisting
amounts owing to Suncoast, subject to the terms of the applicable Mortgage
Servicing Agreement. As used in this Agreement, the term "Advances" means
amounts that, as of the Closing Date, have been advanced by Suncoast or
Suncoast Subsidiaries in connection with servicing the Mortgage Loans
(including, without limitation, principal, interest, taxes, insurance premiums,
and foreclosure and liquidation expenses) and which are required or permitted
to be paid by Suncoast or Suncoast Subsidiaries as the servicer of the Mortgage
Loans pursuant to applicable investor requirements and the terms of the
applicable Mortgage Servicing Agreements.
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5.15 PHYSICAL DAMAGE. To the best knowledge of Suncoast, there
exists no physical damage to any property securing a Mortgage Loan or any real
estate owned ("REO") by Suncoast, which physical damage is not adequately
insured against and that would cause any Mortgage Loans to become delinquent or
adversely affect in a material manner the value or marketability of any
Mortgage Loans, servicing rights, REO or collateral and that would, in the
aggregate, have a Material Adverse Effect. Suncoast shall promptly notify
BankUnited if it receives any information or learns of any facts that would
cause the representation set forth in this Section 5.15 to be false in any
material respect.
5.16 APPLICATION OF FUNDS. All monies received with respect to each
Mortgage Loan have been properly accounted for and applied by Suncoast.
5.17 SUNCOAST SUBSIDIARIES. Each of the representations and
warranties made by Suncoast in this Agreement shall be deemed to have been made
on behalf of each of the Suncoast Subsidiaries to the extent applicable or
related to such Suncoast Subsidiary.
5.18 ENFORCEABILITY. All Mortgage Loans are genuine, valid and
legally binding obligations of the borrowers thereunder, have been duly
executed by a borrower of legal capacity and are enforceable in accordance with
their terms, except as enforcement thereof may be limited by (i) bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
in equity or at law), (ii) state laws requiring creditors to proceed against
the collateral before pursuing the borrower, (iii) state laws on deficiencies
and (iv) the matters set forth in Section 5.18 of the Suncoast Disclosure
Schedule, except where the invalidity or unenforceability of Mortgage Loans
would not, in the aggregate, have a Material Adverse Effect. Except as set
forth in Section 5.18 of the Suncoast Disclosure Schedule, neither the
operation of any of the terms of any Mortgage Loan, nor the exercise of any
right thereunder, has rendered or will render the related mortgage or note
unenforceable, in whole or in part, or subject it to any right of rescission,
setoff, counterclaim or defense, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
5.19 INVESTOR COMMITMENTS. Set forth in Section 5.19 of the
Suncoast Disclosure Schedule is a complete and correct list of each Investor
Commitment to which Suncoast or any Suncoast Subsidiary is a party as of a date
specified in Section 5.19 of the Suncoast Disclosure Schedule not more than 45
days prior to the date of the Agreement. Suncoast has made available to
BankUnited complete and correct copies of all Investor Commitments in effect on
such date. Each Investor Commitment constitutes a valid and binding obligation,
except as set forth in Section 5.19 of the Suncoast Disclosure Schedule, of
Suncoast or a Suncoast Subsidiary, and, to the best knowledge of Suncoast, all
of the other parties thereto, enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting creditors
rights generally and by general principles of equity (whether applied in a
proceeding at law or in equity).
5.20 INQUIRIES. Section 5.20 of the Suncoast Disclosure Schedule
contains a true and correct list of all the audits, investigations, complaints
and inquiries of Suncoast or the Suncoast Subsidiaries open or ongoing at
January 1, 1995 or commenced thereafter by an agency (including, without
limitation, FNMA, FHLMC, VA or HUD), an investor, or a private mortgage
insurer, the
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result of which audits and investigations claimed a material failure to comply
with applicable regulations and could result in (i) a repurchase of Mortgage
Loans or related mortgage properties by Suncoast or any Suncoast Subsidiary,
(ii) indemnification by Suncoast or any Suncoast Subsidiary in connection with
Mortgage Loans, (iii) rescission of an insurance or guaranty contract or
agreement or (iv) payment of a material penalty to an agency, HUD, an investor,
or a private mortgage insurer. Except for customary ongoing quality control
reviews, no such audit or investigation is pending or, to the best knowledge of
Suncoast, threatened. Suncoast has made available to BankUnited copies of all
written reports and materials received in connection with such audits,
investigations, complaints and inquiries.
5.21 REPRESENTATIONS. Except as set forth in Section 5.21 of the
Suncoast Disclosure Schedule, there is no breach or violation of any
representation, warranty or covenant made by Suncoast or any Suncoast
Subsidiary to any investor or other person in connection with the transfer of
the ownership of any Mortgage Loan and/or the servicing rights thereto from
Suncoast or any Suncoast Subsidiary to such investor or other person, except
where all such breaches or violations would in the aggregate not have a
Material Adverse Effect.
5.22 POOL CERTIFICATION. All pools relating to the Mortgage Loans
have been certified, finally certified and recertified (if required) in
accordance with applicable rules and guidelines, and the securities backed by
such pools have been issued on uniform documents, promulgated in the applicable
investor guide without any material deviations therefrom. The principal balance
outstanding and owing on the Mortgage Loans in each pool equals or exceeds the
amount owing to the corresponding security holders of such pool.
5.23 LOAN DISBURSEMENT. All of the Mortgage Loans were fully
disbursed in accordance with applicable law and regulations.
5.24 PAYMENT OF TAXES, INSURANCE PREMIUMS, ETC. The
responsibilities of Suncoast and the Suncoast Subsidiaries with respect to all
applicable taxes (including tax reporting for the period prior to the Closing),
special assessments, ground rents, flood insurance premiums, hazard insurance
premiums and mortgage insurance premiums that are related to the Mortgage Loans
and REO have been met, except for such failures to meet such responsibilities
individually or in the aggregate which would not have a Material Adverse
Effect.
5.25 TAX IDENTIFICATION. All tax identification numbers or
references utilized in Suncoast's business are correct and complete in all
respects, and property descriptions contained in any loan document are legally
sufficient, except where all failures to be correct and complete in the
aggregate will not have a Material Adverse Effect.
5.26 PAYOFF STATEMENTS. All payoff and assumption statements with
respect to each Mortgage Loan provided by Suncoast or any Suncoast Subsidiary to
borrowers or their agents were, at the time they were provided, complete and
accurate, except where each lack of accuracy or completeness in the aggregate
would not have a Material Adverse Effect.
5.27 OTHER TAX AND REGULATORY MATTERS. Neither Suncoast nor any
Suncoast Subsidiary has taken or agreed to take any action or has any knowledge
of any fact or circumstance that would
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(i) prevent the transactions contemplated hereby, including the Merger, from
qualifying as a reorganization within the meaning of Section 368 of the Code,
or (ii) materially impede or delay receipt of any approval referred to in
Section 9.01(b).
5.28 PROPERTIES. Except as disclosed in any Securities Reporting
Document filed since June 30, 1995 and prior to the date hereof and except for
Encumbrances arising, in the ordinary course of business after the date hereof,
Suncoast and the Suncoast Subsidiaries have good and, in the case of real
property, marketable title, free and clear of all Encumbrances, except for
Encumbrances for taxes not yet due and payable, that individually or in the
aggregate would not have a Material Adverse Effect, to all their material
properties and assets whether tangible or intangible, real, personal or mixed,
reflected in the Suncoast Financial Statements as being owned by Suncoast and
Suncoast Subsidiaries as of the date hereof, except for such imperfections of
title and Encumbrances, if any, as do not materially interfere with the present
use of the property or otherwise materially impair the business operations or
the marketability or value of the properties. All buildings, and all fixtures,
equipment and other property and assets which are material to its business on a
consolidated basis, held under leases or subleases by any of Suncoast or any
Suncoast Subsidiary are held under valid instruments enforceable in accordance
with their respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and similar laws of general
applicability affecting creditors rights generally and by general principles of
equity (whether applied in a proceeding at law or in equity). Substantially
all of Suncoast's and the Suncoast Subsidiaries' equipment in regular use has
been well maintained and is in good serviceable condition, reasonable wear and
tear excepted except where any failure to so maintain such equipment or to
preserve such equipment in good serviceable condition would not individually or
in the aggregate have a Material Adverse Effect.
5.29 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 5.29(a) of the
Suncoast Disclosure Schedule, Suncoast and each Suncoast Subsidiary is
in compliance with all federal, state and local laws, rules,
regulations, policies, guidelines, reporting and licensing
requirements and orders applicable to its business or to its Employees
conducting its business, and with its internal policies and procedures
except for failures to comply which will in the aggregate not result
in a Material Adverse Effect.
(b) Since January 1, 1993, except as set forth in Section
5.29(b) the Suncoast Disclosure Schedule, neither Suncoast nor any
Suncoast Subsidiary has received any notification or communication
from any agency or department of any federal, state or local
government, including, the OTS, the FDIC, the SEC and the NASD and the
staffs thereof (collectively, the "Regulatory Authorities") (i)
asserting that Suncoast or any Suncoast Subsidiary is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such agency,
department or regulatory authority, (ii) threatening to revoke any
license, franchise, permit or governmental authorization which is
material to Suncoast and the Suncoast Subsidiaries on a consolidated
basis, (iii) requiring or threatening to require Suncoast or any
Suncoast Subsidiary, or indicating that Suncoast or any Suncoast
Subsidiary may be required, to enter into a cease and desist order,
agreement or memorandum of understanding
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or any other agreement restricting or limiting or purporting to
restrict or limit in any manner the operations of Suncoast or the
Suncoast Subsidiaries, including, without limitation, any restriction
on the payment of dividends, or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit in any manner the
operations of Suncoast or any Suncoast Subsidiary, including, without
limitation, any restriction on the payment of dividends (any such
notice, communication, memorandum, agreement or order described in
this sentence herein referred to as a "Regulatory Agreement").
(c) Since January 1, 1994 neither Suncoast nor any
Suncoast Subsidiary has consented to or entered into or has
outstanding any Regulatory Agreement or memorandum of understanding.
(d) Neither Suncoast nor any Suncoast Subsidiary is
required by Section 32 of FDIA to give prior notice to a federal
banking agency of the proposed addition of an individual to its board
of directors or the employment of an individual as a senior executive
officer.
5.30 EMPLOYEE BENEFIT PLANS.
(a) Suncoast has delivered or made available to
BankUnited prior to the execution of this Agreement or will deliver or
make available to BankUnited at the time of delivery of the Suncoast
Disclosure Schedule true and complete copies (or, in the case of bonus
or other incentive plans, summaries thereof and financial data with
respect thereto) of all material pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all
other material employee programs, arrangements or agreements, whether
arrived at through collective bargaining or otherwise, all material
medical, vision, dental or other health plans, all life insurance
plans and all other material employee benefit plans or fringe benefit
plans, including, without limitation, all "employee benefit plans" as
that term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), currently adopted by,
maintained by, sponsored in whole or in part by, or contributed to by
Suncoast or the Suncoast Subsidiaries or any Affiliate thereof for the
benefit of any Employee or under which any Employee is eligible to
participate and under which Suncoast or the Suncoast Subsidiaries
could have any liability contingent or otherwise (collectively, the
"Suncoast Benefit Plans"). Section 5.30(a) of the Suncoast Disclosure
Schedule contains a listing of all the Suncoast Benefit Plans. Any of
the Suncoast Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred
to herein as a "Suncoast ERISA Plan." Any of the Suncoast Benefit
Plans pursuant to which Suncoast is or may become obligated to, or
obligated to cause the Suncoast Subsidiaries or any other Person to,
issue, deliver or sell shares of capital stock of Suncoast or the
Suncoast Subsidiaries, or grant, extend or enter into any option,
warrant, call, right, commitment or agreement to issue, deliver or
sell shares, or any other interest in respect of capital stock of
Suncoast or the Suncoast Subsidiaries, is referred to herein as a
"Suncoast Stock Plan." No Suncoast Benefit Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA.
Suncoast has set forth in Section 5.30 of the Suncoast Disclosure
Schedule (i) a list of all of the Suncoast Benefit Plans, (ii) a list
of Suncoast
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Benefit Plans that are Suncoast ERISA Plans, (iii) a list of Suncoast
Benefit Plans that are Suncoast Stock Plans, and (iv) a list of the
number of shares covered by, exercise prices for, and holders of, all
stock options granted and available for grant under the Suncoast Stock
Plans.
(b) All Suncoast Benefit Plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws,
rules and regulations the breach or violation of which could
reasonably be expected to result in a Material Adverse Effect.
(c) All liabilities under any Suncoast Benefit Plan are
fully accrued or reserved against in the Suncoast Financial Statements
in accordance with GAAP.
(d) Neither Suncoast nor any Suncoast Subsidiary has any
obligations for retiree health and life benefits under any Suncoast
Benefit Plan or otherwise. There are no restrictions on the rights of
Suncoast or the Suncoast Subsidiaries to amend or terminate any such
Suncoast Benefit Plan without incurring any material liability
thereunder, except for such restrictions as would not have a Material
Adverse Effect.
(e) Except as set forth in Section 5.30(e) the Suncoast
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
or thereby will (i) result in any payment (including, without
limitation, severance, golden parachute or otherwise) becoming due to
any Employees under any Suncoast Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Suncoast Benefit
Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits.
5.31 COMMITMENTS AND CONTRACTS. Except as set forth in Section 5.31
of the Suncoast Disclosure Schedule or with respect to the validity of this
representation, except as may have been permitted by Section 7.01 and 7.02,
neither Suncoast nor any Suncoast Subsidiary is a party or subject to, or has
amended or waived any rights under, any of the following (whether written or
oral, express or implied):
(a) any employment contract or understanding (including
any understandings or obligations with respect to severance or
termination pay liabilities or fringe benefits) with any Employees,
including in any such person's capacity as a consultant (other than
those which either are terminable at will by Suncoast or such
Subsidiary without cost to Suncoast or any Suncoast Subsidiary);
(b) any labor contract or agreement with any labor union;
(c) any contract not made in the usual, regular and
ordinary course of business containing non- competition covenants
which limit the ability of Suncoast or the Suncoast Subsidiaries to
compete in any line of business or which involve any restriction of
the geographical area in which Suncoast or any Suncoast Subsidiary may
carry on its business (other than as may be required by law or
applicable Regulatory Authorities);
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(d) any other contract or agreement which would be
required to be disclosed as an exhibit to Suncoast's annual report on
Form 10-K and which has not been so disclosed;
(e) any real or personal property lease with annual
rental payments aggregating $5,000 or more;
(f) any employment or other contract requiring the
payment of additional amounts as "change in control" payments as a
result of transactions contemplated by this Agreement;
(g) any agreement with respect to (i) the acquisition of
the assets or stock of another financial institution or (ii) the sale
of one or more bank branches which would require additional payments
by Suncoast after the date of this Agreement;
(h) any outstanding interest rate exchange or other
derivative contracts;
(i) any commitment or contract to acquire real property;
or
(j) any other agreement to which Suncoast or any Suncoast
Subsidiary is a party requiring payment by Suncoast or any Suncoast
Subsidiary in excess of $25,000 during the remainder of the term of
such agreement, except as set forth in Section 5.31 of the Suncoast
Disclosure Schedule.
5.32 MATERIAL CONTRACT DEFAULTS. Neither Suncoast nor any Suncoast
Subsidiary is, or has received any notice or has any knowledge that any party
is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which Suncoast or
the Suncoast Subsidiaries is a party or by which Suncoast or the Suncoast
Subsidiaries or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not have, individually
or in the aggregate, a Material Adverse Effect; and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default. Except as set forth in Section 5.32 of the Suncoast
Disclosure Schedule, no consent of any party to any contract to which Suncoast
or any Suncoast Subsidiary is a party is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
consents which in the aggregate if not obtained would not have a Material
Adverse Effect.
5.33 LEGAL PROCEEDINGS. Except as set forth in Section 5.33 of the
Suncoast Disclosure Schedule, there are no actions, suits, proceedings or
investigations by Regulatory Authorities or any other Person instituted or
pending or, to the best knowledge of Suncoast, threatened against Suncoast or
the Suncoast Subsidiaries, or against any property, asset, interest or right of
any of them, that might reasonably be expected to result in a judgment in
excess of $25,000 or that might reasonably be expected to threaten or impede
the consummation of the transactions contemplated by this Agreement. Neither
Suncoast nor any Suncoast Subsidiary is a party to any agreement or instrument
or is subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree, rule, regulation, code or ordinance that,
individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect or, might reasonably be expected to threaten or impede
the consummation of the transactions contemplated by this Agreement.
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5.34 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1996,
except (i) as disclosed in any Securities Reporting Document filed since
December 31, 1995 and prior to the date hereof or (ii) as set forth in Section
5.34 of the Suncoast Disclosure Schedule, neither Suncoast nor any Suncoast
Subsidiary has (A) incurred or paid any liability or obligation (contingent or
otherwise), which individually or in the aggregate had or is reasonably likely
to have a Material Adverse Effect, (B) suffered any change which individually
or in the aggregate is reasonably likely to have a Material Adverse Effect, (C)
failed to operate its business consistent in all material respects with past
practice or (D) changed any accounting practices.
5.35 SECURITIES REPORTING DOCUMENTS. Since July 1, 1992, Suncoast
and each Suncoast Subsidiary has filed on a timely basis all material reports,
schedules, registration statements and definitive proxy statements ("Securities
Reporting Documents"), together with all amendments required to be made with
respect thereto, that they were required to file with (i) the OTS, including,
without limitation, all quarterly reports on Form 10-Q, annual reports on Form
10-K and current reports on Form 8-K, (ii) the FDIC, (iii) any other applicable
state securities or banking authorities (except, in the case of state
securities authorities, filings which are not material) and (iv) the NASD. No
Securities Reporting Document of Suncoast with respect to periods beginning on
or after July 1, 1992 and until the Closing, contained or will contain any
information that was false or misleading with respect to any material fact or
omitted or will omit to state any material fact necessary in order to make the
statements therein not misleading and each such Securities Reporting Document
of Suncoast contained or will contain all information required to be stated
therein.
5.36 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by Suncoast for inclusion in the registration statement on
Form S-4, or other appropriate form, to be filed with the SEC by BankUnited
under the Securities Act in connection with the transactions contemplated by
this Agreement (the "Registration Statement"), or the joint proxy statement to
be used by Suncoast and BankUnited in connection with obtaining all required
approvals of their respective stockholders as contemplated by this Agreement
(the "Joint Proxy Statement") will, in the case of the Joint Proxy Statement,
when it is first mailed to the respective stockholders of Suncoast and
BankUnited, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in
light of the circumstances under which such statements are made, not
misleading, or, in the case of the Registration Statement, when it becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading, or in the case of the Joint Proxy Statement or any amendment
thereof or supplement thereto, at the time of the meeting of the respective
stockholders of Suncoast and BankUnited to be held pursuant to Section 8.03 of
this Agreement, including any adjournments thereof (the "Stockholders'
Meetings"), be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meetings. All documents that Suncoast is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law, including applicable provisions
of the Securities Laws. The information which is set forth in the Suncoast
Disclosure Schedule by Suncoast for the purposes of this Agreement is true and
accurate in all material respects.
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5.37 INSURANCE. Suncoast and each Suncoast Subsidiary is presently
insured, and during each of the past five calendar years has been insured, for
reasonable amounts against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured. The policies of fire, theft, banker's blanket bond, liability
(including directors and officers liability insurance) and other insurance
maintained with respect to the assets or businesses of Suncoast and the
Suncoast Subsidiaries provide adequate coverage against all pending or
threatened claims, and the fidelity bonds in effect as to which Suncoast or any
Suncoast Subsidiary is a named insured are sufficient for their purpose, except
where the failure to have such coverage would not have a Material Adverse
Effect. Such policies are listed and briefly described in Section 5.37 of the
Suncoast Disclosure Schedule.
5.38 LABOR. No material work stoppage involving Suncoast or the
Suncoast Subsidiaries is pending or, to the best knowledge of Suncoast's
management, threatened. Neither Suncoast nor any Suncoast Subsidiary is
involved in, or to the best knowledge of Suncoast's management, threatened with
or affected by, any labor or other employment-related dispute, arbitration,
lawsuit or administrative proceeding which might reasonably be expected to have
a Material Adverse Effect. Employees of Suncoast and the Suncoast Subsidiaries
are not represented by any labor union, and, to the best knowledge of
Suncoast's management, no labor union is attempting to organize employees of
Suncoast or the Suncoast Subsidiaries.
5.39 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
Suncoast's Proxy Statement for its 1995 Annual Meeting of Stockholders or as
set forth in the Suncoast Disclosure Schedule, no executive officer or director
of Suncoast, or any "associate" (as such term is defined in Rule 14a-1 under
the Exchange Act) of any such executive officer or director, has any material
interest in any material contract or property real or personal, tangible or
intangible, used in or pertaining to the business of Suncoast or the Suncoast
Subsidiaries.
5.40 REGISTRATION OBLIGATIONS. Except as set forth in Section 5.40
of the Suncoast Disclosure Schedule, neither Suncoast nor any Suncoast
Subsidiary is under any obligation, contingent or otherwise, presently in
effect or which will survive the Merger to register any of its securities under
the Securities Act.
5.41 BROKERS AND FINDERS. Except as set forth in Section 5.41 of
the Suncoast Disclosure Schedule, neither Suncoast nor any Suncoast Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for Suncoast or Suncoast Subsidiaries in connection with
this Agreement or the transactions contemplated hereby.
5.42 TAKEOVER LAWS. Suncoast has taken all steps necessary to
irrevocably exempt the transactions contemplated by this Agreement from any
applicable state or federal takeover law and from any applicable charter or
contractual provision containing change of control or anti-takeover provisions.
5.43 ENVIRONMENTAL MATTERS. To Suncoast's best knowledge, without
inquiry, neither Suncoast nor any of the Suncoast Subsidiaries has been or is
in violation of or liable under any
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Environmental Law (as hereinafter defined) and no properties owned or leased by
Suncoast or any of the Suncoast Subsidiaries or held as collateral by Suncoast
or any Suncoast Subsidiary, while owned or operated by Suncoast or a Suncoast
Subsidiary or while held as collateral by Suncoast or any Suncoast Subsidiary,
have been or are in violation of any Environmental Law, except for such
violations or liabilities that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect. There are no actions,
suits or proceedings, or demands, claims, notices or investigations (including
without limitation notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the best knowledge of
Suncoast's management, threatened relating to the liability of any properties
owned or leased by Suncoast or any Suncoast Subsidiary under any Environmental
Law, except for liabilities or violations that would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection, preservation or
restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural resource), and/or
(ii) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any
substance presently listed, defined, designated or classified as hazardous,
toxic radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a component.
5.44 SUPPORT OF STOCKHOLDERS To induce BankUnited to enter into
this Agreement Suncoast has obtained and delivered to BankUnited letter
agreements in the form of Exhibit C hereto, with each of the following
stockholders of Suncoast committing these stockholders to actively support the
Merger by, among other things, voting in favor of the Merger at the Suncoast
Stockholders' Meeting and not disposing of any Suncoast Common Stock or
Suncoast Preferred Stock other than pursuant to the Merger: Albert Finch, Paul
Fay, E. J. Guisti, William Hammonds, Norman Mains, Irving P. Cohen, Sumner G.
Kaye, Richard L. Browdy and Wendy M. Mitchler.
5.45 RETAIL SECURITIES ACTIVITIES. Except as set forth in Section
5.45 of the Suncoast Disclosure Schedule, Suncoast's retail securities
brokerage and annuities sales business conducted through Suncoast's branches
has complied with applicable state and federal securities laws and all
applicable requirements of the NASD, except for instances where failure to so
comply, individually or in the aggregate, would not have a Material Adverse
Effect.
5.46 DERIVATIVES CONTRACTS. None of Suncoast nor any of the
Suncoast Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter swap, forward, future, option, cap, floor
or collar financial contract, or any other contract not included on its
statement of financial condition which is a financial derivative contract
(including various combinations thereof) (each a "Derivatives Contract") except
for those Derivative Contracts disclosed in Section 5.46 of the Suncoast
Disclosure Schedule, which includes a complete list, as applicable, of
Suncoast's assets pledged as security for each Derivatives Contract.
5.47 MATERIALITY. The representations and warranties of Suncoast
contained in Sections 5.01 through 5.45 hereof are true and correct in all
material respects. No failure of any such
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representation or breach of any such warranty shall be deemed a breach of this
Agreement unless the same, individually or collectively, shall be material,
unless a different standard of materiality is specifically contained in the
relevant Section.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
BankUnited represents and warrants to Suncoast as follows:
6.01 ORGANIZATION, STANDING AND AUTHORITY. BankUnited is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida. BankUnited is duly qualified to do business and
in good standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be duly
qualified would have a Material Adverse Effect. BankUnited has all requisite
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its assets, properties and business, and to execute and
deliver this Agreement and perform the terms of this Agreement. BankUnited is
duly registered as a savings and loan holding company under the HOLA,
BankUnited has in effect all Authorizations necessary for it to own or lease
its properties and assets and to carry on its business as now conducted, the
absence of which, either individually or in the aggregate, would have a
Material Adverse Effect.
6.02 BANKUNITED CAPITAL STOCK. The authorized capital stock of
BankUnited consists of 18,000,000 shares of BankUnited Common Stock and
10,000,000 shares of BankUnited Preferred Stock. At March 31, 1996, there were
issued and outstanding 5,698,598 shares of BankUnited Common Stock and
2,665,547 shares of BankUnited Preferred Stock and no other shares of capital
stock of any class. All of the issued and outstanding shares of BankUnited
Common Stock and BankUnited Preferred Stock are duly and validly issued and
outstanding and are fully paid and nonassessable.
6.03 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action in respect
thereof on the part of BankUnited, including approval of the Merger by
its Board of Directors, subject to the approval of the stockholders of
BankUnited with respect to the Merger, to the extent required by
applicable law. This Agreement, subject to any requisite regulatory
and stockholder approval hereof with respect to the Merger, represents
a valid and legally binding obligation of BankUnited, enforceable
against BankUnited in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, and similar laws of general applicability affecting
creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
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(b) Neither the execution and delivery of this Agreement
by BankUnited, nor the consummation by BankUnited of the transactions
contemplated hereby or thereby nor compliance by BankUnited with any
of the provisions hereof or thereof will (i) conflict with or result
in a breach of any provision of BankUnited's Articles of Incorporation
or bylaws or (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or
give rise to any right of termination, cancellation. or acceleration
with respect to, or result in the creation of any Encumbrance upon any
property or assets of any of BankUnited or its Subsidiaries pursuant
to any note, bond, mortgage, indenture, license, agreement, lease or
other instrument or obligation to which any of them is a party or by
which any of them or any of their properties or assets may be subject,
and that would, in any such event, have a Material Adverse Effect or
(iii) subject to receipt of the requisite approvals referred to in
Section 9.01 of this Agreement, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to BankUnited or any of
its Subsidiaries or any of their properties or assets.
6.04 FINANCIAL STATEMENTS. BankUnited (i) has delivered to Suncoast
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders'
equity and consolidated statements of cash flows (including related notes and
schedules) of BankUnited and its consolidated Subsidiaries as of and for the
periods ended March 31, 1996, December 31, 1995 and September 30, 1995 included
in a quarterly report on Form 10-Q or an annual report of Form 10-K, as the
case may be, filed by BankUnited pursuant to the Securities Laws (a "BankUnited
Reporting Document"), and (ii) until the Closing will deliver to Suncoast
promptly upon the filing thereof with the SEC copies of the consolidated
balance sheets and related consolidated statements of income, consolidated
statements of changes in shareholders' equity and consolidated statements of
cash flows (including related notes and schedules) included in any BankUnited
Reporting Documents filed subsequent to the execution of this Agreement (the
financial statements and related notes and schedules referred to in clauses (i)
and (ii) above are collectively referred to herein as the "BankUnited Financial
Statements"). The BankUnited Financial Statements (as of the dates thereof and
for the periods covered thereby) (A) are or will be in accordance with the
books and records of BankUnited and its consolidated Subsidiaries, which are or
will be complete and accurate in all material respects and which have been or
will have been maintained in accordance with good business practices, and (B)
present or will present fairly the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of BankUnited and its Subsidiaries as of the dates and for the periods
indicated, in accordance with GAAP consistently applied, except as disclosed,
subject in the case of interim financial statements to normal recurring year-
end adjustments and except for the absence of certain footnote information in
the unaudited statements. BankUnited has delivered to Suncoast (i) copies of
all management letters prepared by Price Waterhouse L.L.P (and any predecessor
thereto) delivered to BankUnited since October 1, 1992 and (ii) copies of
audited balance sheets and related statements of income, changes in
stockholders' equity and cash flows for any of Subsidiary of BankUnited since
October 1, 1992 for which a separate audit has been performed.
6.05 SECURITIES REPORTING DOCUMENTS. Since October 1, 1992,
BankUnited and each of its Subsidiaries has filed on a timely basis all
Securities Reporting Documents, together with all amendments required to be
made with respect thereto, that they were required to file with (i) the SEC,
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including without limitation, all quarterly reports on Form 10-Q, annual
reports on Form 10-K, and current reports of Form 8-K, (ii) the OTS, (iii) the
FDIC, (iv) any other applicable state securities or banking authorities (except
in the case of state securities authorities, filings that were not material),
and (v) the NASD. No Securities Reporting Document of BankUnited with respect
to periods beginning on or after October 1, 1992 and until the Closing
contained or will contain any information that was false or misleading with
respect to any material fact or omitted or will omit to state any material fact
necessary in order to make the statements therein not misleading and each
Securities Reporting Document of BankUnited contained or will contain all
information required to be stated therein.
6.06 STATEMENTS TRUE AND CORRECT. None of the information supplied
or to be supplied by BankUnited for inclusion in the Registration Statement or
the Joint Proxy Statement will, in the case of the Joint Proxy Statement, when
it is first mailed to the respective stockholders of Suncoast and BankUnited,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which such statements are made, not misleading or, in the
case of the Registration Statement, when it becomes effective, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or in
the case of the Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Stockholders' Meetings, be false or misleading with
respect to any material fact or omit to state any material fact necessary to
correct any statement or remedy any omission in any earlier communication with
respect to the solicitation of any proxy for the Stockholders' Meetings. All
documents that BankUnited is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable law,
including applicable provisions of the Securities Laws. The information which
is set forth in the BankUnited Disclosure Schedule by BankUnited for the
purposes of this Agreement is true and correct in all material respects.
6.07 CAPITAL STOCK. At the Effective Time and upon issuance
pursuant to this Agreement, the BankUnited Common Stock and New BankUnited
Preferred Stock issued pursuant to the Merger will be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
6.08 TAX AND REGULATORY MATTERS. Neither BankUnited nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368 of the Code; or materially impede or delay receipt of any approval
referred to in Section 9.01(b).
6.09 LITIGATION. There are no judicial proceedings of any kind or
nature pending or, to the knowledge of BankUnited, threatened against
BankUnited before any court or arbitral tribunal or before or by any
governmental department, agency or instrumentality involving the validity of
the BankUnited Common Stock, the New BankUnited Preferred Stock, or the
transactions contemplated by this Agreement.
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6.10 BROKERS AND FINDERS. Except as set forth in Section 6.10 of
the BankUnited Disclosure Schedule, neither BankUnited nor any of its
Subsidiaries nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for BankUnited or any of its
Subsidiaries in connection with this Agreement or the transactions contemplated
hereby.
6.11 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 6.11(a) of the
BankUnited Disclosure Schedule, each of BankUnited and its
Subsidiaries is in compliance with all federal, state, and local laws,
rules, regulations, policies, guidelines, reporting and licensing
requirements and orders applicable to its business or to BankUnited's
employees conducting its business, and with its internal policies and
procedures except for failures to comply which will in the aggregate
not result in a Material Adverse Effect.
(b) Since January 1, 1993, except as set forth in Section
6.11(b) of the BankUnited Disclosure Schedule, neither BankUnited nor
any Subsidiary of BankUnited has received any notification or
communication from any agency or department of any federal, state or
local government, including, the OTS, the FDIC, the SEC and the NASD
and the staffs thereof (i) asserting that BankUnited or any Subsidiary
of BankUnited is not in substantial compliance with any of the
statutes, regulations, or ordinances which such agency, department or
Regulatory Authority enforces, or the internal policies and procedures
of such agency, department or regulatory authority, (ii) threatening
to revoke any license, franchise, permit or governmental authorization
which is material to BankUnited and the BankUnited Subsidiaries on a
consolidated basis, (iii) requiring or threatening to require
BankUnited or any Subsidiary of BankUnited, or indicating that
BankUnited or any Subsidiary of BankUnited may be required to enter
into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or
purporting to restrict or limit in any manner the operations of
BankUnited or any Subsidiary of BankUnited including, without
limitation, any restriction on the payment of dividends; or (iv)
directing, restricting or limiting, or purporting to direct, restrict
or limit in any manner the operations of BankUnited or any Subsidiary
of BankUnited, including, without limitation, any restriction on the
payment of dividends.
