<PAGE>
As filed with the Securities and Exchange Commission on July 21, 1995
Registration Statement No. ______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------
BARNETT BANKS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 6712 59-0560515
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code Number) Number)
50 NORTH LAURA STREET
JACKSONVILLE, FLORIDA 32202
(904) 791-7720
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------------------
CHARLES E. RICE
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
BARNETT BANKS, INC.
50 NORTH LAURA STREET
JACKSONVILLE, FLORIDA 32202
(904) 791-7720
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
HALCYON E. SKINNER, ESQ.
MAHONEY ADAMS & CRISER, P.A.
50 NORTH LAURA STREET
JACKSONVILLE, FLORIDA 32202
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon the effective date of merger described in this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and and there is compliance
with General Instruction G, please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of
of Securities to be Aggregate Offering Aggregate Registration
to be Registered Registered(1) Price Per Unit(2) Offering Price* Fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$2.00 per share
(including preferred 400,100 $21.12 $8,451,417.00 $2,914
stock purchase rights)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<FN>
-------------------------
(1) Based upon an assumed number of shares that may be issued in the merger
described herein. Such assumed maximum number is based upon the
maximum number of shares of common stock, $3.00 par value ("Community
Bank Common Stock"), of Community Bank of the Islands ("Community Bank")
that may be outstanding immediately prior to the merger. Also includes
associated rights to purchase shares of Barnett Bank's Inc.'s ("Barnett")
Junior Participating Preferred Stock, par value $.10 per share, whcih
rights are (a) not currently exercisable and (b) not currently separable
from shares of common stock, par value $2.00 ("Barnett Common Stock"),
of Barnett. See "THE MERGER -- Description of Barnett Capital Stock."
(2) Estimated solely for the purpose of determining the registration fee.
Pursuant to Rule 457(f)(2), under the Securities Act of 1933, as amended
(the "Securties Act"), the maximum aggregate offering price is based on
the book value of Community Bank Common Stock as of June 30, 1995,
adjusted to reflect the assumed exercise of all outstanding options to
purchase Community Bank Common Stock prior to the merger, multiplied by
the maximum number of shares of Community Bank Common Stock that may be
outstanding immediately prior to the merger. The proposed maximum
offering price per unit has been determined by dividing the maximum
aggregate offering price by the number of shares being registered.
</TABLE>
<PAGE>
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 or until this Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
[COMMUNITY BANK LETTERHEAD]
James G. Lowman
Chairman of the Board
[SEPTEMBER 8, 1995]
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special Meeting of
Shareholders of Community Bank of the Islands ("Community Bank") to be held at
the principal office of Community Bank at 2450 Periwinkle Way, Sanibel Island,
Florida 33957, at [4:30 P.M.] local time on [OCTOBER 10, 1995].
On May 30, 1995, Barnett Banks, Inc. ("Barnett") and Community Bank
entered into an agreement to combine Community Bank with Barnett by merging
Interim Bank of the Islands, a wholly-owned subsidiary of Barnett, with and into
Community Bank (the "Merger"). The Merger, which has been approved by the
Boards of Directors of Barnett and Community Bank, would result in Community
Bank becoming a wholly-owned subsidiary of Barnett.
The purpose of the meeting is to consider and vote on the approval of the
proposed Merger pursuant to the Agreement and Plan of Merger, dated May 30,
1995, among Barnett and Community Bank (the "Merger Agreement"). Under the
terms of the Merger Agreement, upon consummation of the Merger, each outstanding
share of common stock of Community Bank, par value $3.00 per share ("Community
Bank Common Stock") (other than Dissenting Shares, as defined in the attached
Proxy Statement-Prospectus) will be converted into shares of common stock of
Barnett as determined by the Exchange Ratio (as defined in the attached Proxy
Statement-Prospectus), subject to the terms and conditions more specifically set
forth in the Merger Agreement.
Shareholders shall also be entitled to consider and vote on the following
matters related to the Merger: (a) the payment of additional compensation to be
made to an officer of Community Bank upon consummation of the Merger (the
"Change in Control Payment"); and (b) amendment of the Articles of Incorporation
of Community Bank upon consummation of the Merger (the "Amendment"), each as
described in more detail in the attached Proxy Statement-Prospectus.
Approval of the Merger requires the affirmative vote of holders of a
majority of the outstanding shares of Community Bank Common Stock as of the
record date. The Amendment will be approved if the votes cast at the meeting in
favor of the Amendment exceed the votes cast opposing the Amendment. The Change
in Control Payment will be approved upon the affirmative vote of not less than
75% of the outstanding Community Bank Common Stock (excluding shares held by the
recipient of the Change in Control Payment).
Shareholders are entitled to vote all of the shares of Community Bank
Common Stock held by them on [SEPTEMBER 8, 1995], which is the record date for
the Special Meeting.
<PAGE>
We urge you to consider carefully these important matters, which are
described in the attached Proxy Statement-Prospectus. In order to ensure that
your vote is represented at the Special Meeting, please indicate your choice on
the proxy form, date and sign it, and return it in the enclosed envelope. A
prompt response will be appreciated. If you are able to attend the Special
Meeting, you may revoke your proxy and vote in person if you wish.
We look forward to seeing you at the Special Meeting.
_____________________
James G. Lowman
Chairman of the Board
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<PAGE>
COMMUNITY BANK OF THE ISLANDS
2450 Periwinkle Way
Sanibel Island, FL 33957
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a special meeting of shareholders of
Community Bank of the Islands, a bank organized under Florida law ("Community
Bank"), will be held on [TUESDAY, OCTOBER 10, 1995, AT 4:30 P.M.,] local
time, at the principal office of Community Bank at 2450 Periwinkle Way,
Sanibel Island, Florida 33957, to consider and vote on the following matters,
and to transact such other business as may properly come before the meeting:
a. an Agreement and Plan of Merger dated as of
May 30, 1995, between Community Bank, Barnett
Banks, Inc., a Florida corporation ("Barnett"),
and Phantom Bank, a wholly-owned subsidiary of
Barnett now known as Interim Bank of the Islands,
providing for Community Bank to be the surviving
corporation in a merger with Interim Bank of the
Islands (the "Merger"). If the Merger is
consummated, Community Bank will become a
wholly-owned subsidiary of Barnett and the
shareholders of Community Bank will receive shares
of common stock of Barnett, $2.00 par value, in
exchange for their shares of common stock, $3.00
par value of Community Bank, on the terms and
conditions described in the accompanying Proxy
Statement/Prospectus;
b. an amendment to the Articles of Incorporation of
Community Bank to authorize Community Bank to
exercise trust powers following consummation of
the Merger, as more fully described in the
accompanying Proxy Statement-Prospectus; and
-3-
<PAGE>
c. the payment to Mr. James G. Lowman, Community
Bank's Chairman, of additional compensation in the
event of consummation of the Merger, as more fully
described in the accompanying Proxy Statement-
Prospectus.
Holders of record of Community Bank Common Stock at the close of
business on [SEPTEMBER 8, 1995], are entitled to notice of and to vote at the
special meeting and any adjournments thereof.
Pursuant to Section 658.44 of the Florida Banking Code, shareholders
of Community Bank are entitled to dissent from the Merger. A copy of the
provisions of the Florida Banking Code regarding dissenters' rights is
attached as Annex C to the accompanying Proxy Statement-Prospectus.
BY ORDER OF THE BOARD OF DIRECTORS
____________________________________________
Belinda S. Ohmer, Vice President and Cashier
Sanibel, Florida
[SEPTEMBER 8, 1995]
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE
THE ENCLOSED FORM OF PROXY AND RETURN IT TO COMMUNITY BANK IN ORDER TO ASSURE
THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING. A STAMPED, RETURN
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. IF YOU ATTEND THE MEETING, YOU
MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
-4-
<PAGE>
PROXY STATEMENT
COMMUNITY BANK OF THE ISLANDS
FOR SPECIAL MEETING
OF SHAREHOLDERS TO
BE HELD ON [OCTOBER 10, 1995]
______________________________________
PROSPECTUS
BARNETT BANKS, INC.
______________________________________
This Prospectus of Barnett Banks, Inc. ("Barnett") relates to up to
400,100 shares of common stock of Barnett, par value $2.00 per share
("Barnett Common Stock") (together with up to 400,100 rights to purchase
Barnett Junior Participating Preferred Stock, par value $0.10 per share (the
"Rights"), which are attached to and trade with the Barnett Common Stock),
issuable to shareholders of Community Bank of the Islands ("Community Bank")
upon consummation of the proposed merger (the "Merger") herein described of
Interim Bank of the Islands, a wholly owned subsidiary of Barnett ("Merger
Subsidiary"), with and into Community Bank pursuant to the terms and subject
to the conditions of the Agreement and Plan of Merger (the "Merger
Agreement"), dated May 30, 1995, by and among Barnett, Community Bank and
Merger Subsidiary. The Merger Agreement is attached as Appendix A and is
incorporated herein by reference.
THIS PROSPECTUS ALSO SERVES AS THE PROXY STATEMENT OF COMMUNITY BANK
FOR ITS SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON [OCTOBER 10, 1995].
SEE "THE SPECIAL MEETING."
Upon consummation of the Merger, except as described herein, each
outstanding share of (i) common stock of Community Bank, par value $3.00 per
share ("Community Bank Common Stock") (excluding Dissenting Shares) will be
converted into a number of shares of Barnett Common Stock determined in
accordance with the provisions of the Merger Agreement. Community Bank
shareholders will receive, in lieu of fractional shares, cash (without
interest). For a more complete description of the Merger Agreement and the
terms of the Merger, see "THE MERGER."
This Proxy Statement-Prospectus and the form of proxy are first being
mailed to shareholders of Community Bank on or about [SEPTEMBER 8, 1995].
_____________________________________________
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROSPECTUS HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
THE DEPARTMENT OF INSURANCE OF THE STATE OF FLORIDA
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION, THE FLORIDA DEPARTMENT OF INSURANCE
OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. THE SHARES OF BARNETT COMMON STOCK
OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS __________, 1995.
<PAGE>
AVAILABLE INFORMATION
Barnett is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the Commission's
public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the public reference facilities in the Commission's regional offices
located at: Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and Seven World Trade Center, New York, New York 10048.
Copies of such materials can be obtained at prescribed rates by writing to the
Securities and Exchange Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, reports, proxy statements and other
information concerning Barnett may be inspected at the offices of the New York
Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005.
Barnett has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Barnett Common Stock to be issued pursuant to the
Merger. This Proxy Statement-Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Such additional
information may be obtained from the public reference room of the Commission,
450 Fifth Street, N.W., in Washington, D.C. 20549. Statements contained in this
Proxy Statement-Prospectus or in any document incorporated by reference in this
Proxy Statement-Prospectus as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
This Proxy Statement-Prospectus incorporates by reference documents
relating to Barnett, which documents are not presented herein or delivered
herewith. Such documents, excluding exhibits unless specifically incorporated
herein, are available without charge upon request to Corporate Communications,
Barnett Banks, Inc., 50 North Laura Street, Jacksonville, Florida 32202.
Telephone requests may be directed to Corporate Communications at
(904) 791-7668.
The following documents filed with the Commission by Barnett are
incorporated herein, as of their respective filing dates, by reference
-2-
<PAGE>
in this Proxy Statement-Prospectus: (i) Barnett's Annual Report on Form 10-K
for the year ended December 31, 1994, (ii) Barnett's Quarterly Report on Form
10-Q for the three months ended March 31, 1995, (iii) the description of
Barnett's Common Stock contained in its Registration Statement on Form 8-A,
filed with the Commission on December 12, 1979, and (iv) the description of
Barnett's Preferred Stock Purchase Rights, as amended, contained in its
Registration Statement on Form 8-A, filed with the Commission on July 12, 1990.
All documents filed by Barnett pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the Special
Meeting (as defined in "SUMMARY -- The Special Meeting") shall be deemed to be
incorporated herein by reference and to be a part of such filing. Any statement
contained herein or in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated
herein by reference modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed to constitute a part hereof,
except as so modified or superseded.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY BARNETT OR COMMUNITY BANK. THIS PROXY STATEMENT-PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE,
THE BARNETT COMMON STOCK OFFERED BY THIS PROXY STATEMENT-PROSPECTUS, NOR DOES IT
CONSTITUTE THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF BARNETT OR COMMUNITY BANK SINCE
THE DATE HEREOF OR THAT INFORMATION IN THIS PROXY STATEMENT-PROSPECTUS OR IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF OR THE DATES THEREOF.
