EMPLOYMENT AGREEMENT
This
EMPLOYMENT
AGREEMENT
(this
“Agreement”)
is
made and entered into as of this 8th day of August, 2006, by and between Coastal
Bancshares Acquisition Corp., a Delaware corporation (the “Company”)
and
Xxxx X. Xxxxxxxx, a resident of Texas (the “Executive”).
WHEREAS,
the
Company, Coastal Merger Corp., a Texas corporation and wholly-owned subsidiary
of Coastal (“Merger
Sub”),
and
Intercontinental Bank Shares Corporation, a Texas Corporation (“Intercontinental”),
have
entered into that certain Agreement and Plan of Merger, dated as of April 5,
2006 (the “Merger
Agreement”),
pursuant to which Merger Sub will merge with and into the Company and the
separate corporate existence of Merger Sub will cease (the “Merger”);
WHEREAS,
the
Company desires and intends to cause the Executive to be employed as Chairman
of
the Board of Directors and Chief Executive Officer of the Company pursuant
to
the terms and conditions set forth in this Agreement; and
WHEREAS,
the
Company and the Executive have read and understood the terms and provisions
set
forth in this Agreement, and have been afforded a reasonable opportunity to
review this Agreement with their respective legal counsel.
NOW,
THEREFORE,
in
consideration of the mutual promises and covenants set forth in this Agreement,
the Executive and the Company agree as follows:
DURATION
1. This
Agreement shall continue in full force and effect for a period (the
“Term”)
beginning on the date the Merger is consummated (the “Effective
Date”),
and
will expire and terminate by its own terms on the third anniversary of the
consummation of the Merger Agreement (the “Expiration
Date”),
unless either party elects to terminate this Agreement prior to the Expiration
Date, in accordance with the TERMINATION
provisions
set forth below.
2. The
Company and the Executive acknowledge and agree that, subsequent to the
Expiration Date, the parties may agree to continue the employment relationship
upon such terms as they may mutually agree. However, both parties acknowledge
and agree that, in the event they fail to agree upon terms for the continuation
of the Executive’s employment subsequent to the Expiration Date, this Agreement
shall automatically terminate on the Expiration Date without any additional
liability or obligation on the part of either party, and the Executive shall
become an employee at-will.
COMPENSATION
3. All
payments of salary and other compensation to the Executive shall be payable
in
accordance with the Company’s ordinary payroll and other policies and
procedures.
a. Except
as
otherwise set forth herein, for the Term of this Agreement, the Executive will
receive a salary (the “Base Salary”) of (i) $112,500 annually from the
Effective Date and until such time as Executive resigns from his position as
an
officer of Gentium, S.p.A. (“Gentium”),
and
thereafter (ii) $225,000 annually, payable in installments in accordance
with the Company’s payroll policies in effect from time to time during the term
of this Agreement.
b. In
addition to the Base Salary, the Executive shall receive a discretionary
employee bonus targeted at up to fifty percent (50%) of the Base Salary if
all bonus targets are met in full; provided,
however,
that
the Compensation Committee of the Board of Directors of the Company (the
“Compensation
Committee”)
shall
have the sole discretion to determine the discretionary bonus formula and when
bonuses will be paid thereunder.
c. The
Company shall grant to the Executive, on the Effective Date, a number of stock
options exercisable within eight (8) years from the date of the grant of such
options. Such options will enable the Executive to purchase seventy-five
thousand (75,000) shares of Company common stock (“Company
Stock”).
The
exercise price for such stock options shall be equal to the fair market value
of
the Company Stock on the date of such grant. Such options will vest ratably
over
a period of three (3) years and the terms of the stock option plan under which
such options are granted shall control in the event of any conflict with the
terms of this Agreement.
d. In
addition to the compensation provided in this section, during the Term of this
Agreement, the Executive shall be entitled to participate in all fringe benefit
programs and plans established by the Company for its employees, including
medical insurance, life insurance, pension and retirement programs, vacation
pay, company-paid holidays, and other similar benefits, if any. Subject to
the
provisions of Section
3(e)
below,
the Company reserves the right to modify, amend, or eliminate any of the
Executive’s benefits without his prior approval, as long as all
similarly-situated employees are treated similarly. The Executive’s entitlement
to participate in fringe benefit programs and plans established by the Company
shall be governed by terms and conditions set forth in such plans.
e. Both
the
Company and the Executive acknowledge that such compensation and the other
covenants and agreements of the Company contained herein are fair and adequate
compensation for the Executive’s services, and for the mutual promises described
below.