(c) Since January 1, 1994 neither BankUnited nor any
Subsidiary of BankUnited has consented to or entered into any
Regulatory Agreement or memorandum of understanding.
(d) Neither BankUnited nor any Subsidiary of BankUnited
is required by Section 32 of FDIA to give prior notice to a federal
banking agency of the proposed addition of an individual to its board
of directors or the employment of an individual as a senior executive
officer.
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6.12 EMPLOYEE BENEFIT PLANS.
(a) BankUnited has delivered or made available to
Suncoast prior to the execution of this Agreement or will deliver or
make available to Suncoast at the time of delivery of the BankUnited
Disclosure Schedule, true and complete copies (or, in the case of
bonus or other incentive plans, summaries thereof and financial data
with respect thereto) of all material pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other material incentive
plans, all other material employee programs, arrangements or
agreements, whether arrived at through collective bargaining or
otherwise, all material medical, vision, dental or other health plans,
all life insurance plans and all other material employee benefit plans
or fringe benefit plans, including, without limitation, all "employee
benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted by, maintained by, sponsored in whole or in part by,
or contributed to by BankUnited or any Subsidiary of BankUnited or any
affiliate thereof for the benefit of any Employee or under which any
Employee is eligible to participate and under which BankUnited or any
Subsidiary of BankUnited could have any liability contingent or
otherwise (collectively, the "BankUnited Benefit Plans"). Section
6.12(a) of the BankUnited Disclosure Schedule contains a listing of
all the BankUnited Benefit Plans.
(b) All BankUnited Benefit Plans are in compliance with
the applicable terms of ERISA and the Code and any other applicable
laws, rules and regulations the breach or violation of which could
reasonably be expected to result in a Material Adverse Effect.
(c) All liabilities under any BankUnited Benefit Plan are
fully accrued or reserved against in the BankUnited Financial
Statements in accordance with GAAP.
6.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1996,
except (i) as disclosed in any Securities Reporting Document filed since
December 31, 1995 and prior to the date hereof or (ii) as set forth in Section
6.13 of the BankUnited Disclosure Schedule, neither BankUnited nor any
Subsidiary of BankUnited has (A) incurred or paid any liability or obligation
(contingent or otherwise), which has had or is likely to have a Material
Adverse Effect, (B) suffered any change which is likely to have a Material
Adverse Effect, (C) failed to operate its business consistent in all material
respects with past practice or (D) changed any accounting practices.
6.14 MERGER SUB.
(a) When Merger Sub is organized and executes and
delivers this Agreement, Merger Sub will (i) be a federally-chartered
savings bank; (ii) be duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of
its business would require it to be so qualified and in which the
failure to be duly qualified would have a Material Adverse Effect;
(iii) have all requisite corporate power and authority to carry on its
business as now conducted and to own, lease and operate its assets,
properties and business, except where the failure to have such power
and authority would not have a Material Adverse Effect, and to execute
and deliver this Agreement and perform the terms of this Agreement;
(iv) have in effect all Authorizations necessary for it to own or
lease its properties and assets and to carry on its
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business, the absence of which, either individually or in the
aggregate, would have a Material Adverse Effect.
(b) When Merger Sub is organized and executes and
delivers this Agreement, (i) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
will have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of Merger Sub, including
approval of the Merger by its Board of Directors and its shareholder;
(ii) this Agreement, subject to any requisite regulatory approval
hereof with respect to the Merger, will represent a valid and legally
binding obligation of Merger Sub enforceable against Merger Sub in
accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, and similar
laws of general applicability affecting creditors rights generally and
by general principles of equity (whether applied in a proceeding at
law or in equity).
(c) When Merger Sub is organized and executes and
delivers this Agreement, (i) neither the execution and delivery of
this Agreement by Merger Sub nor the consummation by Merger Sub of the
transactions contemplated hereby, nor compliance by Merger Sub with
any of the provisions hereof will (A) conflict with or result in a
breach of any provision of Merger Sub's charter or bylaws or (B)
constitute or result in a breach of any term, condition or provision
of, or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give rise to any right
of termination, cancellation or acceleration with respect to, or
result in the creation of any Encumbrance upon, any property or assets
of Merger Sub pursuant to any note, bond, mortgage, indenture,
license, agreement, lease or other instrument or obligation to which
Merger Sub is a party or by which Merger Sub or any of its properties
or assets may be subject and that would individually or in the
aggregate have a Material Adverse Effect, or (C) subject to receipt of
the requisite approvals referred to in Sections 9.01(a) and 9.01(b) of
this Agreement, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Merger Sub or any of its properties
or assets.
6.15 SUPPORT OF STOCKHOLDERS. To induce Suncoast to enter into this
Agreement BankUnited has obtained and delivered to Suncoast letter agreements
in the form of Exhibit D hereto, with each of the following stockholders of
BankUnited committing these stockholders to actively support the Merger by,
among other things, voting in favor of the Merger at the BankUnited
Stockholders' Meeting: Alfred R. Camner, Earline G. Ford, Lawrence H. Blum,
Allen M. Bernkrant and Marc D. Jacobson.
6.16 MATERIALITY. The representations and warranties of BankUnited
contained in Sections 6.01 through 6.14 hereof are true and correct in all
material respects. No failure of any representation or breach of any warranty
shall be deemed a breach of this Agreement unless the same, individually or
collectively, shall be material, unless a different standard of materiality is
specifically contained in the relevant Section.
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ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 CONDUCT OF SUNCOAST BUSINESS PRIOR TO THE EFFECTIVE TIME.
During the period from the date of this Agreement to the Effective Time,
Suncoast shall, and shall cause each Suncoast Subsidiary to, (i) conduct its
business in the usual, regular and ordinary course consistent with past
practice (other than transactions made pursuant to contracts in existence on
the date hereof and described in Sections 7.01 or 7.02 of the Suncoast
Disclosure Schedule) and (ii) use its best efforts to maintain and preserve
intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key Employees.
7.02 FORBEARANCES OF SUNCOAST. Except as required by law,
regulation or regulatory authority, during the period from the date of this
Agreement to the Effective Time, Suncoast shall not, and shall not permit any
Suncoast Subsidiary to, without the prior written consent of BankUnited (and
Suncoast shall provide BankUnited with prompt notice of any events referred to
in this Section 7.02 occurring after the date hereof):
(a) other than in the ordinary course of business
consistent with past practice since June 30, 1994 ("In the Ordinary
Course"), incur any indebtedness for borrowed money, including Federal
Home Loan Bank advances (other than (i) Federal Home Loan Bank
advances having maturities of six months or less and (ii) short-term
indebtedness incurred to refinance short-term indebtedness and
indebtedness of Suncoast or any Suncoast Subsidiary to Suncoast or any
Suncoast Subsidiary) (it being understood and agreed that incurrence
of indebtedness In the Ordinary Course shall include, without
limitation, the creation of deposit liabilities, purchases of federal
funds, sales of certificates of deposit and entering into repurchase
agreements), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance
other than In the Ordinary Course.
(b) adjust, split, combine or reclassify any capital
stock; make, declare or pay any dividend (other than regular quarterly
cash dividends at a rate not in excess of $0.30 per share) on the
Suncoast Preferred Stock or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock,
or grant any stock appreciation rights or grant any Person any right
to acquire any shares of its capital stock; or issue any additional
shares of capital stock, or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, other than
(i) Suncoast Common Stock issuable on the exercise of stock options
outstanding on the date hereof under the Suncoast Option Plan, (ii)
stock options required to be granted to members of the Board of
Directors under the Suncoast Option Plan, (iii) Suncoast Common Stock
or Suncoast Preferred Stock issuable on the exercise of the Suncoast
Warrants, or (iv) Suncoast Common Stock issuable on conversion of
Suncoast Preferred Stock outstanding on the date hereof (The parties
hereto agree that the issuances by Suncoast of Suncoast Preferred
Stock or Suncoast Common Stock or rights to acquire Suncoast Preferred
Stock or Suncoast Common
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Stock described in clauses (i) - (iv) above are outstanding
obligations of Suncoast and not discretionary payments by Suncoast);
(c) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets, including servicing
rights, to any individual, corporation or other entity, or cancel,
release or assign any indebtedness to any such person or any claims
held by any such person, except In the Ordinary Course or pursuant to
contracts or agreements in force at the date of this Agreement, it
being agreed and understood that sales In the Ordinary Course shall
include (i) the sale and/or purchase of those non-residential loans
pending sale or servicing of residential mortgage loans as noted in
Section 7.02(c) of the Suncoast Disclosure Schedule; (ii) the sale of
such other non-residential loans up to an aggregate amount of $5
million as to which BankUnited is first given the option to purchase;
and (iii) the sale of up to an aggregate of $500,000 in residential
loans out of portfolio and all sales of Warehouse Loans pursuant to
Investor Commitments;
(d) make any investment (including loan purchases and
commitments to purchase loans) of more than $25,000 either by purchase
of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any individual, corporation
or other entity, including servicing rights other than in connection
with contracts in existence on the date hereof and described in
Section 7.02(d) of the Suncoast Disclosure Schedule; provided,
however, that Suncoast may purchase or commit to purchase residential
whole loan mortgage loan packages on the terms and conditions
described in writing to BankUnited by Suncoast and agreed to and
accepted by BankUnited in writing prior to the execution and delivery
of this Agreement.
(e) enter into or terminate any contract or agreement
involving annual payments in excess of $25,000 and which cannot be
terminated without penalty upon 30 or fewer days notice, or make any
change in, or extension of, any of its leases or contracts involving,
annual payments in excess of $25,000 and which cannot be terminated
without penalty upon 30 or fewer days notice; provided, however, that
on all extensions of existing loan servicing contracts, except for
extensions for a term of not more than one year on substantially the
same terms and conditions as those before the extension, Suncoast
shall consult with BankUnited before agreeing to any such extension,
but Suncoast shall not be required to obtain the written approval of
BankUnited prior to agreeing to any such extension;
(f) increase or modify in any manner the compensation or
fringe benefits of any of its Employees or pay any pension or
retirement allowance not required by any existing plan or agreement to
any such Employees, except on the terms and conditions described in
writing to BankUnited by Suncoast and agreed to and accepted by
BankUnited in writing prior to the execution and delivery of this
Agreement, or become a party to, amend or commit itself to any
pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any
Employee other than routine adjustments in compensation and fringe
benefits In the Ordinary Course or accelerate the vesting of any stock
options or other stock-based compensation;
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(g) settle any claim, action or proceeding
involving the payment of money damages in excess of $50,000,
except In the Ordinary Course;
(h) amend its charter or its bylaws;
(i) fail to maintain its Regulatory Agreements, material
licenses and permits or to file in a timely fashion all federal,
state, local and foreign tax returns;
(j) make any capital expenditures of more than $25,000
individually or $50,000 in the aggregate except as noted in Section
7.02(j) the Suncoast Disclosure Schedule;
(k) fail to maintain each Suncoast Benefit Plan or timely
make all contributions or accruals required thereunder in accordance
with GAAP applied on a consistent basis;
(l) originate or purchase any loans with fixed rate terms
longer than three years (except where such loans are Warehouse Loans
originated or purchased In the Ordinary Course and subject to Investor
Commitments) or loans that are not at current market rates for
comparable loan originations; except that Suncoast may originate or
purchase In the Ordinary Course up to an aggregate amount of $5
million of whole residential mortgage loans with fixed rate terms in
excess of three years;
(m) increase interest rates on deposits having a term of
greater than one year to a level higher than interest rates applicable
to BankUnited's comparable deposits, unless the rates are being paid
In the Ordinary Course and are causing disintermediation, in which
case BankUnited shall not unreasonably withhold consent to the payment
of such rates necessary to prevent disintermediation of Suncoast
deposits;
(n) change its underwriting standards for originating or
purchasing loans or servicing;
(o) originate any commercial or non-residential loan
having a principal amount in excess of $500,000 or originate or
purchase any other loan not In the Ordinary Course except as described
in Section 7.01(o) of the Suncoast Disclosure Schedule;
(p) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.02; or
(q) other than in prior consultation with BankUnited,
materially restructure or change its investment securities portfolio,
loan portfolio, or servicing portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or
reported.
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ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 ACCESS AND INFORMATION.
(a) During the period from the date of this Agreement
through the Effective Time, each of Suncoast and BankUnited shall, and
shall cause their respective subsidiaries to, afford the other party,
and the other party's accountants, counsel and other representatives
(including Fiserve), full access during normal business hours and upon
reasonable notice to the properties, books, contracts, tax returns,
commitments, records and data processing files of the other and its
subsidiaries, for the purpose of conducting any review or
investigation reasonably related to the Merger, and Suncoast and
BankUnited and their respective Subsidiaries will cooperate fully with
all such reviews and investigations.
(b) During the period from the date of this Agreement
through the Effective Time, each party shall furnish to the other (i)
all reports referred to in Section 5.35 and 6.04 promptly upon the
filing thereof, (ii) a copy of each Tax Return filed by it and (iii)
monthly and other interim financial statements in the form prepared by
the party for its internal use. During this period, each party shall
also notify the other promptly of any material change in their
respective condition or the condition of any subsidiary.
(c) Notwithstanding the foregoing provisions of this
Section 8.01, no investigation by the parties hereto made heretofore
or hereafter shall affect the representations and warranties of the
parties which are contained herein and each such representation and
warranty shall survive such investigation. BankUnited agrees to notify
Suncoast promptly on any discovery by BankUnited of any breach of any
representation or warranty of Suncoast hereunder; provided however, no
such notification nor any failure of BankUnited to so notify Suncoast
shall result in BankUnited's waiving any such breach.
(d) Each party agrees that it will keep confidential any
information furnished to it in connection with the transactions
contemplated by this Agreement, except to the extent that such
information (i) was already known to the recipient and was received
from a source other than the other party or any of its Subsidiaries,
directors, officers, employees or agents, (ii) was lawfully obtained
from another source, or (iii) is required to be disclosed to the SEC,
the NASD, the OTS, the FDIC or any other governmental agency or
authority, or is otherwise required to be disclosed by law. Each party
agrees not to use such information, and to implement safeguards and
procedures that are reasonably designed to prevent such information
from being used, for any purpose other than in connection with the
transactions contemplated by this Agreement.
(e) Each party shall cooperate, and shall cause its
respective subsidiaries, accountants, counsel and other
representatives to cooperate with the other and its accountants,
counsel and other representatives, in connection with the preparation
by the other of any applications and documents required to obtain the
Approvals, which cooperation shall include
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promptly providing all information, documents and appropriate
representations as may be necessary in connection therewith.
(f) From and after the date of this Agreement, each of
BankUnited and Suncoast shall use its reasonable best efforts to
satisfy or cause to be satisfied all conditions to its respective
obligations under this Agreement. While this Agreement is in effect,
neither BankUnited nor Suncoast shall take any actions, or omit to
take any actions, which would cause this Agreement to become
unenforceable in accordance with its terms.
8.02 REGISTRATION STATEMENT; REGULATORY MATTERS.
(a) BankUnited shall (i) prepare and file the Joint Proxy
Statement/Registration Statement with the SEC, and shall use its best
reasonable efforts to cause the Joint Proxy Statement/Registration
Statement to be filed within thirty days of the date hereof, and (ii)
take any action required to be taken under any applicable state blue
sky or securities laws in connection therewith. Suncoast shall prepare
and file the Joint Proxy Statement with the OTS and shall use its best
reasonable efforts to cause the Joint Proxy Statement to be filed
within 30 days of the date hereof. BankUnited shall furnish Suncoast
with all information concerning BankUnited and its Subsidiaries and
the holders of BankUnited capital stock as Suncoast may reasonably
request in connection with the foregoing. Suncoast and Suncoast
Subsidiaries shall furnish BankUnited with all information concerning
Suncoast, Suncoast Subsidiaries and the holders of Suncoast Capital
Stock as BankUnited may reasonably request in connection with the
foregoing.
(b) BankUnited and Suncoast shall cooperate and use their
respective best reasonable efforts (i) to prepare all documentation,
to effect all filings and to obtain all permits, consents, approvals
and authorizations of all third parties, Regulatory Authorities and
other governmental authorities necessary to consummate the
transactions contemplated by this Agreement, including, without
limitation, any such approvals or authorizations required by the OTS
and (ii) to cause the Merger to be consummated as expeditiously as
reasonably practicable. The Parties agree to file the requisite
applications with the OTS within thirty days from the date hereof, and
BankUnited agrees that it shall be responsible for payment of the fee
for the filing of such application.
8.03 STOCKHOLDERS' APPROVALS.
(a) Subject to Section 8.03(b), Suncoast and BankUnited
shall call meetings of their respective stockholders to be held as
soon as practicable and in accordance with applicable law and its
charter and by-laws for the purpose of voting upon the Merger and
related matters. Suncoast and BankUnited shall use their respective
reasonable best efforts to hold the Stockholders' Meetings not later
than 120 days after the date of this Agreement. The respective Boards
of Directors of Suncoast and BankUnited shall submit for approval of
their respective stockholders the matters to be voted upon at their
respective Stockholders' Meetings, and shall recommend approval of
such matters and use their best reasonable efforts (including, without
limitation, with respect to Suncoast, soliciting proxies for such
approvals and retaining a professional proxy solicitation company) to
obtain such stockholder approvals.
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Suncoast shall consult with BankUnited as to the selection of such
professional proxy solicitation company. The covenants of Suncoast
under this Section 8.03 are subject to the exercise by the Board of
Directors of Suncoast of its fiduciary obligations and the receipt by
the Board of Directors of Suncoast from Raymond James & Associates,
Inc. of a written opinion, dated as of the date of this Agreement, in
form and substance reasonably satisfactory to the Board of Directors
of Suncoast, to the effect that the terms on which Suncoast Capital
Stock is converted into BankUnited capital stock in the Merger is fair
to the holders of Suncoast Capital Stock from a financial point of
view, which opinion shall have been confirmed in writing to Suncoast
as of the date the Proxy Statement is first mailed to the stockholders
of Suncoast and not subsequently withdrawn. The covenants of
BankUnited under this Section 8.03 are subject to the exercise by the
Board of Directors of BankUnited of its fiduciary obligations.
(b) The parties hereto agree that notwithstanding any
other provision of this Agreement, so long as all required approvals
of the stockholders of BankUnited as to the Merger are obtained prior
to the Effective Time as provided herein, BankUnited in its sole
discretion may obtain any such approval by a vote at a meeting of the
stockholders of BankUnited, through action by the stockholders of
BankUnited without a meeting, or otherwise in compliance with
applicable law.
8.04 PRESS RELEASES. Prior to the public dissemination of any press
release or other public disclosure of information about this Agreement, the
Merger or any other transaction contemplated hereby, the parties to this
Agreement shall mutually agree as to the form and substance of such release or
disclosure.
8.05 NOTICE OF DEFAULTS. Each party shall promptly notify the other
of (i) any material change in its business, operations or prospects, (ii) any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any Regulatory Authority, (iii) the institution or
the threat of material litigation involving such party, or (iv) any event or
condition that might be reasonably expected to cause any of its
representations, warranties or covenants set forth herein not to be true and
correct in all material respects as of the Effective Time.
8.06 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use its
respective best reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as reasonably
practicable, including, without limitation, using their respective best efforts
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby. BankUnited and Suncoast shall, and shall cause each of
their respective Subsidiaries to, use its best reasonable efforts to obtain
consents of all third parties and Regulatory Authorities necessary or, in the
reasonable opinion of BankUnited or Suncoast, desirable for the consummation of
the transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of BankUnited
shall be deemed to have been granted authority in the name of Suncoast to take
all such necessary or desirable action.
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8.07 AFFILIATE AGREEMENTS. Suncoast will deliver to BankUnited no
later than 30 days after the date of this Agreement, a letter identifying each
person whom it reasonably believes is an "affiliate" of Suncoast for purposes
of Rule 145 under the Securities Act. Suncoast will use its best reasonable
efforts to cause each person so identified to deliver to BankUnited within
forty-five (45) days after the date of this Agreement a written agreement
substantially in the form of Exhibit D hereto.
8.08 INDEMNIFICATION; INSURANCE.
(a) BankUnited (the "Indemnifying Party") shall
indemnify, defend and hold harmless the present and former officers,
directors, employees and agents of Suncoast and the Suncoast
Subsidiaries (each an "Indemnified Party") after the Effective Time
against all losses, expenses, claims, damages or liabilities
(collectively, "Costs") arising out of actions or omissions occurring
on or prior to the Effective Time (including without limitation, the
transactions contemplated by this Agreement) to the fullest extent
permitted by applicable OTS regulations and Suncoast's charter and
bylaws as in effect on the date hereof. In addition, BankUnited shall
advance expenses as incurred to the fullest extent permitted by the
OTS regulations and by Suncoast's charter and bylaws as in effect on
the date hereof, provided that the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification.
(b) The obligations of BankUnited under this Section 8.08
shall continue for six years following the Effective Time, provided
that all rights to indemnification and advancement of expenses in
respect of any claim made, asserted or commenced within such period
shall continue until the final disposition of such claim.
(c) All rights and obligations under this Section 8.08
shall be in addition to any rights an Indemnified Party may have under
the articles of incorporation or bylaws of BankUnited or any of its
Subsidiaries as in effect on the date hereof, or pursuant to any other
agreement, arrangement or document in effect prior to the Effective
Time.
(d) Any Indemnified Party wishing to claim
indemnification under Section 8.08(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly
notify the Indemnifying Party, but the failure to so notify shall not
relieve the Indemnifying Party of any liability it may have to such
Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time), (i) the Indemnifying Party shall have the right to
assume the defense thereof and the Indemnifying Party shall not be
liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except
that if the Indemnifying Party elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between the Indemnifying Party and
the Indemnified Parties, the Indemnified Parties may retain counsel
which is reasonably satisfactory to the Indemnifying Party, and the
Indemnifying Party shall pay, promptly as statements therefor are
received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction
unless the use of one counsel for such Indemnified Parties would
present such
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counsel with a conflict of interest), (ii) the Indemnified Parties
will cooperate in the defense of any such matter and (iii) the
Indemnifying Party shall not be liable for any settlement effected
without its prior written consent.
(e) At or prior to the Effective Time, BankUnited shall
purchase $5,000,000 of directors and officers liability insurance
coverage for the Indemnified Parties with respect to Costs that may be
incurred by the Indemnified Parties, which coverage shall be for a
term of three years commencing at the Effective Time and shall have a
deductible of $500,000; provided, however, that in no event shall
BankUnited expend in order to obtain such insurance, an amount in
excess of a total of $130,000 in premiums (the "Maximum Amount") for
coverage for such three year period. If the amount of the total
premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, BankUnited shall use its reasonable best
efforts to maintain the most advantageous policies (in terms of
coverage) of directors and officers insurance for a total three year
premium equal to the Maximum Amount.
(f) In the event that BankUnited or any of its respective
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then,
and in each such case, the successors and assigns of such entity shall
assume the obligations set forth in this Section 8.08, which
obligations are expressly intended to be for the irrevocable benefit
of, and shall be enforceable by, each director and officer covered
hereby.
8.09 STOCK OPTIONS.
(a) At the Effective Time, all rights with respect to any
Suncoast Common Stock pursuant to stock options granted by Suncoast
under the Suncoast Option Plan, including options granted under such
plan pursuant to employment or acquisition agreements, which are
outstanding at the Effective Time, whether or not then exercisable,
shall be converted into and become rights with respect to BankUnited
Common Stock and BankUnited shall assume each Suncoast Option, in
accordance with the terms of the Suncoast Option Plan. From and after
the Effective Time, each Suncoast Option shall be exercisable for the
number of shares of BankUnited Common Stock equal to the number of
shares of Suncoast Common Stock subject to such Suncoast Option
immediately prior to the Effective Time, and the per share exercise
price set forth in the Suncoast Option shall remain the same.
(b) At the Effective Time, the Suncoast Option Plan shall
be automatically and without further action assumed by BankUnited (and
thereupon become a stock option plan of BankUnited) as follows: (i)
BankUnited shall be substituted for Suncoast in administering the
Suncoast Option Plan, (ii) references to Suncoast shall be deemed to
be references to BankUnited, references to Suncoast's bylaws shall be
deemed to be references to the bylaws of BankUnited, and any similar
references shall be appropriately adjusted, and (iii) no additional
Suncoast Options shall be granted under the Suncoast Option Plan.
(c) BankUnited shall take all corporate action necessary
(i) to reserve for issuance a sufficient number of shares of
BankUnited Common Stock for delivery upon exercise of the
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options assumed by BankUnited hereunder, and (ii) to ensure that
shares of BankUnited Common Stock issued on exercise of such options
assumed by BankUnited hereunder are registered under the Securities
Act.
8.10 APPOINTMENTS TO BOARD OF DIRECTORS OF BANKUNITED AND
BANKUNITED, FSB. At the Effective Time, Albert Finch shall be appointed as a
Vice-Chairman of the Board of Directors of BankUnited and BankUnited, FSB. At
the Effective Time, the following persons shall be appointed to the Board of
Directors of BankUnited for the terms indicated: Albert Finch - three years;
Norman Mains and Irving Cohen - two years; and E. J. Giusti - one year. The
parties hereto recognize that according to BankUnited's bylaws, each such
person is required to stand for election at the annual shareholders meeting of
BankUnited next following the Effective Time. Accordingly, BankUnited's Board
of Directors, subject to applicable fiduciary obligations, shall (i) nominate
each such person to be elected as a director of BankUnited for the remainder of
such person's term on BankUnited's Board of Directors set forth above at the
annual shareholders meeting of BankUnited next following the Effective Time and
(ii) recommend that the shareholders of BankUnited elect such person to be a
director of BankUnited for such term. At the Effective Time each of the
foregoing persons shall be appointed to the Board of Directors of BankUnited,
FSB for a term of one year.
8.11 VALUATION OF SERVICING PORTFOLIO. At such time as BankUnited
shall reasonably request in connection with setting the Closing, Suncoast shall
provide BankUnited and/or its representatives with a magnetic tape updating the
tapes previously supplied for the purpose of valuing the Servicing Portfolio,
as well as a reconciliation of Suncoast's tape totals to Suncoast's accounting
and bookkeeping records.
8.12 CERTAIN CHANGE IN CONTROL MATTERS. The parties hereto agree
that prior to the Effective Time, Suncoast shall enter into and deliver (i)
certain severance and/or employment continuation agreements (collectively, such
severance and change-in-control agreements are referred to herein as the
"Change-in-Control Agreements") with each of Albert J. Finch, Richard L.
Browdy, and Wendy Mitchler regarding the payment of severance and
change-in-control benefits to them and (ii) a consulting agreement between
BankUnited and Albert J. Finch the term of which shall begin at the Effective
Time. The Change in Control Agreements and such consulting agreement shall be
in the form delivered to and agreed to and accepted by BankUnited in writing
prior to the date this Agreement is executed and delivered. BankUnited hereby
agrees, from and after the Effective Time, to provide the benefits and perform
the obligations of Suncoast set forth in the Change-in-Control Agreements in
accordance with the terms thereof.
8.13 STOCK EXCHANGE LISTING. BankUnited shall use its best efforts
to list, prior to the Effective Time, on the NASDAQ, upon official notice of
issuance, the shares of BankUnited Common Stock and New BankUnited Preferred
Stock to be issued to holders of Suncoast Capital Stock in the Merger.
8.14 EMPLOYEE BENEFITS.
(a) Suncoast shall provide BankUnited in Section 8.14 of the
Suncoast Disclosure Schedule the names of all Suncoast Employees
(including full and part-time employees) as of the date of the
Suncoast Disclosure Schedule (the "Current Employees"), and, as to
each
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Current Employee, such Current Employee's date of hire, current
compensation, and current severance benefits.
(b) BankUnited and Suncoast agree as follows:
(i) As soon as reasonably practicable after the
date of this Agreement BankUnited and Suncoast shall consult with each
other in order for BankUnited in its sole discretion to determine
which employees of Suncoast will become employees of BankUnited after
the Effective Time.
(ii) All employees who accept employment with
BankUnited as of the Effective Time ("Hired Employees") shall be
eligible to participate in the employee benefit plans and other fringe
benefits of BankUnited, including sickness benefit days and vacation
days, on the same terms and conditions as those provided from time to
time by BankUnited to its similarly situated officers and employees,
giving effect, for eligibility and vesting of benefits, to years of
service with Suncoast as if such service were with BankUnited.
(iii) In addition to providing for the Hired
Employee's participation in BankUnited's sickness and vacation plans,
BankUnited agrees to credit each Hired Employee that number of
sickness benefit days and vacation days (provided that in the case of
vacation time, such vacation time was accrued on the books of Suncoast
prior to the Effective Time), in each case accrued as an employee of
Suncoast and not taken by such Hired Employee as of the Effective
Time, which may be taken only in accordance with BankUnited's existing
policy for sickness benefit days and vacation days; provided, however,
that on or before July 1, 1997 BankUnited shall pay such Hired
Employee cash for such Hired Employee's accrued vacation days assumed
by BankUnited pursuant to the previous sentence, but not taken on or
before July 1, 1997. Suncoast employees and dependents participating
in Suncoast's medical plan will not be precluded from participating in
BankUnited's medical plan on account of a pre-existing medical
condition.
(iv) For one year following the Effective Time,
all Hired Employees shall be eligible for severance pay in accordance
with the severance terms set forth in writing by Suncoast to
BankUnited and agreed to and accepted by BankUnited in writing prior
to the date this Agreement is executed and delivered.
8.15 CERTAIN ACTIONS. No party shall take any action which would
adversely affect or delay the ability of either BankUnited or Suncoast to
obtain any necessary approvals of any Regulatory Authority or other
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement. No party shall take
any action that would prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code.
8.16 ACQUISITION PROPOSALS. Suncoast shall not, and shall use its
best reasonable efforts to cause its officers, directors and employees and any
investment banker, attorney, accountant, or other agent retained by it or any
of the Suncoast Subsidiaries not to (i) initiate, encourage or solicit,
directly or indirectly, the making of any proposal or offer (an "Acquisition
Proposal") to acquire all or any significant part of the business and
properties or capital stock of Suncoast or the Suncoast
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Subsidiaries, whether by merger, purchase of securities or assets, tender offer
or otherwise (an "Acquisition Transaction"), or initiate, directly or
indirectly, any contact with any person in an effort to or with a view towards
soliciting any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, an Acquisition Proposal. Notwithstanding the foregoing, Suncoast
may (i) furnish or cause to be furnished information subject to a
confidentiality agreement in a form substantially similar to that previously
executed by BankUnited, (ii) in response to an Acquisition Proposal, issue a
communication to its security holders of the type contemplated by Rule 14d-9(e)
under the Exchange Act, and (iii) participate in discussions and negotiations
directly and through its representatives with persons who have sought the same
if, in each instance, the Suncoast Board determines, based as to legal matters
on the written advice of outside legal counsel, that the failure to furnish
such information or to negotiate with such entity or group or to take and
disclose such position would be inconsistent with the proper exercise of the
fiduciary duties of the Suncoast Board. In the event Suncoast receives an
Acquisition Proposal or such discussions are sought to be initiated or
continued with Suncoast, it shall promptly inform BankUnited as to the material
terms thereof.
8.17 BANKUNITED TERMINATION FEE. To compensate BankUnited for
entering into this Agreement, taking action to consummate the transactions
hereunder and incurring the costs and expenses related thereto and other losses
and expenses, including the foregoing by BankUnited of other opportunities,
Suncoast and BankUnited agree as follows:
(a) Provided that BankUnited shall not be in material
breach of its obligations under this Agreement (which breach has not
been cured promptly following receipt of written notice thereof by
Suncoast specifying in reasonable detail the basis of such alleged
breach), Suncoast shall pay to BankUnited the sum (the "BankUnited
Termination Fee") of (i) $1.0 million if this Agreement is terminated
under the provisions of Section 10.01 (f) or (ii) $100,000 if this
Agreement is terminated under the provisions of Section 10.01(e). In
addition, Suncoast shall pay to BankUnited BankUnited's out-of-pocket
expenses not in excess of $300,000, if the BankUnited Termination Fee
is determined under clause (i) above or $10,000 if the BankUnited
Termination Fee is determined under clause (ii) above (including,
without limitation, amounts paid or payable to banks and investment
bankers, fees and expenses of counsel and printing expenses) (such
expenses are hereinafter referred to as the "BankUnited Expenses"),
incurred by BankUnited or any of its affiliates in connection with or
arising out of transactions contemplated by this Agreement, regardless
of when those expenses are incurred. In the event that this Agreement
is terminated under circumstances under which the BankUnited
Termination Fee is payable, BankUnited shall provide Suncoast with an
itemization of BankUnited Expenses.