-3-
<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
SUMMARY
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Votes Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Recommendations of the Boards of Directors. . . . . . . . . . . . . . . 8
Opinion of Community Banks's Financial Advisor. . . . . . . . . . . . . 9
Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . . 9
Conditions to the Merger. . . . . . . . . . . . . . . . . . . . . . . .10
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . .10
Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . .10
Waiver and Amendment. . . . . . . . . . . . . . . . . . . . . . . . . .11
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Management and Operations After the Merger. . . . . . . . . . . . . . .11
Interests of Certain Persons in the Merger. . . . . . . . . . . . . . .12
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . .12
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . .12
Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Markets and Market Prices . . . . . . . . . . . . . . . . . . . . . . .13
COMPARATIVE UNAUDITED PER SHARE INFORMATION. . . . . . . . . . . . . . . . .15
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .15
SPECIAL MEETING OF SHAREHOLDERS
Purpose, Date, Place and Time . . . . . . . . . . . . . . . . . . . . .16
Shares Entitled to Vote; Shareholder Approval Required. . . . . . . . .16
Voting; Solicitation and Revocation of Proxies. . . . . . . . . . . . .17
THE MERGER
Background of the Merger. . . . . . . . . . . . . . . . . . . . . . . .17
Recommendation of the Boards of Directors . . . . . . . . . . . . . . .19
Opinion of Community Bank's Financial Advisor . . . . . . . . . . . . .20
Comparable Company Analysis . . . . . . . . . . . . . . . . . . . . . .22
Comparable Transaction Analysis . . . . . . . . . . . . . . . . . . . .22
Discounted Cash Flow Analysis . . . . . . . . . . . . . . . . . . . . .23
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . .23
Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . .25
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . .25
Conditions to the Merger. . . . . . . . . . . . . . . . . . . . . . . .26
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . .28
Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . .30
Waiver and Amendment. . . . . . . . . . . . . . . . . . . . . . . . . .32
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Management and Operations After the Merger. . . . . . . . . . . . . . .33
Interests of Certain Persons in the Merger. . . . . . . . . . . . . . .33
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . .35
-4-
<PAGE>
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . .35
Resale of Barnett Common Stock. . . . . . . . . . . . . . . . . . . . .37
Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . . . . .37
Shareholder Investment and Employee Stock Purchase Plans. . . . . . . .38
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Description of Barnett Capital Stock. . . . . . . . . . . . . . . . . .39
Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . . . .45
Certain Differences in Rights of Shareholders . . . . . . . . . . . . .47
Vote on Change in Control Payment . . . . . . . . . . . . . . . . . . .51
Amendment of the Articles of Incorporation of Community Bank. . . . . .53
INFORMATION ABOUT COMMUNITY BAN
Business of Community Bank. . . . . . . . . . . . . . . . . . . . . . .54
Market and Dividend Information Regarding Community Bank. . . . . . . .54
Principal Holders of Community Bank Common Stock. . . . . . . . . . . .55
Financial Information Regarding Community Bank. . . . . . . . . . . . .56
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF COMMUNITY BANK
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Net Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . .78
Non-Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . .79
Asset-Liability Management. . . . . . . . . . . . . . . . . . . . . . .79
Earning Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . .80
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
REGULATORY MATTERS
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Federal Depositor Preference Legislation. . . . . . . . . . . . . . . .84
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
FDICIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Interstate Banking Legislation. . . . . . . . . . . . . . . . . . . . .87
Anticompetitive Effects of the Merger . . . . . . . . . . . . . . . . .88
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
LEGAL OPINION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
APPENDIX A -- AGREEMENT AND PLAN OF MERGER
APPENDIX B -- OPINION OF ALLEN C. EWING & CO.
APPENDIX C -- PROVISIONS FOR DISSENTERS' RIGHTS UNDER THE
FLORIDA BANKING CODE
APPENDIX D -- PROPOSED AMENDED AND RESTATED COMMUNITY BANK ARTICLES OF
INCORPORATION
-5-
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN
ALL RESPECTS BY THE MORE DETAILED INFORMATION INCLUDED IN THIS PROXY STATEMENT-
PROSPECTUS, THE APPENDICES HERETO AND THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE. AS USED IN THIS PROXY STATEMENT-PROSPECTUS, THE TERMS BARNETT AND
COMMUNITY BANK REFER TO SUCH CORPORATIONS, RESPECTIVELY, AND WHERE THE CONTEXT
REQUIRES, SUCH CORPORATIONS AND THEIR RESPECTIVE PREDECESSORS AND SUBSIDIARIES
ON A CONSOLIDATED BASIS. ALL INFORMATION CONCERNING BARNETT INCLUDED IN THIS
PROXY STATEMENT-PROSPECTUS HAS BEEN FURNISHED BY BARNETT AND ALL INFORMATION
CONCERNING COMMUNITY BANK INCLUDED IN THIS PROXY STATEMENT-PROSPECTUS HAS BEEN
FURNISHED BY COMMUNITY BANK.
THE COMPANIES
BARNETT. Barnett, a Florida corporation organized in 1930, is a bank
holding company registered under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). As of March 31, 1995, Barnett owned 31 commercial
banks having 628 offices throughout Florida and Georgia. Barnett also owns
nonbanking subsidiaries that provide support services and specialized
financial services, including trust, merchant services, full-service
brokerage, credit-related insurance, credit card and mortgage banking
services. On March 31, 1995, Barnett had total assets of $41.7 billion and
total deposits of $34.3 billion. On that date, Barnett was the 22nd largest
bank holding company in the United States and the largest bank holding
company in Florida.
Barnett is a legal entity separate and distinct from its subsidiaries.
Accordingly, the right of Barnett, and thus the right of Barnett's creditors
and shareholders, to participate in any distribution of the assets or
earnings of any subsidiary is necessarily subject to the prior claims of
creditors of its subsidiaries, except to the extent that claims of Barnett in
its capacity as a creditor may be recognized. The principal source of
Barnett's revenues is dividends from its subsidiaries.
The principal executive offices of Barnett are located at 50 North Laura
Street, Jacksonville, Florida 32202. Its mailing address is Post Office Box
40789, Jacksonville, Florida 32203-0789, and its telephone number is (904)
791-7720.
COMMUNITY BANK. Community Bank is a state bank organized under the laws
of the State of Florida and located in Sanibel, Florida. Community bank
operates one main office and one branch office, each located in Sanibel,
Florida. On March 31, 1995, Community Bank had total assets of $92.3
million and total deposits of $83.9 million.
The principal executive offices of Community Bank are located at 2450
Periwinkle Way, Sanibel, Florida 33957-3207. Its mailing address
-6-
<PAGE>
is Post Office Box 1640, Sanibel, Florida 33957-1640, and its telephone number
is 813-472-2800.
MERGER SUBSIDIARY. Merger Subsidiary is a state bank organized under the
laws of the State of Florida solely to effectuate the Merger.
ADDITIONAL INFORMATION. For additional information regarding the business
of Barnett and Community Bank, see "THE MERGER -- Background of the Merger" and
"-- Recommendation of the Board of Directors; Reasons for the Merger", and the
documents incorporated herein by reference (see "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE").
THE MERGER
The Merger Agreement provides for the merger of Merger Subsidiary with
and into Community Bank, with Community Bank (hereinafter sometimes referred
to as the "Surviving Corporation") as the surviving corporation. Except as
described under "THE MERGER -- Terms of the Merger," upon consummation of the
Merger, each outstanding share of Community Bank Common Stock (other than
Dissenting Shares; see "The Merger -- Dissenters Rights") will be converted
into the number of shares of Barnett Common Stock (including a pro rata
number of Barnett Junior Participating Preferred Stock) obtained by dividing
$33.16 by the average closing price of Barnett Common Stock on the NYSE (as
reported by THE WALL STREET JOURNAL) for the twenty consecutive NYSE trading
days ending on the fifth business day prior to the effective time of the
Merger (the "Average Closing Price"), subject to adjustments or elections
based upon the occurrence of certain events as set forth in the Merger
Agreement (the "Exchange Ratio"). After consummation of the Merger, each
outstanding share of Barnett's capital stock (including Barnett Common Stock)
will remain outstanding. Holders of Community Bank Common Stock will receive
cash (without interest) in lieu of fractional shares of Barnett Common Stock.
Notwithstanding the foregoing, pursuant to the Merger Agreement, if the
Average Closing Price is less than $43.00, Community Bank may elect to forego
the right of Community Bank shareholders to receive Barnett Common Stock and,
in lieu thereof, each share of Community Bank Common Stock will instead be
exchangeable for the right to receive $33.16 in cash (the "Cash
Consideration"). In addition, if at any time prior to the closing of the
Merger Barnett reasonably determines that the Merger may not qualify for
pooling of interest accounting treatment, Barnett may elect to pay the Cash
Consideration to Community Bank shareholders in lieu of Barnett Common Stock.
See "THE MERGER -- Terms of the Merger" and " -- Accounting Treatment."
THE SPECIAL MEETING
The special meeting of Community Bank's shareholders (the "Special
Meeting") will be held on [OCTOBER 10, 1995] at [4:30 P.M.] local time, at
the main office of Community Bank, 2450 Periwinkle Way, Sanibel
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<PAGE>
Island, Florida 33957, to consider and vote upon the Merger Agreement, an
amendment to Community Bank's Articles of Incorporation to authorize Community
Bank to exercise trust powers following the Merger (the "Amendment") and a
payment to Mr. James G. Lowman, Community Bank's Chairman, of additional
compensation in the event of consummation of the Merger to the extent that such
payment may constitute an "excess parachute payment" under the Internal Revenue
Code of 1986, as amended, (the "Change in Control Payment").
Only holders of record of Community Bank Common Stock at the close of
business on [SEPTEMBER 8, 1995] will be entitled to vote at the Special
Meeting. At such date, there were outstanding and entitled to vote 510,784
shares of Community Bank Common Stock. Each share of Community Bank Common
Stock is entitled to one vote.
For additional information relating to the Special Meeting, see "THE
SPECIAL MEETING."
VOTES REQUIRED
Approval of the Merger Agreement by the shareholders of Community Bank
requires the affirmative vote of a majority of the shares entitled to be voted
by holders of record of Community Bank Common Stock. Approval of the Amendment
by the Community Bank shareholders requires the votes cast in favor of the
Amendment at the Special Meeting to exceed the votes cast against the Amendment.
Approval of the Change in Control Payment requires the affirmative vote of not
less than 75% of the outstanding Community Bank Common Stock (excluding shares
held by Mr. Lowman, the recipient of the Change in Control Payment). The
shareholders of Barnett are not required to approve the Merger Agreement, the
Change in Control Payment, or the Amendment.
As of the record date for the Community Bank Special Meeting, Community
Bank directors and executive officers and their affiliates held approximately
___% of the outstanding Community Bank Common Stock entitled to vote (excluding
shares that may be received upon exercise of options).
See "THE SPECIAL MEETING -- Votes Required " and "THE MERGER -- Conditions
to the Merger."
RECOMMENDATION OF COMMUNITY BANK'S BOARD OF DIRECTORS; REASONS FOR THE MERGER
In 1994, the Community Bank Board of Directors decided to consider a sale
of Community Bank based on a number of factors, including recent favorable sale
prices for banks, the potential of and limitations on the future growth of
Community Bank's market share on Sanibel and Captiva Islands and the need for a
wider range of offered products and services. Community Bank retained the
investment banking firm of Allen C. Ewing & Co. as financial advisor to
Community Bank to locate qualified purchasers in connection with a possible sale
of Community
-8-
<PAGE>
Bank. Ewing engaged in preliminary discussions with certain prospective
purchasers contacted by Ewing, including the range of value which such
candidates were willing to offer for Community Bank. Barnett indicated a
willingness to pay the highest price and to issue stock in a tax-free exchange.
Community Bank's Board of Directors unanimously approved its management to
negotiate a definitive agreement with Barnett for an aggregate merger price of
not less that $17.2 million in Barnett Common Stock.
Community Bank's Board of Directors has approved the Merger Agreement and
determined that the Merger is fair from a financial point of view and is in the
best interests of Community Bank and its shareholders. Accordingly, the Board
of Directors of Community Bank recommends that Community Bank's shareholders
vote in favor of the Merger Agreement. This recommendation is based on a number
of factors discussed in this Proxy Statement-Prospectus. See "THE MERGER--
Background of the Merger and "-- Recommendation of Community Bank's Board;
Reasons for the Merger."
Community Bank's Board of Directors has also approved the Amendment to
Community Bank's Articles of Incorporation to authorize the exercise of trust
powers following the Merger and the Change in Control Payment to Mr. James G.
Lowman, Community Bank's Chairman, upon consummation of the Merger. Community
Bank's Board of Directors recommends that Community Bank shareholders vote in
favor of the Amendment and the Change in Control Payment. See "THE MERGER--
Amendment to Community Bank Articles of Incorporation and "-- Vote on Change in
Control Payment."
OPINION OF COMMUNITY BANK'S FINANCIAL ADVISOR
Allen C. Ewing & Co., the financial advisor retained by Community Bank to
assist in the Merger, has issued a fairness opinion to Community Bank's Board of
Directors to the effect that the Merger is fair from a financial point of view
to the shareholders of Community Bank. See "THE MERGER--Opinion of Community
Bank's Financial Advisor."
EFFECTIVE TIME OF THE MERGER
The Merger will become effective on the date and at the time as set forth
in the certificate of merger issued by the Department of Banking and Finance of
the State of Florida, subject to satisfaction or waiver of all other conditions
to the Merger; provided, however, the Merger may not become effective prior to
November 1, 1995 without the consent of both Barnett and Community Bank.
Subject to the conditions specified in the Merger Agreement, the parties
currently expect that the Merger will become effective on or about [NOVEMBER 1,
1995,] although there can be no assurance as to whether or when the Merger will
occur. See "THE MERGER -- Effective Time of the Merger" and "-- Conditions to
the Merger."
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<PAGE>
CONDITIONS TO THE MERGER
The respective obligations of Barnett and Community Bank to consummate the
Merger are subject to certain conditions (unless waived, to the extent waiver is
permitted by law), including (i) the approval by the shareholders of Community
Bank of the Merger by the vote of at least a majority of the outstanding shares
of Community Bank Common Stock as of the record date, (ii) receipt of all
necessary approvals and consents, regulatory or otherwise, required to
consummate the Merger, including the approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), (iii) receipt of an
opinion of the accounting firm of Arthur Andersen LLP that the Merger qualifies
for "pooling-of-interests" accounting treatment, (iv) receipt of an opinion from
the law firm of Foley & Lardner to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"), and that no gain or loss will be recognized by
the shareholders of Community Bank to the extent that they receive solely
Barnett Common Stock in exchange for their Community Bank Common Stock in the
Merger, (v) the authorization for listing on the NYSE the shares of Barnett
Common Stock to be issued pursuant to the Merger and (vi) certain other
conditions customary in transactions of this nature. See "THE MERGER --
Conditions to the Merger."
REGULATORY APPROVALS
The Merger Agreement provides that the obligation of each of Barnett and
Community Bank to consummate the Merger is conditioned upon the approval of the
Federal Reserve Board and the approval or other action of such other regulatory
authorities as are required under applicable law.
Barnett has filed applications for regulatory review and approval or other
action with the Federal Reserve Board and such other regulatory authorities as
are required under applicable law. There can be no assurance that any such
regulatory authorities will approve or take other required action with respect
to the Merger or, if approved, as to the date of such approvals or action.
See "THE MERGER -- Regulatory Approvals."
BUSINESS PENDING THE MERGER
Prior to the effective time of the Merger, each of Barnett and Community
Bank will conduct business in the usual, regular and ordinary course consistent
with past practice, use its reasonable 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 take
no action which would materially adversely affect or delay the ability of either
Barnett or Community
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<PAGE>
Bank to obtain any necessary approvals of any governmental authority required
for the Merger or any other transaction contemplated by the Merger Agreement.