4. The
Company and the Executive acknowledge that, during the Term of this Agreement,
the Executive’s compensation will be subject to an annual review and annual
increase, consistent with safe and sound Company practices, and in the
discretion of the Compensation Committee.
5. The
Executive acknowledges and agrees that any employee benefits provided to the
Executive by the Company incident to the Executive’s employment are governed by
the applicable plan documents, summary plan descriptions or employment policies,
and may be modified, suspended or revoked at any time, in accordance with the
terms and provisions of the applicable documents.
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RESPONSIBILITIES
6. The
Executive acknowledges and agrees that he shall be employed as Chairman of
the
Board of Directors and Chief Executive Officer of the Company. The Executive
covenants and agrees that he will faithfully devote his best efforts and his
full-time focus to his positions with the Company, except that the Executive
may
serve on up to two (2) outside boards or, in lieu of one of the allowed outside
board positions, a consulting agreement with Gentium that is limited to
approximately the same time commitment as a board position would entail.
7.
a.
During
the Term of this Agreement, the Executive shall serve as Chairman of the Board
of Directors and Chief Executive Officer of the Company. During the Term of
this
Agreement, subject to the supervision and control of the Board of Directors
of
the Company, the Executive shall perform the duties and have the powers and
authority which are consistent with and generally of the nature of the duties
and the authority ordinarily and customarily delegated and granted to an
employee in a similar position, including without limitation, chairing and
planning meetings of the board, liaising with outside directors, participating
in board meetings of Intercontinental National Bank (“Bank”),
oversight of Bank management, participating in strategic planning,
responsibility for the Company’s financial reporting, investor relations,
corporate finance and acquisitions, and the Executive shall perform such other
duties and have such other powers and authority as may be prescribed by the
Board of Directors of the Company from time to time. Any such other duties,
powers and authority shall be consistent with the Executive’s position and shall
not violate any federal, state or local laws or regulations. The Executive
shall
comply with all policies adopted from time to time by the Company.
b. Notwithstanding
the provisions of Section 7(a)
above,
but subject to the provisions of Section
13,
the
duties and responsibilities of the Executive may be changed or modified from
time to time by the Company at the Company’s sole discretion. Upon changes or
modifications to the Executive’s
duties
and responsibilities, the Executive’s employment with the Company shall continue
to be governed by the terms of this Agreement.
8. The
Executive acknowledges and agrees that, during the Term of this Agreement,
he
has a fiduciary duty of loyalty to the Company, and that he will not knowingly
engage in any activity during the Term of this Agreement which will or could,
in
any material way, harm the business, business interests, or reputation of the
Company.
NONINTERFERENCE
9.
a.
The
Executive acknowledges and agrees that he will not, at any time during the
Term
of this Agreement and for the one (1) year period following the termination
of this Agreement by the Executive (or the Company) “Restrictive
Period”),
directly or indirectly, engage in competition with the Company within the
geographic boundaries of Bexar County, Xxxxxx County, the counties contiguous
with them, and the united Mexican States and the Executive will not on his
own
behalf, or as another’s agent, employee, partner, shareholder or otherwise,
engage, within the geographic boundaries of Bexar County, Xxxxxx County, the
counties contiguous with them, and the united Mexican States in any of the
same
or similar duties and/or responsibilities required by the Executive’s positions
with the Company, other than as an employee of the Company pursuant to this
Agreement, or as specifically approved by the Board of Directors of the Company.