(b) If this Agreement is terminated pursuant to (i)
Section 10.01(c) (if and only if (A) the breach by Suncoast giving
rise to BankUnited's right of termination under Section 10.01(c) is
for the specific purpose of inducing BankUnited to terminate this
Agreement in anticipation of an Acquisition Event (a "Wilful Breach")
and (B) pursuant to binding arbitration as defined below, a
determination has been made that (1) such Wilful Breach by Suncoast
has occurred and (2) that an Acquisition Event has occurred within 12
months of the date of such breach by Suncoast); or (ii) Section
10.01(e) (if an Acquisition Event shall occur after the date hereof
and prior to the date that is four months after the date of such
termination), Suncoast shall upon demand by BankUnited, pay or cause
to be paid,
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in same day funds (the "Acquisition Event Termination Fee") to
BankUnited, $1,000,000, or $900,000 if Suncoast shall have already
paid the BankUnited Termination Fee described in Section 8.17(a)(ii)
and the related BankUnited Expenses. "Acquisition Event" shall mean
any of the following: (i) any person or group (as defined in Section
13(d)(3) of the Exchange Act), other than BankUnited or any of its
Subsidiaries, shall have acquired, pursuant to a tender offer,
exchange offer or otherwise, beneficial ownership (including pursuant
to the acquisition of options) of 50% or more of any class of equity
securities of Suncoast or any of its Subsidiaries; (ii) any such
person or group shall have received approval from the OTS to acquire
ownership of 50% or more of any class of equity securities of
Suncoast; or (iii) Suncoast shall have authorized, recommended,
proposed or publicly announced an intention to authorize, recommend or
propose, or shall have entered into, an agreement with any person
(other than BankUnited or a Subsidiary thereof) to (w) effect a
merger, consolidation, business combination, sale of substantially all
the assets, or similar transaction involving Suncoast, (x) sell, lease
or otherwise dispose of assets of Suncoast representing 50% or more of
the consolidated assets of Suncoast, (y) issue, sell or otherwise
dispose of other than by means of a widely disbursed public offering
(including by way of merger, consolidation, share exchange, or any
similar transaction) securities representing 50% or more of any class
of equity securities of Suncoast in the aggregate, or (z) have such
person effect a tender offer or exchange offer that if consummated
would result in any person beneficially owning 50% or more of any
class of equity securities of Suncoast in the aggregate. BankUnited
agrees that any Acquisition Event Termination Fee paid pursuant to
this Section 8.17(b) shall be its exclusive remedy for a Wilful
Breach.
(c) For purposes of matters described in Section
8.17(b)(i) the parties hereto agree to resolve any dispute arising out
of or relating to such matters as follows:
(i) The parties agree to negotiate in good faith
for up to 30 days after written notice by one party to the other party
with respect to any dispute as to matters described in Section
8.17(b)(i) in order to attempt to resolve such dispute.
(ii) In the event that such dispute is not resolved
through mutual discussions within such 30 day period of time, such
dispute shall be submitted by any such party to, and if so submitted
shall be finally settled by, arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award may be entered in any court where the
arbitration takes place or any court having jurisdiction. Any such
arbitration shall take place in Miami, Florida. The arbitrator may
order specific performance or other equitable relief or remedies to
the extent the arbitrator deems appropriate, in any situation in which
a court could so order. All costs of such arbitration, including the
compensation of the arbitrator, shall be split evenly by the parties
hereto. The decision of the arbitrator shall be final and binding upon
the parties, their successors and assigns, and they shall comply with
such decision in good faith, and each party hereby submits itself to
the jurisdiction of the courts of the place where the arbitration is
held for the entry of judgment with respect to and to enforce the
decision of the arbitrator hereunder.
(d) Any payment required by paragraph (a) or (b) of this
Section shall become payable within two business days after
termination of the Agreement.
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<PAGE> 165
(e) Suncoast acknowledges that the agreements contained
in this Section 8.17 are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements,
BankUnited would not enter into this Agreement; accordingly, if
Suncoast fails to promptly pay the BankUnited Termination Fee, the
BankUnited Expenses, or the Acquisition Event Termination Fee, when
due, Suncoast shall in addition thereto pay to BankUnited all costs
and expenses (including fees and disbursements of counsel) incurred in
collecting the BankUnited Termination Fee, the BankUnited Expenses, or
the Acquisition Event Termination Fee, as the case may be, together
with interest on the amount thereof (or any unpaid portion thereof)
from the date such payment was required to be made until the date such
payment is received by BankUnited at the prime rate of Citibank New
York, National Association, as published in the Wall Street Journal
and as in effect from time to time during such period.
8.18 SUNCOAST TERMINATION FEE. To compensate Suncoast for entering
into this Agreement, taking action to consummate the transactions hereunder and
incurring the costs and expenses related thereto and other losses and expenses,
including the foregoing by Suncoast of other opportunities, Suncoast and
BankUnited agree as follows:
(a) Provided that Suncoast shall not be in material
breach of its obligations under this Agreement (which breach has not
been cured promptly following receipt of written notice thereof by
BankUnited specifying in reasonable detail the basis of such alleged
breach), BankUnited shall pay to Suncoast the sum (the "Suncoast
Termination Fee") of $100,000, if this Agreement is terminated under
the provisions of Section 10.01(b), plus out-of-pocket expenses not in
excess of $10,000 (including, without limitation, amounts paid or
payable to banks and investment bankers, fees and expenses of counsel
and printing expenses) (such expenses are hereinafter referred to as
the "Suncoast Expenses") incurred by Suncoast or any of its affiliates
in connection with or arising out of transactions contemplated by this
Agreement, regardless of when those expenses are incurred. In the
event that this Agreement is terminated under circumstances under
which the Suncoast Termination Fee is payable, Suncoast shall provide
BankUnited with an itemization of Suncoast Expenses.
(b) Any payment required by paragraph (a) of this Section
shall become payable within two business days after termination of the
Agreement.
(c) BankUnited acknowledges that the agreements contained
in this Section 8.19 are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements,
Suncoast would not enter into this Agreement; accordingly, if
BankUnited fails to promptly pay the Suncoast Termination Fee or the
Suncoast Expenses when due, BankUnited shall in addition thereto pay
to Suncoast all costs and expenses (including fees and disbursements
of counsel) incurred in collecting the Suncoast Termination Fee or the
Suncoast Expenses, as the case may be, together with interest on the
amount of the Suncoast Termination Fee or the Suncoast Expenses (or
any unpaid portion thereof) from the date such payment was required to
be made until the date such payment is received by Suncoast at the
prime rate of Citibank New York, National Association, as published in
the Wall Street Journal and as in effect from time to time during such
period.
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<PAGE> 166
8.19 SUNCOAST WARRANTS. In the Merger, holders of the Suncoast
Warrants shall have their Suncoast Warrants converted into warrants to acquire
BankUnited Common Stock and/or New BankUnited Preferred Stock as provided in
this Section 8.19. In the Merger, all rights with respect to Suncoast Common
Stock and/or Suncoast Preferred Stock pursuant to the Suncoast Warrants which
are outstanding at the Effective Time shall be converted into and become rights
with respect to BankUnited Common Stock and New BankUnited Preferred Stock,
respectively. In the Merger BankUnited shall assume each Suncoast Warrant, in
accordance with the terms of the Suncoast Warrants, such that (i) the right to
acquire Suncoast Common Stock and/or Suncoast Preferred Stock under the
Suncoast Warrants shall be converted to the right to acquire BankUnited Common
Stock and/or New BankUnited Preferred Stock respectively, on a one share for
one share basis, and on substantially the same terms as are set forth in the
Suncoast Warrants, and (ii) BankUnited shall assume Suncoast's other
obligations under the Suncoast Warrants on substantially the same terms as are
provided in the Suncoast Warrants. BankUnited will execute and deliver to each
registered holder of Suncoast Warrants a supplemental warrant agreement
providing for assumption of the Suncoast Warrant Agreement provided for in this
Section 8.19, subject to applicable law.
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each of BankUnited and Suncoast to effect the
Merger and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) The respective stockholders of Suncoast and
BankUnited shall have approved all matters relating to the Merger
required under applicable law at the Stockholders' Meetings.
(b) This Agreement, the Merger and the other transactions
contemplated hereby shall have been approved by the OTS and any other
Regulatory Authorities whose approval is required for consummation of
the transactions contemplated hereby, which approvals are subject to
no conditions that in the reasonable judgment of BankUnited would
restrict it or its Subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective
Time.
(c) The Registration Statement shall have been declared
effective and shall not be subject to a stop order or any threatened
stop order.
(d) Neither BankUnited nor Suncoast shall be subject to
any active litigation which seeks any order, decree or injunction of a
court or agency of competent jurisdiction to enjoin or prohibit the
consummation of the Merger and there shall be in effect no order,
decree, or injunction of any court or agency of competent
jurisdiction, directing that the consummation of the transactions
contemplated by this Agreement be prohibited or enjoined.
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<PAGE> 167
(e) The shares of BankUnited Common Stock and New
BankUnited Preferred Stock issuable pursuant to the Merger shall have
been authorized for trading on the NASDAQ upon official notice of
issuance.
9.02 CONDITIONS TO OBLIGATIONS OF SUNCOAST TO EFFECT THE MERGER.
The obligations of Suncoast to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of BankUnited set
forth in Article VI hereof shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except to the extent
such representations and warranties are by their express provisions
made as of a specified date) and Suncoast shall have received a
certificate signed by the chairman and chief executive officer,
executive vice president or other duly authorized officer of
BankUnited to that effect.
(b) BankUnited shall have performed in all material
respects all obligations required to be performed by it under this
Agreement prior to the Effective Time, and Suncoast shall have
received a certificate signed by the chairman and chief executive
officer, executive vice president or other duly authorized officer of
BankUnited to that effect.
(c) As of the Effective Time the BankUnited Net Worth
shall be not less than $64,700,000.
(d) Suncoast shall have received an opinion of counsel
for BankUnited addressed to Suncoast and in form reasonably
satisfactory to it as to validity of the approval of the Merger by
BankUnited and Merger Sub.
(e) The Suncoast Board shall have received from Raymond
James & Associates, Inc. a written opinion, dated as of the date of
this Agreement, in form and substance reasonably satisfactory to the
Suncoast Board, to the effect that the terms on which Suncoast Capital
Stock is converted into BankUnited capital stock in the Merger is fair
to the holders of Suncoast Capital Stock from a financial point of
view, which opinion shall have been confirmed in writing to the
Suncoast Board as of the date the Joint Proxy Statement is first
mailed to the stockholders of Suncoast and not subsequently withdrawn.
(f) No event, occurrence, or circumstance shall have
occurred that would constitute a Material Adverse Effect as to
BankUnited.
(g) Suncoast shall have received an opinion of counsel
mutually agreed upon by Suncoast and BankUnited addressed to Suncoast
and/or BankUnited in form reasonably satisfactory to them that for
federal income tax purposes the Merger qualifies as a reorganization
under the provisions of Section 368 of the Code.
9.03 CONDITIONS TO OBLIGATIONS OF BANKUNITED TO EFFECT THE MERGER.
The obligations of BankUnited to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
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<PAGE> 168
(a) The representations and warranties of Suncoast set
forth in Article V hereof shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except to the extent
such representations and warranties are by their express provisions
made as of a specified date) and BankUnited shall have received a
certificate signed by the chairman or the chief executive officer or
other duly authorized officer of Suncoast to that effect.
(b) As of the Effective Time the Suncoast Net Worth shall
be not less than $22,000,000.
(c) Suncoast shall have performed in all material
respects all obligations required to be performed by it under this
Agreement prior to the Effective Time, and BankUnited shall have
received a certificate signed by the chairman or the chief executive
officer or other duly authorized officer of Suncoast to that effect.
(d) BankUnited shall have received an opinion of counsel
for Suncoast addressed to BankUnited and in form reasonably
satisfactory to it as to the validity of the approvals of the Merger
by Suncoast.
(e) No event, occurrence, or circumstance shall have
occurred that would constitute a Material Adverse Effect as to
Suncoast.
ARTICLE X
TERMINATION
10.01 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions contemplated hereby by the stockholders of BankUnited
and Suncoast or both, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) by mutual consent of BankUnited and Suncoast; or
(b) by BankUnited or Suncoast if (i) the OTS has denied
approval of the Merger and such denial has become final and
nonappealable or has approved the Merger subject to conditions that in
the judgment of BankUnited would restrict it or its Subsidiaries or
Affiliates in their respective spheres of operations and business
activities after the Effective Time or (ii) the Effective Time does
not occur by February 28, 1997; or
(c) by BankUnited (if it is not in material breach of any
of its obligations hereunder) pursuant to notice in the event of a
breach or failure by Suncoast that is material in the context of the
transactions contemplated hereby of any representation, warranty,
covenant or agreement by Suncoast contained herein which has not been,
or cannot be, cured within 30 days after written notice of such breach
is given to Suncoast; or
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<PAGE> 169
(d) by Suncoast (if it is not in material breach of any
of its obligations hereunder) pursuant to notice in the event of a
breach or failure by BankUnited that is material in the context of the
transactions contemplated hereby of any representation, warranty,
covenant or agreement by BankUnited contained herein which has not
been, or cannot be, cured within 30 days after written notice of such
breach is given to BankUnited; or
(e) by BankUnited or Suncoast if the stockholders of
BankUnited or Suncoast fail to approve the Merger at the Stockholders'
Meetings; or
(f) by Suncoast if (i) there shall not have been a
material breach of any covenant or agreement on the part of Suncoast
under this Agreement and (ii) prior to the Effective Time, a
corporation, partnership, person or other entity or group shall have
made a bona fide Acquisition Proposal that the Suncoast Board
determines in its good faith judgment and in the exercise of its
fiduciary duties, based as to legal matters on the written opinion of
legal counsel and as to financial matters on the written opinion of an
investment banking firm familiar with savings institutions, is more
favorable to the Suncoast Stockholders than the Merger and that the
failure to terminate this Agreement and accept such alternative
Acquisition Proposal would be inconsistent with the proper exercise of
such fiduciary duties; provided, however, that termination under this
clause (ii) shall not be deemed effective until payment of the
Termination Fee required by Section 8.17.
10.02 BANKUNITED SPECIAL TERMINATION RIGHTS. Notwithstanding any
investigation made by or information known to BankUnited prior to the date
hereof and notwithstanding anything to the contrary herein, and in recognition
of the fact that BankUnited, as of the date hereof, has not had an opportunity
to complete its due diligence review of Suncoast, in addition to the
termination rights set forth in Section 10.01, BankUnited shall have the
following rights (the "BankUnited Special Termination Rights"): at any time
after the date of this Agreement through 6:00 p.m. on the later of (i) 15
business days after the date hereof or (ii) seven business days after the date
on which the completed Suncoast Disclosure Schedule has been delivered to
BankUnited, if BankUnited shall identify any circumstance which in the
reasonable business judgement of its Board of Directors (including a Special
Committee thereof) (w) could materially and adversely impact the reasonably
expected financial and business benefits to BankUnited of the transactions
contemplated by this Agreement, (x) is inconsistent in any material and adverse
respect with the representations and warranties of Suncoast contained in this
Agreement, (y) could have a Material Adverse Effect as to Suncoast, or (z)
results in the net worth of Suncoast being less than $23.0 million, which net
worth shall be determined in accordance with GAAP, BankUnited may exercise the
BankUnited Special Termination Rights by written notice to Suncoast pursuant to
Section 11.06. BankUnited shall inform Suncoast by 6:00 p.m. on the last
business date determined under clause (i) or (ii) of this Section 10.02 if it
determines that as of such date any such circumstance has any of the effects
set forth above. Failure to exercise such right shall have no effect on
BankUnited's right to terminate pursuant to Section 10.01.
10.03 SUNCOAST SPECIAL TERMINATION RIGHTS. Notwithstanding any
investigation made by or information known to Suncoast prior to the date hereof
and notwithstanding anything to the contrary herein, and in recognition of the
fact that Suncoast, as of the date hereof, has not had an opportunity to
complete its due diligence review of BankUnited, in addition to the termination
rights set forth in Section 10.01, Suncoast shall have the following rights
(the "Suncoast Special
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<PAGE> 170
Termination Rights"): at any time after the date of this Agreement through 6:00
p.m. on the later of (i) 15 business days after the date hereof or (ii) seven
business days after the date on which the completed BankUnited Disclosure
Schedule has been delivered to Suncoast, if Suncoast shall identify any
circumstance which in the reasonable business judgement of its Board of
Directors (including a Special Committee thereof) (x) is inconsistent in any
material and adverse respect with the representations and warranties of
BankUnited contained in this Agreement, (y) could have a Material Adverse
Effect as to BankUnited, or (z) results in the net worth of BankUnited being
less than $64.7 million, which net worth shall be determined as of June 30,
1996, determined in accordance with GAAP, Suncoast may exercise the Suncoast
Special Termination Rights by written notice to BankUnited pursuant to Section
11.06. Suncoast shall inform BankUnited by 6:00 p.m. on the last business date
determined under clause (i) or (ii) of this Section 10.03 if it determines that
as of such date any such circumstance has any of the effects set forth above.
Failure to exercise such right shall have no effect on Suncoast's right to
terminate pursuant to Section 10.01.
10.04 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Article 10, this Agreement shall
become void and have no effect, except that (i) the provisions of Sections
8.01(d), 8.17, 8.18, 10.04, and Section 11.01 shall survive any such
termination, and (ii) no party shall be relieved or released from any liability
arising out of an intentional breach of any provision of this Agreement.
10.05 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
FOLLOWING THE EFFECTIVE TIME. Except for Articles III, and IV and Sections
8.08, 8.09, 8.10, 8.12, 8.14 and 8.19, none of the respective representations,
warranties, obligations, covenants and agreements of the parties shall survive
the Effective Time.
10.06 DELIVERY OF BANKUNITED AND SUNCOAST DISCLOSURE SCHEDULES. Each
of BankUnited and Suncoast will use their respective best reasonable efforts to
deliver their completed Disclosure Schedule to the other by 6:00 p.m. on the
seventh business day after the date hereof; provided that each such Disclosure
Schedule shall be delivered no later than the tenth business day after the date
hereof.
ARTICLE XI
GENERAL PROVISIONS
11.01 EXPENSES. Unless otherwise agreed by the parties in writing,
each party hereto shall bear its own expenses incident to preparing, entering
into and carrying out this Agreement and to consummating the Merger.
11.02 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereunder and thereunder, and
such agreements supersede all prior arrangements or understandings with respect
thereto, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors. Other than as expressly set forth in this Agreement,
nothing in this Agreement, expressed or implied, is intended to confer upon any
individual, corporation or other entity, other than BankUnited, Suncoast and
the
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Merger Sub or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
11.03 AMENDMENTS. To the extent permitted by law, this Agreement may
be amended by a subsequent writing signed by each of BankUnited and Suncoast;
provided, however, that the provisions hereof relating to the manner or basis
in which shares of Suncoast Capital Stock will be exchanged for capital stock
of BankUnited shall not be amended after the Stockholders' Meetings without any
requisite approval of the holders of the issued and outstanding shares of
Suncoast Capital Stock entitled to vote thereon.
11.04 WAIVERS. Prior to or at the Effective Time, each of
BankUnited and Suncoast shall have the right to waive any default in the
performance of any term of this Agreement by the other, to waive or extend the
time for the compliance or fulfillment by the other of any and all of the
other's obligations under this Agreement and to waive any or all of the
conditions precedent to its obligations under this Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
11.05 NO ASSIGNMENT. None of the parties hereto may assign any of
its rights or delegate any of its obligations under this Agreement to any other
person or entity. Any such purported assignment or delegation that is made
without the prior written consent of the other parties to this Agreement shall
be void and of no effect.
11.06 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, or by registered or certified mail, postage
prepaid to the persons at the addresses set forth below (or at such other
address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Suncoast: Suncoast Savings and Loan Association, FSA
4000 Hollywood Boulevard - Suite 400N
Hollywood, Florida 33021
Attention: Albert J. Finch, Chairman of the Board and President
Copy to Counsel: Thompson Hine & Flory P.L.L.
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
Attention: Richard E. Streeter
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<PAGE> 172
BankUnited: BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Attention: Alfred R. Camner, Chairman of the
Board and President Samuel A.
Milne, Chief Financial Officer
Copy to Counsel: Stuzin and Camner, P.A.
1221 Brickell Avenue - 25th Floor
Miami, Florida 33131
Attention: Marsha D. Bilzin
11.07 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to take all such actions as are necessary on
its part to cause the consummation of the Merger, will cause irreparable injury
for which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of injunctive relief by
any court of competent jurisdiction to compel performance of the other party's
obligations or any arbitration award hereunder and to the granting by any such
court of the remedy of the specific performance hereunder.
11.08 GOVERNING LAW. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Florida.
11.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement, or in any other instrument referred to
herein, shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
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<PAGE> 173
IN WITNESS WHEREOF, BankUnited and Suncoast have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
BANKUNITED FINANCIAL CORPORATION
By: /s/ Alfred R. Camner
--------------------------------------
Alfred R. Camner
Chairman of the Board and President
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
By: /s/ Albert J. Finch
--------------------------------------
Albert J. Finch
Chairman of the Board and President
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<PAGE> 174
EXHIBIT A
Board of Directors of
Surviving Corporation
<PAGE> 175
BOARD OF DIRECTORS
OF
SURVIVING CORPORATION
If BankUnited, FSB is not the Surviving Corporation then the following
individuals will be directors of the Surviving Corporation at the Effective
Time:
Name Home Address
- ---- -------------
Alfred R. Camner 6855 S.W. 101 Street
Miami, Florida 33156
James A. Dougherty 5331 S.W. 90 Avenue
Cooper City, Florida 33328
Earline G. Ford 20490 N.E. 22nd Court
N. Miami Beach, Florida 33180
<PAGE> 176
If BankUnited, FSB is the Surviving Corporation then the following
individuals will be directors of the Surviving Corporation at the Effective
Time:
Name Home Address
- ---- ------------
Alfred R. Camner 6855 S.W. 101 Street
Miami, Florida 33156
James A. Dougherty 5331 S.W. 90 Avenue
Cooper City, Florida 33328
Lawrence H. Blum 10100 Hidden Place
Miami, Florida 33156
Earline G. Ford 20490 N.E. 22nd Court
N. Miami Beach, Florida 33180
Marc D. Jacobson 115 E. Rivo Alto Drive
Miami Beach, Florida 33140
Allen M. Bernkrant 13643 Deering Bay Drive
Resident #125
Miami, Florida 33158
Patricia L. Frost 125 E. San Marino Drive
Miami Beach, Florida 33139
Anne W. Solloway 8124 S.W. 87 Terrace
Miami, Florida 33143
Sandra Goldstein 611 Ocean Drive - Apt. #2E
Key Biscayne, Florida 33149
Christina Cuervo Migoya 1600 S. Miami Avenue
Miami, Florida 33129
Albert J. Finch 15 Dogwood Road
Hollywood, Florida 33021
Norman E. Mains 1065 Fisher Lane
Winnetka, Illinois 60093
Irving P. Cohen 4832 Flower Valley Road
Rockville, Maryland 20853
E. J. Giusti 2500 E. Las Olas
Blvd., Ste. 1002 Fort
Lauderdale, Florida 33301
Mr. Bruce Friesner 5431 North 36th Court
Hollywood, Florida 33021
Dr. Neil Messinger 10801 S.W. 93rd Court
Miami, Florida 33176
<PAGE> 177
EXHIBIT B
Offices of Surviving Corporation
<PAGE> 178
OFFICES OF SURVIVING CORPORATION
If BankUnited, FSB is not the Surviving Corporation then the offices
of the Surviving Corporation at the Effective Time will be as follows:
Office Headquarters Mortgage Origination Offices
- ------------------- ----------------------------
255 Alhambra Circle Suite 550N
Coral Gables, Florida 33134 4000 Hollywood Boulevard
(305) 569-2000 Hollywood, Florida 33021
(305) 986-2030
Savings Branches 7700 N. Kendall Drive
- ---------------- Suite 506
4350 Sheridan Street Miami, Florida 33156
Hollywood, Florida 330221
(305) 963-2974
501 Golden Isles Drive
Hallandale, Florida 33009
(305) 458-5004
100 S. Flamingo Road
Pembroke Pines, Florida 33027
(305) 437-9458
1177 George Bush Boulevard, Suite 203
Delray Beach, Florida 33483
(407) 265-1332
227 Commercial Boulevard
Lauderdale-by-the-Sea, Florida 33308
(305) 776-6655
1313 North Ocean Boulevard
Pompano Beach, Florida 33062
(954) 784-4188
<PAGE> 179
OFFICES OF SURVIVING CORPORATION
If BankUnited, FSB is the Surviving Corporation then the offices of
the Surviving Corporation at the Effective Time will be as follows:
Office Headquarters 2201 West Hillsboro Boulevard
- ------------------- Deerfield Beach, Florida 33442
255 Alhambra Circle (954) 427-6390
Coral Gables, Florida 33134
(305) 569-2000 7431-39 West Atlantic Avenue
Delray Beach, Florida 33446
(407) 495-5020
Savings Branches
- ---------------- 6075 Sunset Drive
4350 Sheridan Street South Miami, Florida 33143
Hollywood, Florida 330221 (305) 663-8000
(305) 963-2974
5779 North University Drive
501 Golden Isles Drive Tamarac, Florida 33321
Hallandale, Florida 33009 (954) 722-4701
(305) 458-5004
117 N. Congress Avenue
100 S. Flamingo Road Boynton Beach, Florida 33426
Pembroke Pines, Florida 33027
(305) 437-9458 1313 North Ocean Boulevard
Pompano Beach, Florida 33062
1177 George Bush Boulevard, Suite 203 (954) 784-4188
Delray Beach, Florida 33483
(407) 265-1332
Mortgage Origination Offices
227 Commercial Boulevard ----------------------------
Lauderdale-by-the-Sea, Florida 33308 Suite 550N
(305) 776-6655 4000 Hollywood Boulevard
Hollywood, Florida 33021
21222 St. Andrews Blvd. (305) 986-2030
Boca Raton, Florida 33434
(407) 750-7710 7700 N. Kendall Drive
Suite 506
255 Alhambra Circle Miami, Florida 33156
Coral Gables, Florida 33134
(305) 569-2000
1307 University Drive
Coral Springs, Florida 33071
(954) 752-8572
<PAGE> 180
EXHIBIT C
Voting Agreement
Pursuant to Section 5.44
of the Agreement and Plan of Merger
<PAGE> 181
Name (please print):
-----------------------------------------
Number of Shares of Suncoast Common Stock:
---------------
Number of Shares of Suncoast Preferred Stock:
---------------
July 15, 1996
BANKUNITED FINANCIAL CORPORATION
255 Alhambra Circle
Coral Gables, Florida 33134
Dear Madam or Sir:
The undersigned has been informed that BankUnited Financial
Corporation ("BankUnited") has entered into an agreement and plan of merger
dated as of the date hereof (the "Agreement") with Suncoast Savings and Loan
Association, FSA ("Suncoast") pursuant to which BankUnited will acquire
Suncoast in a merger transaction (the "Transaction") in which shares of
BankUnited will be issued for shares of Suncoast. A copy of the Agreement, as
executed, has been provided to the undersigned and the undersigned has reviewed
and is familiar with the terms of the Agreement.
As a condition and inducement to BankUnited's willingness to enter
into the Agreement, the undersigned confirms the undersigned's agreement with
BankUnited as follows:
1. The undersigned represents and warrants that as of the date hereof the
undersigned owns or has the power to vote the number of shares of
Common Stock, par value $1.10 per share, of Suncoast (the "Common
Stock") set forth above, which includes shares of Common Stock held by
Suncoast's Stock Bonus/401(k) Plan which the undersigned is entitled
to vote. Except for shares of Suncoast's Series A Noncumulative
Convertible Preferred Stock ("Preferred Stock") and options to
purchase Common Stock outstanding under Suncoast's stock option
plan(s), if any, owned by the undersigned, the undersigned does not
own or hold any rights to acquire any additional shares of the Common
Stock (by conversion of convertible securities, exercise of stock
options or otherwise) or any interest therein or any voting rights
with respect thereto.
2. The undersigned will not contract to sell, sell or otherwise transfer
or dispose of any shares of Common Stock or Preferred Stock or any
additional shares of Common Stock or Preferred Stock that the
undersigned may subsequently acquire, or any interest therein or
securities convertible into Common Stock or any voting rights with
respect thereto, other than pursuant to the Transaction or with
BankUnited's prior written consent.
3. The undersigned agrees to vote all shares of the Common Stock
beneficially owned by the undersigned at the record date for the
special meeting of shareholders of Suncoast to be called to consider
and vote on the Transaction, or the undersigned shall cause such
shares to be voted, in favor of the Transaction pursuant to the
Agreement, with such modifications to the Agreement as the parties
thereto may make. At any meeting of shareholders held to consider any
other acquisition proposal with respect to Suncoast or to take action
to nullify or prevent
<PAGE> 182
the Transaction, all such shares owned or controlled by the
undersigned will be voted against such proposal.
4. The undersigned shall use his or her reasonable best efforts to
cooperate fully with BankUnited in connection with the Transaction and
to take promptly all such actions as may be necessary or appropriate
to consummate such Transaction.
5. The undersigned agrees that damages are an inadequate remedy for the
breach by the undersigned of any term or condition of this letter
agreement and that BankUnited shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief in
order to enforce the agreements herein.
6. The obligations of the parties hereunder shall terminate upon the
earlier to occur of termination of the Agreement in accordance with
its terms or consummation of the Transaction.
7. This agreement shall be fully binding upon and inure to the benefit of
the respective parties' successors, assigns, executors, trustees and
heirs.
8. This agreement shall be governed by and construed under the laws of
the State of Florida (without giving effect to the choice of law
provisions thereof). Any term or provision of this agreement which is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this agreement or affecting the
validity or enforceability of any of the terms or provisions of this
agreement in any other jurisdiction. If any provisions of this
agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
9. Notwithstanding the foregoing, this agreement shall have no effect on
the undersigned's conduct as a member of the Board of Directors of
Suncoast, or as an executive officer of Suncoast if the undersigned is
a member of the Board of Directors of Suncoast or is an executive
officer of Suncoast.
10. The undersigned consents to the jurisdiction of any state or federal
court located within the county of Dade, state of Florida, and
irrevocably agree that all actions or proceedings arising out of or
relating to this agreement shall be litigated in such courts. The
undersigned accepts individually and in connection with the
undersigned's properties, generally and unconditionally, the
jurisdiction of the aforesaid courts and waives any defense of forum
non conveniens, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this agreement.
11. The undersigned agrees that in the event of litigation between the
undersigned and BankUnited arising out of this Agreement, if
BankUnited prevails in such litigation, BankUnited shall be entitled
to recover reasonable attorneys' fees, trial and appellate court
costs, and all other costs or expenses associated with such
litigation.
<PAGE> 183
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of such counterparts together shall
constitute one and the same instrument.
Very truly yours,
--------------------------------
Signature
<PAGE> 184
EXHIBIT D
Voting Agreement
Pursuant to Section 6.15
of the Agreement and Plan of Merger
<PAGE> 185
Name (please print):
-------------------------------------------------
Number of Shares of BankUnited Class A Common Stock:
----------------
Number of Shares of BankUnited Class B Common Stock:
----------------
Number of Shares of BankUnited Preferred Stock (all series):
---------
July 15, 1996
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
4000 Hollywood Boulevard
Hollywood, FL 33021
Dear Madam or Sir:
The undersigned has been informed that BankUnited Financial
Corporation ("BankUnited") has entered into an agreement and plan of merger
dated as of the date hereof (the "Agreement") with Suncoast Savings and Loan
Association, FSA ("Suncoast") pursuant to which BankUnited will acquire
Suncoast in a merger transaction (the "Transaction") in which shares of
BankUnited will be issued for shares of Suncoast. A copy of the Agreement, as
executed, has been provided to the undersigned and the undersigned has reviewed
and is familiar with the terms of the Agreement.
As a condition and inducement to Suncoast's willingness to enter into
the Agreement, the undersigned confirms the undersigned's agreement with
Suncoast as follows:
1. The undersigned represents and warrants that as of the date hereof the
undersigned owns or has the power to vote the number of shares of
Class A and Class B Common Stock, par value $.01 per share, of
BankUnited (the "Common Stock") set forth above. Except for shares of
BankUnited's Preferred Stock (all series) ("Preferred Stock") and
options to purchase Common Stock outstanding under BankUnited's stock
option plan(s), if any, owned by the undersigned, the undersigned does
not own or hold any rights to acquire any additional shares of the
Common Stock (by conversion of convertible securities, exercise of
stock options or otherwise) or any interest therein or any voting
rights with respect thereto.
2. The undersigned agrees to vote all shares of Common Stock beneficially
owned by the undersigned at the meeting of the shareholders of
BankUnited next following the date of this Agreement at which
directors of BankUnited are elected, in favor of electing to the Board
of Directors of BankUnited the persons set forth in Section 8.10 of
the Agreement for the terms set forth therein.