In addition to its other obligations prior to the effective time of the Merger,
Community Bank has promised not to solicit, encourage or facilitate any takeover
proposals other than the transactions contemplated by the Merger Agreement. See
"THE MERGER -- Business Pending the Merger."
WAIVER AND AMENDMENT
Prior to the effective time of the Merger, any provision of the Merger
Agreement may be waived, to the extent permitted by law, by the party entitled
to the benefits of such provision. In addition, the Merger Agreement may be
amended at any time upon the written agreement of Barnett and Community Bank
without the approval of their shareholders, except that the manner or basis in
which shares of Community Bank Common Stock will be exchanged for Barnett Common
Stock may not be changed after the Special Meeting without requisite shareholder
approval. See "THE MERGER -- Waiver and Amendment."
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the effective time of the Merger, whether before or after any requisite
shareholder approval, (i) by mutual consent of Barnett and Community Bank, or
(ii) by either Barnett or Community Bank (A) at any time after January 31, 1996,
(B) sixty days after any necessary regulatory approval of the Merger has been
denied and such denial has become final and nonappealable, (C) in the event of a
material breach by another party of any representation, warranty, covenant or
other agreement contained in the Merger Agreement which breach is not cured
within thirty days' following written notice to the breaching party, provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in the Merger Agreement, or (D)
if the shareholders of Community Bank fail to approve the Merger at the Special
Meeting.
See "THE MERGER -- Terms of the Merger," "-- Conditions to the Merger," "--
Regulatory Approvals," "-- Waiver and Amendment" and "-- Termination."
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Following the Merger, there will be no change in the current officers and
directors of Barnett. Community Bank's directors and officers immediately prior
to the effective time of the Merger shall be the directors and officers of
Community Bank after such effective time.
Under the Merger Agreement, Barnett and Community Bank have agreed not to
take, or cause to be taken, any action, whether before or after
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<PAGE>
the effective time of the Merger, which would disqualify the Merger as (i) a
"pooling of interests" for accounting purposes or (ii) a "reorganization" within
the meaning of Section 368(a) of the Code; provided, however, that this
prohibition shall not apply to Barnett if Barnett elects to pay cash as
permitted by the Merger Agreement.
See "THE MERGER -- Management and Operations After the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Barnett has generally agreed to cause Community Bank as the Surviving
Corporation to indemnify the present and former officers, directors and
employees of Community Bank against certain liabilities arising prior to the
effective time of the Merger to the full extent then permitted under Florida law
and by the Articles of Incorporation and Bylaws of Community Bank, as in effect
on the date of the Merger Agreement, and has agreed to guarantee these
indemnification obligations of Community Bank as the Surviving Corporation for
three years from and after the effective time of the Merger.
The Merger Agreement obligates Barnett to provide to the employees of
Community Bank who remain employees of the Merger Subsidiary after the effective
time of the Merger employee benefits substantially equivalent to those provided
from time to time to employees of Barnett and its subsidiaries.
See "THE MERGER -- Management and Operations After the Merger," and "--
Interests of Certain Persons in the Merger." See also "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE" and "MANAGEMENT AND ADDITIONAL INFORMATION."
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a pooling of
interests. It is a condition to consummation of the Merger that Barnett and
Community Bank receive an opinion from Arthur Andersen LLP that the Merger will
be accounted for as a pooling of interests.
See "THE MERGER -- Conditions to the Merger" and "-- Accounting Treatment".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Unless Barnett or Community Bank shall have elected the payment of the
Cash Consideration in lieu of Barnett Common Stock pursuant to the Merger
Agreement, it shall be a condition to the consummation of the Merger, Foley &
Lardner, counsel for Community Bank, will have delivered an opinion that (i) the
Merger will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code by reason of Section 368(a)(2)(E) of the Code, (ii) no
gain or loss
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<PAGE>
will be recognized by Community Bank as a result of the Merger, (iii) no gain or
loss will be recognized by shareholders of Community Bank who exchange all their
Community Bank Common Stock solely for Barnett Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest in Barnett Common Stock), (iv) the aggregate tax basis of Barnett
Common Stock received by shareholders who exchange all of their Community Bank
Common Stock solely for Barnett Common Stock in the Merger will be the same as
the aggregate tax basis of the Community Bank Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received) and (v) the holding period of the Barnett
Common Stock in the hands of the Community Bank shareholders will, in each case,
include the holding period of the shares of Community Bank Common Stock
surrendered in exchange therefor, provided that the Community Bank Common Stock
was, in each instance, held as a capital asset in the hands of the Community
Bank shareholders on the effective date of the Merger. For a more complete
description of the federal income tax consequences of the Merger, see "THE
MERGER -- Certain Federal Income Tax Consequences." Due to, among other
reasons, the individual nature of the tax consequences of the Merger, it is
recommended that each Community Bank shareholder consult his or her own tax
advisor concerning the tax consequences of the Merger.
DISSENTERS' RIGHTS
The holders of Community Bank Common Stock will have certain dissenters'
rights as a result of the matters voted on at the Special Meeting. See "THE
MERGER -- Dissenters' Rights."
MARKETS AND MARKET PRICES
Barnett Common Stock is listed under the symbol BBI on the NYSE. No public
trading market exists for Community Bank Common Stock. To the best of Community
Bank's knowledge, there have been no arm's length sales of Community Bank Common
Stock during the last two years.
The following table sets forth the closing price per share of Barnett
Common Stock on the NYSE on May 30, 1995, the last business day preceding public
announcement of the execution of the Merger Agreement and on [AUGUST 25, 1995]
and equivalent per share prices (as explained below) of Community Bank Common
Stock.
<TABLE>
<CAPTION>
<S> <C> <C>
Barnett Common Stock Exchange Ratio Community Bank
Price Per Share Common Stock
Per Share Equivalent
$43.00(1) .7712 $33.16
- ----------------------
<FN>
1 Pursuant to the Merger Agreement, if the Average Closing Price of
Barnett Common Stock is equal to or less than this amount, the Maximum
Exchange Ratio of .7712 applies (unless Community Bank shall have elected
to receive the Cash Consideration in lieu of Barnett Common Stock pursuant
to the Merger Agreement.) This stock price is provided for informational
purposes only and is not intended to reflect the value of Barnett Common
Stock at any time.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
$48.88(2) .6784(3) $33.16
$51.00(4) .6502 $33.16
$_____(5) $33.16
<FN>
- --------------------------
2 The closing price of Barnett Common Stock on the NYSE on May 30, 1995, the
last trading day preceding public announcement of the Merger.
3 The Exchange Ratio determined pursuant to the Merger Agreement assuming an
Average Closing Price of $48.88.
4 Pursuant to the Merger Agreement, if the Average Closing Price is equal to
or greater than this amount, the Minimum Exchange Ratio of .6502 applies.
This stock price is provided for informational purposes only and is not
intended to reflect the value of Barnett Common Stock at any time.
5 The closing price of Barnett Common Stock on the NYSE on [AUGUST 25, 1995,]
the most recent practicable date preceding the date of this Proxy
Statement-Prospectus.
</TABLE>
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<PAGE>
The equivalent per share price of a share of Community Bank Common Stock at
each specified date represents the closing price of a share of Barnett Common
Stock on such date multiplied by the Exchange Ratio.
Shareholders are advised to obtain current market quotations for Barnett
Common Stock. No assurance can be given as to the market price of Barnett
Common Stock at or after the effective time of the Merger. It is expected that
the market price of Barnett Common Stock will fluctuate between the date of this
Proxy Statement-Prospectus and the date on which the Merger is consummated and
thereafter.
COMPARATIVE UNAUDITED PER SHARE INFORMATION
The following summary presents selected comparative unaudited per share
information (i) for Barnett on a historical basis and on a pro forma combined
basis assuming that the Merger had been effective during the periods presented
and (ii) for Community Bank on a historical basis and on a pro forma equivalent
basis. The pro forma information has been prepared giving effect to the Merger
as a pooling of interests. For a description of the effect of pooling-of-
interests accounting on the Merger and the historical financial statements of
Barnett, see "THE MERGER -- Accounting Treatment. The pro forma financial
information should be read in conjunction with the historical consolidated
financial statements of Barnett and Community Bank and the related notes thereto
included herein or in documents incorporated herein by reference, as applicable.
See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE".
The following information is not necessarily indicative of the results of
operations or combined financial position that would have resulted had the
Merger been consummated at the beginning of the periods indicated, nor is it
necessarily indicative of the results of operations of future periods or future
combined financial position.
<TABLE>
<CAPTION>
EQUIVALENT SHARE DATA
Year ended Three months
December 31, ended
1994 1993 1992 March 31, 1995
----------------------------------------------------------
<S> <C> <C> <C> <C>
NET income per share (primary):
Barnett $4.79 $4.10 $1.97 $1.27
Community 2.59 2.22 2.21 0.86
Barnett pro forma combined 4.79 4.10 1.98 1.27
Community pro forma equivalent 3.11 2.67 1.29 0.83
NET income per share (fully diluted):
Barnett 4.66 4.01 1.97 1.23
Community 2.59 2.22 2.21 0.86
Barnett pro forma combined 4.66 4.01 2.02 1.23
Community pro forma equivalent 3.03 2.61 1.31 0.80
CASH dividends per common share:
Barnett 1.59 1.41 1.32 0.41
Community 2.00 3.00 1.00 -
Community pro forma equivalent (1) 1.03 0.92 0.86 0.27
BOOK value per common share (period end):
Barnett 31.09 28.34 25.40 32.29
Community 14.51 13.89 15.24 15.39
Barnett pro forma combined 31.06 28.32 25.40 32.26
Community pro forma equivalent 20.20 18.41 16.52 20.98
<FN>
(1) Community pro forma equivalent dividends per share represent historical
dividends per share declared by Barnett, multiplied by the conversion ratio
of .6502 shares of Barnett common stock for each share of Community common
stock.
</TABLE>
SELECTED FINANCIAL INFORMATION
The following tables set forth certain selected historical financial
information for Barnett. The selected historical financial information is based
upon, derived from, and should be read in conjunction with, the historical
consolidated financial statements of Barnett and the related notes therein,
included in documents incorporated herein by reference. See "INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE." Interim unaudited information for Barnett
for the three months ended March 31, 1995 reflect, in the opinion of the
management of Barnett, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such information. Results for
the three months ended March 31, 1995, are
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<PAGE>
not necessarily indicative of results which may be expected for any other
interim period or for the year as a whole.
BARNETT BANKS, INC. AND AFFILIATES - CONSOLIDATED
SELECTED FINANCIAL DATA - TAXABLE EQUIVALENT
<TABLE>
<CAPTION>
Three months ended Years ended
(Dollars in Millions, except March 31, December 31,
per share data) 1995 1994 1994 1993 1992 1991 1990
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income $430.5 $415.3 $1,677.5 $1,700.3 $1,736.1 $1,568.0 $1,490.8
Provision for loan losses 24.3 19.4 74.0 120.4 257.3 453.9 491.6
Non-interest income 169.7 137.3 542.6 599.0 620.7 546.8 452.7
Non-interest expense (excluding
restructuring charge 370.4 340.5 1,364.2 1,501.0 1,645.5 1,497.1 1,320.0
Restructuring charge - - - - 92.6 - -
Net income 128.7 118.0 488.0 421.0 207.7 81.4 55.5
Per Share Data:
Net income - Primary 1.27 1.15 4.79 4.10 1.97 0.80 0.65
Net income - Fully Diluted 1.23 1.12 4.66 4.01 1.97 0.80 0.65
Cash dividends 0.41 0.36 1.59 1.41 1.32 1.32 1.29
Ratios:
Return on assets 1.26 % 1.26 % 1.28 % 1.13 % 0.55 % 0.21 % 0.15 %
Return on equity 15.97 16.10 16.11 15.42 8.27 3.83 2.73
Average assets $40,858 $37,565 $38,169 $37,356 $37,923 $37,900 $36,122
Average equity 3,223 2,930 3,029 2,730 2,511 2,128 2,032
Period end assets 41,735 37,983 41,278 38,331 39,465 38,491 37,978
Period end long-term debt 898 681 777 682 701 710 495
Period end equity 3,268 2,946 3,134 2,874 2,556 2,314 1,938
</TABLE>
SPECIAL MEETING OF SHAREHOLDERS
PURPOSE, DATE, TIME AND PLACE
This Proxy Statement-Prospectus and the accompanying form of proxy are
furnished in connection with the solicitation of proxies by the Board of
Directors of Community Bank for use in connection with the Special Meeting of
Community Bank's shareholders to be held at the principal office of the Bank
at 2450 Periwinkle Way, Sanibel Island, Florida 33957, at
[4:30 P.M. ON TUESDAY, OCTOBER 10, 1995.] The Special Meeting is being held
to consider and vote on the Merger Agreement. If the Merger is consummated,
shareholders of Community Bank will receive shares of Barnett Common Stock,
on the terms described below, in exchange for their shares of Community Bank
Common Stock, unless Community Bank or Barnett shall have elected the payment
of the Cash Consideration in lieu of Barnett Common Stock pursuant to the
Merger Agreement. The meeting is also being held to consider and vote on the
Amendment to Community Bank's Articles of Incorporation to authorize
Community Bank to exercise trust powers following the Merger and on a Change
in Control Payment to Community Bank's Chairman, Mr. James G. Lowman, in the
event the Merger is consummated.
SHARES ENTITLED TO VOTE; SHAREHOLDER APPROVAL REQUIRED
Holders of record of Community Bank Common Stock at the close of
business on [SEPTEMBER 8, 1995] are entitled to notice of and to vote at the
Special Meeting. As of the record date, directors and executive officers
beneficially owned, directly or indirectly, _____ shares of Community Bank's
Common Stock, constituting _____% of the shares outstanding. As of the
close of business on that date, 510,784 shares of Community Bank Common Stock
were outstanding. Each holder of Community Bank Common Stock is entitled to
one vote for each share of Common Stock owned on the record date. The
affirmative vote in person or by proxy at the Special Meeting by holders of
not less than a majority of Community Bank's outstanding Common Stock is
required for approval of the Merger Agreement. The Amendment will be
approved if the votes cast at the Special Meeting in favor of the Amendment
exceed the votes cast opposing the Amendment. The Change in Control Payment
will be approved upon the affirmative vote of not less than 75% of Community
Bank's outstanding Common Stock (excluding shares held by Mr. Lowman, the
recipient of the Change in Control Payment). For this purpose, abstentions
and broker "non-votes" will not be counted.