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b. The
Executive also covenants and agrees that during the Restrictive Period, the
Executive shall not: (i) recruit, hire, or attempt to recruit or hire,
directly or by assisting others, any other employees of the Company (for
purposes of this covenant, “other employees” shall refer to employees who are
still actively employed by, or doing business with, the Company at the time
of
the attempted recruiting or hiring), nor shall the Executive contact or
communicate with any other employees of the Company for the purpose of inducing
other employees to terminate their employment with the Company; or
(ii) solicit, directly or by assisting others, the Companying business of
any customers of the Company as of the date of such termination.
c. The
Executive acknowledges and agrees that in exchange for the execution of the
noninterference agreement set forth above, the Executive will receive
substantial, valuable consideration including: (i) confidential trade
secret and proprietary information relating to the Company, including, without
limitation, information relating to the identity and special needs of the
Company’s current and prospective customers, the Company’s current and
prospective services, the Company’s business projections and market studies, the
Company’s business plans and strategies, the Company’s studies and information
concerning special services unique to the Company (the “Confidential
Information”);
(ii) employment; and (iii) compensation and benefits as described in
this Agreement. The Executive acknowledges and agrees that this constitutes
fair
and adequate consideration for the execution of the noninterference agreement
set forth above.
REMEDIES
10. In
the
event that the Executive violates any of the provisions set forth in this
Agreement relating to NONINTERFERENCE,
the
Executive acknowledges and agrees that the Company may suffer immediate and
irreparable harm. Consequently, the Executive acknowledges and agrees that
the
Company shall be entitled to immediate injunctive relief, either by temporary
or
permanent injunction and without the necessity of posting a bond or proving
actual damages, to prevent such a violation.
TERMINATION
11. The
Executive acknowledges and agrees that the Board of Directors of the Company
reserves the right to terminate this Agreement, for any reason, by providing
the
Executive with written notice of the termination, delivered in person, or by
certified U.S. mail to the Executive’s last known address reflected in the
Company’s personnel records. Such notice shall be effective upon personal
delivery or three (3) days after mailing by certified mail. However, if the
Agreement is terminated at the Company’s insistence without Good Cause (as
defined in this Agreement), the Company covenants and agrees to provide the
Executive with the SEVERANCE
set
forth
in Section 17
of this
Agreement.
12. The
Executive acknowledges and agrees that the Company may terminate this Agreement
at any time, without notice, for “Good
Cause,”
which
is defined as the following:
4
a. conviction
of, or a plea of nolo
contendere,
by the
Executive to a felony or to fraud, embezzlement or misappropriation of funds;
b. the
commission by the Executive of a fraudulent act or insider abuse with regard
to
the Company;
c. a
knowing
omission, breach of trust or fiduciary duty by the Executive;
d. substantial
and direct responsibility by the Executive for the insolvency of, the appoint
of
a conservator or receiver for, or the troubled condition, as defined by
applicable regulations of the appropriate federal banking agency, of the
Company;
e. a
material violation by the Executive of any applicable federal banking law or
regulation that has had a material adverse effect on the Company;
f. the
Executive’s intentional violation or conspiracy to violate section 215,
656, 657, 1005, 1006, 1007, 1014, 1032, or 1344 of title 18 of the United States
Code, or section 1341 or 1343 of such title affecting a federally insured
financial institution as defined in title 18 of the United States
Code;
g. the
willful failure by the Executive to adhere to the Company’s written policies,
which causes a material monetary injury or other material harm to the Company;
or
h. the
willful failure by the Executive to substantially perform material stated duties
of the position with the Company.
Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated by
reason of violating Sections 12(b),
(c),
(g),
or
(h)
until
the Executive is notified in writing by the Company (or its successor entity)
of
a determination by the Company of a violation of Sections 12(b),
(c),
(g),
or
(h),
specifying the particulars thereof in reasonably sufficient detail, and giving
the Executive a reasonable opportunity (of not less than thirty (30) days),
together with counsel, to explain to the Company why there has been no violation
of Sections 12(b),
(c),
(g),
or
(h),
followed by a finding by the Company, to be detailed in writing within a Notice
of Termination, (1) that in the good faith opinion of the Company (or its
successor entity) the Executive has committed an act described in Sections 12(b),
(c),
(g),
or
(h)
above,
(2) specifying the particulars thereof in detail, and (3) determining
in good faith that such violation has not been corrected, or is not capable
of
correction. Nothing herein shall limit the Executive’s right to contest the
validity or propriety of any such determination.