3. The undersigned agrees to vote all shares of the Common Stock
beneficially owned by the undersigned at the record date for the
special meeting of shareholders of BankUnited to be called to consider
and vote on the Transaction, or the undersigned shall cause such
shares to be voted, in favor of the Transaction pursuant to the
Agreement, with such modifications to the Agreement as the parties
thereto may make.
<PAGE> 186
4. The undersigned shall use his or her reasonable best efforts to
cooperate fully with Suncoast in connection with the Transaction and
to take promptly all such actions as may be necessary or appropriate
to consummate such Transaction.
5. The undersigned agrees that damages are an inadequate remedy for the
breach by the undersigned of any term or condition of this letter
agreement and that Suncoast shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief in
order to enforce the agreements herein.
6. The obligations of the parties hereunder shall terminate upon the
earlier to occur of termination of the Agreement in accordance with
its terms or consummation of the Transaction.
7. This agreement shall be fully binding upon and inure to the benefit of
the respective parties' successors, assigns, executors, trustees and
heirs.
8. This agreement shall be governed by and construed under the laws of
the State of Florida (without giving effect to the choice of law
provisions thereof). Any term or provision of this agreement which is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this agreement or affecting the
validity or enforceability of any of the terms or provisions of this
agreement in any other jurisdiction. If any provision of this
agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
9. Notwithstanding the foregoing, this agreement shall have no effect on
the undersigned's conduct as a member of the Board of Directors of
BankUnited, or as an executive officer of BankUnited if the
undersigned is a member of the Board of Directors of BankUnited or is
an executive officer of BankUnited.
10. The undersigned consents to the jurisdiction of any state or federal
court located within the county of Dade, state of Florida, and
irrevocably agrees that all actions or proceedings arising out of or
relating to this agreement shall be litigated in such courts. The
undersigned accepts individually and in connection with the
undersigned's properties, generally and unconditionally, the
jurisdiction of the aforesaid courts and waives any defense of forum
non conveniens, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this agreement.
11. The undersigned agrees that in the event of litigation between the
undersigned and Suncoast arising out of this Agreement, if Suncoast
prevails in such litigation, Suncoast shall be entitled to recover
reasonable attorneys' fees, trial and appellate court costs, and all
other costs or expenses associated with such litigation.
<PAGE> 187
This agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of such counterparts together shall
constitute one and the same instrument.
Very truly yours,
------------------------------
Signature
<PAGE> 188
EXHIBIT E
Rule 145 Affiliate Agreement
Pursuant to Section 8.07
of the Agreement and Plan of Merger
<PAGE> 189
Name (please print)
-------------------
_____________ ___, 1996
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Dear Madam or Sir:
This letter is delivered to you in compliance with Section 8.07 of the
Agreement and Plan of Merger, dated July 15, 1996 (the "Agreement"), between
BankUnited Financial Corporation ("BankUnited") and Suncoast Savings and Loan
Association, FSA ("Suncoast"), providing for the merger (the "Merger") of
Suncoast with and into a newly formed, wholly-owned subsidiary of BankUnited.
1. The undersigned represents and warrants to you that the shares
of Class A Common Stock of BankUnited and the shares of the new series of
BankUnited Preferred Stock (collectively, the "BankUnited Stock"), which the
undersigned shall receive in exchange for shares of common stock or preferred
stock of Suncoast, are not being acquired by the undersigned with a view to
their distribution except to the extent and in the manner provided for in
paragraph (d) of Rule 145 under the Securities Act of 1933, as amended (the
"Act"). The undersigned agrees that the undersigned will not sell, transfer or
otherwise dispose of any shares of BankUnited Stock to be received by the
undersigned in connection with the Merger unless (i) such sale, transfer, or
other disposition has been registered under this Act, (ii) such sale, transfer,
or other disposition is made in conformity with the volume and other applicable
limitations of Rule 145 under the Act, or (iii) the undersigned at the
undersigned's expense delivers to BankUnited an opinion of counsel in form and
substance reasonably satisfactory to BankUnited to the effect that the proposed
transfer of BankUnited Stock does not violate the federal securities laws.
2. The undersigned acknowledges that to the extent the
undersigned believed necessary, the undersigned discussed this letter and any
applicable limitations upon the resale of BankUnited Stock with either counsel
for undersigned or counsel for Suncoast. The undersigned agrees that BankUnited
may place the legend set forth below on the certificate or certificates for any
or all BankUnited Stock to be received by the undersigned in connection with
the Merger and may file stop-transfer instructions with respect to such shares
with the transfer agent for such shares. The undersigned understands that the
legend set forth on the certificate or certificates for BankUnited Stock to be
received by the undersigned shall be removed as well as the related
stop-transfer instructions when such restrictions are no longer applicable to
such shares.
<PAGE> 190
3. Pursuant to the provisions of the preceding paragraph, the
certificate or certificates evidencing BankUnited Stock received by the
undersigned may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF SUCH RULE
HAVE BEEN FULFILLED."
Very truly yours,
----------------------------------
Signature
<PAGE> 191
EXHIBIT 3.2.1
BY-LAWS, AS AMENDED
<PAGE> 192
BYLAWS OF
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
ARTICLE I
HOME OFFICE
The home office of the association shall be located at 4000 Hollywood
Boulevard, Hollywood, in the County of Broward, in the State of Florida.
ARTICLE II
SHAREHOLDERS
SECTION 1. Place of Meetings. All annual and special meetings of
shareholders shall be held at the home office of the association or at such
other place in the State in which the principal place of business of the
association is located as the board of directors may determine.
SECTION 2. Annual Meeting. A meeting of the shareholders of the
association for the election of directors and for the transaction of any other
business of the association shall be held annually within 120 days after the
end of the association's fiscal year on the last Friday of October if not a
legal holiday, and if a legal holiday, then on the next day following which is
not a legal holiday, at 10:00 a.m. or at such other date and time within such
120 day period as the board of directors may determine.
SECTION 3. Special Meetings. Special meetings of the shareholders
for any purpose or purposes, unless otherwise prescribed by the regulations of
the Office of Thrift Supervision (Office), may be called at any time by the
chairman or vice chairman of the board, the president, or a majority of the
board of directors, and shall be called by the chairman or vice chairman of
the board, the president, or the secretary upon written request of the holders
of not less than one-tenth (1/10) of all the outstanding capital stock of the
association entitled to vote at the meeting. Such written request shall state
the purpose or purposes of the meeting and shall be delivered to the home
office of the association addressed to the chairman of the board, the
president, or the secretary.
SECTION 4. Conduct of Meetings. Annual and special meetings shall
be conducted in accordance with the most current edition of Robert's Rules of
Order unless otherwise prescribed by regulations of the Office or these
bylaws. The board of directors shall designate, when present, either the
chairman or vice chairman of the board or president to preside at such
meetings.
<PAGE> 193
SECTION 5. Notice of Meetings. Written notice stating the place,
day and hour of the meeting and the purpose(s) for which the meeting is called
shall be delivered not fewer than ten (10) nor more than fifty (50) days before
the date of the meeting, either personally or by mail, by or at the direction
of the chairman or vice chairman of the board, the president, or the secretary
or the Directors calling the meeting, to each shareholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the mail, addressed to the shareholder at the address as it
appears on the stock transfer books or records of the association as of the
record date prescribed in Section 6 of this Article II with postage prepaid.
When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. It shall not be necessary to give any notice
of the time and place of any meeting adjourned for less than thirty (30) days
or of the business to be transacted at the meeting, other than an announcement
at the meeting at which such adjournment is taken.
SECTION 6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment, or shareholders entitled to receive payment of any dividend,
or in order to make a determination of shareholders for any other proper
purpose, the board of directors shall fix in advance a date as the record date
for any such determination of shareholders. Such date in any case shall be not
more than sixty (60) days and, in case of a meeting of shareholders, not fewer
than ten (10) days prior to the date on which the particular action, requiring
such determination of shareholders, is to be taken. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment.
SECTION 7. Voting Lists. At least twenty (20) days before each
meeting of the shareholders, the officer or agent having charge of the stock
transfer books for shares of the association shall make a complete list of the
shareholders entitled to vote at such meeting, or any adjournment, arranged in
alphabetical order, with the address and the number of shares held by each.
This list of shareholders shall be kept on file at the home office of the
association and shall be subject to inspection by any shareholder at any time
during usual business hours, for a period of twenty (20) days prior to such
meeting. Such list shall also be produced and kept open at the time and place
of the meeting and shall be subject to inspection by any shareholder during
the entire time of the meeting. The original stock transfer book shall
constitute prima facie evidence of the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders. In lieu of
making the shareholder list available for inspection by shareholders as
provided in the preceding paragraph, the board of
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<PAGE> 194
directors may elect to follow the procedures prescribed in subsection 552.6(d)
of the Office's regulations as now or hereafter in effect.
SECTION 8. Quorum. A majority of the outstanding shares of the
association entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. The shareholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to constitute less than a quorum.
SECTION 9. Proxies. At all meetings of shareholders, a shareholder
may vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney-in-fact. Proxies solicited on behalf of the management
shall be voted as directed by the shareholder or, in the absence of such
direction, as determined by a majority of the board of directors. No proxy
shall be valid more than eleven (11) months from the date of its execution
except for a proxy coupled with an interest.
SECTION 10. Voting of Shares in the Name of Two or More Persons.
When ownership stands in the name of two or more persons, in the absence of
written directions to the association to the contrary, at any meeting of the
shareholders of the association any one or more of such shareholders may cast,
in person or by proxy, all votes to which such ownership is entitled. In the
event an attempt is made to cast conflicting votes, in person or by proxy, by
the several persons in whose names shares of stock stand, the vote or votes to
which those persons are entitled shall be cast as directed by a majority of
those holding such and present in person or by proxy at such meeting, but no
votes shall be cast for such stock if a majority cannot agree.
SECTION 11. Voting of Shares by Certain Holders. Shares standing in
the name of another corporation may be voted by any officer, agent, or proxy as
the bylaws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine. Shares
held by an administrator, executor, guardian or conservator may be voted by
him or her, either in person or by proxy, without a transfer of such shares
into his or her name. Shares standing in the name of a trustee may be voted by
him or her, either in person or by proxy, but no trustee shall be entitled to
vote shares held by him or her, without a transfer of such shares into his or
her name. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted
3
<PAGE> 195
by such receiver without the transfer into his or her name if authority to do
so is contained in an appropriate order of the court or other public authority
by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the association nor
shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held by the
association, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
SECTION 12. Cumulative Voting Limitation. Shareholders shall not be
permitted to cumulate their votes for election of directors.
SECTION 13. Inspectors of Election. In advance of any meeting of
shareholders, the board of directors may appoint any persons other than
nominees for office as inspectors of election to act at such meeting or any
adjournment. The number of inspectors shall be either one or three. Any such
appointment shall not be altered at the meeting. If inspectors of election are
not so appointed, the chairman or vice chairman of the board or the president
may, or on the request of not fewer than 10 percent (10%) of the votes
represented at the meeting shall, make such appointment at the meeting. If
appointed at the meeting, the majority of the votes present shall determine
whether one or three inspectors are to be appointed. In case any person
appointed as inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment by the board of directors in advance of the
meeting or at the meeting by the chairman or vice chairman of the board or the
president.
Unless otherwise prescribed by regulations of the Office, the duties
of such inspectors shall include: determining the number of shares and the
voting power of each share, the shares represented at the meeting, the
existence of a quorum, and the authenticity, validity and effect of proxies:
receiving votes, ballots or consents; hearing and determining all challenges
and questions in any way arising in connection with the rights to vote:
counting and tabulating all votes or consents; determining the result; and such
acts as may be proper to conduct the election or vote with fairness to all
shareholders.
SECTION 14. Nominating Committee. The board of directors shall act
as a nominating committee for selecting the management nominees for election as
directors. Except in the case of a
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nominee substituted as a result of the death or other incapacity of a
management nominee, the nominating committee shall deliver written nominations
to the secretary at least twenty (20) days prior to the date of the annual
meeting. Upon delivery, such nominations shall be posted in a conspicuous
place in each office of the association. No nominations for directors except
those made by the nominating committee shall be voted upon at the annual
meeting unless other nominations by shareholders are made in writing and
delivered to the secretary of the association at least five (5) days prior to
the date of the annual meeting. Upon delivery, such nominations shall be
posted in a conspicuous place in each office of the association. Ballots
bearing the names of all persons nominated by the nominating committee and by
shareholders shall be provided for use at the annual meeting. However, if the
nominating committee shall fail or refuse to act at least twenty (20) days
prior to the annual meeting, nominations for directors may be made at the
annual meeting by any shareholder entitled to vote and shall be voted upon.
SECTION 15. New Business. Any business to be taken up at the annual
meeting shall be stated in writing and filed with the secretary of the
association at least five (5) days before the date of the annual meeting, and
all business so stated, proposed, and filed shall be considered at the annual
meeting; but no other proposal shall be acted upon at the annual meeting. Any
shareholder may make any other proposal at the annual meeting and the same may
be discussed and considered, but unless stated in writing and filed with the
secretary at least five (5) days before the meeting, such proposal shall be
laid over for action at an adjourned, special or annual meeting of the
shareholders taking place thirty (30) days or more thereafter. This provision
shall not prevent the consideration and approval or disapproval at the annual
meeting of reports of officers, directors, and committees; but in connection
with such reports, no new business shall be acted upon at such annual meeting
unless stated and filed as herein provided.
Section 16. Informal Action by Shareholders. Any action required to
be taken at a meeting of the shareholders, or any other action which may be
taken at a meeting of shareholders, may be taken without a meeting if consent
in writing, setting forth the action so taken, shall be given by all of the
shareholders entitled to vote with respect to the subject matter.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
association shall be under the direction of its board of directors. The board
of directors shall annually elect a chairman of the
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<PAGE> 197
board, vice chairman of the board and a president from among its members and
shall designate, when present, either the chairman or vice chairman of the
board or the president, to preside at its meetings.
SECTION 2. Number and Term. The board of directors shall consist of
eight (8) members, and shall be divided into three (3) classes as nearly equal
in number as possible. The members of each class shall be elected for a term
of three (3) years and until their successors are elected and qualified. One
class shall be elected by ballot annually.
SECTION 3. Regular Meetings. A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately after,
and at the same place as, the annual meeting of shareholders. The board of
directors may provide, by resolution, the time and place, within the
association's normal lending territory, for the holding of additional regular
meetings without other notice than such resolution.
SECTION 4. Qualification. Each director shall at all times be the
beneficial owner of not less than 100 shares of capital stock of the
association unless the association is a wholly owned subsidiary of a holding
company.
SECTION 5. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman or vice chairman
of the board, the president or one-third (1/3) of the directors. The persons
authorized to call special meetings of the board of directors, may fix any
place, within the association's normal lending territory, as the place for
holding any special meeting of the board of directors called by such persons.
Members of the board of directors may participate in special meetings
by means of conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person but shall not constitute
attendance for the purpose of compensation pursuant to Section 12 of this
Article.
SECTION 6. Notice. Written notice of any special meeting shall be
given to each director at least two (2) days prior thereto when delivered
personally or by telegram or at least five (5) days prior thereto when
delivered by mail at the address at which the director is most likely to be
reached. Such notice shall be deemed to be delivered when deposited in the
mail so addressed, with postage prepaid if mailed or when delivered to the
telegraph company if sent by telegram. Any director may waive notice of any
meeting by a writing filed with the secretary. The attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the
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meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of the board of directors need
be specified in the notice of waiver or notice of such meeting.
SECTION 7. Quorum. A majority of the number of directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the board of directors; but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time. Notice of any adjourned meeting shall
be given in the same manner as prescribed by Section 6 of this Article III.
SECTION 8. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the board of directors, unless a greater number is prescribed by regulation of
the Office or by these bylaws.
SECTION 9. Action Without a Meeting. Any action required or
permitted to be taken by the board of directors at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors.
Section 10. Resignation. Any director may resign at any time by
sending a written notice of such resignation to the home office of the
association addressed to the chairman of the board or the president. Unless
otherwise specified, such resignation shall take effect upon receipt by the
chairman of the board or the president. More than three (3) consecutive
absences from regular meetings of the board of directors, unless excused by
resolution of the board of directors, shall automatically constitute a
resignation, effective when such resignation is accepted by the board of
directors.
SECTION 11. Vacancies. Any vacancy occurring on the board of
directors may be filled by the affirmative vote of a majority of the remaining
directors although less than a quorum of the board of directors. A director
elected to fill a vacancy shall be elected to serve until the next election of
directors by the shareholders. Any directorship to be filled by reason of an
increase in the number of directors may be filled by election by the board of
directors for a term of office continuing only until the next election of
directors by the shareholders.
SECTION 12. Compensation. Directors, as such, may receive a stated
salary for their services. By resolution of the board of directors, a
reasonable fixed sum, and reasonable expenses of attendance, if any, may be
allowed for actual attendance at each regular or special meeting of the board
of directors. Members of either standing or special committees may be allowed
such compensation for actual attendance at committee meetings as the board of
directors may determine.
7
<PAGE> 199
SECTION 13. Presumption of Assent. A director of the association
who is present at a meeting of the board of directors at which action on any
association matter is taken shall be presumed to have assented to the action
taken unless his or her dissent or abstention shall be entered in the minutes
of the meeting or unless he or she shall file a written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary of
the association within five (5) days after the date a copy of the minutes of
the meeting is received. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 14. Removal of Directors. At a meeting of shareholders
called expressly for that purpose, any director may be removed for cause by a
vote of the holders of a majority of the shares then entitled to vote at an
election of directors. Whenever the holders of the shares of any class are
entitled to elect one or more directors by the provisions of the charter or
supplemental sections thereto, the provisions of this section shall apply, in
respect to the removal of a director or directors so elected, to the vote of
the holders of the outstanding shares of that class and not to the vote of the
outstanding shares as a whole.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
SECTION 1. Appointment. The board of directors, by resolution
adopted by a majority of the full board, may designate the chief executive
officer and two or more of the other directors to constitute an executive
committee. The designation of any committee pursuant to this Article IV and
the delegation of authority shall not operate to relieve the board of
directors, or any director, of any responsibility imposed by law or regulation.
SECTION 2. Authority. The executive committee, when the board of
directors is not in session, shall have and may exercise all of the authority
of the board of directors except to the extent, if any, that such authority
shall be limited by the resolution appointing the executive committee; and
except also that the executive committee shall not have the authority of the
board of directors with reference to: the declaration of dividends; the
amendment of the charter or bylaws of the association, or recommending to the
shareholders a plan of merger, consolidation, or conversion; the sale, lease,
or other disposition of all or substantially all of the property and assets of
the association otherwise than in the usual and regular course of its business;
a voluntary dissolution of the association; a revocation of any of the
foregoing; or the approval of a transaction in which any member
8
<PAGE> 200
of the executive committee, directly or indirectly, has any material beneficial
interest.
SECTION 3. Tenure. Subject to the provisions of Section 8 of this
Article IV, each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his or her
designation and until a successor is designated as a member of the executive
committee.
SECTION 4. Meetings. Regular meetings of the executive committee
may be held without notice at such times and places as the executive committee
may fix from time to time by resolution. Special meetings of the executive
committee may be called by any member thereof upon not less than one day's
notice stating the place, date, and hour of the meeting, which notice may be
written or oral. Any member of the executive committee may waive notice of any
meeting and no notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the executive committee need not
state the business proposed to be transacted at the meeting.
SECTION 5. Quorum. A majority of the members of the executive
committee shall constitute a quorum for the transaction of business at any
meeting thereof, and action of the executive committee must be authorized by
the affirmative vote of a majority of the members present at a meeting at which
a quorum is present.
SECTION 6. Action Without a Meeting. Any action required or
permitted to be taken by the executive committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the members of the executive committee.
SECTION 7. Vacancies. Any vacancy in the executive committee may be
filled by a resolution adopted by a majority of the full board of directors.
SECTION 8. Resignations and Removal. Any member of the executive
committee may be removed at any time with or without cause by resolution
adopted by a majority of the full board of directors. Any member of the
executive committee may resign from the executive committee at any time by
giving written notice to the president or secretary of the association. Unless
otherwise specified, such resignation shall take effect upon its receipt; the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 9. Procedure. The executive committee shall elect a
presiding officer from its members and may fix its own rules of procedure which
shall not be inconsistent with these bylaws. It shall keep regular minutes of
its proceedings and report the same
9
<PAGE> 201
to the board of directors for its information at the meeting held next after
the proceedings shall have occurred.
SECTION 10. Other Committees. The board of directors may by
resolution establish an audit, loan, or other committee composed of directors
as they may determine to be necessary or appropriate for the conduct of the
business of the association and may prescribe the duties, constitution, and
procedures thereof.
ARTICLE V
OFFICERS
SECTION 1. Positions. The officers of the association shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by the board of directors. The board of directors may
also designate the chairman of the board as an officer. The president shall be
the chief executive officer, unless the board of directors designates the
chairman of the board as chief executive officer. The president shall be a
director of the association. The offices of the secretary and treasurer may be
held by the same person and a vice president may also be either the secretary
or the treasurer. The board of directors may designate one or more vice
presidents as executive vice president or senior vice president. The board of
directors may also elect or authorize the appointment of such other officers as
the business of the association may require. The officers shall have such
authority and perform such duties as the board of directors may from time to
time authorize or determine. In the absence of action by the board of
directors, the officers shall have such powers and duties as generally pertain
to their respective offices.
SECTION 2. Election and Term of Office. The officers of the
association shall be elected annually at the first meeting of the board of
directors held after each annual meeting of the stockholders. If the election
of officers is not held at such meeting, such election shall be held as soon
thereafter as possible. Each officer shall hold office until a successor has
been duly elected and qualified or until the officer's death, resignation, or
removal in the manner hereinafter provided. Election or appointment of an
officer, employee or agent shall not of itself create contractual rights. The
board of directors may authorize the association to enter into an employment
contract with any officer in accordance with regulations of the Office, but no
such contract shall impair the right of the board of directors to remove any
officer at any time in accordance with Section 3 of this Article V.
SECTION 3. Removal. Any officer may be removed by the board of
directors whenever in its judgment the best interests of the association will
be served thereby, but such removal, other than
10
<PAGE> 202
for cause, shall be without prejudice to the contractual rights, if any, of
the person so removed.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise may be filled by the board
of directors for the unexpired portion of the term.
SECTION 5. Remuneration. The remuneration of the officers shall be
fixed from time to time by the board of directors.
ARTICLE VI
CONTRACTS, LOANS, CHECKS, AND DEPOSITS
SECTION 1. Contracts. To the extent permitted by regulations of the
Office, and except as otherwise prescribed by these bylaws with respect to
certificates for shares, the board of directors may authorize any officer,
employee, or agent of the association to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the association. Such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
association and no evidence of indebtedness shall be issued in its name unless
authorized by the board of directors. Such authority may be general or
confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts, or other orders
for the payment of money, notes, or other evidences of indebtedness issued in
the name of the association shall be signed by one or more officers, employees
or agents of the association in such manner as shall from time to time be
determined by the board of directors.
SECTION 4. Deposits. All funds of the association not otherwise
employed shall be deposited from time to time to the credit of the association
in any duly authorized depositories as the board of directors may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing
shares of capital stock of the association shall be in such form as shall be
determined by the board of directors and approved by the Office. Such
certificates shall be signed by the chief executive officer or by any other
officer of the association
11
<PAGE> 203
authorized by the board of directors, attested by the secretary or an assistant
secretary, and sealed with the corporate seal or a facsimile thereof. The
signatures of such officers upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar
other than the association itself or one of its employees. Each certificate
for shares of capital stock shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares are issued,
with the number of shares and date of issue, shall be entered on the stock
transfer books of the association. All certificates surrendered to the
association for transfer shall be cancelled and no new certificate shall be
issued until the former certificate for a like number of shares has been
surrendered and cancelled, except that in the case of a lost or destroyed
certificate, a new certificate may be issued upon such terms and indemnity to
the association as the board of directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of capital stock
of the association shall be made only on its stock transfer books. Authority
for such transfer shall be given only by the holder of record or by his or her
legal representative, who shall furnish proper evidence of such authority, or
by his or her attorney authorized by a duly executed power of attorney and
filed with the association. Such transfer shall be made only on surrender for
cancellation of the certificate for such shares. The person in whose name
shares of capital stock stand on the books of the association shall be deemed
by the association to be the owner for all purposes.
ARTICLE VIII
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the association shall end on the last day of June
of each year. The association shall be subject to an annual audit as of the
end of its fiscal year by independent public accountants appointed by and
responsible to the board of directors. The appointment of such accountants
shall be subject to annual ratification by the shareholders.
ARTICLE IX
DIVIDENDS
Subject to the terms of the association's charter and the regulations
and orders of the Office, the board of directors may, from time to time,
declare, and the association may pay, dividends on its outstanding shares of
capital stock.
12
<PAGE> 204
ARTICLE X
CORPORATE SEAL
The board of directors shall provide an association seal which shall
be two concentric circles between which shall be the name of the association.
The year of incorporation or an emblem may appear in the center.
ARTICLE XI
AMENDMENTS
These bylaws may be amended in a manner consistent with regulations
of the Office at any time by a majority of the full board of directors or by a
majority of the votes cast by the stockholders of the association at any legal
meeting.
13
<PAGE> 205
EXHIBIT 3.2.2
AMENDMENT TO BY-LAWS
DATED FEBRUARY 5, 1996
<PAGE> 206
SECRETARY'S CERTIFICATE
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
I, the undersigned, hereby certify that I am the Secretary of SUNCOAST
SAVINGS AND LOAN ASSOCIATION, FSA, ("Suncoast"), a Federally chartered stock
savings association, and have knowledge of the matters contained in this
Certificate and hereby certify that the following is a true and accurate
excerpt of the minutes of a meeting of the Board of Directors held on February
5, 1996:
After discussion, the following resolution was unanimously approved by
the Board of Directors:
BE IT HEREBY RESOLVED, that the number of directors on the Board be
increased by one (1) member to eight (8) members and that pursuant to
Article XI of the Bylaws of the Association, that Article III, Section
2, be amended to provide as follows:
"The board of directors shall consist of eight (8) members, and shall
be divided into three (3) classes as nearly equal in number as
possible. The members of each class shall be elected for a term of
three (3) years and until their successors are elected and qualified.
One class shall be Selected by ballot annually."
FURTHER RESOLVED, that pursuant to Article III, Section 11 of the
Bylaws of the Association, that Walter Sweeting be elected by the Board
of Directors to fill the vacancy occurring on the board of directors
due to the increase in the number of directors for a term of office
continuing until the 1996 election of directors by the shareholders.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of this
corporation this 25th day of September, 1996.
/s/ Wendy Mitchler
-------------------------
Wendy Mitchler
Secretary
<PAGE> 207
EXHIBIT 10.3.2
SIXTH ADDENDUM TO LEASE BETWEEN HOLLYWOOD CORPORATE CIRCLE
ASSOCIATES AND SUNCOAST DATED DECEMBER 5, 1994
<PAGE> 208
SIXTH AMENDMENT TO LEASE
THIS SIXTH AMENDMENT TO LEASE (this "Sixth Amendment") is dated as of
the 1st day of April, 1996. The parties to this Sixth Amendment are COLONY
PRESIDENTIAL PARTNERS, L.P., a Delaware limited partnership, as
successor-in-interest to HOLLYWOOD CORPORATE CIRCLE ASSOCIATES ("Landlord") and
SUNCOAST SAVINGS AND LOAN ASSOCIATION, a FSA ("Tenant").
BACKGROUND FACTS
A. Landlord and Tenant entered into that certain Office Lease
Agreement (the "Original Lease") dated June 19, 1989, whereby Tenant leased
certain property (the "Demised Premises"), containing approximately 30,000
rentable square feet identified in more detail in the Original Lease (as such
space was subsequently increased), within an office building commonly known as
"Presidential Circle" (the "Building"), located at 4000 Hollywood Blvd.,
Hollywood, Florida 33021.
B. Landlord and Tenant subsequently entered into that certain
Addendum To Office Lease Agreement dated September 11, 1990 (the "Addendum").
C. Landlord and Tenant subsequently entered into that certain
First Addendum To Office Lease Agreement dated as of September, 1990 (the
"First Amendment").
D. Landlord and Tenant subsequently entered into that certain
Second Addendum To Office Lease Agreement dated June 29, 1993 (the "Second
Amendment").
E. Landlord and Tenant subsequently entered into that certain
Third Addendum To Office Lease Agreement dated August 30, 1993 (the "Third
Amendment").
F. Landlord and Tenant subsequently entered into that certain
Fourth Addendum To Office Lease Agreement dated September 20, 1994 (the "Fourth
Amendment").
G. Landlord and Tenant subsequently entered into that certain
Fifth Addendum To Office Lease Agreement dated December 5, 1994 (the "Fifth
Amendment") (the Original Lease, the Addendum, the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment
shall collectively be referred to herein as the "Lease").
H. Landlord and Tenant desire to again modify the Lease as of the
date of this Sixth Amendment in accordance with the terms and conditions set
forth below.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the sum of Ten and No/100 Dollars
($10.00) paid by Tenant to Landlord and the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged by both parties, Landlord and Tenant agree as follows
(with capitalized terms not defined in this Sixth Amendment having the same
meaning as set forth for such terms in the Lease):
1. Background Facts. The above Background Facts are true and
correct and are hereby incorporated by this reference as if set forth in their
entirety.
2. Acknowledgments and Representations. Landlord and Tenant
hereby acknowledge, agree and confirm that: (i) as of the date of this Sixth
Amendment, the Demised Premises currently consist of 34,833 rentable square
feet and, as of the "Partial Release Date"
<PAGE> 209
(as defined below) the Demised Premises will automatically be deemed to be
reduced to exclude the "Released Space" (as defined below) and to consist of
34,097 rentable square feet; (ii) notwithstanding the release of the Released
Space as of the Partial Release Date, Tenant shall continue to be fully
responsible for all of its obligations pursuant to the Lease with respect to
the balance of the Demised Premises and, also, for all of its obligations as
provided in this Sixth Amendment; (ii) Landlord has complied with all of the
terms and conditions of the Lease; (iii) except as expressly set forth in this
Sixth Amendment; no construction obligations remain to be performed by
Landlord; (iv) Tenant has no right to any credit, claim, cause of action,
offset or similar charge against Landlord or against the Base Rent or any other
charges due Landlord under the Lease; (v) Tenant is not entitled to any future
rental abatement, concession, credit or reduction; and (vi) the Lease is
currently scheduled to terminate on February 28, 2000.
3. Release. On April 15, 1996 (the "Partial Release Date"), Tenant shall
no longer have any right to possess the space located within the Building
consisting of 736 rentable square feet (the "Released Space") as shown in more
detail on Exhibit "A" attached to this Sixth Amendment and, as such, as of the
Partial Release Date, Tenant shall no longer have any right, interest or option
in or to the Released Space.
4. Condition. Tenant, at Tenant's sole cost and expense, shall return the
Released Space to Landlord on the Partial Release Date, without notice or
demand, (i) in broom-clean and good condition (together with all keys with
respect to the Released Space) and (ii) with all damage to the Released Space
repaired (including, without limitation ensuing that the windows are not broken
and are in good condition) and all of Tenant's signage located within the
Released Space removed.
5. Personalty. As of the Partial Release Date, Tenant's right, title and
interest in all of the personal property, fixtures and leasehold improvements
(collectively, the "Personalty") installed or located in the Released Space, if
any, shall automatically be assigned to Landlord, free of charge, and will
automatically become the exclusive property of Landlord. This assignment shall
be effective and self-operative without the execution of any other instrument.
Tenant further acknowledges and warrants that, as of the Partial Release Date,
all of the Personalty will be free and clear of all liens and encumbrances of
any kind whatsoever.
6. Tenant Indemnity. In addition to all of Tenant's other obligations as
set forth in the Lease, Tenant shall indemnify, defend, and hold Landlord
harmless (using counsel acceptable to Landlord) from and against any and all
liability, losses, damages, causes of action, suits, interests, fines,
penalties, claims, judgments and expenses (including, without limitation,
court costs and attorneys' fees through the trial and appellate levels) arising
from, or in connection with, (i) the occupation, possession, use, construction,
alteration, repair, maintenance and/or control by Tenant and/or Tenant's
officers, employees, agents, invitees, licensees, contractors, guests and/or
any other party under the control of Tenant, of the Released Space and/or
improvements within the Released Space and/or (ii) a default or
misrepresentation by Tenant under this Sixth Amendment. The terms set forth in
the Article shall survive both the Partial Release Date and the termination or
expiration of the Lease.
7. Landlord Release. Tenant hereby releases and forever discharges
Landlord, of and from any and all actions, causes of actions, suits, debts,
accounts, covenants, contracts, promises, damages, judgments, claims and
demands whatsoever, at law, in equity, and/or pursuant to the Lease, which
Tenant has, or ever had, or which any personal representative, successor, heir
or
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<PAGE> 210
assign, can, shall, or may have against Landlord (including, without
limitation, Landlord's officer, partners, employees and agents) for or by
reason of any matter, cause or thing whatsoever, arising out of or in any way
related to the Released Space.