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<PAGE>
VOTING; SOLICITATION AND REVOCATION OF PROXIES
The Board of Directors of Community Bank has designated Lyman H. Frank and
James G. Lowman, or either of them, with full power of substitution, as proxies
to vote the shares of Community Bank Common Stock solicited on its behalf. If
the enclosed form of proxy is executed and returned, it may nevertheless be
revoked at any time insofar as it has not been exercised. Any shareholder may
attend the Special Meeting and vote in person whether or not the shareholder has
previously given a proxy. The persons named in the enclosed proxy will vote as
directed with respect to the Merger Agreement, the Amendment, and the Change in
Control Payment, or in the absence of any direction, in favor of the Merger
Agreement, the Amendment, and the Change in Control Payment. Community Bank
does not expect to pay any compensation for the solicitation of proxies but may
reimburse brokers and other persons holding stock in their names, or in the
names of nominees, for their expenses of sending proxy material to principals
and obtaining their proxies. In addition to use of the mails, proxies may be
solicited by telephone, telegram or in person by directors, officers and a
limited number of employees of Community Bank, who will not be paid any special
compensation for such services. Pursuant to the Merger Agreement, Barnett and
Community Bank have agreed to bear equally any proxy solicitation expenses,
including mailing. See "THE MERGER --Expenses."
THE BOARD OF DIRECTORS OF COMMUNITY BANK RECOMMENDS A VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENT, THE AMENDMENT, AND THE CHANGE IN CONTROL PAYMENT. SEE
"THE MERGER--RECOMMENDATION OF COMMUNITY BANK'S BOARD; REASONS FOR THE MERGER;
AMENDMENT TO COMMUNITY BANK ARTICLES OF INCORPORATION; AND VOTE ON CHANGE IN
CONTROL PAYMENT." PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
COMMUNITY BANK SHAREHOLDERS SHOULD NOT SEND
ANY STOCK CERTIFICATES WITH THEIR PROXY CARDS.
THE MERGER
This section of the Proxy Statement-Prospectus describes certain aspects of
the proposed Merger. To the extent that it relates to the Merger Agreement, the
following description does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement, which is attached as Appendix A
to this Proxy Statement-Prospectus and is incorporated herein by reference.
All shareholders are urged to read carefully the Merger Agreement, as well as
the other Appendices, in their entirety.
BACKGROUND OF THE MERGER
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<PAGE>
In the Fall of 1994, Community Bank's Board of Directors determined that it
should consider a sale of the Bank, particularly if a merger could be arranged
that would enable Community Bank shareholders to diversify their investment in
Community Bank by exchanging shares in a non-taxable transaction with those of
an institution having a broad market for its shares.
In making this determination, the Board of Directors considered the fact
that recent prices paid for banks were highly favorable and had improved
dramatically from those experienced in 1989-91 when a sharp drop in real estate
values adversely affected asset quality in many Florida financial institutions.
The Board of Directors also considered the fact that Community Bank had achieved
a 45% market share of the deposits and loans available in the Sanibel/Captiva
market area and recognized that future growth would have to come from growth of
the market area and at the expense of competitive institutions operating in the
market area. The Board of Directors took into consideration the environmental
restrictions limiting future growth on Sanibel and Captiva Islands and also the
possibility that other bank holding companies operating in Lee County were
considering the establishment of branches on Sanibel and Captiva Islands. The
Board of Directors were aware that the affluent residents of Sanibel/Captiva
required a wider range of products and services including trust and investment
advisory services which Community Bank did not offer and could only do so with a
commitment to substantial long-term investment in qualified personnel and
equipment.
In January 1995, Community Bank retained the investment banking firm of
Allen C. Ewing & Co. ("Ewing") as financial advisor to Community Bank to locate
qualified purchasers in connection with a possible sale or merger of Community
Bank. Ewing is a regional investment banking firm specializing in research,
trading and the provision of corporate finance activities to the banking and
thrift industries. Ewing was selected to assist the Board of Directors in
discussing a merger with a wide variety of institutions, to assist in the
negotiation of a transaction, and to issue its fairness opinion based on its 25
years of experience and its knowledge of the financial services industry, in
general, and its specific knowledge of the Florida banking industry.
Ewing and the management of Community Bank prepared a Confidential
Memorandum concerning the operations of Community Bank and its market area.
Ewing contacted approximately fifteen prospective purchasers, all of which were
bank holding companies operating in the State of Florida or which had plans to
enter the Florida market. Ewing sent the Confidential Memorandum to ten
prospective purchasers who expressed interest in acquiring Community Bank and
subsequently engaged in preliminary discussions with four of these candidates,
including Barnett, all of which visited Community Bank's offices on Sanibel
Island. These institutions indicated a range of value that they were
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willing to offer for Community Bank. Barnett indicated its willingness to pay
the highest price and to issue shares in a tax-free exchange. Representatives
of Community Bank and Barnett conducted discussions in May 1995, and, as a
result of these negotiations, Community Bank's Board of Directors met on May 15,
1995, and unanimously voted to authorize management to negotiate a definitive
agreement with Barnett providing for an aggregate merger price of not less than
$17.2 million, payable in the form of shares of Barnett Common Stock based on
the trading price of Barnett Common Stock over a to-be-determined averaging
period.
At the meeting held on May 15, 1995, Community Bank's Board of Directors
received Ewing's oral opinion concerning its ability to issue a fairness opinion
to the Board of Directors of Community Bank concerning the Barnett proposal.
Based on Ewing's opinion that the proposed transaction with Barnett was fair,
from a financial point of view, to the shareholders of Community Bank, the Board
of Directors met on May 30, 1995 and voted to approve the Merger and Merger
Agreement.
The Exchange Ratio, which represents the number of shares of Barnett Common
Stock to be exchanged for each outstanding share of Community Bank Common Stock,
was negotiated at arm's length between representatives of Community Bank and
representatives of Barnett. There were no contracts, relationships or
transactions between Community Bank and its affiliates, on the one hand, and
Barnett and its affiliates, on the other hand, prior to the negotiation and
execution of the Merger Agreement.
RECOMMENDATION OF COMMUNITY BANK'S BOARD; REASONS FOR THE MERGER
Community Bank's Board of Directors considered a variety of factors in
evaluating and approving the Merger and the Merger Agreement, including (1)
concern that Community Bank could begin to lose market share to the larger banks
on Sanibel Island which presently offer more services to customers and have more
Lee County locations, (2) the value of the Barnett Common Stock to be received
by Community Bank's shareholders, relative to the book value and per share
earnings and dividends of Community Bank's Common Stock, (3) the book value
multiples of other recent banking institution mergers in Florida, (4) the
prospective value of the Barnett Common Stock based on Barnett's position as the
leading independent banking organization based in Florida, (5) the fact that the
receipt by Community Bank's shareholders of Barnett Common Stock in the Merger
will not be a taxable transaction to such shareholders, (6) the marketability of
the Barnett Common Stock, (7) information concerning the financial condition,
results of operations and business prospects of Community Bank and Barnett, and
(8) other pertinent information. Community Bank's Board of Directors did not
assign any different weights to these factors, but considered all of such
factors to be material.
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Barnett believes that Community Bank represents an attractive acquisition
opportunity that is consistent with its expansion strategy. The Merger will
enable Barnett to strengthen its position in the Sanibel/Captiva market though
the acquisition of the leading banking institution in the area. Barnett's
management believes that the additional services offered by Barnett, including
the trust services expected to be offered by Community Bank following approval
of the Merger, should enable Barnett to enhance Community Bank's market position
following the Merger.
COMMUNITY BANK'S BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND
DETERMINED THAT THE MERGER IS FAIR FROM A FINANCIAL POINT OF VIEW AND IS IN THE
BEST INTERESTS OF COMMUNITY BANK AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD
OF DIRECTORS OF COMMUNITY BANK RECOMMENDS THAT COMMUNITY BANK'S SHAREHOLDERS
VOTE IN FAVOR OF THE MERGER AGREEMENT.
OPINION OF COMMUNITY BANK'S FINANCIAL ADVISOR
Ewing issued its oral opinion to the Community Bank Board of Directors on
May 17, 1995, that the Merger with Barnett is fair, from a financial point of
view, to the shareholders of Community Bank. Ewing subsequently issued its
written opinion to Community Bank's Board of Directors indicating that the
proposed transaction with Barnett is fair, from a financial point of view, to
the shareholders of Community Bank (the "Opinion").
The full text of Ewing's Opinion is attached as Appendix B to this Proxy
Statement-Prospectus and is incorporated herein by reference. The description
of the Opinion set forth herein is qualified in its entirety by reference to
Appendix B. Community Bank shareholders are urged to read the Opinion in its
entirety for a description of the assumptions made and matters considered by
Ewing in connection therewith.
Ewing's Opinion is directed to the Community Bank Board of Directors only
and does not constitute a recommendation to any Community Bank shareholder as to
how such shareholder should vote at the Special Meeting. Ewing has not been
requested to opine as to and the Opinion does not in any manner address the
underlying business decision by the Community Bank Board of Directors to effect
the Merger. No limitations were imposed on the scope of Ewing's investigation
or the procedures followed by Ewing in rendering its Opinion.
In arriving at its Opinion, Ewing reviewed and analyzed: (i) the Merger
Agreement; (ii) such publicly-available information concerning Community Bank
which Ewing believed to be relevant to its inquiry; (iii) financial and
operating information with respect to the business, operations and prospects of
Community Bank furnished to it by Community Bank; (iv) a comparison of the
historical financial results and present
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financial condition of Community Bank with those of other banks which it deemed
relevant; and (v) a comparison of the financial terms of the acquisition with
the terms of certain other recent transactions which it deemed comparable.
Ewing also reviewed the trading patterns and market valuations of Barnett Common
Stock and the financial condition of Barnett. Ewing considered the results of
Community Bank's efforts to solicit proposals from other interested parties,
held discussions with the management of Community Bank concerning its
operations, financial condition and prospects, and undertook such other studies,
analyses and investigations as it deemed appropriate.
Ewing will receive a fee in cash from Community Bank at the closing of the
Merger in exchange for Ewing's financial advisory services in connection with
the Merger in an amount equal to one percent (1%) of the total Merger price
payable to the shareholders of Community Bank determined as of the date of
closing. This fee, which covers Ewing's services in identifying and negotiating
with potential Merger candidates, advising Community Bank in connection with the
Merger, and rendering the Opinion, will be paid by Community Bank immediately
prior to the Merger out of Community Bank's current earnings and will not result
in any adjustment to the Merger consideration. Community Bank also has agreed
to indemnify Ewing for certain expenses in the event of any administrative
proceeding or litigation in connection with the financial advisory services
provided by Ewing to Community Bank.
The following paragraphs summarize certain material portions of the
financial and comparative analyses performed by Ewing in arriving at its
Opinion. This summary does not purport to be a complete description of the
analyses performed or the matters considered by Ewing in arriving at its
Opinion. The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances, and therefore,
such an opinion is not readily susceptible to summary description. Furthermore,
in arriving at its Opinion, Ewing did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor. Accordingly, Ewing
believes that its analysis must be considered as a whole and that considering
any portions of such analysis 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 analysis, Ewing made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond Community Bank's control.
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
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favorable than as set forth therein. Analyses relating to the value of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. In addition, as described above, Ewing's
Opinion, along with its presentations to the Community Bank Board of Directors,
is just one of many factors taken into consideration by the Community Bank Board
of Directors.
COMPARABLE COMPANY ANALYSIS
Using publicly available information concerning other Florida banks and
bank holding companies, Ewing compared the financial performance of Community
bank with ten Florida banks whose shares are listed on NASDAQ as well as the
average of all profitable independent Florida banks consisting of 270 banks as
provided by SNL Data Service. Ewing utilized returns on assets and equity as
indicators of profitability, equity/assets ratios as evidence of adequate
capitalization, the ratio of non-performing assets/assets as an indicator of
asset quality, and a comparison of efficiency ratios as an indicator of the
efficiency of the respective companies in maintaining adequate expense control.
As indicated in the analysis, Ewing concluded that Community Bank's operating
performance was superior to the Florida peer group averages and that Community
Bank merited a superior price.
COMPARABLE TRANSACTION ANALYSIS
Using publicly available information, Ewing reviewed certain terms and
financial characteristics of selected transactions involving the acquisitions of
high-performing banks by bank holding companies. Ewing restricted the universe
of comparable transactions to eight transactions involving the acquisition of
Florida banks having assets of between $80 and $300 million. The comparable
transactions included the acquisitions of (identified by acquiree/acquiror):
Reliance Bank of Melbourne/Huntington; Peoples State Bank of New Port
Richey/SunTrust; Security National of Winter Park/Huntington; Bank of
Tampa/AmSouth; Beach One Financial of Vero Beach/Northern Trust; Citizens
National of Naples/AmSouth; Parkway Bank of Fort Myers/AmSouth; Commercial Trust
of Miami/Intercontinental. The median ratios for the acquisition price-to-
trailing twelve-month earnings for the comparable group was 18.20x versus 15.40x
for the Community Bank transaction; the price/book ratio for the comparable
group was 2.18x versus 2.32x for the Community Bank transaction; and the
price/deposits percentage for the comparable group was 18.80% versus 22.90% for
the Community Bank transaction. Because the circumstances surrounding each of
the transactions analyzed were diverse and because of the inherent differences
between the operations of Community Bank and the selected companies, Ewing
believed that a reliance on a purely quantitative comparable transaction
analysis would not be proper without the appropriate use of qualitative
judgments concerning differences between the characteristics of these
transactions and the Merger. The
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qualitative judgments made by Ewing in connection with its Opinion included
Ewing's views as to the potential buyers in each of these transactions, their
levels of interest in the acquisition of these companies and the ability of the
acquirors to implement costs savings and develop new business in the various
markets in which these acquired companies operate.