13. The
Company acknowledges and agrees that the Executive reserves the right to
terminate this Agreement at any time, for any reason, with or without cause,
by
providing thirty (30) days written notice, by personal delivery or
certified United States mail, to the Company at its principal business address
of the Executive’s intention to terminate this Agreement. Such notice shall be
effective upon personal delivery or three (3) days after mailing by certified
mail. In the event that the Executive does so because of a Constructive
Termination (as defined in this Agreement), the Company covenants and agrees
to
provide the Executive with the SEVERANCE
set
forth below in this Agreement. In the event that a Change of Control (as defined
below) of the Company occurs, the Executive shall have the right to terminate
this Agreement within ninety (90) days subsequent to the Change of Control
by
providing thirty (30) days written notice, by personal delivery or
certified United States mail, to the Bank at its principal business address
of
the Executive’s intention to terminate this Agreement. If the Executive
terminates this Agreement pursuant to the terms of this Section
13,
then
the provisions of Section
9
and
Section
17
shall
not apply. For purposes hereof, a “Change
of Control”
of
the
Company shall be deemed to have occurred if: (a) any person, as such term is
used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended, becomes a beneficial owner (within the meaning of Rule 13d-3 under
such Act) of fifty percent (50%) or more of the Company’s outstanding common
stock; or (b) the Company is merged, consolidated, or reorganized into or with,
or sells all or substantially all of its assets to, another corporation or
other
entity, and immediately after such transaction less than fifty percent (50%)
of
the voting power of the then-outstanding securities of such corporation or
other
entity immediately after such transaction is held in the aggregate by holders
of
the Company’s common stock immediately before such transaction.
5
“Constructive
Termination”
shall
mean the Company, without the prior written consent of the Executive:
a. materially
and adversely changes the Executive’s duties, responsibilities and status with
the Company, or materially and adversely changes the Executives’ reporting
responsibilities, titles or offices, or removes the Executive from or fails
to
re-elect the Executive to, any of such positions, except in connection with
the
Executives’ termination for “Good Cause” or disability, or as a result of the
Executive’s death;
b. reduces
the Executive’s base compensation benefits as in effect on the Effective Date or
as the same may be increased from time to time, other than as part of a
reduction applicable generally to all or substantially all of the Company’s
executive employees, or when base compensation benefits are replaced by other
compensation or benefits of equal or greater value; or
c. acts,
or
fails to act, in a manner that adversely affects the Executive’s participation
in, or materially reduces, in the aggregate, the Executive’s benefits under,
employee benefit and compensation plans, other than as part of a reduction
applicable generally to all or substantially all of the Company’s executive
employees, or when the Executive’s benefits and/or base compensation benefits
are replaced by base compensation benefits of equal or greater
value.
Notwithstanding
the foregoing, the Executive shall not be deemed to have incurred a
“constructive termination” of employment unless the Executive first shall have
notified the Board in writing that the Executive has incurred a “constructive
termination” of employment, specifying the particulars thereof in reasonably
sufficient detail, and giving the Company a reasonable opportunity (of not
less
than thirty (30) days), together with its counsel, to explain to the
Executive that the Executive has not incurred a “constructive termination” of
employment, such finding to be detailed to the Executive in writing, or to
cure
such constructive termination.
14. The
Executive acknowledges and agrees that in the event of the Executive’s death,
this Agreement will terminate immediately, without notice, on the date of the
Executive’s death. The Executive acknowledges and agrees that, in the event of
his death, the Company will pay to the Executive’s estate all compensation due
and owing through the date of the Executive’s death. The Company agrees that, in
the event this Agreement is terminated as a result of the Executive’s death, the
Company will continue to pay the Executive’s Base Salary for one (1) year
subsequent to such termination to the Executive’s spouse, and in the event that
the Executive does not have a spouse at the time of his death, to the personal
representative of the Executive’s and the Executive’s healthcare benefits shall
continue for a period of one (1) year subsequent to such termination, subject
to
the terms and conditions of the plans governing such healthcare benefits. In
the
event that the plans governing the Executive’s healthcare benefits do not allow
for the Executive’s healthcare benefits to continue after his death, the Company
shall provide to the Executive’s spouse and children healthcare benefits
comparable to the healthcare benefits that the Executive had at the time of
his
death, at no cost. The Company may elect to pay the Base Salary in a lump
sum.