8. Default. In the event Tenant fails to timely and fully comply
with the terms set forth in this Sixth Amendment and/or the Lease, Tenant, in
addition to all other rights and remedies to which Landlord is entitled as
provided under the Lease, at law and/or in equity, shall be liable to Landlord
for all damages, (including, without limitation, all consequential damages, as
well as all damages and/or costs Landlord may incur to a third party as a
result of such failure), plus payment to Landlord of Base Rent on the Released
Space equal to 200% of the rate then otherwise due on such space for the time
Tenant remains in possession or otherwise fails to return the Released Space to
Landlord in accordance with the requirements set forth above in this Sixth
Amendment. The provisions of this paragraph do not and shall not act to waive
Landlord's right of reentry or any other right hereunder. Any retention of the
Released Space after the Partial Release Date or failure by Tenant to return
the Released Space to Landlord in accordance with the requirements set forth
above in this Sixth Amendment shall be considered, in Landlord's sole
discretion, as a month-to-month holdover.
9. Attorneys' Fees. In the event of any litigation under this
Sixth Amendment, the prevailing party shall be entitled to collect its
reasonable attorneys' fees and court costs, including those on appeal and in
bankruptcy.
10. Notices. The Lease is hereby modified to provide that notices
to Landlord shall be directed to:
Colony Presidential Partners, L.P.
c/o Colony Advisors
1999 Avenue of the Stars, Suite 1200
Los Angeles, CA 90067
Continental Real Estate Companies
2665 South Bayshore Drive
Suite 1002
Miami, Florida 33133
Attn: Carol Greenberg Brooks
11. Ratification. Tenant hereby represents and warrants to
Landlord that (i) the execution and delivery of this Sixth Amendment has been
fully authorized by all necessary corporate action and (ii) the person
executing this Sixth Amendment has the requisite authority to do so and has the
authority and power to bind Tenant on whose behalf such party has signed.
12. Conflict. In the event of any conflict between the terms of
this Sixth Amendment and the terms of the Lease, it is expressly agreed that
the terms of this Sixth Amendment shall control. Except as modified, amended or
supplemented by the provisions of this Sixth Amendment, all of the terms,
obligations and conditions of the Lease are hereby ratified and shall remain in
full force and effect.
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<PAGE> 211
IN WITNESS WHEREOF, Landlord and Tenant have caused this Sixth Amendment to be
executed as of the day and year first above written.
Signed, sealed and delivered in COLONY PRESIDENTIAL PARTNERS,
the presence of: L.P., a Delaware limited
partnership, as successor-in-
interest to HOLLYWOOD CORPORATE
CIRCLE ASSOCIATES
By: PRESIDENTIAL GENPAR,
INC., a Delaware
corporation, its sole
general partner
/s/ Joy Mallory By: /s/ Kevin C. McTavisi
- ----------------------- ----------------------
Name: Joy Mallory Name: Kevin C. McTavisi
----------------- ---------------------
Title: Vice President
--------------------
/s/ Angel White
- -----------------------
Name: Angel White
SUNCOAST SAVINGS AND LOAN
ASSOCIATION, a FSA
/s/ Beth M. Kroll By: /s/ Larry Chardon
- ----------------------- ----------------------------
Name: Beth M. Kroll Name: Larry Chardon
--------------------------
Title: SVP
-------------------------
/s/ Ellen Dalerigue
- -----------------------
Name: Ellen Dalerigue
-----------------
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<PAGE> 212
EXHIBIT 10.5
MASTER AGREEMENT BETWEEN DATA-LINK, L.L.C. D/B/A
FISERV MORTGAGE PRODUCTS DIVISION AND SUNCOAST
DATED JUNE 17, 1996
<PAGE> 213
Agreement Number:___________
AGREEMENT
between
DATA-LINK SYSTEMS, L.L.C.
1818 Commerce Drive
South Bend, IN 46628
and
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
4000 Hollywood Boulevard, Suite 400 N
Hollywood, FL 33021-6733
Date June 17, 1996
[FISERV LOGO]
<PAGE> 214
AGREEMENT dated as of June 17, 1996 (the "Agreement") between DATA-LINK
SYSTEMS, L.L.C., ("Data-Link") a Wisconsin corporation, dba Fiserv Mortgage
Products Division and Suncoast Savings and Loan Association, FSA ("Client").
- -----------------------------------------------------------------------------
Data-Link and Client hereby agree as follows:
1. Term. The initial term of this Agreement shall be three (3) years
and, unless written notice of non-renewal is provided by either party at
least 180 days prior to expiration of the initial term of any renewal term,
this Agreement shall automatically renew for a renewal term of one (1) year.
This Agreement shall commence on the day the Data-Link Services (as hereinafter
defined) are first used by Client.
2. Services. (a) Services Generally. Data-Link, itself and through its
affiliates, agrees to provide Client, and Client agrees to obtain from
Data-Link the services (the "Services") and products (the "Products")
(collectively the "Services") described in the attached Exhibits:
Exhibit A- Mortgage Processing Services
Exhibit A-1 - Enhancement Summary
Exhibit A-2 - Loan Servicing investment Summary
Exhibit A-3 - Negotiated Terms
Exhibit A-4 - Pricing Schedule
Exhibit A-5 - Performance Standards
Exhibit A-6 - Conversion Services and Training
Exhibit A-7 - SSI- Master Software System License Agreement
The Exhibits set forth specific terms and conditions applicable to the
Services and/or Products, and where applicable, the Data-Link affiliate
performing the Services and/or Products. Client may also select additional
services (the "Additional Services") and products (the "Additional Products")
(collectively the "Data-Link Additional Services") from time to time by
incorporating an appropriate Exhibit to this Agreement.
(b) Conversion Services. Data-Link will convert existing applicable
Client data files to the Data-Link Services. Those activities designed to
transfer the processing of Client's data from its present servicer to the
Data-Link Services are referred to as "Conversion Services". Client agrees to
cooperate with Data-Link in connection with Data-Link's provision of Conversion
Services and to provide all necessary information and assistance in order to
convert the Client data files. Client is responsible for all out-of-pocket
expenses associated with the Conversion Services. Data-Link will provide
Conversion Services as required in connection with Data-Link Services.
(c) Training Services. Data-Link shall provide training, training
aids, user manuals, and other documentation for Client's use as Data-Link, in
its sole discretion, deems necessary to enable Client personnel to become
familiar with the Data-Link Services. If requested by Client, classroom
training in the use and operation of the Data-Link Services will be provided at
a training facility designated by Data-Link. All such training aids and
manuals remain the property of Data-Link.
(d) Network Support Services. At Client's request, Data-Link shall
provide Network Support Services (the "Network Support Services") consisting of
communication line monitoring and diagnostic equipment and support personnel to
discover, diagnose, repair, or report line problems to the appropriate
telephone company.
Data-Link Systems, L.L.C. Proprietary & Confidential 2
<PAGE> 215
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AGREEMENT
- ------------------------------------------------------------------------------
3. Communication Lines, Computer Terminals, and Related Equipment. (a)
Communications Lines and Related Equipment. Data-Link shall order, on Client's
behalf, the installation of appropriate data communication lines and
communications equipment at Data-Link's data center to facilitate Client's
access to the Data-Link Services. Client understands and agrees to pay such
charges relating to the installation and use of data communications lines and
communications equipment as set forth in the Exhibits. Data-Link shall use its
best efforts in isolating data transmission problems and obtaining service from
the hardware vendors and/or communications carriers. In situations where data
transmission is rendered impossible by virtue of equipment failure at
Data-Link's site or of the inability to transmit because of the communication
carrier, Data-Link will provide for automatic dial back-up connectivity over
public telephone lines until connectivity over the leased circuit can be
restored.
(b) Computer Terminals and Related Equipment. Client shall obtain for
its locations sufficient computer terminals and other equipment, approved by
Data-Link and compatible with the Data-Link Services, to transmit and receive
data between Client's locations and Data-Link's data center. Data-Link and
Client may mutually agree to change the type of computer terminal and equipment
used by Client.
4. Fees for Data-Link Services. (a) General. Client agrees to pay
Data-Link the fees for the Data-Link Services specified in the Exhibits. Fees
for Data-Link Services, as set forth in Exhibit A-4, except for those negotiated
terms listed in Exhibit A-2, may be increased from time to time as set forth
herein. Upon 90 day notification to and acceptance by Client, Data-Link may
increase its fees (no more often than annually) in amounts not to exceed the
increase in the "Consumer Price Index for all urban consumers specified for all
items" for the previous twelve month period. The price increase will not
exceed 5% per year.
(b) Additional Charges. Fees for passthrough expenses, such as
telephone, microfiche, courier, and other charges incurred by Data-Link for
goods or services obtained by Data-Link on Client's behalf shall be billed to
Client at cost. Such passthrough expenses may be changed from time to time
upon notification of a fee change from a vendor/provider.
(c) Taxes. Data-Link shall add to each invoice, and Client shall pay,
any sales, use, excise, value added, and other taxes and duties however
designated at are levied by any taxing authority relating to the Data-Link
Services. In no event shall Client be responsible for taxes based upon the net
income of Data-Link.
(d) Network Support Services. Network Support Services shall be
rendered from Data-Link premises. Off-premise support will be provided upon
Client's request on an as available basis at the then-current Data-Link time
and materials rates, plus reasonable travel and living expenses.
(e) Payment Terms. Fees for Data-Link Services are due and payable
monthly upon receipt of invoice. Any payment due, but not received by the
tenth (10th) day of the second (2nd) month following the period being invoiced
will be subject to a late charge. The late charge will be assessed at one and
one-half percent (1.5%) per month on any past due invoices, or the maximum
permitted by law, if less.
5. Procedures for Use Of Services. (a) Procedures. Client agrees to
comply with any applicable regulatory requirements and with reasonable
operating and access procedures for use of the Services established by
Data-Link and furnished from time to time to Client.
(b) Changes. Data-Link continually reviews and modifies the Data-Link
systems used in the delivery of the Services (the "Data-Link System") to
improve service and to comply with governmental regulations, if any, applicable
to the data utilized in providing the Services. Data-Link reserves the right
to make changes in the Services, including but not limited to operating
procedures, the type of equipment or software resident at, and the location of
the Data-Link data center. Data-Link will notify Client of any material change
that affects Client's normal operating procedures, reporting, or service costs
prior to implementation of such change. Data-Link will be responsible for all
cost associated with changes at the Data-Link Data Center which are performed
for the furtherance of the Data-Link's business objective and do not provide a
significant "business advantage" for Client.
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6. Client Obligations. (a) Input. Client shall be solely
responsible for the input, transmission, or delivery to and from Data-Link of
all information and data required by Data-Link to perform the Services unless
Client has retained Data-Link to handle such responsibilities. The data shall
be provided in a format and manner approved by Data-Link. Client will provide
at its own expense or procure from Data-Link all equipment, computer software,
communication lines, and interface devices required to access the Data-Link
System. If Client has elected to provide such items itself, Data-Link shall
provide Client with a list of compatible equipment and software.
(b) Client Personnel. Client shall designate appropriate Client
personnel for training in the use of the Data-Link System, shall supply
Data-Link with reasonable access to Client's site during normal business hours
for Conversion Services and shall cooperate with Data-Link personnel in their
performance of Services, including Conversion Services.
(c) Use of Data-Link System. Client shall comply with any operating
instructions on the use of the Data-Link System provided by Data-Link, shall
review all reports furnished by Data-Link for accuracy, and shall work with
Data-Link to reconcile any out of balance conditions. Client shall determine
and be responsible for the authenticity and accuracy of all information and
data submitted to Data-Link.
(d) Forms, Supplies, Etc. Client shall furnish, or, if Data-Link
agrees to so furnish, reimburse Data-Link for, any special forms, supplies,
microfiche, or courier services applicable to the provisions of Services.
7. Ownership and Confidentiality. (a) Client information.
Data-Link agrees to hold as confidential plans, customer lists, information,
and other proprietary material ("Client Confidential Information") received
from Client by Data-Link. "Client Confidential Information" shall also include
information and data concerning the business and financial records of Client's
customers prepared by or for Data-Link, or used in any way by Data-Link in
connection with the provision of Data-Link Services. All Client Confidential
Information shall remain the property of the Client, including master and
transaction data files. Client Confidential Information will be returned to
Client at the termination or expiration of this Agreement.
Data-Link will use the same care and discretion to avoid disclosure of
Client Confidential Information as it uses with its own similar information
that it does not wish disclosed, but in no event less than a reasonable
standard of care. Data-Link may use Client Confidential Information for any
purpose that does not violate such obligation of confidentiality. Data-Link
may disclose Client Confidential Information to (i) its employees and employees
of its affiliates who have a need to know; and (ii) any other party with
Client's written consent. Before disclosure to any of the above parties,
Data-Link will have a written agreement with such party sufficient to require
that party to treat Client Confidential Information in accordance with this
Agreement. Data-Link may disclose Client Confidential Information to the
extent required by law. However, Data-Link agrees to give Client prompt notice
and make a reasonable effort to obtain a protective order. Client Confidential
Information continues to be subject to this Agreement for two (2) years
following the date of disclosure.
No obligation of confidentiality applies to any Client Confidential
Information that Data-Link (i) already possesses without obligation of
confidentiality; (ii) develops independently; (iii) rightfully receives without
obligation of confidentiality from a third party. No obligation of
confidentiality applies to any Client Confidential Information that is, or
becomes, publicly available without breach of this Agreement. In addition, no
obligation of confidentiality applies to any ideas, concepts, know-how, or
techniques contained in Client Confidential Information that are related to
Client's business activities ("Client Business Knowledge"). However, this does
not give Data-Link the right to disclose, except as set forth elsewhere in this
Agreement (i) the source of the Client Business Knowledge; (ii) any financial,
statistical, or personnel data; or (iii) the business plans of the Client.
Data-Link Systems, L.L.C. Proprietary & Confidential 4
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(b) Data-Link Information. Client agrees to hold as confidential
all plans, information, research, development, trade secrets, and business
affairs (including that of any Data-Link client, supplier, or affiliate) and
other proprietary material ("Data-Link Confidential Information") received by
Client from Data-Link. "Data-Link Confidential Information" shall also include
Data-Link's proprietary computer programs, including custom software
modifications, software documentation and training aids, and all data, code,
techniques, algorithms, methods, logic, architecture, and designs embodied or
incorporated therein. All Data-Link Confidential Information shall remain the
property of Data-Link. Data-Link Confidential Information shall be returned to
Data-Link, or certified in writing that it has been destroyed at the expiration
or termination of this Agreement.
Client will use the same care and discretion to avoid disclosure of
Data-Link Confidential Information as it uses with its own similar information
that it does not wish disclosed, but in no event less than a reasonable
standard of care. Client will not use Data-Link Confidential Information
except in connection with Data-Link Services under this Agreement. Client may
disclose Data-Link Confidential Information to (i) its employees who have a
need to know; (ii) its business partners and customers who have a need to know;
and (iii) any other party with Data-Link's written consent. Before disclosure
to any of the above parties, Client will have a written agreement with such
party sufficient to require that party to treat Data-Link Confidential
Information in accordance with this Agreement. Client may disclose Data-Link
Confidential Information to the extent required by law or pursuant to
securities or banking regulation. However, in the event of a judicial or
administrative subpoena, Client agrees to provide Data-Link prompt notice and
make a reasonable effort to obtain a protective order.
No obligation of confidentiality applies to any Data-Link Confidential
Information that Client (i) already possesses without obligation of
confidentiality; (ii) develops independently; (iii) rightfully receives without
obligation of confidentiality from a third party. No obligation of
confidentiality applies to any Data-Link Confidential Information that is, or
becomes, publicly available without breach of this Agreement. In addition, no
obligation of confidentiality applies to any ideas, concepts, know-how, or
techniques contained in Data-Link Confidential Information that are related to
Data-Link's business activities ("Data-Link Business Knowledge"). However,
this does not give Client the right to disclose, except as set forth elsewhere
in this Agreement (i) the source of the Data-Link Business Knowledge;
(ii) any financial, statistical, or personnel data; or (iii) the business plans
of Data-Link.
(c) Data-Link System. The Data-Link System contains information
and computer software that are proprietary and confidential information of
Data-Link, its suppliers, and licensors. Client agrees not to attempt to
circumvent the devices employed by Data-Link to prevent unauthorized access to
the Data-Link System, including, but not limited to, alterations, decompiling,
disassembling, modifications, and reverse engineering thereof.
(d) Confidentiality of this Agreement. Data-Link and Client agree
to keep confidential the prices, terms and conditions of this Agreement,
without disclosure to third parties except as required by law or regulation,
including securities and banking laws and regulations.
8. Regulatory Agencies, Regulations and Legal Requirements. (a)
Client Files. The records maintained and produced for Client in the
performance of this Agreement (the "Client Files") may be subject to
examination by such Federal, State, or other governmental regulatory agencies
as may have jurisdiction over the Client's business to the same extent as such
records would be subject if they were maintained by Client on its own premises.
Client agrees that Data-Link is authorized to give all reports, summaries, or
information contained in or derived from the data in the possession of
Data-Link relating to Client when formally requested to do so by an authorized
regulatory or governmental agency.
Data-Link Systems, L.L.C. Proprietary & Confidential 5
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(b) Compliance with Regulatory Requirements. Client agrees to
comply with, and shall be responsible for complying with, applicable
regulatory and legal requirements, if applicable, including without
limitation:
(i) submitting a copy of this Agreement to the appropriate
regulatory agencies prior to the date Services commence;
(ii) providing adequate notice to the appropriate regulatory
agencies of the termination of this Agreement or any material changes in
Services;
(iii) retaining records of its accounts as required by
regulatory authorities;
(iv) obtaining and maintaining, at its own expense, any
Fidelity Bond required by any regulatory or governmental agency; and
(v) maintaining, at its own expense, such casualty insurance
coverage for loss of records from fire, disaster, or other causes, and
taking such precautions regarding the same, as may be required by
regulatory authorities.
9. Warranties. (a) Data-Link Warranties. Data-Link
represents and warrants that:
(i) (A) the Services will conform in all material respects to
the specifications set forth in the Exhibits and with Data-Link
published documentation; (B) Data-Link will perform Client's work
accurately provided that Client supplies accurate data and follows
the procedures described in all Data-Link documentation, notices, and
advices; (C) Data-Link personnel will exercise due care in the
provision of Services; and (D) the Data-Link System will comply in all
material respects with all applicable Federal and State regulations
governing the Services. In the event of an error or other default
caused by any Data-Link personnel, systems or equipment, Data-Link
shall correct the data and/or affected report within a reasonable
period of time at no additional cost to Client. Client agrees to
notify Data-Link within twenty-four (24) hours after Client's receipt
of the work containing the error.
(ii) it owns or has a license to furnish all equipment or
software comprising the Data-Link System. Data-Link shall indemnify
Client and hold it harmless against any claim or action that alleges
that the use of the Data-Link System infringes a United States patent,
copyright or other proprietary right of a third party. Client agrees
to notify Data-Link promptly of any such claim and grants to Data-Link
the sole right to control the defense and disposition of all such
claims. Client shall provide Data-Link with reasonable cooperation
and assistance in the defense of any such claim.
THE WARRANTY STATED ABOVE IS A LIMITED WARRANTY AND IS THE ONLY WARRANTY MADE
BY DATA-LINK. DATA-LINK DOES NOT MAKE, AND CLIENT HEREBY EXPRESSLY WAIVES, ALL
OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
(b) Client Warranties. Client represents and warrants that: (a)
no contractual obligations exist that would prevent Client from entering into
this Agreement; (b) it has complied with all applicable regulatory
requirements; and (c) Client has requisite authority to execute, deliver, and
perform this Agreement. Client will indemnify and hold harmless Data-Link, its
officers, directors, employees, and affiliates against any claims or actions
arising out of the use by Client of the Data-Link System in a manner other than
that provided in this Agreement or in the operating instructions supplied by
Data-Link to Client.
10. Limitation of Liability. Data-Link will reimburse Client for
out-of-pocket costs and any incremental fees incurred due to any material
failure of Data-Link to perform in accordance with its performance
specifications in the documentation manuals, or Data-Link's failure to possess
the right to provide continued service, or for patent, trademark, copyright, or
trade secret infringement. In no event will Data-Link be liable for any
indirect, special or consequential damages arising out of this Agreement or the
use of any equipment, software, documentation or services provided under this
Agreement as long as Client is able to use said system in accordance with
Data-Link published Documentation.
Data-Link Systems, L.L.C. Proprietary & Confidential 6
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11. Performance Standards; Remedy. The Data-Link standard of
performance with respect to any Service provided hereunder shall be set forth
in the applicable Exhibit for the Service being provided. In the event that
Data-Link fails to achieve any performance standard within thirty (30) days
written notice of any material degradation of service caused by System failures
or unresolved errors impacting the Client's ability to conduct business
operating the Data-Link System, Data-Link will reimburse Client for costs,
losses and any out-of-pocket expenses directly related to Client's inability to
process Client information on the Data-Link System or Client may also terminate
this Agreement. Data-Link will have a reasonable period of time to correct
System deficiencies not materially impacting Client's ability to process
customer information.
In the event that Data-Link fails to meet the standards set forth in
the applicable Exhibit for ninety (90) days following receipt of written notice
from Client, Client may terminate this Agreement without penalty. Data-Link
shall cooperate with Client to achieve an orderly transition to Client's
replacement processing system.
12. Disaster Recovery. (a) General. Data-Link maintains a disaster
recovery service plan (the "Disaster Recovery Service Plan") for each Service
provided by Data-Link. A "Disaster" shall mean any unplanned interruption of
the operations of or inaccessibility to the Data-Link data center in which
Data-Link, using reasonable judgment, requires relocation of processing to a
primary recovery location. Data-Link shall notify Client as soon as possible
after it deems a service outage to be a Disaster. Data-Link shall move the
processing of Client's standard on-line services to a primary recovery location
as expeditiously as possible and shall coordinate the cut-over to back-up
telecommunication facilities with the appropriate carriers to ensure that
Client's processing is not unreasonably delayed. Client shall maintain
adequate records of all transactions during the period of service interruption
and shall have personnel available to assist Data-Link in implementing the
switchover to the primary recovery location. During a Disaster, optional or
on-request services shall be provided by Data-Link only to the extent adequate
capacity exists at the primary recovery location and only after stabilizing the
provision of base on-line services.
(b) Data Communications. Data-Link shall work with Client to
establish a plan for alternative data communications in the event of a
Disaster.
(c) Annual Test. Data-Link shall test its Disaster Recovery
Service Plan annually. Client agrees to participate in and assist Data-Link
with such test, if requested by Data-Link. Test results will be made available
to Client's management, regulators, internal and external auditors, and
Client's insurance underwriters, upon request.
(d) Client Plans. Data-Link agrees to release the information
necessary to allow Client to develop a disaster contingency plan that operates
in concert with the Disaster Recovery Service Plan.
(e) Warranty. Client understands and agrees that the Disaster
Recovery Service Plan is designed to minimize, but not eliminate, risks
associated with a Disaster affecting the Data-Link data center supplying the
Services. Data-Link warrants it will take all prudent and reasonable steps to
ensure that service will be uninterrupted or error free in the event of a
Disaster. Client maintains responsibility for adopting a disaster recovery plan
relating to disasters affecting Client's facilities and for securing business
interruption insurance or other insurance as necessary for Client's protection.
13. Termination. (a) Material Breach. Except as provided
elsewhere in this Section 13, either party may terminate this Agreement and
pursue any and all remedies available to it at law or in equity in the event of
a material breach by the other party not cured within thirty (30) days
following written notice stating, with particularity and in reasonable detail,
the nature of the claimed breach.
Data-Link Systems, L.L.C. Proprietary & Confidential 7
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(b) Failure to Pay. With the exception of amounts which are in
good faith being disputed by Client, in the event any invoice remains unpaid by
Client thirty (30) days after its due date, upon thirty (30) days prior written
notice, may terminate this Agreement and/or Client's access to and use of the
Data-Link services. Any invoice submitted by Data-Link shall be deemed correct
unless Client provides written notice to Data-Link within ninety (90) days of
the invoice date specifying the nature of the disagreement. Remedies contained
in this Section 13 are cumulative and are in addition to the other rights and
remedies available to Data-Link under this Agreement or otherwise.
(c) Defaults. In the event that either party files any petition
for protection under any Federal or state bankruptcy acts, or if an involuntary
petition in bankruptcy is filed against either party and is not discharged in
thirty (30) days, or if either party commits an act of bankruptcy, or if a
receiver, trustee or marshall of either party's assets is appointed, the other
party may immediately terminate this Agreement by giving written notice of
termination to that party. The non-defaulting party shall be entitled to
pursue any and all remedies available to it at law or in equity.
(d) Convenience. Client may terminate this Agreement during any
term by paying a termination fee based on the remaining unused term of this
Agreement, the amount to be determined by multiplying the Client's average of
the prior twelve (12) monthly invoices for each of the Data-Link Services
received by Client during the term by fifty (50) percent times the remaining
months of the term. Client understands and agrees that Data-Link losses
incurred as a result of early termination of the Agreement would be difficult
or impossible to calculate as of the effective date of termination since they
will vary based on, among other things, the number of clients using the
Data-Link System on the date the Agreement terminates. Accordingly, the amount
set forth in the first sentence of this subsection represents Client's
agreement to pay and Data-Link's agreement to accept as liquidated damages (and
not as a penalty) such amount for any such Client termination for convenience.
(e) Merger. In the event of a merger between Client and another
organization in which Client is not the surviving organization and where the
other organization was not previously a user of Data-Link services similar to
the Services being provided hereunder, Data-Link will allow an early
termination of this Agreement upon the following terms and conditions:
(i) Written notice must be given three (3) months in
advance, specifying the termination date;
(ii) Data-Link may specify a deconversion date (not
more than thirty (30) days after the requested
termination date), based on its previous
commitments and work loads; and
(iii) Data-Link may charge a termination fee in
accordance with subsection (d) above.
(f) Return of Data Files. Upon expiration or termination of this
Agreement, Data-Link shall furnish to Client such copies of Client's data files
("Client Files") as Client may request in Data-Link's standard machine readable
format form along with such information and assistance as is reasonable and
customary to enable Client to deconvert from the Data-Link System, provided,
however, that Client consents and agrees and authorizes Data-Link to retain
Client Files until (i) Data-Link has been paid in full for all Services
provided hereunder through the date such Client Files are returned to Client,
and has been paid any and all other amounts that are due or will become due
under this Agreement, including, but not limited to, data communication lease
obligations, if any; (ii) Data-Link has been paid its then standard rates for
providing the services necessary to return such Client Files; (iii) if this
Agreement is being terminated, Data-Link has been paid any applicable
termination fee pursuant to subsection (e) above; and (iv) Client has either
certified to Data-Link that the confidential information has been destroyed, or
returned to Data-Link all Data-Link Confidential Information if requested by
Data-Link and the return shipping is paid by Data-Link. Unless directed by
Client in writing to the contrary, Data-Link shall be permitted to destroy
Client Files any time after thirty (30) days from the final use of Client
Files for processing.
(g) Miscellaneous. Client understands and agrees that Client is
responsible for the deinstallation and return shipping of any Data-Link-owned
equipment located on Client's premises. Prior to termination of this
Agreement, Client shall promptly reimburse Data-Link for the cost of any
preprinted statements, checks, or any other forms that Data-Link has prepared
specifically at the request of the Client and has on hand at the termination of
this Agreement.
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14. Arbitration. (a) General. Except with respect to disputes
arising from a misappropriation or misuse of either party's proprietary rights,
any dispute or controversy arising out of this Agreement, or its
interpretation, shall be submitted to and resolved exclusively by arbitration
under the rules then prevailing of the American Arbitration Association, upon
written notice of demand for arbitration by the party seeking arbitration,
setting forth the specifics of the matter in controversy or the claim being
made. The arbitration shall be heard before an arbitrator mutually agreeable
to Client and Data-Link; provided, that if Client and Data-Link cannot agree on
the choice of an arbitrator within ten (10) days after the first party to seek
arbitration has given written notice, then the arbitration shall be heard by
three arbitrators, one to be chosen by Client, one to be chosen by Data-Link,
and the third to be chosen by those two arbitrators. A hearing on the merits
of all claims for which arbitration is sought by either party shall be
commenced not later than sixty (60) days from the date demand for arbitration
is made by the first party seeking arbitration. The arbitrator(s) must render
a decision within ten (10) days after the conclusion of such hearing. Any
award in such arbitration shall be final and binding upon the parties and the
judgment thereon may be entered in any court of competent jurisdiction.
(b) Applicable Law. The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. 1-16. The arbitrators shall apply
the substantive law of the State of Wisconsin, without reference to provisions
relating to conflict of laws. The arbitrators shall not have the power to
alter, modify, amend, add to, or subtract from any term or provision of this
Agreement, nor to rule upon or grant any extension, renewal, or continuance of
this Agreement. The arbitrators shall have the authority to grant any legal
remedy available had the parties submitted the dispute to a judicial proceeding.
(c) Situs. If arbitration is required to resolve any disputes
between the parties, the proceedings to resolve the first such dispute shall be
held in Hollywood, Florida, the proceedings to resolve the second such dispute
shall be held in Milwaukee, Wisconsin, and the proceedings to resolve any
subsequent disputes shall alternate between Hollywood, Florida and Milwaukee,
Wisconsin.
15. Insurance. Data-Link carries the following types of insurance
policies written by a carrier or carriers rated "A" or above by Best:
(i) Comprehensive General Liability in an amount not
less than $1 million per occurrence for claims arising
out of bodily injury and property damage;
(ii) Commercial Crime covering employee dishonesty in
an amount not less than $5 million;
(iii) All-risk property coverage including Extra
Expense and Business Income coverage; and
(iv) Workers Compensation as mandated or allowed by
the laws of the state in which the services are being
performed, including $500,000 coverage for Employer's
Liability.
16. Audit. Data-Link employs an internal auditor responsible for
ensuring the integrity of its data processing environments and internal
controls. In addition, Data-Link provides for periodic independent audits of
its operations. Data-Link shall provide Client with a copy of the audit of the
Data-Link data center serving Client within a reasonable time after its
completion and shall charge each client a fee based on the pro rata cost of
such audit. Such fee shall not exceed $500 annually. Data-Link shall also
provide a copy of such audit to the appropriate regulatory agencies, if any,
having jurisdiction over Data-Link's provision of Services hereunder.
17. General. (a) Binding Agreement. This Agreement is binding
upon the parties and their respective successors and permitted assigns.
Neither this Agreement nor any interest may be sold, assigned, transferred,
pledged or otherwise disposed of by Client, whether pursuant to change of
control or otherwise, without the prior written consent of Data-Link which
consent shall not be unreasonably withheld. Client agrees that Data-Link may
subcontract any of the Services to be performed under this Agreement. Any such
subcontractors shall be required to comply with all of the applicable terms and
conditions of this Agreement.
Data-Link Systems, L.L.C. Proprietary & Confidential 9
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SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AGREEMENT
(b) Entire Agreement. This Agreement, including its Exhibits,
which are expressly incorporated herein by reference, constitutes the complete
and exclusive statement of the agreement between the parties as to the subject
matter hereof and supersedes all previous agreements with respect thereto.
Modifications of this Agreement must be in writing and signed by duly
authorized representatives of the parties. Each party hereby acknowledges that
it has not entered into this Agreement in reliance upon any representation made
by the other party not embodied herein. In the event any of the provisions of
any Exhibit or Schedule hereto are in conflict with any of the provisions of
this Agreement, the terms and provisions of this Agreement shall control unless
the Exhibit or Schedule in question expressly provides that its terms and
provisions shall control.
(c) Severability. If any provision of this Agreement is held to
be unenforceable or invalid, the other provisions shall continue in full force
and effect.
(d) Governing Law. This Agreement will be governed by the
substantive laws of the State of Wisconsin, without reference to provisions
relating to conflict of laws.
By entering into this Agreement, Data-Link agrees that the Office of
Thrift Supervision, FDIC, or the regulatory agencies having authority over
Client's operations shall have the authority and responsibility provided to the
regulatory agencies pursuant to the Bank Service Corporation Act, 12 U.S.C.
1867(C) relating to services performed by contract or otherwise.
(e) Force Majeure. Neither party shall be responsible for delays
or failures in performance resulting from acts reasonably beyond the control of
that party.
(f) Notices. Any written notice required or permitted to be given
hereunder shall be given by: (i) Registered or Certified Mail, Return Receipt
Requested, postage prepaid; (ii) by confirmed facsimile; or (iii) by nationally
recognized courier service to the other party at the addresses listed on the
cover page of this Agreement or to such other address or person as a party may
designate in writing.
(g) No Waiver. The failure of either party to insist on strict
performance of any of the provisions hereunder shall not be construed as the
waiver of any subsequent default of a similar nature.