DISCOUNTED CASH FLOW ANALYSIS
As part of its analysis, Ewing projected earnings and dividends for the
three years, 1996, 1997, and 1998, based on the historical performance of
Community Bank. Ewing projected a terminal value for Community Bank as of
December 31, 1998, by projecting a theoretical sales price of Community Bank at
that date by multiplying the book value at December 31, 1998, by the average
multiple of book value used in Florida banking transactions over the past twelve
years. Ewing discounted projected dividends and the estimated terminal value
from the hypothetical sale using a discount rate of 11%, which reflects the
average multiple of earnings for listed Florida bank stocks over the past twelve
years. It is Ewing's opinion that this average earnings multiple reflects the
market's best judgment as to the predictability and risk of projected earnings
of Florida banking institutions. This analysis projected a present value of
approximately $17.6 million to Community Bank which Ewing considered to be
comparable to the Barnett proposal of $17.2 million and well within the range of
variation found in projected values using the discounted cash flow method.
In issuing its Opinion, Ewing assumed and relied upon the accuracy and
completeness of the financial and other information used by it in arriving at
its Opinion and as provided by Community Bank. Ewing made no independent
verification of the supplied information. In arriving at its Opinion, Ewing did
not conduct a physical inspection of the properties and facilities of Community
Bank, did not make or obtain any evaluation or appraisal of the assets or
liabilities of Community Bank, and did not review any credit or loan files from
Community Bank's loan portfolio. The Opinion is based upon market, economic,
and other conditions as they existed on the date of the Opinion.
TERMS OF THE MERGER
At the effective time of the Merger, Merger Subsidiary will merge with and
into Community Bank, with Community Bank as the surviving corporation. The
Articles of Incorporation and Bylaws of Community Bank in effect at the
effective time of the Merger will govern the surviving corporation until amended
or repealed in accordance with applicable law and except as amended upon
consummation of the Merger as described in "THE MERGER -- Amendment of the
Articles of Incorporation of Community Bank". At the effective time of the
Merger, each outstanding share of Community Bank Common Stock will be converted
into shares of Barnett Common Stock in accordance with the Exchange Ratio;
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PROVIDED, HOWEVER, that, pursuant to the Merger Agreement, if the Average
Closing Price of Barnett Common Stock is equal to or greater than $51.00, the
Exchange Ratio shall be .6502, and if the Average Closing Price is equal to or
less than $43.00 (the "Minimum Price"), the Exchange Ratio shall be .7712. In
the alternative, if the Average Closing Price is less than the Minimum Price,
Community Bank may elect to forego the right of Community Bank shareholders to
receive Barnett Common Stock in the Merger and, in lieu thereof, to receive the
Cash Consideration, without interest, for each share of Community Bank Common
Stock which would otherwise be exchangeable for Barnett Common Stock pursuant to
the Merger Agreement. In addition, if Barnett determines in good faith that the
Merger may not qualify for accounting purposes as a pooling of interests,
Barnett may at its option elect to pay to holders of Community Bank Common Stock
the Cash Consideration in lieu of the exchange of Community Bank Common Stock
for Barnett Common Stock.
In addition, at the effective time of the Merger, all rights with respect
to Community Bank Common Stock pursuant to stock options granted by Community
Bank, which are outstanding at such time, whether or not then exercisable, will
be converted into and will become rights with respect to Barnett Common Stock in
accordance with the Exchange Ratio. The rights to Barnett Common Stock received
upon consummation of the Merger will be substantially equivalent to the rights
such optionees had with respect to Community Bank Common Stock immediately prior
to the effective time of the Merger. See "-- Interests of Certain Persons in
the Merger."
The Merger Agreement provides that, in the event that Barnett changes the
number of shares of Barnett Common Stock issued and outstanding between the date
of the Merger Agreement and the effective time of the Merger as a result of a
stock split, stock dividend, recapitalization, reclassification or other similar
transaction, the Exchange Ratio will be adjusted proportionately.
No fractional shares of Barnett Common Stock will be issued in the Merger.
Instead, the Merger Agreement provides that each holder of shares of Community
Bank Common Stock exchanged pursuant to the Merger, who would otherwise have
been entitled to receive a fraction of a share of Barnett Common Stock (after
taking into account all certificates delivered by such holder) will receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Barnett Common Stock multiplied by the Average Closing Price. No
such holder will be entitled to dividends, voting rights or any other rights as
a shareholder in respect of any fractional share.
Shares of Barnett capital stock (including Barnett Common Stock) issued and
outstanding immediately prior to the effective time of the Merger will remain
issued and outstanding after the Merger.
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EFFECTIVE TIME OF THE MERGER
The Merger will become effective on the date and at the time as set forth
in the Certificate of Merger issued by the Department of Banking and Finance of
the State of Florida. The parties currently expect that the Merger will become
effective on or about [NOVEMBER 1, 1995], although there can be no assurance as
to whether or when the Merger will occur. See "-- Conditions to the Merger" and
"-- Regulatory Approvals."
SURRENDER OF CERTIFICATES
Not later than promptly after the effective time of the Merger, The First
Chicago Trust Company of New York, acting in the capacity of exchange agent for
Barnett (the "Exchange Agent"), will mail to each former holder of record of
shares of Community Bank Common Stock a form of letter of transmittal, together
with instructions for the exchange of Community Bank for certificates
representing Barnett Common Stock.
COMMUNITY BANK SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE APPROPRIATE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon the surrender to the Exchange Agent of one or more certificates for
Community Bank Common Stock, together with a properly completed letter of
transmittal, there will be issued and mailed to the holder thereof a certificate
or certificates representing the number of shares of Barnett Common Stock to
which such holder is entitled, together with all declared but unpaid dividends
in respect of such shares and, where applicable, a check for the amount
representing any fractional shares (each without interest). A certificate for
Barnett Common Stock or any check representing cash in lieu of fractional shares
and/or declared but unpaid dividends may be issued in a name other than the name
in which the surrendered certificate is registered only if (i) the certificate
surrendered is properly endorsed, accompanied by a guaranteed signature if
required by the letter of transmittal and otherwise in proper form for transfer
and (ii) the person requesting the issuance of such certificate either pays to
the Exchange Agent any transfer or other taxes required by reason of the
issuance of a certificate for such shares in a name other than the registered
holder of the certificate surrendered or establishes to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable. Certificates
surrendered for exchange by any person constituting an "affiliate" of Community
Bank for purposes of Rule 145(c) under the Securities Act, will not be exchanged
for certificates representing whole shares of Barnett Common Stock until Barnett
has received a written agreement from such person as described under "-- Resale
of Barnett Common Stock." The Exchange Agent will issue Barnett Common Stock in
exchange for lost, stolen, mutilated or destroyed certificates upon the making
of an affidavit by the person claiming
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such person's certificate to be lost, stolen or destroyed and, if the value of
such certificate is in excess of $5,000, the posting by such person of a bond in
an amount equal to such value as indemnity against potential claims.
All Barnett Common Stock issued pursuant to the Merger will be deemed
issued as of the effective time of the Merger. After the effective time of the
Merger, former holders of record of Community Bank Common Stock will be entitled
to vote the number of shares of Barnett Common Stock into which their Community
Bank shares have been converted, but only if they have surrendered their
Community Bank certificates. No dividend or other distribution payable to the
holders of record of Barnett Common Stock at or as of any time after the
effective time of the Merger will be paid to the holder of any Community Bank
certificate until such holder physically surrenders such certificate, promptly
after which time all such dividends or distributions will be paid (without
interest). After the effective time of the Merger, there will be no transfers
on the transfer books of Community Bank of the shares of Community Bank Common
Stock that were outstanding immediately prior to the effective time of the
Merger. If, after the effective time of the Merger, certificates representing
such shares are presented for transfer to the Exchange Agent, they will be
canceled and exchanged for certificates representing shares of Barnett Common
Stock in accordance with the Merger Agreement.
Neither Barnett, Community Bank, the Exchange Agent nor any other person
will be liable to any former holder of Community Bank Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
CONDITIONS TO THE MERGER
The Merger will occur if the Merger Agreement is approved by the requisite
vote of the shareholders of Community Bank. In addition, consummation of the
Merger is subject to the satisfaction of certain other conditions, unless
waived, to the extent waiver is permitted by law. Conditions applicable to all
parties include, but are not limited to: (i) the receipt of all necessary
approvals and consents, regulatory or otherwise, including the approval of the
Federal Reserve Board; (ii) the effectiveness of the Registration Statement,
including the Proxy Statement-Prospectus, and the absence of a stop order or
threatened stop order suspending such effectiveness; (iii) the absence of an
order, decree or injunction of a court or agency of competent jurisdiction
enjoining or prohibiting consummation of the Merger; (iv) authorization for
listing on the NYSE upon official notice of issuance of the shares of Barnett
Common Stock issuable pursuant to the Merger.
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Community Bank will be obligated to effect the Merger upon the satisfaction
or waiver of the following conditions:
(i) the continued accuracy in all material respects of the
representations and warranties made by Barnett;
(ii) to the extent that they receive solely Barnett Common Stock in
exchange for their Community Bank Common Stock in the Merger, receipt by
Community Bank of an opinion of counsel to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code,
and that no gain or loss will be recognized by the shareholders of
Community Bank; and
(iii) the receipt by Barnett of the material consent or approval of
each person, other than governmental entities, whose material consent or
approval is required in connection with the Merger.
Barnett is obligated to consummate the Merger upon the satisfaction or
waiver of the following conditions:
(i) the continued accuracy in all material respects of the
representations and warranties made by Community Bank;
(ii) unless Barnett or Community shall have elected the payment of
Cash Consideration in lieu of Barnett Common Stock pursuant to the Merger
Agreement, the receipt of a letter from Arthur Andersen LLP to the effect
that the Merger will qualify for "pooling of interests" accounting
treatment;
(iii) no required regulatory approval imposes any restriction or
condition on Barnett, Community Bank, the Merger Subsidiary or any of
Barnett's other subsidiaries that Barnett determines would materially
adversely affect, and make inadvisable, the Merger;
(iv) the execution of Non-Compete Agreements by the directors of
Community Bank and Nancy Frank prohibiting such individuals from competing
with the Surviving Bank for a period of three years after the effective
time of the Merger; and
(v) the receipt by Community Bank of the material consent or approval
of each person, other than governmental entities, whose consent or approval
is required in connection with the Merger Agreement.
The representations and warranties of each of the parties concern, among
other things: their organization, capitalization and subsidiaries, as
applicable; the authorization and enforceability of the Merger Agreement; their
financial statements; the absence of
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undisclosed liabilities; the absence of certain changes or events; and reports
to regulatory authorities.
In addition, unless waived, each party's obligation to effect the Merger is
subject to performance by the other party of its material obligations under the
Merger Agreement and the receipt of certain certificates from the other party.
No assurances can be provided as to when or if all of the conditions precedent
to the Merger can or will be satisfied or waived by the party permitted to do
so.
REGULATORY APPROVALS
FEDERAL RESERVE BOARD. The Merger is subject to prior approval by the
Federal Reserve Board under the BHC Act and the Bank Merger Act. On or about
June 29, 1995, Barnett filed an application with the Federal Reserve Board under
Section 3(a)(3) of the BHC Act seeking approval of the Merger. Under the BHC
Act, the Federal Reserve Board is required, in approving a transaction such as
the Merger, to take into consideration the financial and managerial resources
and future prospects of the existing and proposed institutions and the
convenience and needs of the communities to be served. In considering financial
resources and future prospects, the Federal Reserve Board will, among other
things, evaluate the adequacy of the capital levels of Barnett and its bank
subsidiaries following the Merger. Depending on the views of the Federal
Reserve Board as to what constitutes adequate capital levels for a financial
institution of Barnett's size and financial condition, the Federal Reserve Board
may, as a condition to its approval of the Merger, require Barnett to raise
additional capital. Such capital may take the form of equity or equity-linked
securities or subordinated debt or a combination thereof.
Barnett does not currently intend to raise additional capital in connection
with the Merger or otherwise, either equity or debt, nor has the Federal Reserve
Board indicated to Barnett that it intends to require Barnett to raise any such
capital as a condition to its approval of the Merger. If Barnett were required
by the Federal Reserve Board to raise additional capital, Barnett does not
believe that the amount of such capital would be material to the financial
position of Barnett.
The BHC Act prohibits the Federal Reserve Board from approving the Merger
if it would result in a monopoly or be in furtherance of any
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combinations or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States, or if its effect in any
section of the country may be to substantially lessen competition or to tend to
create a monopoly, or if it would in any other manner result in a restraint in
trade, unless the Federal Reserve Board finds that the anti-competitive effects
of the Merger are clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
communities to be served. In addition, under the Community Reinvestment Act of
1977, as amended, the Federal Reserve Board must take into account the record of
performance of the existing institutions in meeting the credit needs of the
entire community, including low- and moderate-income neighborhoods, served by
such institutions.
Under the BHC Act, the Merger may not be consummated until the 15th day
following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness
of the Federal Reserve Board's approval unless a court specifically orders
otherwise. It is possible that the Federal Reserve Board or the United States
Department of Justice may request that Barnett or Community Bank divest certain
operations in order to alleviate what such agency believes would otherwise be an
adverse competitive effect. The application to the Federal Reserve Board has
not proposed any such divestiture. Although Barnett and Community Bank regard a
request for divestiture as unlikely, neither can predict whether such
divestiture will be required, or if required, what the aggregate amount of such
divestiture may be. See "REGULATORY MATTERS -- Anticompetitive Effects of the
Merger."
The Merger Agreement would allow Barnett to unilaterally terminate the
Merger Agreement if the regulatory authorities imposed as a condition to
approval of the Merger any term, condition or restriction upon Barnett,
Community Bank or any of their respective subsidiaries that Barnett in good
faith reasonably determines would so materially adversely affect the economic or
business benefits of the transactions contemplated by the Merger Agreement as to
render inadvisable the consummation of the Merger.