6
15. The
Executive acknowledges and agrees that this Agreement will terminate
immediately, without notice, in the event the Executive becomes physically
or
mentally disabled, as defined by 29 C.F.R. § 1630.2(g)(1), and cannot
perform the essential functions of his position, with or without reasonable
accommodation for the period designated by the Executive’s disability insurance
after which disability payments will begin. The Company agrees that, in the
event this Agreement is terminated as a result of the Executive’s physical or
mental disability, as defined by 29 C.F.R. § 1630.2(g)(1), the Company will
continue to pay the Executive’s Base Salary for one (1) year subsequent to such
termination and the Executive’s healthcare benefits shall continue for a period
of one (1) year subsequent to such termination, subject to the terms and
conditions of the plans governing such healthcare benefits. In the event that
the plans governing the Executive’s healthcare benefits do not allow for the
Executive’s healthcare benefits to continue after his disability, the Company
shall provide healthcare benefits comparable to the healthcare benefits that
the
Executive had at the time of his disability, at no cost. The Company may elect
to pay the Base Salary in a lump sum.
16. The
Executive acknowledges and agrees that in the event of termination of this
Agreement, for whatever reason, whether at the insistence of the Executive
or at
the insistence of the Company, the Executive will return to the Company within
two (2) business days of the time when notice of termination is communicated
by
either party, any and all equipment, literature, documents, data, information,
order forms, memoranda, correspondence, customer and prospective customer lists,
customer’s orders, records, cards or notes acquired, compiled or coming into the
Executive’s knowledge, possession or control in connection with his activities
as an employee of the Company, as well as all machines, parts, equipment or
other materials received from the Company or from any of its customers, agents
or suppliers, in connection with such activities.
SEVERANCE
17. The
Executive and the Company acknowledge and agree that, if the Company elects
to
terminate this Agreement at any time prior to the Expiration Date for any reason
other than “Good Cause,” as defined in this Agreement or the Executive
terminates this Agreement because of a Constructive Termination, the Executive
shall be entitled to severance pay. Such severance pay shall be equal to the
equivalent of the Executive’s then current annual salary, whichever is greater,
less statutory payroll deductions, payable over a twelve (12) month period
in accordance with the Company’s ordinary payroll policies and procedures,
beginning on the date that the notice of termination becomes effective (the
“Termination
Date”).
In
addition, the Executive shall be entitled to participate in the medical
insurance benefits of the Company, effective on the Termination Date, for a
period of twelve (12) months beginning on the Termination Date. The
Executive’s entitlement to any severance pay under this Agreement is strictly
contingent
on the Executive complying with the terms of the restrictive covenants set
out
in Section 9
and
Section
28
of this
Agreement, and any material breach by the Executive of the terms of the
restrictive covenants set out in Section 9
or
Section
28
shall
allow the Company to immediately cease payment of any installments of such
severance pay not yet paid at the time of the breach, and Company shall have
no
further obligations to the Executive. This remedy is in addition to others
available to the Company under law or as provided in this Agreement for any
breach of the restrictive covenants contained herein. Any termination of
severance pay pursuant to the above provisions shall not be interpreted to
limit
or alter the scope or duration of the Executive’s obligations pursuant to
Section 9.
7
SEVERABILITY
18. The
Executive acknowledges and agrees that each covenant and/or provision of this
Agreement shall be enforceable independently of every other covenant and/or
provision. Furthermore, the Executive acknowledges and agrees that, in the
event
any covenant and/or provision of this Agreement is determined to be
unenforceable for any reason, the remaining covenants and/or provisions will
remain effective, binding and enforceable.
WAIVER
19. The
parties acknowledge and agree that the failure of either to enforce any
provision of this Agreement shall not constitute a waiver of that particular
provision, or of any other provisions of this Agreement.
SUCCESSORS
AND ASSIGNS
20. The
Executive acknowledges and agrees that this Agreement may be assigned by the
Company to any successor-in-interest and shall inure to the benefit of, and
be
fully enforceable by, any successor and/or assignee; and this Agreement will
be
fully binding upon, and may be enforced by the Executive against, any successor
and/or assignee of the Company.
21. The
Executive acknowledges and agrees that his obligations, duties and
responsibilities under this Agreement are personal and shall not be assignable,
and that this Agreement shall be enforceable by the Executive only. In the
event
of the Executive’s death, this Agreement shall be enforceable by the Executive’s
estate, executors and/or legal representatives, only to the extent provided
herein.