(h) Prevailing Party. The prevailing party in any arbitration,
suit, or action brought against the other party to enforce the terms of this
Agreement or any rights or obligations hereunder, shall be entitled to receive
its reasonable costs, expenses, and attorneys' fees of bringing such
arbitration, suit, or action.
(i) Survival. All rights and obligations of the parties under this
Agreement that, by their nature, do not terminate with the expiration or
termination of this Agreement shall survive the expiration or termination of
this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date indicated
below.
For Client: For Data-Link:
- ------------------------------------------ -------------------------------
Suncoast Savings and Loan Association, FSA
By: /s/ Thomas A. Procelli By: /s/ Richard C. Bryant
-------------------------------------- ---------------------------
Name: Thomas A. Procelli Name: Richard C. Bryant
------------------------------------- --------------------------
Title: Senior Vice President Title: President
------------------------------------ -------------------------
Date: June 26, 1996 Date: June 28, 1996
------------------------------------ -------------------------
Data-Link Systems, L.L.C. Proprietary & Confidential 11
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Mortgage Processing Services
Client agrees with Data-Link as follows:
1. Services. Data-Link will provide Client the Mortgage
Processing Services (the "Mortgage Processing Services") specified herein.
2. Fees. Client shall pay Data-Link the fees and other charges
for the Mortgage Processing Services specified in Exhibit A - 4 hereto.
3. Communications Hardware and Software.
(a) Client understands and agrees to the following:
(i) Client must contact Data-Link to
obtain equipment configuration
and addressing information for
all network-attached devices.
Client agrees to configure all
such equipment in accordance with
such information.
(ii) Client must provide Data-Link
sixty (60) days prior written
notice, specifying the effective
date prior to disconnecting
data communications services
provided by Data-Link.
(iii) Clint must use Remote Job Entry
or Network Job Entry for report
delivery.
(b) In order to maintain compatibility with IBM
software, Data-Link installs new releases to its
communications software. Data-Link will provide prior
written notice to Client of its planned installations.
Client must obtain appropriate changes for its
communications software in order to retain
compatibility.
4. Hours of Operation. The Mortgage Processing Services will be
available for use by Client between 7:00 a.m. and 7:00 p.m. (Eastern time zone),
Monday through Saturday (excluding New Year's Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day). Client acknowledges that
the Processing Services will not always be available on Saturdays during
months when the last day of the month falls on a Saturday or Sunday. The
Data-Link system will be available for inquiry purposes 24 hours a day, Monday
through Saturday, except for a maintenance period of approximately 30 minutes
per day, and on Saturdays from 12:00 a.m., through 7:00 p.m., unless notified
in advance by Data-Link that the system will be unavailable. The maintenance
period will commence at approximately 3:00 a.m. (Eastern time) each day.
5. Protection of Data. Data-Link will copy Client's data to tape
daily and sent to an off-site storage facility.
6. Processing Priority. Data-Link does not and will not subscribe
to any processing priority; all users receive equal processing consideration.
7. On-Line Security. Data-Link will provide "on-line" security
via utilization of leased lines with poll/select protocol.
Data-Link Systems, L.L.C. Proprietary & Confidential 12
<PAGE> 225
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA EXHIBIT A
- -------------------------------------------------------------------------------
8. User Group Membership. Data-Link supports a formal User Group
for Mortgage Processing clients. The annual dues for support of the User Group
are $500 (five hundred dollars) per institution per year. Membership in the
User Group is mandatory. Active participation on User Group subcommittees is
voluntary. Voting privileges and the ability to submit suggestions for
consideration by the User Group are contingent upon the payment of annual dues.
Funds collected will be placed in a checking account controlled by the User
Group Executive Board and will be used exclusively for the expenses of the User
Group. Expenses incurred by Data-Link will not be charged to the User Group,
nor does Data-Link receive any financial benefit from User Group dues.
9. Manuals. Two (2) complete sets of manuals will be provided to
Client free of charge. Additional manuals may be purchased by Client at any
time during the term of this agreement at the then-current prices.
- -------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to
the Agreement to be executed by their duly authorized representatives as of the
date indicated below.
For Client: For Data-Link:
SUNCOAST SAVINGS & LOAN ASSOCIATION, FSA DATA-LINK SYSTEMS, L.L.C.
By: /s/ Thomas A. Procelli By: /s/ Richard C. Bryant
---------------------------- --------------------------
Name: Thomas A. Procelli Name: Richard C. Bryant
--------------------------- -------------------------
Title: Senior Vice President Title: President
-------------------------- -------------------------
Date: June 26, 1996 Date: June 26, 1996
-------------------------- -------------------------
Data-Link Systems, L.L.C. Proprietary & Confidential 13
<PAGE> 226
EXHIBITS
A-1 THROUGH A-7
HAVE BEEN DELETED
<PAGE> 227
EXHIBIT 10.5.1
MASTER SOFTWARE SYSTEM LICENSE AGREEMENT, BETWEEN
SERVANTIS SYSTEMS INC. AND SUNCOAST, DATED JUNE 26, 1996
<PAGE> 228
MASTER SOFTWARE SYSTEM LICENSE AGREEMENT
Date: June 26, 1996
<TABLE>
<S> <C>
Agreement No.:
----------- [LOGO] SSI
Company Name ("Customer") Suncoast Savings and Loan Association, FSA Servantis Systems, Inc.
---------------------------------------------- 4411 East Jones Bridge Rd.,
Address 4000 Hollywood Boulevard, Suite 400N Norcross, Georgia 30092
----------------------------------------------------------------- 404/441-3387
City, State, Zip Hollywood, FL 33021-6733
--------------------------------------------------------
</TABLE>
SERVANTS SYSTEMS, INC. ("SSI"), by its signature indicating acceptance hereof,
grants to the Customer a Non-Exclusive, Non-Transferable Perpetual License to
use only one production copy of the products named on the Software Schedule
("Schedule") including modifications (if applicable) and consisting of one set
of computer software programs and associated documentation (hereinafter the
"Products"). The Software shall be used at the facility location and for the
License Fee set forth on the Schedule and shall be used in accordance with this
Agreement.
STANDARD TERMS AND CONDITIONS
1. Term of Agreement
The terms of this Agreement and the license granted hereunder shall commence
upon acceptance of this Agreement by SSI. SSI may, in its sole discretion,
terminate this Agreement at any time and revoke the license granted herein (i)
immediately if Customer violates or permits the violation of any of the
provisions of Section 2 hereof; or (ii) thirty days after SSI notifies Customer
in writing of any other breach by customer, provided such breach remains
uncorrected thirty (30) days following receipt of notification of such breach.
In either event, Customer shall receive no refund of any license fee or other
charges paid hereunder. Upon termination of this Agreement for any reason,
Customer shall promptly return all products (including all associated
documentation) to SSI, retaining no copies.
2. Title and Non-Disclosure
2.1 SSI retains and reserves title and full ownership rights to the Products
licensed under this Agreement, including all modification, enhancements, and
releases. In some instances, title and full ownership rights shall remain with
a third party from whom SSI has obtained marketing rights. Customer
acknowledges the rights of SSI and any third party licensor and agrees to
honor them. This Agreement conveys only a limited license, not legal or
equitable title, to the Products. The Products (including all associated
documentation) are confidential information and trade secrets of SSI, whether or
not any portion thereof is or may be copyrighted or patented. Delivery of the
Products and associated documentation shall not constitute publication thereof.
2.2 Customer's license to use the Products under this Agreement may not be
assigned, sublicensed or otherwise transferred voluntarily whether by operation
of law (as in connection with a merger) or otherwise, by Customer without SSI's
prior written consent. However, Customer may assign its rights hereunder to
wholly-owned subsidiaries of Customer engaged in the same business as Customer
provided that Customer provides SSI with a concurrent written agreement
acceptable to SSI whereby assignee or sublicensee agrees to be bound by the
provisions of this Agreement. At SSI's option, the transferee may be required
to execute SSI's then-current license agreement prior to consummation of the
transfer. Customer shall be jointly and severally liable with any such
transferee hereunder.
2.3 Customer may add to, delete from, or modify the Products in any manner but
no such changes shall have any adverse effect on SSI's title to the Products.
Any Customer changes to the Products shall void the SSI limited warranty of the
Products with respect to the feature or function which Customer modifies, and
its interface with other features and functions. Customer shall not offer
or make available to any person or entity, for a charge or without a charge, any
enhancement, feature of modification to the products which may be designed by or
on behalf of Customer, without the prior written consent of SSI. SSI shall have
the exclusive right to make available to third parties any modifications to the
Products made by SSI for Customer. SSI shall preserve Customer's anonymity, if
desired.
2.4 Reproduction, printing, displaying or copying the Products in any form
(including any associated documentation) without the express prior written
consent of SSI or as otherwise expressly permitted herein is prohibited.
Customer agrees to reproduce and incorporate SSI's trade secret or copyright
notices in any copies.
2.5 Customer agrees to protect and preserve the confidentiality of the Products
(including all associated documentation). In fulfilling this obligation,
Customer further agrees to take all reasonable precautions to prevent any
portion of the products, in any form or medium, from being disclosed or made
available by the Customer or by any of Customer's employees to any other person,
firm or corporation except as is expressly permitted herein. In no event shall
Customer take precautions any less stringent than those employed to protect its
own trade secrets and proprietary information. Customer shall limit access to
the Products (and associated documentation) to employees of the Customer and
consultants who have entered into a binding written agreement with Customer to
maintain the confidentiality of the Products and who must have access in order
for Customer to utilize the Products in the manner intended by this Agreement.
Customer agrees to (i) promptly identify to SSI all consultants and others who
are given access to the Products, (ii) insure that consultants and others who
are given access to the Products comply with the terms of this Agreement and do
not remove, copy or otherwise misappropriate the Products or any portion of the
Products, and (iii) otherwise cooperate with SSI in protecting the
confidentiality of the Products. Customer shall promptly notify SSI of any
instances of unauthorized use or disclosure of any portion of the Products and
shall cooperate with SSI in any action relating thereto.
2.6 This Agreement is expressly made subject to any laws, regulation, orders,
or other restrictions on the export from the United States of America of
Products, or of information about such Products, which may be imposed from time
to time by the Government of the United States of America. Customer may not
export or re-export the Products or any related technical data.
2.7 So long as SSI's performing services under this Agreement, Customer shall
not either directly or indirectly, except with the prior written approval of
SSI, solicit or offer employment to any SSI employee with whom Customer has had
contact in the course of performance of services hereunder.
3. Authorized Use of the Products.
3.1 The Products (including any changes thereto made by or on behalf of
Customer) may be used only for, by or on behalf of the Customer by employees of
Customer (or one of its wholly-owned subsidiaries) at the facility identified on
the Schedule and only to process its own data and the data of its wholly-owned
subsidiaries. Unless otherwise specifically provided on the Schedule, Customer
shall not use the Products in the operation of a service bureau, or allow access
to the Products by third parties through terminals located outside Customer's
premises. There shall be no other use of the Products without prior written
consent of SSI. Customer may substitute one facility for another at any time
provided SSI is notified in writing prior to any such facility substitution.
Such
<PAGE> 229
notification shall include a written representation that all copies of the
Product at the old facility have been destroyed or transferred to the new
facility.
3.2 In addition, Customer may use the Products at a facility or facilities
not set forth on the Schedule on an emergency basis to effect backup of
Customer's primary facility or facilities. Written notice of any such
emergency use shall be given to SSI no later than five (5) days following the
commencement of such use.
3.3 Customer may License the use of additional production copies of the
Products at the facility or at another facility only if and after Customer (i)
notifies SSI in advance of such use in writing which identifies the equipment
and location of the additional production copies and (ii) pays SSI a
supplemental license fee for each additional use equal to eighty percent (80%)
of the License Fee for the Products under the then-current SSI price list. Use
of the additional production copies of the Products shall be only for those
purposes permitted under, and subject to, this Agreement. Notwithstanding any
other provisions of this Agreement, the License Fee provided for in this
Paragraph shall become due and payable in full to SSI upon the exercise by the
Customer of its privilege to use the Products at more than one facility
provided by this Paragraph.
4. LIMITED WARRANTY
4.1 (a) SSI warrants that for three (3) months from the date of
this Agreement, the Products, as delivered by SSI, will perform in accordance
with the Product documentation manuals (as amended for Customer by SSI, if
applicable).
(b) SSI will hold harmless and defend Customer against any
patent, copyright, or trade secret infringement claim or suit against Customer
arising from Customer's authorized use of the Products in accordance with this
Agreement (excluding any modification to the Products not supplied by SSI)
provided that Customer shall (i) give SSI written notice of any allegation of
infringement as soon as it is received (ii) permit SSI to control the defense
against any such allegation, and (iii) cooperate with SSI's efforts to defend
against such claim.
(c) SSI does not warrant that the execution of the Products
shall be uninterrupted or error free. SSI's sole obligation under the warranty
in this paragraph 4.1 shall be to correct Products so that they will perform
in accordance with the Product documentation manuals, or customer at SSI's
option, either (i) provide Customer with substituted Products or portions
thereof which do not breach this warranty or (ii) refund the License Fee upon
return by Customer of all Products (including Documentation Manuals) to SSI.
This shall be the sole and exclusive remedy of Customer as to the subject
matter hereof.
4.2 SSI shall not be liable for any indirect, consequential, incidental or
special damages due to any failure of any Product to perform in accordance with
its performance specifications in the Product documentation manuals (as amended
for Customer by SSI) or SSI's failure to possess the right to grant this
license, or for patent, trademark, copyright, or trade secret infringement.
the limitation on damages is agreed and intended by the parties to survive even
if the limited remedy set forth herein fails of its essential purpose.
Customer and SSI agree that the Uniform Commercial Code shall apply to give
full effect to the warranty disclaimers and limitations of liability set forth
herein.
4.3. SSI's warranty obligations hereunder are contingent upon reasonably
prompt installation by Customer of all changes and releases to the Products
provided by SSI to Customer.
4.4 THIS LIMITED WARRANTY IS IN LIEU OF ANY AND ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE. SSI HAS AUTHORIZED NO OTHER WARRANTY WITH RESPECT TO THE
PRODUCTS AND CUSTOMER HAS NOT RELIED ON ANY OTHER WARRANTY IN ITS DECISION TO
EXECUTE THIS AGREEMENT. THE SOLE REMEDIES OF CUSTOMER FOR ANY BREACH OF THIS
LIMITED WARRANTY IN ITS DECISION TO EXECUTE THIS AGREEMENT. THE SOLE REMEDIES
OF CUSTOMER FOR ANY BREACH OF THIS LIMITED WARRANTY ARE SET FORTH HEREIN, AND
IN NO EVENT SHALL SSI BE LIABLE TO ANYONE FOR FAILURE TO FULFILL ITS
OBLIGATIONS UNDER THIS AGREEMENT BECAUSE OF CIRCUMSTANCES BEYOND ITS CONTROL,
NOR SHALL THE LIABILITY OF SSI HEREUNDER EXCEED THE LICENSE FEE ACTUALLY PAID
BY CUSTOMER UNDER THIS AGREEMENT. THIS LIMITED WARRANTY SHALL BE VOID IF THE
EQUIPMENT FAILS TO PERFORM ACCORDING TO ITS STANDARD PERFORMANCE SPECIFICATIONS
OR THE OPERATING SYSTEM FAILS TO PERFORM ACCORDING TO THE SPECIFICATIONS
CONTAINED IN ITS DOCUMENTATION.
4.5 UNDER ANY CIRCUMSTANCES, SSI'S LIABILITY FOR DAMAGES FOR ANY CAUSE
WHATSOEVER, WHETHER IN CONTRACT OR IN TORT, SHALL NOT EXCEED THE LICENSE FEE
ACTUALLY PAID BY CUSTOMER FOR THE PRODUCTS, EXCEPT IN THE CASE OF SSI'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. DAMAGES HEREUNDER SHALL BE THE SOLE AND
EXCLUSIVE REMEDY OF CUSTOMER. IN NO EVENT SHALL SSI BE LIABLE FOR ANY CLAIM.
WHETHER IN CONTRACT OR IN TORT THAT AROSE MORE THAN ONE YEAR PRIOR TO
INSTITUTION OR SUIT THEREON.
5. General
5.1 Titles and paragraph headings are for reference only. The
representations, terms and conditions of this Agreement supersede any and all
previous oral or written communications with respect to the Products. This
Agreement contains the entire and final agreement of the parties hereto and
shall not be modified or amended except in writing signed by an authorized
representative of Customer and SSI. SSI shall be bound by no terms or
conditions stated in any purchase order or other writing of Customer unless
expressly made a part hereof by specific reference hereto acknowledged in
writing by an authorized officer of SSI. Section 2 and Subsections 4.1(c)
through 4.5 and Section 5 shall survive termination of this Agreement.
5.2 No waiver of any breach of any provision of this Agreement shall
constitute a waiver of any prior, concurrent or subsequent breach of the same or
any other provisions hereof and no waiver shall be effective unless made in
writing. In the event that any provision of this Agreement shall be held
invalid or otherwise unenforceable, such provision shall be served and the
remaining provisions of this Agreement shall continue in full force and effect.
5.3 All notices which either party hereto is required or may desire to give
the other party shall be given by addressing the notice to the address set forth
on the first page of the Agreement, and depositing it in the United States mail,
postage prepaid, by registered or certified mail. Notices so sent will be
deemed given on the third United States mail delivery day following the such
deposit.
5.4 In the event that either party shall cease conducting business in the
normal course, become insolvent, or become subject to any proceeding under
federal bankruptcy laws (other than any proceeding for reorganization of a
debtor in possession) or any other similar statute, then, at the option of the
other party, this Agreement shall be deemed to have terminated after written
notice to the other party.
5.5. This Agreement is entered into in, and shall be governed by and
construed under the laws of the State of Georgia.
5.6 This Agreement shall be binding upon SSI and its successors and assigns,
and the Customer and its successors and assigns.
(CUSTOMER) SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
----------------------------------------------
Signature: /s/ Thomas A. Procolli
-----------------------------------------------
Name: Thomas A. Procolli
---------------------------------------------------
Title: Senior Vice President
---------------------------------------------------
ACCEPTED BY:
SERVANTS SYSTEMS, INC.
Signature: /s/ Robert Lewis
-----------------------------------------------
Name: Robert Lewis
---------------------------------------------------
Title: Executive Vice President
---------------------------------------------------
<PAGE> 230
SOFTWARE SCHEDULE
SSI Agreement No.:
---------------
Schedule No.:
--------------------
Date: JUNE 26, 1996 [SERVANTIS LOGO]
----------------------------
SERVANTIS SYSTEMS,INC.
4411 East Jones Bridge Rd.,
Norcross, Georgia 30092
770/441-3387
Company Name ("Customer") SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
-------------------------------------------
Address 4000 HOLLYWOOD BOULEVARD, SUITE 400N
--------------------------------------------------------------
City, State & Zip HOLLYWOOD, FL 33021-6733
----------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Product Name License Fee Object
Code
- -------------------------------------------------------------------------------
<S> <C> <C>
TPLS FORECLOSURE MONITORING, UP TO 5 CONCURRENT USERS
TPLS BANKRUPTCY MONITORING, UP TO 3 CONCURRENT USERS
TPLS FORECLOSURE CLAIMS, UP TO 2 USERS
TPLS REO MANAGEMENT, SINGLE USER
DATALINK INTERFACES
INFORMIX SQL, C-15AM, 4GL
TOTAL
SEE ADDENDUM ATTACHED HERETO AND MADE A PART HEREOF.
- -------------------------------------------------------------------------------
</TABLE>
Additional SST Software Products and Systems may be license at the then-current
prices of SSI subject to all terms and conditions of this Schedule and the
Master Software System License Agreement upon acceptance by SSI of a written
order from an authorized representative of the Customer. Installation of the
Products shall be on the equipment and at the facility described below:
Equipment Manufacturer:___________ Model:___________ Operating System:__________
Facility Location: 4000 HOLLYWOOD BOULEVARD, SUITE 400N, HOLLYWOOD,FL 33021
------------------------------------------------------------
Additional Terms and Conditions
1. TERMS AND CONDITIONS
This Schedule is entered into pursuant to the Master Software System License
Agreement ("Agreement") attached hereto and incorporated herein by reference.
The agreement between SSI and Customer for licensing of the Products described
herein consists of the provisions of this Schedule and the Agreement. Any
references to the products in the Agreement shall be deemed to include this
Schedule. Any other terms used in this Schedule which are defined in the
Agreement shall have the same meaning in this Schedule as they have in the
Agreement.
2. PAYMENT
The total License Fee shall be due and payable in U.S. dollars by the Customer
to SSI. The License Fee does not include any (i) sales, use, value added,
privilege, ad valorem, excise taxes or other similar taxes, (ii) duties or (iii)
similar assessments all of which are the sole liability of Customer and shall be
paid by Customer. SSI shall pay its own taxes based on net income. Customer
shall not deduct from payments to SSI any amounts paid or payable to third
parties for taxes, duties, etc., however designated, including amounts payable
under the Canada Income Tax Act. Payment terms are as follows:
90% of the License Fee shall be payable to SSI upon the execution of
this Agreement by both SSI and Customer, before the Products are
delivered. 10% of the License Fee shall be payable to SSI immediately
upon the Products having been demonstrated to the Customer to perform
according to Product Documentation Manuals using Customer's computer and
SSI's test data, or three (3) months from date of this Agreement,
whichever occurs first. All amounts owed to SSI by Customer that are
not paid when due shall bear interest from the date due at the rate
of 1-1/2 percent per month.
3. ON-SITE SUPPORT
Customer may purchase on-site support on a mutually agreed-upon time frame at
SSI's standard charges for man-days and materials. Customer will pay actual
reasonable travel and living expenses incurred by SSI personnel in providing any
on-site support to Customer or for any other mutually agreeable purpose.
<TABLE>
<S> <C>
ACCEPTED BY:
(CUSTOMER) SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA SERVANTIS SYSTEMS, INC.
--------------------------------------------
Signature: /s/ Thomas A. Procolli Signature: /s/ Robert Lewis
------------------------------------------ -----------------------------------------
Name: Thomas A. Procolli Name: Robert Lewis
------------------------------------------------ ------------------------------------------------
Title: Senior Vice President Title: Executive Vice President
----------------------------------------------- -----------------------------------------------
</TABLE>
<PAGE> 231
ADDENDUM
TO THE
MASTER SOFTWARE SYSTEM LICENSE AGREEMENT
AND THE SOFTWARE SCHEDULE
This Addendum amends and supplements the Master Software System License
Agreement ("Agreement") and the Software Schedule by and between Servantis
Systems, Inc. ("SSI") and Suncoast Savings and Loan Association, FSA,
("Customer") dated June 26, 1996.
1. PAYMENT
Paragraph 2 of the Software Schedule is deleted in its entirety and
replaced by the following:
50% of the License Fee shall be payable to CheckFree upon the
execution of this Agreement by both SSI and Customer, before the
Products are delivered.
25% of the License Fee shall be payable to SSI upon the receipt of
Products by Customer, but not later than three (3) months from date
of this Agreement.
25% of the License Fee shall be payable to SSI immediately upon the
Products having been demonstrated to the Customer to perform
according to Product Documentation Manuals using Customer's computer
and SSI's test data, or three (3) months from date of this Agreement,
whichever occurs first. All amounts owed by SSI by Customer that
are not paid when due shall bear interest from the date due at the
rate of 1 1/2 percent per month.
2. TITLE AND NON-DISCLOSURE
The first sentence of Paragraph 2.2 of the Master Software System
License Agreement is supplemented as follows: ", which consent will not
be unreasonably withheld."
Paragraph 2.4 of Master Software System License Agreement is
supplemented and amended as follows:
Notwithstanding the foregoing, reproduction, printing, displaying or
copying the Product Documentation Manuals which is reasonably
necessary for the conduct of business and training users in
the operation of the system is expressly permitted under the
contract. Customer agrees to incorporate SSI's trade secret or
copyright notices in any copies.
3. PARAGRAPH 2.5 OF THE MASTER SOFTWARE SYSTEM LICENSE AGREEMENT IS
SUPPLEMENTED AS FOLLOWS:
Notwithstanding the foregoing, Customer shall be permitted under the
contract to grant its customers and contractors, without notice to
SSI, access to the Products and associated documentation in
furtherance of the Customer's "Loan Servicing" business. However,
upon written request from SSI, Customer will promptly provide a
list of all third parties who have had access to the Products.
<PAGE> 232
4. PARAGRAPH 3.1 OF THE MASTER SOFTWARE SYSTEM LICENSE AGREEMENT IS
SUPPLEMENTED AS FOLLOWS:
Subject to the number of workstations licensed by Customer, Customer
shall be permitted to grant its customers and contractors "Limited
Remote" access to the Products in furtherance of Customer's "Loan
Servicing" business. Third parties will be required to sign a
Confidentiality and Non-Disclosure Agreement, prior to having access to
SSI Products.
5. SSI represents and warrants to Customer that the Products and all changes
and releases to the Product, as delivered to the Customer, perform the
essential purpose for which they were designed. SSI makes its best efforts
to provide Products which comply with current regulations, as amended from
time to time, including the regulations of FNMA, FHLMC, GNMA, HUD, FHA, and
VA.
6. In the event Customer must involuntarily transition to a non-SSI system
because the Product does not materially perform in accordance with the
Product Documentation Manuals, in addition to the remedies detailed in
4.1(c) of the Master Software System License Agreement, SSI agrees to use
reasonable best efforts in identifying a substitute product, and cooperate
in good faith to transition the Customer to the new system.
7. SSI agrees that in the event SSI withdraws from the software business or
discontinues support of the Product, source code for the Product will
be available at no charge other than the costs associated with software
retrieval, duplication and shipping, provided Customer has a current
Software Maintenance Agreement in effect. Source code will then be made
available for the purpose of maintenance only, and the same terms and
conditions of the original Agreement will apply. In the event that a
successor to SSI continues supporting the aforementioned products, source
code would not pass to Customer unless licensed separately.
8. MAINTENANCE AND SUPPORT SERVICES
In consideration of the annual software maintenance fee, SSI shall provide
Customer the maintenance and ongoing services listed below:
a. Telephone Support. SSI will furnish to Customer a telephone number for
use by Customer to obtain reasonable operator support and advice
relating to the functions of the Products.
b. Software Enhancements. SSI shall provide Customer with any
enhancement(s) to the Product that SSI may acquire or develop and offer
to other licensees of the Products. SSI will provide enhancements in
such form and with accompanying instructions sufficient to enable
Customer to install the enhancements.
c. Annual User Conference. Customer shall have the right to attend SSI's
Annual User Conference.
<PAGE> 233
9. SOFTWARE MAINTENANCE FEES
SSI agrees to not increase the annual software maintenance fee
more often than once every twelve (12) months, and limit any increase
to no more than 10% per year. In the event SSI does not increase the
software maintenance fee in any given year, SSI agrees not to
retroactively increase the software maintenance fee.
10. ARBITRATION
SSI and Customer agree to notify each other as promptly as possible
of any conflicts arising from this Agreement or in the interpretation
of the provisions of this Agreement, or any dispute as to whether
or not an event of default has occurred. SSI and Customer
further agree to attempt to resolve all such conflicts as promptly as
possible and in good faith before initiating any causes or action
arising from this Agreement in a court of law. Any controversy or
claim, including any claim of misrepresentation, arising from or
related to this Agreement and/or any contract hereafter entered into
between SSI and Customer, or the breach thereof, or the furnishing of
any equipment, software or service by SSI to Customer, shall be settled
by arbitration. The arbitration shall be conducted by a single
arbitrator under the then current rules of the American Arbitration
Association. The arbitrator shall be chosen from a panel of persons
knowledgeable in business information and data processing systems. The
decision and award of the arbitrator shall be final and binding and the
award shall be deemed to be made in Atlanta, Georgia. Notwithstanding
the foregoing, the arbitrator cannot override the terms of this
Agreement.
<TABLE>
ACCEPTED BY:
<C> <C>
SERVANTIS SYSTEMS, INC. Suncoast Savings and Loan Association, FSA
/s/ Robert Lewis /s/ Thomas A. Procelli
- --------------------------------------- --------------------------------------------
Signature Signature
Robert Lewis Thomas A. Procelli
- --------------------------------------- --------------------------------------------
Name Name
Executive Vice President Senior Vice President
- -------------------------------------- --------------------------------------------
Title Title
June 28, 1996 June 26, 1996
- -------------------------------------- --------------------------------------------
Date Date
</TABLE>
<PAGE> 234
EXHIBIT 10.7.2
AMENDMENT TO DEFERRED COMPENSATION PLAN AGREEMENT FOR
ALBERT J. FINCH DATED JULY 15, 1996
<PAGE> 235
AMENDMENT TO
DEFERRED COMPENSATION PLAN
This Amendment to Deferred Compensation Plan (the "Agreement") by and
between SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a federal stock savings
association ("Suncoast"), and ALBERT J. FINCH ("Finch") is made and entered
into at Hollywood, FL as of the 15th day of July, 1996.
Recitals
WHEREAS, Suncoast maintains the Deferred Compensation Plan (the "Plan")
and Finch is a Participant in the Plan; and
WHEREAS, Suncoast and Finch desire to amend the terms of the Plan in the
respects hereinafter set forth, among other things, in order to clarify the
parties' previous understanding and intent at the time the Plan was entered
into that in the event of a Change in Control, Finch would be 100% vested in
the Plan;
NOW, THEREFORE, in consideration of the mutual promises and covenants
between the parties, the sufficiency of which is hereby acknowledged, Suncoast
and Finch hereby agree that the terms of the Plan shall be amended and that
the Plan shall be administered as follows:
1. Merger as Change in Control. The proposed merger of Suncoast
with and into a subsidiary of BankUnited Financial Corporation, a Florida
corporation, will constitute a Change in Control for purposes of the Plan and
the Trust. Pursuant to Section 2.2 of the Trust Agreement, following the
Change in Control, the Trustee shall have complete authority to administer the
Trust, and, pursuant to Section 10.1 of the Trust Agreement, following the
Change in Control, the Trustee shall act on its own discretion to carry out the
terms of the Trust Agreement in accordance with the Plan, the Trust Agreement,
and this Amendment.
2. Vesting. Upon a Change in Control, a Participant shall be 100%
vested.
3. Payment of Benefits. After a Change in Control or upon a
Termination of Employment, the benefits under the Plan shall not be required
to be paid in a lump sum, but rather the benefits shall be paid in accordance
with the election made by the Participant with respect to the payment of the
Retirement Benefit pursuant to Section 5.2 of the Plan. In the case of Finch,
this was an election to receive the Retirement Benefit in equal monthly
payments over a period of 60 months. The payment of benefits to Finch under
the Plan shall be made by the Trustee from the Trust and shall commence within
60 days following the Change in Control.
<PAGE> 236
4. Crediting Rate. The "Crediting Rate" for the three-year period
following the Change in Control shall be 9% per annum. The Crediting Rate
shall be applied to the Participant's Account Balance at the time of the Change
in Control without reduction for subsequent installment distributions, and the
benefits to be paid to a Participant under the Plan shall be calculated by
application of this Crediting Rate without reduction for present value. After
the three-year period following the Change in Control, the "Crediting Rate"
shall be zero.
5. Funding of Trust. Prior to the Change in Control, Suncoast
will make a contribution to the Trust to the extent necessary to fully fund the
Trust to provide the benefit to which Finch is entitled under the Plan.
6. Definitions. Unless otherwise provided in this Amendment, the
capitalized terms in this Amendment shall have the same meaning as under the
Plan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SUNCOAST SAVINGS AND LOAN
ASSOCIATION, FSA
By ???
----------------------------
Title:
ALBERT J. FINCH
/s/ Albert J. Finch
------------------------------
2
<PAGE> 237
EXHIBIT 10.13
EMPLOYMENT CONTINUATION AND SEVERANCE AGREEMENT BETWEEN
SUNCOAST AND ALBERT J. FINCH DATED AUGUST 28, 1996
<PAGE> 238
EMPLOYMENT CONTINUATION AND SEVERANCE AGREEMENT
This Employment Continuation and Severance Agreement (the "Agreement")
by and between SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a federal stock
savings association ("Suncoast"), and ALBERT J. FINCH (the "Executive") is made
and entered into at Hollywood, Florida as of the 28th day of August, 1996.