The BHC Act provides for the publication of notice and public comment on
the applications and authorizes the Federal Reserve Board to permit interested
parties to intervene in the proceedings. If an interested party is permitted to
intervene, such intervention could delay the regulatory approvals required for
consummation of the Merger.
In addition, on or about June 29, 1995, Barnett filed an application under
Section 18(c) of the Bank Merger Act with the Federal Reserve Board and the
Federal Deposit Insurance Corporation, as well as a merger application under
Section 658.41 of the Florida Banking Code
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with the Florida Department of Banking and Finance (the "Florida Department")
seeking approval of the Merger.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION. Barnett and
Community Bank have filed all applications and have taken other appropriate
action with respect to any requisite approvals or other action of any
governmental authority.
The Merger Agreement provides that the obligation of each of Barnett and
Community Bank to consummate the Merger is conditioned upon the receipt of all
material governmental approvals. See "-- Conditions to the Merger," "-- Waiver
and Amendment" and "-- Termination." There can be no assurance that any
governmental agency will approve or take any other required action with respect
to the Merger, and, if approvals are received or action is taken, there can be
no assurance that such approvals or action will occur in a timely manner, that
such approval or action will not be conditioned upon such matters that would
cause the parties to abandon the Merger or that no action will be brought
challenging such approvals or action, including a challenge by the Department of
Justice or, if such a challenge is made, that it will be resolved favorably for
consummation of the Merger.
Barnett and Community Bank are not aware of any governmental approvals or
actions that may be required for consummation of the Merger except as described
above. Should any such approval or action be required, it is presently
contemplated that such approval or action would be sought. There can be no
assurance, however, that any such approval or action, if needed, could be
obtained and would not be conditioned in a manner that would cause the parties
to abandon the Merger.
BUSINESS PENDING THE MERGER
The Merger Agreement provides that, during the period from the date of the
Merger Agreement to the effective time of the Merger, except as provided in the
Merger Agreement, Community Bank will conduct its business in the usual, regular
and ordinary course consistent with past practice and prudent banking practice,
use its reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships, retain the
services of its officers and key employees and take no action which would
materially adversely affect or delay the ability of either Barnett or Community
Bank to obtain any necessary approvals of any governmental authority or
otherwise required for the Merger or any other transaction contemplated by the
Merger Agreement or to perform its covenants and agreements under the Merger
Agreement.
Furthermore, from the date of the Merger Agreement to the effective time of
the Merger, Community Bank shall not, without the prior written consent of
Barnett except as provided in the Merger
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Agreement (i) incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any person other than in the ordinary course of business consistent with
prior practice; (ii) adjust, split, combine or reclassify any capital stock;
(iii) make, declare or pay any dividend 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; (iv) sell, lease, transfer,
mortgage, encumber or otherwise dispose of any of its material properties or
assets to any person, other than activities in the ordinary course of business
consistent with prior practice; (v) make any material investment in any entity;
(vi) enter into, renew, amend or terminate any material contract or leases;
(vii) increase in any manner the compensation or fringe benefits of any of its
employees or directors or pay any pension or retirement allowance not required
by an existing plan or agreement, or become a party to, amend, renew or commit
itself to any pension, retirement, profit-sharing or welfare benefit plan, or
employment agreement with or for the benefit of any employee or director; (viii)
amend its Articles of Incorporation or its Bylaws or any other governing
document; (ix) enter into any new line of business; (x) take any action which
would cause the termination or cancellation by the FDIC of insurance in respect
of Community Bank's deposits; (xi) make any equity investment in real estate;
(xii) commit any act or omission which constitutes a material breach under any
material contract or license by which Community Bank is bound; (xiii) incur or
commit to any capital expenditure (other than expenses (A) in the ordinary
course of business and (B) which in any event are in an amount no more than
$25,000 individually and $50,000 in the aggregate); (xiv) change its methods of
accounting in effect at December 31, 1994; (xv) issue, deliver or sell any
shares of its capital stock or any securities convertible into its capital stock
or any rights, warrants or options to acquire its capital stock, other than the
issuance of Community Bank Common Stock pursuant to stock options granted
pursuant to Community Bank stock plans outstanding prior to the date of the
Merger Agreement; or (xvi) agree to take any action prohibited by the Merger
Agreement.
In addition, Community Bank will not and will not permit or authorize any
of their officers, directors or employees or other agents to solicit, encourage,
or facilitate any inquiries or proposals, subject to the fiduciary duties of the
Board of Directors of Community Bank, which may lead to any takeover proposal,
endorse any takeover proposal, participate in negotiations, or provide third
parties with any nonpublic information relating to any such proposal. The
Merger Agreement obligates Community Bank to promptly advise Barnett of any such
inquiries or proposals. As used in the Merger Agreement, "takeover proposal"
means any tender or exchange offer, proposal for a merger, consolidation or
other business combination or any proposal to acquire a substantial equity
interest in or a substantial portion of
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the assets of Community Bank, other than the transactions contemplated or
permitted by the Merger Agreement. The Merger Agreement also prohibits Barnett
and Community Bank from taking any action, which would disqualify the Merger as
a "pooling of interests" for accounting purposes or as a "reorganization" within
the meaning of Section 368(a) of the Code; provided, however, that this
prohibition shall not apply to Barnett if Barnett elects to pay cash in lieu of
Barnett Common Stock as described in "-- Terms of the Merger."
The Merger Agreement also provides that, during the period from the date of
the Merger Agreement until the effective time of the Merger, neither Barnett nor
any of its subsidiaries shall take any action that is intended or may reasonably
be expected to result in any of Barnett's representations or warranties in the
Merger Agreement becoming untrue in any material respect or in any of the
conditions to the Merger not being satisfied.
WAIVER AND AMENDMENT
Prior to the effective time of the Merger, any provision of the Merger
Agreement, including, without limitation, the conditions to consummation of the
Merger and the restrictions described under "-- Business Pending the Merger,"
may be (i) waived, to the extent permitted under law, or (ii) amended at any
time by written agreement of the parties approved by their respective Board of
Directors, whether before or after the Special Meeting; provided however, that
provisions which reduce the amount or change the form of consideration to be
delivered to Community Bank shareholders under the Merger Agreement may not be
amended after the Special Meeting without the requisite approval of the
shareholders of Community Bank entitled to vote thereon.
TERMINATION
The Merger Agreement provides that, whether before or after the approval
by the shareholders of Community Bank at the Special Meeting of the matters to
be voted on in connection with the Merger, the Merger Agreement may be
terminated and the Merger abandoned at any time prior to the effective time of
the Merger (i) by mutual consent of Barnett and Community Bank, which consent in
the case of Community Bank shall require a determination by a vote of a majority
of Community Bank's Board of Directors; (ii) by either Barnett or Community Bank
(A) sixty days after any required regulatory approval of the Merger has been
denied and such denial has become final and nonappealable, (B) at any time after
January 31, 1996; (C) in the event of a material breach by another party of any
representation, warranty, covenant or other agreement contained in the Merger
Agreement, which breach is not cured within 30 days after written notice thereof
is given to the party committing such breach or which breach by its nature
cannot be cured (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained in
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the Merger Agreement, and, in the case of representations and warranties,
provided such breach represents or is likely to cause a material adverse change
in the condition of the breaching party, or (D) if the shareholders of Community
Bank fail to approve the matters required to be approved by such shareholders at
the Special Meeting or (iii) by Barnett, if the Board of Directors of Community
Bank, after recommending in this Prospectus-Proxy Statement that Community Bank
shareholders approve the Merger, shall have withdrawn or amended such
recommendation in any way materially adverse to Barnett.
In the event of the termination and abandonment of the Merger Agreement
pursuant to the provisions thereof, the Merger Agreement will become void and
have no effect, except that (i) certain provisions of the Merger Agreement
relating to expenses and confidentiality of information obtained pursuant to the
Merger Agreement or in connection with the negotiation thereof will survive any
such termination and abandonment, and (ii) no party will be relieved or released
from any liability arising out of its willful breach of any provision of the
Merger Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Upon the effective time of the Merger, the separate corporate existence of
Merger Subsidiary shall cease, and the surviving corporation will be Community
Bank, existing as a wholly owned subsidiary of Barnett. Community Bank's
directors and executive officers immediately prior to the effective time of the
Merger shall be the directors and officers of Community Bank at the effective
time of the Merger and shall hold office subject to Community Bank's Articles of
Incorporation, Bylaws and the laws of the State of Florida. Upon consummation
of the Merger, the present offices and branch of Community Bank will continue to
conduct their banking operations at the present locations. Under the Merger
Agreement, Barnett and Community Bank have agreed not to take or cause to be
taken any action, whether before or after the effective time of the Merger,
which would disqualify the Merger as (i) a "pooling of interests" for accounting
purposes or (ii) a "reorganization" within the meaning of Section 368(a) of the
Code; provided, however, that this prohibition shall not apply to Barnett if
Barnett elects to pay cash as permitted by the Merger Agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Merger Agreement provides that the directors and executive officers of
Community Bank immediately prior to the Effective Time will constitute the
directors and executive officers of Community Bank immediately following the
Merger and until their successors are elected and qualified. Nancy H. Frank is
Executive Vice President of Community Bank and the wife of Lyman H. Frank,
Community Bank's President and Chief Executive Officer. Mrs. Frank has received
a written commitment from Barnett that her current position and compensation
package will be
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available to her through at least June 30, 1996 notwithstanding Barnett's policy
prohibiting spouses from working in the same reporting hierarchy.
Barnett, as a condition of the Merger, has required that Lyman H. Frank,
President of Community Bank, James G. Lowman, Chairman of Community Bank, and
Nancy H. Frank, Executive Vice President of Community Bank, sign agreements not
to compete with Community Bank for three years following the Merger. Community
Bank has agreed to pay the foregoing executive officers, together with Belinda
S. Ohmer, the Vice President and Cashier of Community Bank, a total of $779,000
immediately prior to consummation of the Merger as compensation for entering
into the non-compete agreements, in order to induce such executive officers to
remain in the employ of Community Bank until the Merger and to work diligently
toward consummation of the Merger, and to reward such executive officers for the
decisive role they played in taking the Bank from organization in 1988 to the
increase in shareholder value represented by the Merger consideration. This
compensation will be paid by Community Bank immediately prior to the Merger out
of Community Bank's current earnings and will not result in any adjustment to
the Merger consideration. These payments to Community Bank's executive officers
are as follows: Mr. Lowman, $150,000; Mr. Frank, $350,000; Mrs. Frank,
$216,000; and Ms. Ohmer, $63,000. Messrs. Lowman and Frank each will receive as
additional compensation the automobile owned by Community Bank that he presently
uses for business purposes. Payment of a portion of the Change in Control
Payment to Mr. Lowman is conditioned upon receipt of a favorable vote of the
holders of Community Bank Common Stock. See "Vote on Change in Control
Payment."
The Merger Agreement requires Barnett to use best efforts to provide
Community Bank employees who continue after the Merger with employee benefits
substantially equivalent in the aggregate to those provided to other Barnett
employees, including health insurance coverage that is not subject to any
pre-existing medical condition exception. Community Bank employees will be
given credit for their years of service with Community Bank for purposes of
eligibility and participation (but not vesting or benefit accrual) in Barnett's
401(k), pension and flexible benefits plans and for purposes of determining
vacation benefits.
Allen G. TenBroek, a director of Community Bank, holds presently
exercisable non-qualified stock options expiring on May 31, 1999, to acquire
2,750 shares of Community Bank Common Stock at an exercise price of $9.89 per
share and presently exercisable non-qualified stock options expiring on December
31, 2000, to acquire 5,170 shares of Community Bank Common Stock at an exercise
price of $11.84 per share. The Merger Agreement provides for such options to be
converted in the Merger to non-qualified options to acquire that number of
shares of Barnett Common Stock (rounded down to the nearest whole share) equal
to
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the number of Barnett shares that Mr. TenBroek would acquire in the Merger if he
exercised his Community Bank options immediately prior to the record date for
the Merger. The aggregate exercise price of such Barnett options will be the
same as the aggregate exercise price of the Community Bank options Mr. TenBroek
presently holds.
The Merger Agreement requires Community Bank to indemnify present and
former directors, officers and employees of Community Bank after the Merger
against liabilities and expenses arising out or acts or omissions prior to the
Effective Time (including in connection with the Merger) to the fullest extent
permitted by Florida law and Community Bank's Articles of Incorporation and
Bylaws in effect on the date of the Merger Agreement, including the advancement
of legal fees and expenses in any legal proceeding. Barnett is required to
guarantee these indemnification obligations for a period of three years after
the Merger.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the receipt by Barnett of a
letter from Arthur Andersen LLP, Barnett's independent public accountants, to
the effect that the Merger qualifies for pooling-of-interests accounting
treatment, unless Barnett or Community Bank shall have elected the payment of
Cash Consideration in lieu of Barnett Common Stock in accordance with the Merger
Agreement. Barnett and Community Bank have agreed to use their best efforts to
cause the Merger to qualify for the pooling-of-interests treatment by Barnett.
Under the pooling-of-interests method of accounting, the historical basis
of the assets and liabilities of Barnett and Community Bank will be combined at
the effective time of the Merger and carried forward at their previously
recorded amounts, and the shareholders' equity accounts of Barnett and Community
Bank will be combined on Barnett's consolidated balance sheet and no goodwill or
other intangible assets will be created.