CHOICE
OF LAW
22. Both
parties acknowledge and agree that the law of Texas will govern the validity,
interpretation and effect of this Agreement, and any other dispute relating
to,
or arising out of, the employment relationship between the Company and the
Executive.
8
MODIFICATION
23. Both
parties acknowledge and agree that this Agreement and the stock option plan
and
stock grants set forth in Section 3(c)
of this
Agreement constitute the complete and entire agreement between the parties;
that
the parties have executed this Agreement based upon the express terms and
provisions set forth herein; that the parties have not relied on any
representations, oral or written, which are not set forth in this Agreement;
that no previous agreement, either oral or written, shall have any effect on
the
terms or provisions of this Agreement; and that all previous agreements, either
oral or written, are expressly superseded and revoked by this
Agreement.
24. Both
parties acknowledge and agree that the covenants and/or provisions of this
Agreement may not be modified by any subsequent agreement unless the modifying
agreement; (a) is in writing; (b) contains an express provision
referencing this Agreement; (c) is signed by the Executive; and (d) is
approved by a majority of the Board of Directors of the Company.
INDEMNIFICATION
25. During
the Term of this Agreement, the Company shall indemnify the Executive against
all judgments, penalties, fines, amounts paid in settlement and reasonable
expenses (including, but not limited to, attorneys’ fees) relating to his
employment by the Company to the fullest extent permissible under the Company’s
Articles of Incorporation, and may purchase such indemnification insurance
as
the Board of Directors may from time to time determine.
LEGAL
CONSULTATION
26. The
Executive and the Company acknowledge and agree that both parties have been
accorded a reasonable opportunity to review this Agreement with legal counsel
prior to executing the agreement.
NOTICES
27. Any
and
all notices of documents or other notices required to be delivered under the
terms of this Agreement shall be addressed to each party as
follows:
EXECUTIVE: | |||
Xxxx X. Xxxxxxxx | |||
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|||
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COMPANY: | |||
0000
Xxxx Xxxxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxx
Fax:
(000) 000-0000
|
9
CONFIDENTIALITY
28. The
Executive acknowledges that he will have access, during the course of service
to
the Company, to Confidential Information and products of the Company. The
Executive acknowledges that all Confidential Information provided to the
Executive is provided in confidence and trust and that the Company’s maintenance
of the confidentiality of its proprietary Confidential Information to the
fullest extent possible is extremely important. The Executive agrees not to
use,
disclose, disseminate or otherwise make available to any third party, either
directly or indirectly, any Confidential Information at any time or in any
manner, except as expressly authorized in writing by the Company. The Executive
agrees to take all reasonable precautions to prevent inadvertent or other
disclosure, use or transfer of any of the Confidential Information. The
provisions of this Section
28
shall
survive the termination of this Agreement.
ARBITRATION
29. Except
where (a) legal action is required to prevent a breach of this Agreement,
(b) with respect to the Company’s remedies pursuant to Section
10,
or (c)
to enforce an arbitration award granted under this section, if this Agreement
gives rise in any way to a dispute that cannot be settled through negotiation,
any claim or dispute arising under or relating to this Agreement shall be
submitted to final and binding arbitration in Houston, Texas pursuant to the
Commercial Rules of the American Arbitration Association as in effect from
time
to time. The parties agree that any party requesting arbitration of any dispute
under this section must give formal written notice of the party’s demand for
arbitration. The parties further agree that each party may be represented by
counsel in any proceeding under this section, and that all expenses and fees
incurred in connection with any proceeding under this section shall be paid
by
the non-prevailing party (as determined by the arbitrators). Each party to
this
Agreement consents, on behalf of himself or itself and his respective
successors, heirs and assigns, to such binding arbitration in accordance with
the terms of this section. The duty to arbitrate will survive the termination
of
this Agreement.
10
EXECUTED
ON THIS
8th
day of
August, 2006, in Houston, Texas.
“EXECUTIVE” | ||
/s/ Xxxx X. Xxxxxxxx | ||
Xxxx X. Xxxxxxxx |
||
“COMPANY” | ||
COASTAL BANCSHARES ACQUISITION
CORP.
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By: | /s/ W. Xxxxxx Xxxxxxx | |
W. Xxxxxx Xxxxxxx |
||
President
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