Recitals
WHEREAS, the Executive has provided valuable service to Suncoast as an
executive officer and is currently serving as Chairman, President, Chief
Executive Officer and Chief Operating Officer of Suncoast;
WHEREAS, negotiations are currently ongoing with BankUnited Financial
Corporation, a Florida corporation ("BankUnited"), contemplating the proposed
merger of Suncoast with and into a subsidiary of BankUnited (the "Merger");
WHEREAS, the Board of Directors of Suncoast (the "Board") has
determined that it is in the best interests of Suncoast and its stockholders to
assure that Suncoast will have the continued dedication and service of the
Executive as a member of Suncoast's management during the Merger negotiations;
WHEREAS, the Board in addition believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Merger, and to
encourage the Executive's full attention and dedication to Suncoast;
WHEREAS, in order to accomplish these objectives, the Board has caused
Suncoast to enter into this Agreement;
NOW, THEREFORE, in consideration of the payment by Suncoast to the
Executive of an aggregate amount of $300,000 (the "Payment") as more fully set
forth herein, and the mutual promises and covenants between the parties, the
sufficiency of which is hereby acknowledged, the Executive and Suncoast hereby
agree to the following Terms and Conditions:
Terms and Conditions
1. Employment Continuation Payment. In consideration of the
Executive's remaining in the employ of Suncoast through the closing of the
Merger (the "Closing"), or in the event that Suncoast terminates the
Executive's employment prior to the
<PAGE> 239
Closing other than for Cause, Suncoast agrees to pay the amount of $150,000 to
the Executive on the later of the date of the Closing or January 2, 1997. In
the event that the Executive does not remain in the employ of Suncoast through
the Closing as a result of voluntary resignation or termination for Cause, no
payment will be made by Suncoast to the Executive under this Agreement.
"Cause" means any action or inaction of the Executive involving personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform the Executive's
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses), or final cease-and-desist order, or material
breach of any provision of this Agreement.
2. Severance Payment. The parties acknowledge that the employee
continuation payment provided for in Paragraph 1 is in addition to and not in
substitution for the severance payment to which the Executive would otherwise
be entitled under Suncoast's existing senior officer severance policy
("Severance Policy Payment"). In further consideration of the Executive's
entitlement to a Severance Policy Payment, the Executive's services as an
employee of Suncoast and the termination of that employment resulting from the
Merger, Suncoast agrees to make a severance payment in the amount of six
months' salary, or $150,000, to the Executive on January 2, 1997, which
severance payment is substantially comparable to, but in lieu of, the Severance
Policy Payment.
3. Condition to Employment Continuation and Severance Payments.
The employment continuation and severance payments under this Agreement by
Suncoast to the Executive will be paid only in the event of the closing of the
merger of Suncoast with and into a subsidiary of BankUnited Financial
Corporation (the "Closing"). In the event that the Closing does not occur
prior to January 2, 1997, the employment continuation and severance payments
will not be made until the date of the Closing.
4. Amendment. This Agreement may not be amended, altered, or
modified, except by a written instrument signed by the parties hereto, or their
respective successors, and may not be otherwise terminated except as provided
herein.
5. Effect of Agreement. This Agreement shall be binding upon and
inure to the benefit of Suncoast and its successors and the Executive, his
successors, heirs, executors, administrators, and beneficiaries.
6. Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior understanding whether written or oral.
2
<PAGE> 240
7. Assignment of Suncoast's Obligations. Suncoast agrees to
provide in the Merger documents that BankUnited shall be obligated to expressly
assume this Agreement and make the Payment to the same extent as Suncoast would
be required to perform.
8. Assignment or Transfer. The right of the Executive to receive
the Payment is assignable and may be alienated, pledged, or otherwise
encumbered. The Executive's heirs, executors, administrators, successors,
personal representatives, or assigns shall have all of the rights, title, and
interests of the Executive in and to the Payment.
9. Arbitration and Attorneys' Fees. Any dispute with respect to
this Agreement shall be decided by a confidential arbitration, in the City of
Ft. Lauderdale, Florida, pursuant to the rules of the American Arbitration
Association then in effect. The prevailing party in such proceedings shall be
entitled to an award of reasonable attorneys' fees and costs.
10. Governing Law. Florida law shall apply to every aspect of this
Agreement, including but not limited to the interpretation, application, and
enforcement of the terms of this Agreement, except where the laws of the United
States may apply.
11. Withholding. All payments made pursuant to this Agreement
shall be subject to withholding taxes to the extent required by applicable law.
12. Certain Regulatory Considerations.
(a) Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(b) If the Executive is suspended and/or temporarily
prohibited from participating in the conduct of Suncoast's affairs by a notice
served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act
(the "FDIA"), Suncoast's obligations under this Agreement shall be suspended as
of the date of service unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, Suncoast may in its discretion (i) pay the
Executive all or part of the compensation withheld while its contract
obligations were suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(c) If the Executive is removed and/or permanently
prohibited from participating in the conduct of Suncoast's affairs by an order
issued under section 8(e)(4) or (g)(1) of the FDIA, all obligations of Suncoast
under this Agreement shall
3
<PAGE> 241
terminate as of the effective date of the order, but vested rights of the
parties hereto shall not be affected.
(d) If Suncoast is in default (as defined in section
3(x)(1) of the FDIA) all obligations under this Agreement shall terminate as of
the date of default, but this Section 12(d) shall not affect any vested rights
of the parties hereto.
(e) All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of the contract
is necessary for the continued operation of Suncoast (i) by the Director of the
Office of Thrift Supervision (the "Director") or his or her designee, at the
time the Federal Deposit Insurance Corporation or the Resolution Trust
Corporation enters into an agreement to provide assistance to or on behalf of
Suncoast under the authority contained in section 13(c) of the FDIA; or (ii) by
the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to the
operation of Suncoast or when Suncoast is determined by the Director to be in
an unsafe or unsound condition. Any rights of the parties hereto that have
already vested, however, shall not be affected by such action.
(f) The provisions of this Section 12 shall be deemed to
be modified or deleted in whole or in part, as appropriate, to conform to the
applicable provisions of the FDIA, as such provisions may be amended or
rescinded at any time during the term of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE SUNCOAST SAVINGS AND LOAN
ASSOCIATION, FSA
/s/ Albert J. Finch By /s/ Richard L. Browdy
- ------------------------- ----------------------------------
Albert J. Finch Title: Exec. Vice President
and Chief Financial Officer
4
<PAGE> 242
EXHIBIT 10.13.1
EMPLOYMENT CONTINUATION AGREEMENT BETWEEN
SUNCOAST AND RICHARD J. BROWDY DATED AUGUST 28, 1996
<PAGE> 243
EMPLOYMENT CONTINUATION AGREEMENT
This Employment Continuation and Severance Agreement (the "Agreement")
by and between SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a federal stock
savings association ("Suncoast"), and RICHARD L. BROWDY (the "Executive") is
made and entered into at Hollywood, Florida as of the 28th day of August, 1996.
Recitals
WHEREAS, the Executive has provided valuable service to Suncoast as an
executive officer and is currently serving as Executive Vice President and
Chief Financial Officer of Suncoast;
WHEREAS, negotiations are currently ongoing with BankUnited Financial
Corporation, a Florida corporation ("BankUnited"), contemplating the proposed
merger of Suncoast with and into a subsidiary of BankUnited (the "Merger");
WHEREAS, the Board of Directors of Suncoast (the "Board") has
determined that it is in the best interests of Suncoast and its stockholders to
assure that Suncoast will have the continued dedication and service of the
Executive as a member of Suncoast's management during the Merger negotiations;
WHEREAS, the Board in addition believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Merger, and to
encourage the Executive's full attention and dedication to Suncoast;
WHEREAS, in order to accomplish these objectives, the Board has caused
Suncoast to enter into this Agreement;
NOW, THEREFORE, in consideration of the payment by Suncoast to the
Executive of $280,000 (the "Payment") as more fully set forth herein, and the
mutual promises and covenants between the parties, the sufficiency of which is
hereby acknowledged, the Executive and Suncoast hereby agree to the following
Terms and Conditions:
Terms and Conditions
1. Employment Continuation Payment. In consideration of the
Executive's remaining in the employ of Suncoast through the closing of the
Merger (the "Closing") (including two three-month periods thereafter; provided,
however, that the Executive and/or Suncoast may terminate this Agreement upon
thirty days' prior
<PAGE> 244
notice in the second three-month period), or in the event that Suncoast
terminates the Executive's employment prior to the Closing other than for
Cause, Suncoast agrees to pay the amount of $280,000 to the Executive on the
later of the date of the Closing or January 2, 1997. In the event that the
Executive does not remain in the employ of Suncoast through the Closing as a
result of voluntary resignation or termination for Cause, no payment will be
made by Suncoast to the Executive under this Agreement. "Cause" means any
action or inaction of the Executive involving personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform the Executive's duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses), or final cease-and-desist order, or material breach of any
provision of this Agreement.
2. Amendment. This Agreement may not be amended, altered, or
modified, except by a written instrument signed by the parties hereto, or their
respective successors, and may not be otherwise terminated except as provided
herein.
3. Condition to Employment Continuation Payment. The employment
continuation payment under this Agreement by Suncoast to the Executive will be
paid only in the event of the Closing. In the event the Closing does not occur
prior to January 2, 1997, the employment continuation payment will not be made
until the date of the Closing.
4. Effect of Agreement. This Agreement shall be binding upon and
inure to the benefit of Suncoast and its successors, and this Agreement shall
inure to the benefit of and be enforceable by the Executive, his successors,
heirs, executors, administrators, and beneficiaries. The Payment is in lieu of
those severance payments the Executive would otherwise be eligible for under
Suncoast's senior officer severance pay policy. Nothing contained in this
Agreement shall be construed to affect the rights the Executive may have in any
other benefits for which the Executive may qualify, including payment upon
termination for vacation time earned but not taken.
5. Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior understanding whether written or oral.
6. Assignment of Suncoast's Obligations. Suncoast agrees to
provide in the Merger documents that BankUnited shall be obligated to expressly
assume this Agreement and make the Payment to the same extent as Suncoast would
be required to perform.
7. Assignment or Transfer. The right of the Executive to receive
the Payment is assignable and may be alienated, pledged,
2
<PAGE> 245
or otherwise encumbered. The Executive's heirs, executors, administrators,
successors, personal representatives, or assigns shall have all of the rights,
title, and interests of the Executive in and to the Payment.
8. Arbitration and Attorneys' Fees. Any dispute with respect to
this Agreement shall be decided by a confidential arbitration, in the City of
Ft. Lauderdale, Florida, pursuant to the rules of the American Arbitration
Association then in effect. The prevailing party in such proceedings shall be
entitled to an award of reasonable attorneys' fees and costs.
9. Governing Law. Florida law shall apply to every aspect of
this Agreement, including but not limited to the interpretation, application,
and enforcement of the terms of this Agreement, except to the extent the laws
of the United States may apply.
10. Withholding. All payments made pursuant to this Agreement
shall be subject to withholding taxes to the extent required by applicable law.
11. Certain Regulatory Considerations.
(a) Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(b) If the Executive is suspended and/or temporarily
prohibited from participating in the conduct of Suncoast's affairs by a notice
served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act
(the "FDIA"), Suncoast's obligations under this Agreement shall be suspended as
of the date of service unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, Suncoast may in its discretion (i) pay the
Executive all or part of the compensation withheld while its contract
obligations were suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(c) If the Executive is removed and/or permanently
prohibited from participating in the conduct of Suncoast's affairs by an order
issued under section 8(e)(4) or (g)(1) of the FDIA, all obligations of Suncoast
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the parties hereto shall not be affected.
(d) If Suncoast is in default (as defined in section
3(x)(1) of the FDIA) all obligations under this Agreement shall terminate as of
the date of default, but this Section 11(d) shall not affect any vested rights
of the parties hereto.
3
<PAGE> 246
(e) All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of the contract
is necessary for the continued operation of Suncoast (i) by the Director of the
Office of Thrift Supervision (the "Director") or his or her designee, at the
time the Federal Deposit Insurance Corporation or the Resolution Trust
Corporation enters into an agreement to provide assistance to or on behalf of
Suncoast under the authority contained in section 13(c) of the FDIA; or (ii) by
the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to the
operation of Suncoast or when Suncoast is determined by the Director to be in
an unsafe or unsound condition. Any rights of the parties hereto that have
already vested, however, shall not be affected by such action.
(f) The provisions of this Section 11 shall be deemed to
be modified or deleted in whole or in part, as appropriate, to conform to the
applicable provisions of the FDIA, as such provisions may be amended or
rescinded at any time during the term of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE SUNCOAST SAVINGS AND LOAN
ASSOCIATION, FSA
/s/ Richard L. Browdy By /s/ Albert J. Finch
- ------------------------- ----------------------------
Richard L. Browdy Title:
4
<PAGE> 247
EXHIBIT 10.13.2
EMPLOYMENT CONTINUATION AGREEMENT BETWEEN
SUNCOAST AND WENDY MITCHLER DATED AUGUST 28, 1996
<PAGE> 248
EMPLOYMENT CONTINUATION AGREEMENT
This Employment Continuation Agreement (the "Agreement") by and
between SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a federal stock savings
association ("Suncoast"), and WENDY MITCHLER (the "Executive") is made and
entered into at Hollywood, Florida as of the 28th day of August, 1996.
Recitals
WHEREAS, the Executive has provided valuable service to Suncoast as an
executive officer and is currently serving as General Counsel, Senior Vice
President, and Secretary of Suncoast;
WHEREAS, negotiations are currently ongoing with BankUnited Financial
Corporation, a Florida corporation ("BankUnited"), contemplating the proposed
merger of Suncoast with and into a subsidiary of BankUnited (the "Merger");
WHEREAS, the Board of Directors of Suncoast (the "Board") has
determined that it is in the best interests of Suncoast and its stockholders to
assure that Suncoast will have the continued dedication and service of the
Executive as a member of Suncoast's management during the Merger negotiations;
WHEREAS, the Board in addition believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Merger, and to
encourage the Executive's full attention and dedication to Suncoast;
WHEREAS, in order to accomplish these objectives, the Board has caused
Suncoast to enter into this Agreement;
NOW, THEREFORE, in consideration of the payment by Suncoast to the
Executive of $110,000 (the "Payment") as more fully set forth herein, and the
mutual promises and covenants between the parties, the sufficiency of which is
hereby acknowledged, the Executive and Suncoast hereby agree to the following
Terms and Conditions:
Terms and Conditions
1. Employment Continuation Payment. In consideration of the
Executive's remaining in the employ of Suncoast through the closing of the
Merger (the "Closing"), or in the event that Suncoast terminates the
Executive's employment prior to the Closing other than for Cause, Suncoast
agrees to pay the amount
<PAGE> 249
of $110,000 to the Executive on the later of the date of the Closing or January
2, 1997. In the event that the Executive does not remain in the employ of
Suncoast through the Closing as a result of voluntary resignation or
termination for Cause, no payment will be made by Suncoast to the Executive
under this Agreement. "Cause" means any action or inaction of the Executive
involving personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform the
Executive's duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses), or final cease-and-desist order,
or material breach of any provision of this Agreement.
2. Amendment. This Agreement may not be amended, altered, or
modified, except by a written instrument signed by the parties hereto, or their
respective successors, and may not be otherwise terminated except as provided
herein.
3. Condition to Employment Continuation Payment. The employment
continuation payment under this Agreement by Suncoast to the Executive will be
paid only in the event of the Closing. In the event the Closing does not occur
prior to January 2, 1997, the employment continuation payment will not be made
until the date of the Closing.
4. Effect of Agreement. This Agreement shall be binding upon and
inure to the benefit of Suncoast and its successors, and this Agreement shall
inure to the benefit of and be enforceable by the Executive, her successors,
heirs, executors, administrators, and beneficiaries. The Payment is in lieu of
those severance payments the Executive would otherwise be eligible for under
Suncoast's senior officer severance pay policy. Nothing contained in this
Agreement shall be construed to affect the rights the Executive may have in any
other benefits for which the Executive may qualify, including payment upon
termination for vacation time earned but not taken.
5. Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior understanding whether written or oral.
6. Assignment of Suncoast's Obligations. Suncoast agrees to
provide in the Merger documents that BankUnited shall be obligated to expressly
assume this Agreement and make the Payment to the same extent as Suncoast would
be required to perform.
7. Assignment or Transfer. The right of the Executive to receive
the Payment is assignable and may be alienated, pledged, or otherwise
encumbered. The Executive's heirs, executors, administrators, successors,
personal representatives, or assigns
2
<PAGE> 250
shall have all of the rights, title, and interests of the Executive in and to
the Payment.
8. Arbitration and Attorneys' Fees. Any dispute with respect to
this Agreement shall be decided by a confidential arbitration, in the City of
Ft. Lauderdale, Florida, pursuant to the rules of the American Arbitration
Association then in effect. The prevailing party in such proceedings shall be
entitled to an award of reasonable attorneys' fees and costs.
9. Governing Law. Florida law shall apply to every aspect of
this Agreement, including but not limited to the interpretation, application,
and enforcement of the terms of this Agreement, except to the extent the laws
of the United States may apply.
10. Withholding. All payments made pursuant to this Agreement
shall be subject to withholding taxes to the extent required by applicable law.
11. Certain Regulatory Considerations.
(a) Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(b) If the Executive is suspended and/or temporarily
prohibited from participating in the conduct of Suncoast's affairs by a notice
served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act
(the "FDIA"), Suncoast's obligations under this Agreement shall be suspended as
of the date of service unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, Suncoast may in its discretion (i) pay the
Executive all or part of the compensation withheld while its contract
obligations were suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(c) If the Executive is removed and/or permanently
prohibited from participating in the conduct of Suncoast's affairs by an order
issued under section 8(e)(4) or (g)(1) of the FDIA, all obligations of Suncoast
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the parties hereto shall not be affected.
(d) If Suncoast is in default (as defined in section
3(x)(1) of the FDIA) all obligations under this Agreement shall terminate as of
the date of default, but this Section 11(d) shall not affect any vested rights
of the parties hereto.
3
<PAGE> 251
(e) All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of the contract
is necessary for the continued operation of Suncoast (i) by the Director of the
Office of Thrift Supervision (the "Director") or his or her designee, at the
time the Federal Deposit Insurance Corporation or the Resolution Trust
Corporation enters into an agreement to provide assistance to or on behalf of
Suncoast under the authority contained in section 13(c) of the FDIA; or (ii) by
the Director or his or her designee, at the time the Director or his or her
designee approves a supervisory merger to resolve problems related to the
operation of Suncoast or when Suncoast is determined by the Director to be in
an unsafe or unsound condition. Any rights of the parties hereto that have
already vested, however, shall not be affected by such action.
(f) The provisions of this Section 11 shall be deemed to
be modified or deleted in whole or in part, as appropriate, to conform to the
applicable provisions of the FDIA, as such provisions may be amended or
rescinded at any time during the term of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE SUNCOAST SAVINGS AND LOAN
ASSOCIATION, FSA
/s/ Wendy Mitchler By /s/ Albert J. Finch
- -------------------------- -----------------------------
Wendy Mitchler Title:
4
<PAGE> 252
EXHIBIT 10.13.3
AMENDMENT TO EMPLOYMENT CONTINUATION AND SEVERANCE
AGREEMENT BETWEEN SUNCOAST AND ALBERT J. FINCH
DATED SEPTEMBER 26, 1996
<PAGE> 253
AMENDMENT TO
EMPLOYMENT CONTINUATION AND SEVERANCE AGREEMENT
This Amendment to Employment Continuation and Severance Agreement (the
"Amendment") by and between SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA, a
federal stock savings association ("Suncoast"), and ALBERT J. FINCH (the
"Executive") is made and entered into at Hollywood, Florida on the 26th day of
September, 1996.
Recitals
WHEREAS, on August 28, 1996, the Executive and Suncoast entered into
an Employment Continuation and Severance Agreement (the "Agreement") in
connection with the merger of Suncoast with and into a subsidiary of BankUnited
Financial Corporation, a Florida corporation (the "Merger");
WHEREAS, Section 4 of the Agreement provides that the Agreement may be
amended by a written instrument signed by the parties thereto;
WHEREAS, Suncoast and the Executive have determined that it is in
their best interests to amend the terms of the Agreement in the respects
hereinafter set forth, among other things, to change the time of payment of the
employment continuation and severance payments pursuant to the Agreement,
because the date of the consummation of the Merger (the "Closing") will occur
earlier than originally anticipated;
NOW, THEREFORE, in consideration of the mutual promises and covenants
between the parties, the sufficiency of which is hereby acknowledged, the
Executive and Suncoast hereby agree that the terms of the Agreement shall be
amended and that the Agreement shall be administered as follows:
1. Employment Continuation Payment. Suncoast agrees to pay the
amount of the employment continuation payment to the Executive pursuant to
Section 1 of the Agreement on the date of the Closing.
2. Severance Payment. Suncoast agrees to make the severance
payment to the Executive pursuant to Section 2 of the Agreement on the date of
the Closing.
3. Additional Payment. In the event that the Closing occurs
prior to November 30, 1996, Suncoast agrees to make an additional payment to
the Executive on the date of the Closing in an amount equal to the amount of
compensation that Suncoast otherwise would have paid to the Executive for his
services as an officer and employee of Suncoast for the period from the date of
<PAGE> 254
the Closing through the end of November 1996. This additional payment to the
Executive is in addition to the payment of compensation that Suncoast will make
to the Executive for his services up to the date of the Closing and is also in
addition to the employment continuation and severance payments otherwise made
by Suncoast to the Executive pursuant to the Agreement as amended by the
Amendment.
4. Effect of Amendment. This Amendment shall amend the Agreement
only in the respects set forth herein and the terms and provisions of the
Agreement, as amended by this Amendment, shall continue to be binding upon and
inure to the benefit of Suncoast and its successors and the Executive, his
successors, heirs, executors, administrators, and beneficiaries.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
day and year first above written.
EXECUTIVE SUNCOAST SAVINGS AND LOAN
ASSOCIATION, FSA
/s/ Albert J. Finch By /s/ ?
- ------------------------- ----------------------------
Albert J. Finch Title:
2
<PAGE> 255
EXHIBIT 10.15
FEDERAL HOME LOAN BANK OF ATLANTA (THE "BANK") AGREEMENT FOR
ADVANCES AND SECURITY AGREEMENT WITH BLANKET FLOATING LIEN
BETWEEN SUNCOAST AND THE BANK DATED JANUARY 18, 1996
<PAGE> 256
FEDERAL HOME LOAN BANK OF ATLANTA
AGREEMENT FOR ADVANCES AND SECURITY AGREEMENT
WITH BLANKET FLOATING LIEN
AGREEMENT, dated as of January 18, 1996, between Suncoast Savings &
Loan Association, FSA having its principal place of business at 4000 Hollywood
Blvd., Suite 400N, Hollywood, FL. 33021-6733 (Member") and the Federal Home
Loan Bank of Atlanta, 1475 Peachtree Street, N.E., Atlanta, Georgia 30309
("Bank").
WHEREAS, the Member desires from time to time to participate in the
Bank's credit programs under the terms of this Agreement, and the Bank is
authorized to extend credit to the Member pursuant to the provisions of the
Federal Home Loan Bank Act, as now and hereafter amended (the "Act"), and the
regulations and guidelines of the Federal Housing Finance Board (the "Board")
or any successor entity now and hereafter in effect (collectively, the
"Regulations"); and
WHEREAS, the Bank requires that advances by the Bank be secured
pursuant to this Agreement, and the Member agrees to provide the security the
Bank in accordance with this Agreement.
NOW THEREFORE, the Member and the Bank agree as follows:
ARTICLE I: DEFINITIONS
SECTION 1.01 DEFINITIONS. As used herein, the following terms shall have the
following meanings:
(A) "Advance" or "Advances" means any and all loans or other
extensions of credit, including all Commitments, heretofore, now or
hereafter granted by the Bank to, on behalf of, or for the
account of, the Member.
(B) "Application" means a writing, signed by the Member, and in such
form or forms as shall be specified by the Bank from time to time, by
which the Member requests, and which if executed by the Bank shall
together with this Agreement evidence the terms of, an Advance or
a commitment for an Advance.
(C) "Capital Stock" means all of the capital stock of the Bank held by
the Member and all payments which have been or hereafter are made on
account of subscriptions to and all unpaid dividends on such
capital stock.
(D) "Collateral" means all property, including the proceeds thereof,
heretofore assigned, transferred or pledged to the Bank by the Member
as collateral for Advances or other extensions of credit prior to the
date hereof, all Capital Stock, and First Mortgage Collateral,
including the proceeds thereof, which is now or hereafter pledged to
the Bank pursuant to Section 3.01 hereof.
(E) "Collateral Maintenance Level" means the aggregate dollar amount
equal to such percentage(s) as the Bank may specify from time to time
of (1) the outstanding amounts of all Advances; (2) with respect to each
outstanding Swap Transaction, the amount for which the Member is
required to maintain Collateral; and (3) any additional obligations and
liabilities of the Member to the Bank. The Bank may increase or
decrease the Collateral Maintenance Level at any time.
(F) "Commitment" or "Commitments" means any and all agreements under
which the Bank is contractually obligated to make a loan to, or to make
a future payment on behalf or for the account of, the Member (but
excluding any obligations that the Bank may now or hereafter have to
honor items or transfer orders under a depository or similar agreement
between the Bank and the Member), regardless of whether such obligation
is contingent in whole or in part, including, without limitation,
letters of credit issued for the account of the Member.
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(G) "Confirmation of Advance" means a writing or machine readable
electronic transmission in such form or forms as the Bank may generate
from time to time, by which the Bank agrees to and confirms the
Member's request for an advance or a commitment for an Advance and
which, together with this Agreement, shall evidence the terms of
such Advance or commitment.
(H) "First Mortgage Collateral" means First Mortgage Documents
(excluding securitized loans and participation or other fractional
interests therein) and all ancillary security agreements, policies and
certificates of insurance or guarantees, evidences of recordation,
applications, underwriting materials, surveys, appraisals, approvals,
permits, notices, opinions of counsel and loan servicing data and all
other electronically stored and written records or materials relating
to the loans evidenced or secured by the First Mortgage Documents.
(I) "First Mortgage Documents" mean mortgages and deeds of trust
(herein "mortgages") secured by a first lien on one-to-four unit single
family dwellings, and all notes, bonds or other instruments (herein
"mortgage notes") evidencing fully disbursed loans secured by such
mortgages and any endorsements or assignments thereof to the Member.
(J) "Indebtedness" means all indebtedness, now or hereafter
outstanding, of the Member to the Bank, including, without limitation,
all Advances and all other obligations to pay and liabilities of the
Member to the Bank.
(K) "Lendable Collateral Value" means an amount equal to such
percentage as the Bank shall from time to time, in its sole discretion,
ascribe to the market value or unpaid principal balances of items of
Qualifying Collateral.
(L) "Qualifying Collateral" means First Mortgage Collateral which:
(i) is eligible as collateral that can be used to support the
origination of Advances under the terms and conditions of the Act and
the Regulations, and satisfies such other requirements as may be
established by the Bank; (ii) is owned by the Member free and clear of
any liens, encumbrances or other interests other than the assignment to
the Bank hereunder, (iii) has not been in default within the most
recent 12-month period excepting only payments which are not past due
except as permitted by the Bank's Credit Policy; (iv) relates to
residential real property on which is located a one-to-four unit single
family dwelling that is covered by fire and hazard insurance in an
amount at least sufficient to discharge the mortgage loan in full in
case of loss and as to which all real estate taxes are current; (v) has
not been classified as substandard, doubtful, or loss by the Member's
regulatory authority or its management; and (vi) does not secure an
indebtedness on which any director, officer, employee, attorney or
agent of the Member of any Federal Home Loan Bank is personally liable
unless the acceptance of such Collateral by the Bank has been
specifically approved by formal resolution of the Board.
(M) "Swap Transaction" means an interest rate swap, interest rate cap,
floor or collar, currency exchange transaction or similar transaction
entered into between the Bank and the Member.
ARTICLE II: ADVANCES AGREEMENT
SECTION 2.01 ADVANCE DOCUMENTATION. The Member may apply for Advances and
commitments for Advances by completing and submitting an Application to the
Bank or by telephone or other unsigned communication. The Bank may suspend the
use of telephonic applications at any time. The terms of each Advance or
commitment shall be conclusively established by this Agreement and by either
(i) the Member's Application when such Application is executed by the Bank
without any change, or (ii) in the case of an Application received, completed
or modified by the Bank pursuant to a telephonic or other unsigned communication
from the Member ("telephonic application"), by a Confirmation of Advance
generated by the Bank. The Member shall be estopped from asserting any claim or
defense with respect to the terms applicable to an Advance or a commitment for
an Advance entered into pursuant to a telephonic applicator unless, within two
(2) business days of receipt of the Bank's Confirmation of Advance, the Member
delivers to the Bank a written notice specifying the disputed term(s) or
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condition(s) of the Advance or commitment. Within three (3) business days of
the date of the Member's receipt of the Bank's Confirmation of Advance, the
Member shall prepare, sign and submit to the Bank a completed Application
conforming to such Confirmation of Advance. Upon the request of the Bank, the
Member shall sign and deliver to the Bank a promissory note or notes in such
form as the Bank may reasonably require evidencing any Advance. Unless
otherwise agreed to by the Bank in writing, each Advance shall be made by
crediting the Member's demand deposit account(s) with the Bank.
SECTION 2.02 REPAYMENT OF ADVANCES. The Member agrees to repay each Advance
in accordance with this Agreement and the terms and conditions of the
Application or Confirmation of Advance evidencing such Advance. Interest shall
be paid on each Advance at the times specified by the Bank in writing and shall
be charged for each day that an Advance is outstanding at the rate applicable
to the Advance. The Member shall pay to the Bank, immediately and without
demand, interest on any past due principal of and interest on any Advance at an
interest rate which is the greater of (i) the rate applicable to such Advance
plus one percent (1%) or (ii) the rate in effect and being charged by the Bank
from time to time on overdrafts on demand deposit accounts of its Members, but
in no event more than any applicable limit set by the Regulations. The Member
shall ensure that, on any day on which any payment is due to the Bank with
respect to Advances or other Indebtedness, the Member's demand deposit
account(s) with the Bank has an available balance in an amount at least equal
to the amounts then due and payable to the Bank, and the Member hereby
authorizes the Bank to debit the Member's demand deposit account(s) with the
Bank for all amounts due and payable with respect to any Advance and for all
other amounts due and payable hereunder. In the event that the available
balance in the Member's demand deposit account(s) is insufficient to pay such
due and payable amounts, the Bank may, without notice to or request from the
Member, apply any other deposits, credits, or monies of the Member then in the
possession of the Bank to the payment of amounts due and payable. All payments
with respect to Advances shall be applied first to any fees or charges
applicable thereto and to interest due thereon, in such order as the Bank may
determine, and then to any principal amount thereof that is then due and
payable.
SECTION 12.03 RIGHT OF BANK TO MAKE ADVANCES WITH RESPECT TO OUTSTANDING
COMMITMENTS. In the event that there are one or more outstanding Commitments at
the time of an Event of Default under Section 4.01 hereof, the Bank may at its
option, and without notice to or request from the Member, make an Advance by
crediting a special account of the Member with the Bank in an amount equal to
the outstanding Commitments. Amounts credited to such special account shall be
utilized by the Bank for the purpose of satisfying the Bank's obligations
under such Commitments. When all such obligations have expired or have been
satisfied, the Bank shall disburse the balance, if any, in such special account
first to the satisfaction of any amounts then due and owing by the Member to
the Bank and then to the Member or its successors in interest. Advances made
pursuant to this Section 2.03 shall be payable on demand and shall bear interest
from the date the same shall be made until paid at the rate in effect and being
charged by the Bank from time to time on overdrafts on demand deposit accounts
of its members, but in no event more than any applicable limit set by the
Regulations.
SECTION 2.04 AMORTIZATION OF ADVANCES. In the event that the Bank determines
that the creditworthiness of the Member, as determined from time to time by the
Bank, does not meet the requirements of the Bank, the Bank may, without
limitation of the Bank's rights upon the occurrence of an Event of Default
hereunder, require amortization by means of monthly payments of principal on all
or part of the Member's Advances. The Member agrees to begin making such
monthly amortization payments, upon thirty (30) days written notice from the
Bank, in such monthly amounts as the Bank shall specify in writing. No monthly
payment shall exceed ten percent (10%) of the original principal balance of the
Advance being amortized. Unless otherwise specified by the Bank in writing to
the Member, such monthly amortizing payments shall not extend or modify the
maturity date or other scheduled payment dates applicable to the Advance being
amortized.
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SECTION 3.01 CREATION OF SECURITY INTEREST. As security for all indebtedness,
the Member hereby assigns, transfers, and pledges to the Bank, and grants to
the Bank a security interest in all of the Capital Stock and First Mortgage
Collateral now or hereafter owned by the Member, and all proceeds thereof,
provided, however, the First Mortgage Collateral that is encumbered or disposed
of by the Member in conformity with the requirements of Section 3.04 (A) hereof
shall not be subject to the security interest created hereunder. Without
limitation of the foregoing, all property heretofore assigned, transferred or
pledged by the Member to the Bank as collateral securing Indebtedness and other
obligations of the Member prior to the date hereof is hereby assigned,
transferred and pledged to the Bank as Collateral hereunder.