The unaudited pro forma financial information contained in this Proxy
Statement-Prospectus has been prepared using the pooling-of-interests accounting
method to account for the Merger. See "SUMMARY -- Comparative Unaudited Per
Share Information".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
IN THE OPINION OF FOLEY & LARDNER, COUNSEL TO COMMUNITY BANK, THE FOLLOWING
DISCUSSION SETS FORTH THE MATERIAL FEDERAL INCOME TAX
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CONSEQUENCES OF THE MERGER TO COMMUNITY BANK AND ITS SHAREHOLDERS TO THE EXTENT
THAT NEITHER BARNETT NOR COMMUNITY BANK ELECT THE PAYMENT OF THE CASH
CONSIDERATION PURSUANT TO THE MERGER AGREEMENT. NEVERTHELESS, THIS DISCUSSION
IS NOT A COMPLETE DESCRIPTION OF ALL THE CONSEQUENCES OF THE MERGER AND, IN
PARTICULAR, MAY NOT ADDRESS FEDERAL INCOME TAX CONSIDERATIONS THAT MAY BE
RELEVANT TO CERTAIN SHAREHOLDERS ENTITLED TO SPECIAL TREATMENT UNDER THE CODE
(INCLUDING, WITHOUT LIMITATION, INSURANCE COMPANIES, DEALERS IN SECURITIES,
CERTAIN RETIREMENT PLANS, FINANCIAL INSTITUTIONS, TAX EXEMPT ORGANIZATIONS,
FOREIGN PERSONS OR SHAREHOLDERS WHO ACQUIRED THEIR COMMUNITY BANK COMMON STOCK
PURSUANT TO THE EXERCISE OF AN EMPLOYEE STOCK OPTION OR OTHERWISE AS
COMPENSATION). EACH SHAREHOLDER'S INDIVIDUAL CIRCUMSTANCES MAY AFFECT THE TAX
CONSEQUENCES OF THE MERGER TO SUCH SHAREHOLDER. IN ADDITION, THIS DISCUSSION
DOES NOT ADDRESS THE TAX CONSEQUENCES OF THE MERGER UNDER APPLICABLE FOREIGN,
STATE OR LOCAL LAWS OR THE TAX CONSEQUENCES OF THE MERGER IF THE MERGER IS
EFFECTED FOR THE CASH CONSIDERATION. CONSEQUENTLY, EACH COMMUNITY BANK
SHAREHOLDER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC
TAX CONSEQUENCES OF THE MERGER.
Neither Barnett nor Community Bank has requested an advance ruling from the
Internal Revenue Service as to the tax consequences of the Merger.
As a condition to the consummation of the Merger in exchange for Barnett
Common Stock, Community Bank shall have received an opinion from Foley &
Lardner, its counsel, concerning certain federal income tax consequences, based
upon certain customary representations set forth therein. Based in part on such
representations and assuming that neither Barnett nor Community Bank elect the
payment of the Cash Consideration in lieu of Barnett Common Stock pursuant to
the Merger Agreement, Foley & Lardner will issue an opinion that the material
federal income tax consequences expected to result from the Merger, under
currently applicable law, are as follows:
(i) The Merger will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Code by reason of the operation of Section
368(a)(2)(E) of the Code;
(ii) No gain or loss will be recognized by Community Bank as a result
of the Merger;
(iii) No gain or loss will be recognized by the shareholders of
Community Bank who exchange all their Community Bank Common Stock solely
for Barnett Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Barnett Common
Stock);
(iv) The tax basis of the Barnett Common Stock received by
shareholders who exchange all of their Community Bank Common Stock solely
for Barnett Common Stock in the Merger will be the same as the tax basis of
the Community Bank Common Stock
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surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received); and
(v) The holding period of the Barnett Common Stock in the hands of the
Community Bank shareholders will, in each case, include the holding period
of the shares of Community Bank Common Stock surrendered in exchange
therefor, provided that the Community Bank Common Stock was, in each
instance, held as a capital asset in the hands of the Community Bank
shareholders on the effective date of the Merger.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL INFORMATION
ONLY AND DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO ALL
SHAREHOLDERS OF COMMUNITY BANK, INCLUDING THOSE WHO ACQUIRED COMMUNITY BANK
COMMON STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION. IN ADDITION, THE DISCUSSION DOES NOT ADDRESS THE STATE, LOCAL OR
FOREIGN TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY
EXISTING PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS
THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE
FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGES COULD AFFECT THE CONTINUING
VALIDITY OF THIS DISCUSSION. IN VIEW OF THIS AND THE INDIVIDUAL NATURE OF TAX
CONSEQUENCES, EACH COMMUNITY BANK SHAREHOLDER SHOULD CONSULT SUCH SHAREHOLDER'S
OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
SUCH SHAREHOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS.
RESALE OF BARNETT COMMON STOCK
The shares of Barnett Common Stock issuable to shareholders of Community
Bank upon consummation of the Merger have been registered under the Securities
Act. Such shares may be traded freely and without restriction by those
shareholders not deemed to be "affiliates" of Community Bank as that term is
defined in the rules under the Securities Act. "Affiliates" are generally
defined as persons who control, are controlled by or are under common control
with Community Bank at the time of the Special Meeting. Accordingly,
"affiliates" generally will include directors and executive officers of
Community Bank. Barnett Common Stock received by those shareholders of
Community Bank who are deemed to be "affiliates" of Community Bank may be resold
without registration as provided for by Rules 144 or 145, or as otherwise
permitted, under the Securities Act. This Proxy Statement-Prospectus does not
cover any resales of Barnett Common Stock received by affiliates of Community
Bank, or by certain of their family members or related interests.
Community Bank has agreed to use its best efforts to cause each holder of
Community Bank Common Stock deemed to be an affiliate of such company to enter
into an agreement providing that such affiliate will not sell, pledge, transfer
or otherwise dispose of the shares of Barnett Common Stock to be received by
such person in the Merger except in compliance with the applicable provisions of
the Securities Act and the rules and regulations thereunder.
STOCK EXCHANGE LISTING
The Merger Agreement provides for the filing of, and Barnett has filed (or
will file), a listing application with the NYSE covering the
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shares of Barnett Common Stock issuable pursuant to the Merger. It is a
condition to the consummation of the Merger that such shares of Barnett Common
Stock be authorized for listing on the NYSE effective upon official notice of
issuance.
SHAREHOLDER INVESTMENT AND EMPLOYEE STOCK PURCHASE PLANS
Barnett has a Shareholder Investment Plan, which provides, for those
shareholders and customers who elect to participate, that dividends on shares of
Barnett Common Stock will be reinvested in additional shares of Barnett Common
Stock without paying brokerage commissions. The Shareholder Investment Plan
also allows automatic monthly deductions from a Barnett checking, NOW or money
market account to purchase Barnett Common Stock. Barnett also has an Employee
Stock Purchase Plan pursuant to which employees may purchase shares of Barnett
Common Stock through automatic payroll deductions. Participants in the
Employee Stock Purchase Plans may also participate in the Shareholder Investment
Plan. Each of the plans also permits participants to invest, through optional
cash payments within certain dollar limitations, in additional shares of Barnett
Common Stock. It is anticipated that after the effective time of the Merger,
Barnett will continue its Shareholder Investment and Employee Stock Purchase
Plans. Customers and shareholders of Community Bank who receive Barnett Common
Stock in the Merger will have the right to participate in the Shareholder
Investment Plan after the Effective Time of the Merger.
The Merger Agreement permits Community Bank to continue to issue Community
Bank Common Stock pursuant to stock options outstanding prior to the date of the
Merger Agreement. After the date of the Merger Agreement, Community Bank may
not issue any further options to acquire Community Bank Common Stock until the
effective time of the Merger.
EXPENSES
The Merger Agreement provides that Barnett and Community Bank will each
pay its own expenses in connection with the Merger and the transactions
contemplated thereby, except that Barnett and Community Bank will bear equally
the expenses of preparing, printing and filing the registration statement and
any proxy solicitation expenses, including mailing.
DIVIDENDS
The Merger Agreement provides that, after the date of its execution,
Community Bank may not declare or pay any dividends or other distributions with
respect to its capital stock.
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DESCRIPTION OF BARNETT CAPITAL STOCK
GENERAL
The authorized capital stock of Barnett consists of 200,000,000 shares of
Common Stock, par value $2.00 per share, and 20,000,000 shares of Preferred
Stock, par value $0.10 per share (the "Preferred Stock"). As of March 31, 1995,
there were issued and outstanding 97,127,142 shares of Common Stock, 2,000,000
shares of Barnett's Series A $4.50 Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock"), 12,289 shares of Barnett's Series B $2.50
Cumulative Convertible Preferred Stock (the "Series B Preferred Stock"), and
2,300,000 shares of Barnett's Series C $4.00 Cumulative Convertible Preferred
Stock (the "Series C Preferred Stock"). In addition, Barnett has authorized
Junior Participating Preferred Stock, $0.10 par value (the "Junior Participating
Preferred Stock"), for issuance upon the exercise of certain rights described
below.
Since Barnett is a holding company, the right of Barnett, and hence the
right of creditors and shareholders of Barnett, to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise is necessarily subject to the prior claims of creditors of the
subsidiary, except to the extent that claims of Barnett itself as a creditor of
the subsidiary may be recognized. The principal source of Barnett's revenues is
dividends from its subsidiaries. See "REGULATORY MATTERS" for a discussion of
restrictions on the subsidiary banks' ability to pay dividends to Barnett.
The following summary does not purport to be complete and is subject to in
all respects, and qualified in its entirety by, the applicable provisions of the
Florida Business Corporation Act, Barnett's Amended and Restated Articles of
Incorporation, as amended (the "Articles"), including the Certificates of
Designation describing the Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock and the Junior Participating Preferred
Stock, the Bylaws of Barnett (the "Bylaws") and the Rights Agreement (as defined
below). The Articles, the Bylaws and the Rights Agreement are incorporated by
reference in this Proxy Statement-Prospectus.
COMMON STOCK
The holders of the Barnett Common Stock are entitled to receive dividends
from funds legally available therefore when, as, and if declared by Barnett's
Board of Directors, and are entitled upon liquidation to receive pro rata the
net assets of Barnett after satisfaction in full of the prior rights of
creditors of Barnett and holders of any Preferred Stock. The principal source
of funds for payment of dividends by Barnett is dividends paid by Barnett's
subsidiaries.
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The holders of Barnett Common Stock are entitled to one vote for each share
held on all matters as to which shareholders are entitled to vote. The holders
of Barnett Common Stock do not have cumulative voting rights, any preferential,
subscriptive or preemptive rights with respect to any securities of Barnett, or
any conversion rights. The Barnett Common Stock is not subject to redemption.
The outstanding shares of Barnett Common Stock are fully paid and nonassessable.
The Articles were amended in April 1985 to add a "fair price provision"
that would require the vote of the holders of at least 80 percent of the voting
power of the then outstanding shares of capital stock of Barnett entitled to
vote generally in an election of directors (the "Voting Stock") for approval of
certain business combinations, including certain mergers, asset sales, security
issuances, recapitalizations and liquidations, involving Barnett or its
subsidiaries and certain acquiring persons (namely a person, entity or specified
group which beneficially owns more than 10 percent of the Voting Stock), unless
the "fair price" and other procedural requirements of the amendment are met, or
unless approved by a majority of directors who are not affiliated with the
acquiring party. At the same time, the Articles were amended (and conforming
amendments were made to the Bylaws) (i) to provide for classification of
Barnett's Board of Directors into three classes, (ii) to require the vote of 80
percent of the directors then in office to fill any vacancies in Barnett's Board
of Directors and any newly created directorships and (iii) to permit the removal
of directors only for cause and only by the affirmative vote of holders of 80
percent of the Voting Stock. Each of the foregoing provisions may only be
amended or repealed by the affirmative vote of the holders of 80 percent of the
Voting Stock. Furthermore, the Articles require the affirmative vote of at least
a majority of the Voting Stock in order to authorize Barnett to directly or
indirectly acquire the equity securities of a person who has owned five percent
of the class of securities being acquired for a period of less than two years.
The Voting Stock beneficially owned by such a five percent holder is excluded
from such vote. The affirmative vote is not necessary if the acquisition of such
person's securities is part of a tender or exchange offer made by Barnett on the
same terms to all holders of such securities.
First Chicago Trust Company of New York is the transfer agent and registrar
for the Barnett Common Stock.
RIGHTS TO PURCHASE JUNIOR PARTICIPATING PREFERRED STOCK
On February 21, 1990, Barnett's Board of Directors declared a dividend
distribution of one right (a "Right") for each outstanding share of Barnett
Common Stock to shareholders of record at the close of business on March 12,
1990. Barnett's Board of Directors declared such dividend distribution in the
belief that it was desirable and in the best interests of Barnett and its
shareholders that steps be taken to
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preserve for Barnett's shareholders the long-term value of Barnett in the event
of a potential takeover or other action which appears to Barnett's Board of
Directors to be coercive, unfair or inadequate. Each Right entitles the
registered holder to purchase from Barnett a unit consisting of one one-
hundredth of a share (a "Unit") of Junior Participating Preferred Stock at a
purchase price of $125.00 per Unit, subject to adjustment. The description and
terms of the Rights are summarized below and are set forth in a Rights Agreement
(the "Rights Agreement"), between Barnett and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent"). As long as the Rights are attached
to the Barnett Common Stock and in certain other circumstances specified in the
Rights Agreement, one Right (as such number may be adjusted pursuant to the
provisions of the Rights Agreement) shall be deemed to be delivered with each
share of Barnett Common Stock issued or transferred by Barnett in the future.
The following summaries do not purport to be complete and are subject to and are
qualified in their entirety by reference to all the provisions of the Rights
Agreement, including the definitions therein of certain terms used in this Proxy
Statement-Prospectus.
Initially, the Rights are attached to all Barnett Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Barnett Common Stock and a
"Distribution Date" will occur upon the earlier of the close of business on the
tenth day following (i) a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the outstanding shares of Barnett Common Stock or
voting securities representing 20% or more of the voting power of Barnett, (ii)
the commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 20% or more of such outstanding shares of
Barnett Common Stock or such voting power of Barnett then outstanding or (iii)
the determination by a majority of the members of Barnett's Board of Directors
who are not officers of Barnett that with respect to any person who, alone or
with affiliates or associates, has become the beneficial owner of 10% or more of
the outstanding shares of Barnett Common Stock or voting power of Barnett then
outstanding, (a) such beneficial ownership is intended to cause Barnett to
provide such person with short-term financial gain by repurchasing his Barnett
Common Stock or voting power under circumstances where such Barnett directors
determine that such repurchase would not be in the best long-term interests of
Barnett or (b) such beneficial ownership is causing or reasonably likely to
cause a material adverse impact on the business or certain business prospects or
relationships of Barnett. (Any person whose beneficial ownership satisfies the
conditions of (a) or (b) above is referred to herein and in the Rights Agreement
as an "Adverse Person").