SECTION 3.02 ADDITIONAL COLLATERAL AND DOCUMENTATION; REQUIRED SUBSTITUTION OF
"ADVANCES, SPECIFIC COLLATERAL PLEDGE AND SECURITY AGREEMENT". The Member
agrees to assign, transfer and pledge Collateral in conformity with the Bank's
"Advances, Specific Collateral Pledge and Security Agreement" (i) at any time
the Member shall not have assigned, transferred, or pledged to the Bank under
this Agreement First Mortgage Collateral which is Qualifying Collateral and
which has a Lendable Collateral Value at least equal to the Collateral
Maintenance Level or (ii) at any time the Member does not qualify under the
Bank's criteria for member eligibility to secure Advances under this Agreement
or (iii) if the Bank determines in good faith that the value of the Member's
Qualifying Collateral may not be adequately ascertained, or (iv) at any time
the Bank deems itself insecure. In addition, the Member agrees to maintain such
additional amounts of Collateral (which may be Collateral that is not
Qualifying Collateral) as may be required by the Bank in order to protect its
security position with respect to outstanding Indebtedness. If the Bank
requires the Member to substitute for this Agreement the Bank's "Advances,
Specific Collateral Pledge and Security Agreement," the Member must execute
that agreement and comply with the requirements of that agreement in all
respects. To assure that the Member provides to the Bank Qualifying Collateral
with a Lendable Collateral Value at least equal to the Collateral Maintenance
Level at all times, the Bank may require, in connection with the substitution
of agreements, that the Member make, execute, record, and deliver to the Bank
additional agreements, financing statements, notices, assignments, listings,
powers, and other documents with respect to such Collateral and the Bank's
security interest therein.
SECTION 3.03 MEMBER'S REPRESENTATION AND WARRANTIES CONCERNING COLLATERAL.
The Member represents and warrants to the Bank, as of the date hereof and the
date of each Advance hereunder, as follows:
(A) The Member owns and has marketable title to the Collateral and has
the right and authority to grant a security interest in the Collateral
and to subject all of the Collateral to this Agreement;
(B) The information given from time to time by the Member as to each
item of Collateral is true, accurate and complete in all material
respects;
(C) All the Collateral meets the standards and requirements with
respect thereto from time to time established by the Act, the
Regulations and the Bank;
(D) The lien of each mortgage pledged as Collateral hereunder is a
first, prior and perfected lien under applicable law;
(E) The Member has not conveyed or otherwise created, and there does
not otherwise exist, any participation interest or other direct,
indirect, legal, or beneficial interest in any Collateral on the part of
anyone other than the Bank and the Member;
(F) Except as may be approved in writing by the Bank, no account
debtor or other obligor owing any obligation to the Member with respect
to any item of First Mortgage Collateral has or will have any defenses,
offsetting claims, or other rights affecting the right of the Member or
the Bank to enforce such mortgage, mortgage note or promissory
obligation, and no defaults (or conditions that, with the passage of
time or the giving of notice or both, would constitute a default) exist
under any such writings; and
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(G) No part of any real property or interest in real property that is
the subject of First Mortgage Collateral which is Qualifying Collateral
contains or is subject to the effects of toxic or hazardous materials
or other hazardous substances (including those defined in the
Comprehensive Environmental Response Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601. et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.;
and in the regulations adopted and publications promulgated pursuant to
said law(s) the presence of which could subject the Bank to any
liability under applicable state or Federal law or local ordinance
either at any time that such property is pledged to the Bank or upon
the enforcement by the Bank of its security interest therein. The
Member hereby agrees to indemnify and hold the Bank harmless against all
costs, claims, expenses, damages, and liabilities resulting in any way
from the presence or effects of any such toxic or hazardous substances
or materials in, on, or under any real property or interest in real
property that is subject to or included in the Collateral.
SECTION 3.04 COLLATERAL MAINTENANCE REQUIREMENT.
(A) The Member shall at all times maintain as Collateral an
amount of Qualifying Collateral which has a Lendable Collateral Value
that is at least equal to the then current required Collateral
Maintenance Level. The Member shall not assign, pledge, transfer,
create any security interest in, sell, or otherwise dispose of any
Collateral if: (i) such Collateral has been specified or identified
pursuant to Section 3.05 hereof or is held by or on behalf of the Bank
pursuant to Section 3.06 hereof, or the Bank has otherwise perfected
its security interest in such Collateral; or (ii) at the time of or
immediately after such action, the Member is not or would not be in
compliance with the collateral maintenance requirements of the first
sentence of this Section 3.04 (A) or is otherwise in default under
this Agreement.
(B) Except for Collateral delivered pursuant to Section 3.06 hereof,
Collateral shall be held by the Member in trust for the benefit of, and
subject to the direction and control of, the Bank and will be
physically safeguarded by the Member with at least the same degree of
care as the Member uses in physically safeguarding its other property.
Without limitation of the foregoing, the Member shall take all action
necessary or desirable to protect and preserve the Collateral and the
Bank's interest therein, including without limitation the maintaining
of insurance on property securing First Mortgage Collateral (such
policies and certificates of insurance or guaranty relating to such
mortgages are herein called "insurance"), the collection of payments
under all mortgages and under all insurance, and otherwise assuring
that all mortgages are serviced in accordance with the standards of a
reasonable and prudent mortgagee.
(C) If any Collateral that was Qualifying Collateral ceases to be
Qualifying Collateral and, after such event, the Member is not or would
not be in compliance with the collateral maintenance requirements of
the first sentence of this Section 3.04(A), the Member shall promptly
notify the Bank in writing of that fact and, if so requested by the
Bank, of the reason that the Collateral has ceased to be Qualifying
Collateral. If such Collateral was specified or identified pursuant to
Section 3.05 hereof, or delivered to the Bank pursuant to Section 3.06
hereof, the Member shall promptly specify, identify, or deliver, as the
case may be, other Qualifying Collateral having at least the same
Lendable Collateral Value as the Collateral so requested to be
withdrawn.
(D) The Bank may review the form and sufficiency of all documents
pertaining to the Collateral. Such documents must be satisfactory to
the Bank and, if not, such Collateral may not be acceptable as
Qualifying Collateral or may have a Lendable Collateral Value applied
thereto that is less than the Lendable Collateral Value otherwise
applicable under the Bank's Credit Policy, as the Bank may specify. The
Bank may require that the Member make any or all documents pertaining
to the Collateral available to the Bank for its inspection and
approval.
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SECTION 3.05 SPECIFICATION AND IDENTIFICATION OF COLLATERAL.
(A) Upon the Bank's written or oral request, or at such times as shall
be necessary to satisfy the requirements of the Bank, or promptly, at any
time that the Member becomes subject to any mandatory collateral
specification requirements that may be established in writing by the Bank
and in any case from time to time thereafter until such time as may be
agreed upon by the Bank in writing, the Member shall deliver to the Bank a
status report and accompanying schedules, all in the form(s) prescribed by
the Bank, specifying and describing the First Mortgage Collateral that is
certified by the Member to be Qualifying Collateral.
(B) The Member shall hold each set of First Mortgage Documents which is
a part of such specified Collateral in a separate file folder with each
file folder clearly labeled with the loan identification number and the
name of the borrower(s). Each such file folder shall be clearly marked or
stamped with the statement: "The Deed of Trust/Mortgage and Note Relating
to This Loan Have Been Assigned to the Federal Home Loan Bank of Atlanta."
If so requested by the Bank, the Member shall physically segregate any
First Mortgage Collateral specified in each status report delivered
pursuant to subsection (A) of this Section 3.05 from all other property of
the Member in a manner satisfactory to the Bank.
SECTION 3.06 DELIVERY OF COLLATERAL.
(A) Upon the Bank's written or oral request, or promptly at any time
that the Member becomes subject to any mandatory collateral delivery
requirements that may be established in writing by the Bank, and until
such time as may be agreed upon by the Bank in writing, the Member shall
deliver to the Bank, or to a custodian designated by the Bank, such First
Mortgage Collateral as may be necessary so that the Lendable Collateral
Value of Qualifying Collateral held by the Bank, or such custodian, meets
or exceeds the Collateral Maintenance Level at all times. Collateral
delivered to the Bank shall be endorsed or assigned, as appropriate, in
recordable form by the Member of the Bank, as specified by the Bank.
Unless otherwise indicated by the Bank, such endorsements or assignments
may be in blanket form provided that there shall be separate endorsements
and assignments for each county or recording district in which the real
property covered by an item of First Mortgage Collateral is located. The
Member need only deliver the First Mortgage Documents relating to the
First Mortgage Collateral delivered hereunder together with recordable
assignments of the mortgages, unless otherwise directed by the Bank.
Concurrently with the initial delivery of Collateral, the Member shall
deliver to the Bank a status report and accompanying schedules, all in the
form(s) prescribed by the Bank, specifying and described the Collateral
held by the Bank or its custodian and certifying that such Collateral is
Qualifying Collateral.
(B) The Member agrees to pay to the Bank such reasonable fees and
charges as may be assessed by the Bank to cover the Bank's overhead and
other costs relating to the receipt, holding, redelivery and reassignment
of Collateral and to reimburse the Bank upon request for all recording
fees and other reasonable expenses, disbursements and advances incurred or
made by the Bank in connection therewith (including the reasonable
compensation and the expenses and disbursements of any custodian,
consultant or appraiser that may be appointed by the Bank hereunder, and
the agents and legal counsel of the Bank and of such custodian).
(C) The Member shall, upon request of the Bank, immediately take such
other actions as the Bank shall deem necessary or appropriate to perfect
the Bank's security interest in the Collateral or otherwise to obtain,
preserve, protect, enforce or collect the Collateral or the proceeds
thereof.
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SECTION 3.07 WITHDRAW OF COLLATERAL. Upon receipt by the Bank of writings in
the form specified by the Bank constituting (i) a request from the Member for
the withdrawal of Collateral which has been specified of identified pursuant to
Section 3.05 hereof or has been delivered pursuant to Section 3.06 hereof, or
as to which the Bank has otherwise perfected its security interest, (ii) a
detailed listing of the Collateral to be withdrawn, and (iii) a certificate of
a responsible officer of the Member certifying as to the Qualifying Collateral
that is specified and identified by the Member or held be the Bank, as
appropriate, after such withdrawal, and upon the Bank's determination that the
Lendable Collateral Value of the remaining Qualifying Collateral is not less
than the current required Collateral Maintenance Level, the Bank shall promptly
redeliver, release or reassign to the Member the Collateral specified in the
Member's listing of the Collateral to be withdrawn, provided that the
Collateral requested to be withdrawn is not required by the Bank to be
maintained as additional Collateral. Notwithstanding anything to the contrary
herein contained, while an Event of Default hereunder shall have occurred and
be continuing, or at any time that the Bank reasonably and in good faith deems
itself insecure, the Member may not obtain any such withdrawal.
SECTION 3.08 REPORTS; COLLATERAL AUDITS; ACCESS.
(A) The Member shall furnish to the Bank annually, and at such other
times as the Bank may request, an audit report with respect to the
Member's Collateral and Qualifying Collateral, prepared by the Member's
external auditor and in form and substance acceptable to the Bank, and
such financial reports and other information relating to the Member's
financial condition as the Bank may reasonably request.
(B) The Member shall furnish to the Bank at such times as the Bank may
request, or as necessary to satisfy the requirements of the Bank, a
status report to the Member's Collateral prepared by the Member in form
and substance acceptable to the Bank, and as of a date within two
weeks of the report due date. The status report shall be a written
report covering such matters regarding the Collateral as the Bank may
require, including listings of mortgages and unpaid principal balances
thereof and certifications concerning the status of payments on
mortgages and of taxes and insurance on property securing mortgages.
(C) If so requested by the Bank, the Member shall promptly report to
the Bank any event which reduces the principal balance of any mortgage
or other item of Collateral by five percent (5%) or more, whether by
prepayment, foreclosure sale, insurance or guaranty payment or
otherwise.
(D) The Member shall give the Bank access at all reasonable times to
Collateral in the Member's possession and to the Member's books and
records of account relating to such Collateral, for the purpose
of the Bank's examining, verifying or reconciling the Collateral and
the Member's reports to the Bank thereon.
(E) If the Member becomes aware or has reason to believe that the
Lendable Collateral Value of the Member's Qualifying Collateral has
fallen below the Collateral Maintenance Level, or that a contingency
exists which with the lapse of time could result in the Member failing
to meet the Collateral Maintenance Level, the Member shall immediately
notify the Bank.
(F) All Collateral and any matters relating thereto shall be subject to
audit and verification by or on behalf of the Bank. Such audits and
verifications may occur without notice during the Member's normal
business hours or upon reasonable notice at such other times as the
Bank may reasonably request. The Member shall provide access to, and
shall make adequate working facilities available to, the representatives
or agents of the Bank for purposes of such audits. Reasonable fees and
charges may be assessed to the Member by the Bank to cover overhead
and other costs relating to such audit and verification.
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(G) Notwithstanding anything to the contrary, the Member shall be
solely responsible for the accuracy and adequacy of all information and
data in such audit or status report (or other writing specifying and
describing any Collateral) submitted to the Bank, regardless of the form
in which submitted. The Bank shall have no duty to make any
independent examination of or calculation with respect to the
information submitted in an audit or status report (or in any written
schedule that may be submitted by the Member) and, without limiting the
generality of the foregoing, the Bank makes no representation or
warranty as to the validity, accuracy, or completeness of any
information contained in any written records of the Bank concerning, or
of any response to, such audit or status report.
SECTION 3.09 ADDITIONAL DOCUMENTATION. The Member shall make, execute, record
and deliver to the Bank such financing statements, notices, assignments,
listings, powers, and other documents with respect to the Collateral and the
Bank's security interest therein and in such form as the Bank may reasonable
require.
SECTION 3.10 BANK'S RESPONSIBILITIES AS TO COLLATERAL. The Bank's duty as to
the Collateral shall be solely to use reasonable care in the custody and
preservation of the Collateral in its possession, which shall not include any
steps necessary to preserve rights against prior parties nor the duty to send
notices, perform services, or take any action in connection with the management
of the Collateral. The Bank shall not have any responsibility or liability for
the form, sufficiency, correctness, genuineness or legal effect of any
instrument or document constituting a part of the Collateral, or any signature
thereon or the description or misdescription, or value of property represented,
or purported to be represented, by any such document or instrument. The Member
agrees that any and all Collateral may be removed by the Bank from the state or
location where situated, and may be subsequently dealt with by the Bank as
provided in this Agreement.
SECTION 3.11 BANK'S RIGHTS AS TO COLLATERAL; POWER OF ATTORNEY. At any time or
times, at the expense of the Member, the Bank may in its discretion, before or
after the occurrence of an Event of Default as defined in Section 4.01 hereof,
in its own name or in the name of its nominee or of the Member, do any or all
things and take any and all actions that are pertinent to the protection of the
Bank's interest hereunder and are lawful under the laws of the State of
Georgia, including, but not limited to, the following:
(A) Terminate any consent given hereunder;
(B) Notify obligors on any Collateral to make payments thereon
directly to the Bank;
(C) Endorse any Collateral in the Member's name;
(D) Enter into any extension, compromise, settlement, or other
agreement relating to or affecting any Collateral;
(E) Take any action the Member is required to take or which is otherwise
reasonably necessary to (1) sign and record a financing statement or
otherwise perfect a security interest in any or all of the Collateral or
(2) to obtain, preserve, enforce or collect the Collateral;
(F) Take control of any funds or other proceeds generated by the
Collateral and use the same to reduce indebtedness as it becomes due;
and
(g) Cause the Collateral to be transferred to its name or the name of
its nominee.
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The Member hereby appoints the Bank as its true and lawful attorney, for and on
behalf of the Member and in its name, place and stead, to prepare, execute and
record endorsements and assignments to the Bank of all or any item of
Collateral, giving or granting to the Bank, as such attorney, full power and
authority to do or perform every lawful act necessary or proper in connection
therewith as fully as the Member might or could do. The Member hereby ratifies
and confirms all that the Bank shall lawfully do or cause to be done by virtue
of this special power of attorney. This special power of attorney is granted
for a period commencing on the date hereof and continuing until the discharge
of all indebtedness and all obligations of the Member hereunder regardless of
any default by the Member, is coupled with an interest, and is irrevocable for
the period granted.
SECTION 3.12 SUBORDINATION OF OTHER LOANS TO FIRST MORTGAGE COLLATERAL. The
Member hereby agrees that all mortgage notes which are part of the First
Mortgage Collateral ("pledged notes") shall have priority in right and remedy
over any other loans, whenever made, and, however evidenced, which are also
secured by the mortgages or security agreements securing the pledged notes.
The pledged notes shall be satisfied out of the property (or proceeds thereof)
covered by such mortgages or security agreements before any payment is made on
the loans which are not part of the Collateral. To this end, the Member hereby
subordinates the lien of such mortgages and security agreements with respect to
such other loans to the lien of such mortgages and security agreements with
respect to the pledged notes. The Member further agrees to retain possession of
all notes or other instruments evidencing such other loans and not to pledge,
assign, or transfer the same, except insofar as such other loans may be pledged
to the Bank as part of the Collateral.
SECTION 3.13 PROCEEDS OF COLLATERAL. The Member, as the Bank's agent, shall
collect all payments when due on all Collateral. If the Bank so requires, the
Member shall hold such collections separate from its other monies in on or more
designated cash collateral accounts maintained at the Bank and apply them to
the reduction of indebtedness as it becomes due; otherwise, the Bank consents to
the Member's use and disposition of all such collections.
ARTICLE IV: DEFAULT; REMEDIES
SECTION 4.01 EVENTS OF DEFAULT; ACCELERATION. Upon the occurrence of any of
the following events or conditions of default ("Event of Default"), the Bank
may at its option, by a notice to the Member, declare all or any part(s) of the
indebtedness and accrued interest thereon, including any prepayment fees or
charges which are applicable to any Advance, to be immediately due and payable
without presentment, demand, protest, or any further notice:
(A) Failure of the Member to pay when due any interest on or principal
of any Advance; or
(B) Failure of the Member to perform any promise or obligation or to
satisfy any condition or liability contained herein, in any
Application, in any Confirmation of Advance or in any other agreement
to which the Member and the Bank are parties; or
(C) Evidence coming to the attention of the Bank that any
representations, statements, or warranties made or furnished in any
manner to the Bank by or on behalf of the Member in connection with any
Advance or Swap Transaction, any specification or description of
Qualifying Collateral or any report or certification concerning the
status, value, or principal balance of any item of Collateral was
false in any material respect when made or furnished; or
(D) Failure of the Member to maintain adequate Qualifying Collateral
free of any encumbrances or claims as required herein; or
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(E) The issuance of any tax, levy, seizure, attachment, garnishments,
levy of execution, or other process with respect to the Collateral; or
(F) Any suspension of payment by the Member to any creditor of sums due
or the occurrence of any event which results in another creditor having
the right to accelerate the maturity of any indebtedness of the Member
under any security agreement, indenture, loan agreement, or comparable
undertaking; or
(G) Appointment of a conservator, receiver, or similar official for the
Member or any subsidiary of the Member, of the Member's property, entry
of a judgment or decree adjudicating the Member or any subsidiary of the
Member's insolvent or bankrupt or any assignment by the Member or any
subsidiary of the Member for benefit of creditors; or
(H) Sale by the Member of all or a material part of the Member's assets
or the taking of any other action by the Member to liquidate or dissolve;
or
(I) Termination for any reason of the Member's membership in the Bank,
or the Member's ceasing to be a type of entity that is eligible under the
Act to become a member of the Bank; or
(J) Merger, consolidation or other combination of the Member with an
entity which is not a member of the Bank if the nonmember entity is the
surviving entity; or
(K) With respect to Advances made pursuant to Section 11(g)(4) of the
Act, if the creditor liabilities of the Member, excepting liabilities to
the Bank, are increased in any manner to an amount exceeding five percent
(5%) of the Member's net assets; or
(L) The Bank reasonably and in good faith determines that a material
adverse change has occurred in the financial condition of the Member from
that disclosed at the time of the making of any Advance or from the
condition of the Member as theretofore most recently disclosed to the
Bank.
SECTION 4.02 REMEDIES. Upon the occurrence of any Event of Default, the Bank
shall have all of the rights and remedies provided by applicable law which
shall include, but not be limited to, all of the remedies of a secured party
under the Uniform Commercial Code as in effect in the State of Georgia. In
addition, the Bank may take immediate possession of any of the Collateral or
any part thereof wherever the same may be found. The Bank may sell, assign and
deliver the Collateral or any part thereof at public or private sale for such
price as the Bank deems appropriate without any liability for any loss due to
decrease in the market value of the Collateral during the period held. The
Bank shall have the right to purchase all or part of the Collateral at such
sale. If the Collateral includes insurance or securities which will be
redeemed by the issuer upon surrender, or any accounts or deposits in the
possession of the Bank, the Bank may realize upon such Collateral without
notice to the Member. If any notification of intended disposition of any of
the Collateral is required by applicable law, such notification shall be deemed
reasonable and properly given if given as provided by applicable law or in
accordance with Section 5.06 hereof at least 5 days before any such
disposition. The proceeds of any sale shall be applied in the order that the
Bank, in its sole discretion, may choose. The Member agrees to pay all the
costs and expenses of the Bank in the collection of the indebtedness and
enforcement of the Bank's rights and remedies in case of default, including,
without limitation, reasonable attorney's fees. The Bank shall, to the extent
required by law apply, any surplus, after (i) payment of the Indebtedness, (ii)
provision for repayment to the Bank of any amounts to be paid or advanced under
Outstanding Commitments, and (iii) payment of all costs of collection and
enforcement, to the claims of the person(s) legally entitled thereto, with any
remaining surplus paid to the Member. The Member shall be liable to the Bank
for any deficiency remaining.
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SECTION 4.03 PAYMENT OF PREPAYMENT CHARGES. Any prepayment fees or charges
applicable to an Advance shall be payable at the time of any voluntary payment
or involuntary payment of all or part of the principal of such Advance prior to
the originally scheduled maturity thereof, including without limitation
payments that are made as a part of a liquidation of the Member or that become
due by operation of law or as a result of an acceleration pursuant to Section
4.01 hereof, whether such payment is made by the Member, by a conservator,
receiver, liquidator or trustee of or for the Member, or by any successor to or
any assignee of the Member.
ARTICLE V: MISCELLANEOUS
SECTION 5.01 GENERAL REPRESENTATIONS AND WARRANTIES BY THE MEMBER. The Member
hereby represents and warrants that, as of the date hereof and the date of each
Advance hereunder:
(A) The Member is not, and neither the execution of nor the
performance of any of the transactions or obligations of the Member under
this Agreement shall, with the passage of time, the giving of notice or
otherwise, cause the Member to be: (i) in violation of its charter or
articles of incorporation, by-laws, the Act or the Regulations, any other
law or administrative regulation, or any court decree; or (ii) in default
under or in breach of any material indenture, contract or other instrument
or agreement to which the Member is a party of or by which it or any of
its property is bound.
(B) The Member has full corporate power and authority and has received
all corporate and governmental authorizations and approvals (including
without limitation those required under the Act and the Regulations) as
may be required to enter into and perform its obligations under this
Agreement, to borrow each Advance and to obtain each commitment for
Advance.
(C) The information given by the Member in any document provided, or
in any oral statement made, in connection with an application or request
for an Advance or commitment for Advance, is true, accurate and complete
in all material aspects.
SECTION 5.02 ASSIGNMENT. The Bank may assign or negotiate to any other Federal
Home Loan Bank or to any other person or entity, with or without recourse, any
Indebtedness of the Member or participations therein, and the Bank may assign
or transfer all or any part of the Bank's right, title, and interest in and to
this Agreement and may assign and deliver the whole or any part of the
Collateral to the transferee, which shall succeed to all the powers and rights
of the Bank in respect thereof, and the Bank shall thereafter be forever
relieved and fully discharged from any liability or responsibility with respect
to the transferred Collateral. The Member may not assign or transfer any of its
rights or obligations hereunder without the express prior written consent of
the Bank.
SECTION 5.03 DISCRETION OF THE BANK TO GRANT OR DENY ADVANCES. Nothing
contained herein or in any documents describing or setting forth the Bank's
credit program and credit policies shall be construed as an agreement or
commitment on the part of the Bank to grant Advances or extend commitments for
Advances hereunder, the right and power of the Bank in its discretion to either
grant or deny an Advance or commitment for an Advance requested hereunder being
expressly reserved. The determination by the Bank of Lendable Collateral Value
shall not constitute a determination by the Bank that the Member may obtain
Advances or commitments for Advances in amounts up to such Lendable Collateral
Value.
SECTION 5.04 AMENDMENT; WAIVERS. No modification, amendment or waiver of any
provision of this Agreement or consent to any departure therefrom shall be
effective unless in a writing executed by a responsible officer of the party
against whom such change is asserted and shall be effective only in the
specific instance and for the purpose of which given. No notice to or demand
on the Member in any case shall entitle the Member to any other or further
notice or demand in the same, or similar or other
11
<PAGE> 267
circumstances. Any forbearance, failure or delay by the Bank in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver thereof, and
any single or partial exercise by the Bank of any right, power or remedy
hereunder shall not preclude the further exercise thereof. Every right, power
and remedy of the Bank shall continue in full force and effect until
specifically waived by the Bank in writing.
SECTION 5.05 JURISDICTION; LEGAL FEES. In any action or proceeding brought by
the Bank or the Member in order to enforce any right or remedy under this
Agreement, the parties hereby consent to, and agree that they will submit to,
the jurisdiction of the United Stated District Court for the Northern District
of Georgia or, if such action or proceeding may not be brought in Federal
court, the jurisdiction of the courts of the State of Georgia located in the
City of Atlanta. The Member agrees that if any action or proceeding is brought
by the Member seeking to obtain any legal or equitable relief against the Bank
under or arising out of this Agreement or any transaction contemplated hereby
and such relief is not granted by the final decision, after any and all
appeals, of a court of competent jurisdiction, the Member will pay all
attorney's fees and other costs incurred by the Bank in connection therewith.
SECTION 5.06 NOTICES. Except as provided in the last sentence of this Section,
any written notice, advice, request, consent or direction given, made or
withdrawn pursuant to this Agreement shall be either in writing or transmitted
electronically and reproduced mechanically by the addressee, and shall be
given by first class mail, postage prepaid, by telecopy or other facsimile
transmission, or by private courier or delivery service. All non-oral
notices shall be deemed given when actually received at the principal office of
the Bank or the Member, as appropriate. All notices shall be designated to the
attention of an office or section of the Bank or of the Member if the Bank or
the Member has made a request for the notice to be so addressed. Any notice by
the Bank to the Member pursuant to Sections 3.05 or 3.06 hereof may be oral and
shall be deemed to have been duly given to and received by the Member at the
time of the oral communication.
SECTION 5.07 SIGNATURES OF MEMBER. For purposes of this Agreement, documents
shall be deemed signed by the Member when a signature of an authorized
signatory or any authorized facsimile thereof appears on the document. The Bank
may rely on any signature or facsimile thereof which reasonably appears to the
Bank to be the signature of an authorized person, including signatures
appearing on documents transmitted electronically to and reproduced
mechanically at the Bank. The Secretary or an Assistant Secretary of the
Member shall from time to time certify to the Bank on forms provided by the Bank
the names and specimen signatures of the persons authorized to apply on behalf
of the Member to the Bank for Advances and commitments for Advances and
otherwise act for and on behalf of the Member in accordance with this
Agreement. Such certifications are incorporated herein and made a part of this
Agreement and shall continue in effect until expressly revoked in writing by
the Member notwithstanding that subsequent certifications may authorize
additional persons to act for and on behalf of the Member.
SECTION 5.08 APPLICABLE LAW; SEVERABILITY. In addition to the terms and
conditions specifically set forth herein and in any application or confirmation
of Advance between the Bank and the Member, this Agreement and all Advances and
all commitments for Advances shall be governed by the statutory and common law
of the United States and, to the extent Federal law incorporates or defers to
state law, the laws (exclusive of the choice of law provisions) of the State of
Georgia. Notwithstanding the foregoing, the Uniform Commercial Code as in
effect in the State of Georgia shall be deemed applicable to this Agreement and
to any Advance hereunder and shall govern the attachment and perfection of any
security interest granted hereunder. In the event that any portion of this
Agreement conflicts with applicable law, such conflict shall not affect other
provisions of this Agreement which can be given effect without the conflicting
provision, and to this end the provisions of this Agreement are declared to be
severable.
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<PAGE> 268
SECTION 5.09 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the Member and
the Bank.
SECTION 5.10 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto relating to the subject matter
hereof and supersedes all prior agreements between such parties which relate
to such subject matter. Notwithstanding the above, rates of interest,
repayment schedules, and fees and other charges applicable to Advances and
commitments for Advances made by the Bank to the Member prior to the execution
of this Agreement shall continue to be governed exclusively by the terms of the
prior agreements pursuant to which such Advances and commitments for Advances
were made, provided, however, Section 4.03 hereof shall apply to all Advances.
WITNESS WHEREOF, Member and Bank have caused this Agreement to be
signed in their names by their duly authorized officers as of the date first
above mentioned.
Suncoast Savings and Loan Association, FSA
- -------------------------------------------------------------------------------
(Full Corporate Name of Member)
By: /s/ Richard L. Browdy Richard L. Browdy, Exec. Vice President/CFO
---------------------------- -------------------------------------
(Authorized Signature) (Typed Name and Title of Signer)
By: /s/ Edward T. Kirchmier Edward T. Kirchmier, Sr. Vice President
---------------------------- -------------------------------------
(Authorized Signature) (Typed Name and Title of Signer)
(SEAL)
FEDERAL HOME LOAN BANK OF ATLANTA
SENIOR VICE PRESIDENT
AND CHIEF CREDIT OFFICER
By: /s/ Carol Jackson
----------------------------- -------------------------------
(Authorized Officer) (Title)
VICE PRESIDENT AND
By: /s/ William C. B??? DIRECTOR OF COLLATERAL SERVICES
----------------------------- -------------------------------
(Authorized Officer) (Title)
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FEDERAL HOME LOAN BANK OF ATLANTA
MEMBER ACKNOWLEDGEMENT
AND NOTARIZATION
STATE OF Florida }
} ss:
County of Broward }
On this 18th day of January, 1996, before me personally came Richard L.
Browdy and Edward T. Kirchmier, to me known, who, being by me duly sworn, did
depose and state that they are the Exec. Vice president/CFO and Sr. Vice
President/Controller of said Member; the Member described in and which executed
the above instrument; that they know the seal of said Member; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors or other governing body of said Member; and
that they signed their names thereto by order of the Board of Directors or
other governing body of said Member and that said Richard L. Browdy and Edward
T. Kirchmier acknowledged the execution of said instrument to be the voluntary
act and deed of said Member.
/s/ Rita O. Occhionero (SEAL)
- --------------------------------------
Notary Public Signatures
Notary Public in and
for the State of Florida
My commission expires: 12/18/97
------------
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<PAGE> 270
EXHIBIT 11.1
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
COMPUTATION OF SHARES USED FOR EARNINGS PER SHARE CALCULATION
<TABLE>
<CAPTION>
Years Ended June 30,
-----------------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Primary:
Average shares outstanding 1,989,616 1,940,275 1,903,571
Net effect of dilutive stock options 147,711 - 201,787
---------- ---------- ----------
Total 2,137,327 1,940,275 2,105,358
========== ========== ==========
Net income $2,402,252 $ 601,437 $2,102,502
Preferred stock dividends 1,104,000 1,104,000 779,976
---------- ---------- ----------
Earnings (loss) available to common stockholders $1,298,252 $ (502,563) $1,322,526
========== ========== ==========
Per share amount $ 0.61 $ (0.26) $ 0.63
========== ========== ==========
Fully Diluted:
Average shares outstanding 1,989,616 1,940,275 1,903,571
Net effect of dilutive stock options 148,714 175,782 211,789
Conversion of convertible preferred stock 1,536,400 1,536,400 1,473,260
---------- ---------- ----------
Total 3,674,730 3,652,457 3,588,620
========== ========== ==========
Net income $2,402,252 $ 601,437 $2,102,502
========== ========== ==========
Per share amount $ 0.61 * $ 0.59
========== ========== ==========
</TABLE>
* Ommitted due to anit-dilution.
EXHIBIT 11.1
<PAGE> 271
EXHIBIT 21.1
Subsidiaries of the Registrant
------------------------------
SCG Mortgage Corporation
4000 Hollywood Boulevard
Hollywood, Florida 33021
Incorporated in the State of Delaware
Suncoast Finance Corporation
Corporation Trust Center
4000 Hollywood Boulevard
Hollywood, Florida
Incorporated in the State of Delaware
Suncoast Management Corporation
Corporation Trust Center
4000 Hollywood Boulevard
Hollywood, Florida
Incorporated in the State of Delaware
SCS Ventures, Incorporated
4000 Hollywood Boulevard
Hollywood, Florida
Incorporated in the State of Florida
SCG Holdings, Inc.
4000 Hollywood Boulevard
Hollywood, Florida
Incorporated in the State of Florida