Until the Distribution Date, the Rights will be transferred with and only
with Barnett Common Stock certificates. Barnett is not
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required to issue fractions of shares of Junior Participating Preferred Stock or
Barnett Common Stock upon exercise of the rights.
The Rights are not exercisable until after the Distribution Date and will
expire at the close of business on March 11, 2000, unless earlier redeemed by
Barnett in accordance with the Rights Agreement.
In the event that (i) a person becomes the beneficial owner of 20% or more
of the then outstanding shares of Barnett Common Stock or voting power (except
pursuant to an offer for all outstanding shares of Barnett Common Stock and all
other voting securities which the independent and disinterested directors of
Barnett determine to be fair to and otherwise in the best interests of Barnett
and its shareholders) or (ii) any person is determined to be an Adverse Person
(either (i) or (ii) being a "Flip-in Event"), each holder of a Right (with the
exception of an Adverse or Acquiring Person) will thereafter have the right to
receive, upon exercise, Barnett Common Stock having a value equal to two times
the exercise price of the Right. However, Rights are not exercisable following
the occurrence of a Flip-in Event until such time as the Rights are no longer
redeemable by Barnett as set forth below.
In the event of certain business combinations involving Barnett, each
holder of a Right may receive, upon exercise, common stock of the acquiring
company having a value equal to two times the exercise price of the Right.
These certain business combinations involving Barnett and the Flip-in Events are
referred to together as the "Triggering Events."
The purchase price payable, and the number of Units of Junior Participating
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution that
would result from certain forms of distributions to holders of such Junior
Participating Preferred Stock.
At any time until the earlier of (i) the close of business on the tenth
day following the public announcement by Barnett or an Acquiring person that the
Acquiring Person has become such, (ii) the declaration by Barnett's Board of
Directors that a person is an Adverse Person, or (iii) March 11, 2000, Barnett
may redeem the Rights in whole, but not in part, at a price of $.01 per Right.
At any time after the occurrence of a Flip-in Event, Barnett's Board of
Directors may exchange the Rights (other than Rights owned by an Acquiring
Person or an Adverse Person) in whole or in part, at an exchange ratio of one
share of Barnett Common Stock, or equivalent equity security, per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of Barnett, including, without limitation, the right to
vote or to receive dividends. While the distribution of
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the Rights will not be taxable to shareholders of Barnett or to Barnett,
shareholders may, depending upon the circumstances, recognize taxable income in
the event that the Rights become exercisable for Barnett Common Stock (or other
consideration) or for common stock of the acquiring company as set forth above,
or are exchanged as provided in the preceding paragraph.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by
Barnett's Board of Directors prior to the Distribution Date. After the
Distribution Date, only certain limited provisions of the Rights Agreement may
be amended by the Board of Directors.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Barnett in a
manner defined as a Triggering Event unless the offer is conditioned on a
substantial number of Rights being acquired. The Rights, however, should not
affect any offer for all outstanding shares of Barnett Common Stock and other
voting securities deemed to be fair and otherwise in Barnett's best interests by
Barnett's Board of Directors or any merger or other business combination
approved by Barnett's Board of Directors.
PREFERRED STOCK
Under the Articles, Barnett's Board of Directors is authorized without
further shareholder action to provide for the issuance of up to 20,000,000
shares of Preferred Stock in one or more series, with such voting powers,
designations, preferences, rights, qualifications, limitations and restrictions,
as shall be set forth in resolutions providing for the issue thereof adopted by
the Board of Directors. As of the date of this Proxy Statement-Prospectus,
Barnett has three series of Preferred Stock outstanding which rank on parity as
to dividend and liquidation rights and have the voting, dividend, liquidation,
conversion, redemption and other rights set forth in the following paragraphs.
Barnett has also authorized and reserved for issuance shares of Junior
Participating Preferred Stock to be issued upon the exercise of the Rights. The
Junior Participating Preferred Stock ranks junior to the Series A Preferred
Stock, the Series B Preferred Stock and the Series C Preferred Stock and senior
to the Barnett Common Stock. First Chicago Trust Company of New York is the
transfer agent, registrar, dividend disbursing agent and redemption agent for
each of the three series of Preferred Stock.
SERIES A PREFERRED STOCK. Dividends on the Series A Preferred Stock are
paid at the annual rate of $4.50 per share and are cumulative. In the event of
dissolution, liquidation or winding up of Barnett, holders of the Series A
Preferred Stock will be entitled to payment in full of $50.00 per share, plus
any accrued and unpaid dividends, prior to any distribution to holders of
Barnett Common
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Stock. The Series A Preferred Stock does not have any voting rights, except as
expressly provided by Florida law, or in the event that the equivalent of six
quarterly dividends payable on the Series A Preferred Stock are in arrears, or
in the event of certain amendments, alterations or repeals of the Articles
adversely affecting the holders of Series A Preferred Stock.
Shares of the Series A Preferred Stock are convertible into shares of
Barnett Common Stock, at a conversion price of $26.50 per share (assuming a
value of $50.00 per share of the Series A Preferred Stock), which is equivalent
to approximately 1.8868 shares of Barnett Common Stock for each share of Series
A Preferred Stock. The conversion price is subject to adjustment under certain
conditions.
The Series A Preferred Stock is redeemable at the election of Barnett at a
declining premium in the sixth through tenth years after issuance and is
redeemable at par anytime thereafter. The Board of Directors of Barnett has
authorized the redemption of the Series A Preferred Stock at the discretion
of Barnett's management and in accordance with its terms.
At March 31, 1995, there were 2,000,000 shares of Series A Preferred Stock
issued and outstanding.
SERIES B PREFERRED STOCK. Dividends on the Series B Preferred Stock are
paid at the annual rate of $2.50 per share and are cumulative. In the event of
dissolution, liquidation or winding up of Barnett, holders of the Series B
Preferred Stock will be entitled to payment in full of $25.00 per share, plus
any accrued and unpaid dividends, prior to any distribution to holders of
Barnett Common Stock. The Series B Preferred Stock does not have any voting
rights, except as provided by Florida law or in the event that any dividends on
the Series B Preferred Stock are in arrears. If such dividends are in arrears,
holders of Series B Preferred Stock will vote together with holders of Barnett
Common Stock, and each holder of Series B Preferred Stock will be entitled to
the number of votes equal to the number of whole shares of Barnett Common Stock
into which his shares of Series B Preferred Stock are then convertible.
Shares of Series B Preferred Stock are convertible into shares of Barnett
Common Stock at any time at a rate of 2.5988 shares of Barnett Common Stock for
each share of Series B Preferred Stock. The conversion rate is subject to
adjustment under certain conditions.
The Series B Preferred Stock is redeemable in the eleventh year after
issuance, at the election of Barnett, at a price per share equal to the sum of:
(a) $25.00; (b) any accrued and unpaid dividends; and (c) a declining premium in
the eleventh through fifteenth years after issuance. Barnett is obligated to
purchase shares of Series B Preferred Stock, beginning in the sixteenth year
following issuance, at the election of the holder at a price of $25.00 per
share, plus any accrued and unpaid dividends.
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At March 31, 1995, there were 12,289 shares of Series B Preferred Stock
issued and outstanding.
SERIES C PREFERRED STOCK. Dividends on the Series C Preferred Stock are
paid at the annual rate of $4.00 per share and are cumulative. In the event of
dissolution, liquidation or winding up of Barnett, holders of the Series C
Preferred Stock will be entitled to payment in full of $50.00 per share, plus
any accrued and unpaid dividends, prior to any distribution to holders of
Barnett Common Stock. The Series C Preferred Stock does not have any voting
rights, except as expressly provided by Florida law, or in the event that (i)
the equivalent of six quarterly dividends payable on the Series C Preferred
Stock are in arrears, (ii) the Articles are amended, altered or repealed in a
manner which adversely affects the holders of Series C Preferred Stock, or
(iii) shares of any class of stock ranking prior to the Series C Preferred
Stock, as to dividends or upon liquidation, or of any obligation or security
convertible into any right to purchase any such prior shares, are created,
authorized or issued.
Shares of the Series C Preferred Stock are convertible into shares of
Barnett Common Stock, at a conversion price of $39.50 per share (assuming a
value of $50.00 per share of the Series C Preferred Stock), which is equivalent
to approximately 1.2658 shares of Barnett Common Stock for each share of Series
C Preferred Stock. The conversion price is subject to adjustment under certain
conditions.
The Series C Preferred Stock is redeemable at the election of Barnett at a
declining premium in the sixth through tenth years after issuance and is
redeemable at par any time thereafter. In the event that any quarterly dividend
payable on the Series C Preferred Stock is in arrears and until all such
dividends in arrears are paid or declared and set apart for payment, Barnett may
not redeem any shares of Series C Preferred Stock unless all outstanding shares
of Series C Preferred Stock are simultaneously redeemed or acquire any shares of
Series C Preferred Stock except in a purchase offer made on the same terms to
all holders for the purchase of all outstanding shares of Series C Preferred
Stock. The Board of Directors of Barnett has authorized the redemption of the
Series C Preferred Stock at the discretion of Barnett's management and in
accordance with its terms.
At March 31, 1995, there were 2,300,000 shares of Series C Preferred Stock
issued and outstanding.
DISSENTERS' RIGHTS
THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
PROCEDURE TO BE FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PROVISIONS OF SECTION
658.44 OF THE FLORIDA BANKING CODE THE FULL TEXT OF WHICH IS ATTACHED HERETO AS
APPENDIX C. SINCE THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRES
STRICT ADHERENCE TO THE PROVISIONS OF THESE LAWS, SHAREHOLDERS WHO MIGHT DESIRE
TO EXERCISE
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SUCH RIGHTS SHOULD REVIEW SUCH LAWS CAREFULLY, TIMELY CONSULT THEIR OWN LEGAL
ADVISOR AND STRICTLY FOLLOW THE PROVISIONS OF FLORIDA LAW.
Only Community Bank shareholders of record at the close of business on
[SEPTEMBER 8, 1995], will have the right to vote on the Merger. Shareholders
who would like to exercise their dissenters' rights under Florida law to
demand that Community Bank pay them in cash the fair value of their shares as
of the effective date of the Merger in lieu of receiving Barnett Common Stock
(such a shareholder being hereinafter referred to as a "Dissenting
Shareholder") must (i) vote their shares against approval of the Merger
Agreement; or (ii) deliver written notification to Community Bank that such
shareholders dissent from the Merger Agreement at or prior to the Special
Meeting. Such a Dissenting Shareholder can neither vote in favor of approval
of the Merger Agreement by proxy or in person nor deliver a signed but
unmarked proxy unless such proxy is revoked prior to the vote on the Merger.
The Dissenting Shareholder may dissent as to less than all the shares then
registered in his name.
PURSUANT TO THE ABOVE, ANY DISSENTING SHAREHOLDER SHOULD SEND A WRITTEN
OBJECTION TO THE MERGER AGREEMENT, AS SET FORTH ABOVE, TO COMMUNITY BANK AT THE
FOLLOWING ADDRESS: 2450 PERIWINKLE WAY, SANIBEL ISLAND, FL 33957.
Holders of Community Bank Common Stock who intend to exercise their
dissenters' rights should bear in mind that the fair value of their shares of
Community Bank Common Stock could be more than, the same as, or less than, the
consideration they would receive pursuant to the Merger.
On or promptly after the effective date of the Merger, Barnett may fix an
amount which it considers to be not more than the fair market value of Community
Bank Common Stock and, if Barnett fixes such amount, shall offer to pay to each
Dissenting Shareholder such amount for the shares held by the Dissenting
Shareholder. Dissenting Shareholders who accept such offer shall be entitled to
receive the amount so offered in cash upon surrendering the stock certificate as
to which they dissented at any time within 30 days after the effective date of
the Merger. Dissenting Shareholders who do not accept such offer shall be
entitled to receive in cash for their shares of Community Bank Common Stock an
amount determined as of the effective date of the Merger by three appraisers.
One appraiser shall be selected by Dissenting Shareholders owning at least two-
thirds of shares held by Dissenting Shareholders, one appraiser shall be
selected by the Board of Directors of Community Bank and the third appraiser
shall be selected by the first two appraisers so chosen. The value agreed upon
by any two appraisers shall control and be final and binding on all parties.
If, within 90 days from the effective date of the Merger, one or more of the
appraisers is not selected as provided above for any reason or such appraisers
fail to determine the value of the Dissenting Shareholders, the Florida
Department of Banking and Finance shall cause an appraisal of shares
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which will be final and binding on all parties. The expenses of any such
appraisal shall be paid by Community Bank. The owners of such shares the value
of which are to be determined by appraisal shall be entitled to receive the
value of such shares in cash upon surrender of the stock certificates
representing such shares at any time within 30 days after the value of such
shares has been determined by appraisal.
CERTAIN DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Each of Barnett and Community Bank is a Florida corporation subject to the
provisions of the Florida Business Corporation Act. Shareholders of Community
Bank, whose rights are governed by Community Bank's Articles of Incorporation
and Bylaws, will, upon consummation of the Merger, become shareholders of
Barnett. The rights of such shareholders as shareholders of Barnett will then
be governed by the Amended and Restated Articles of Incorporation of Barnett and
the Bylaws of Barnett.
Except as set forth below, there are no material differences between the
rights of a Community Bank under Community Bank's Articles of Incorporation and
Bylaws, on the one hand, and the rights of a Barnett shareholder under the
Amended and Restated Articles of Incorporation and Bylaws of Barnett on the
other hand. THIS SUMMARY DOES NOT PURPORT TO BE A COMPLETE DISCUSSION OF, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, FLORIDA LAW AND THE ARTICLES OF
INCORPORATION AND BYLAWS OF EACH OF BARNETT AND COMMUNITY BANK.
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
BARNETT. The Board of Directors of Barnett consists of fourteen members,
unless otherwise determined by resolution adopted by the vote of at least 80% of
the entire Board of Directors. Barnett's Board of Directors is divided into
three classes, and directors are elected to serve three-year terms. However,
except as otherwise required by law, whenever the holders of a series of
Preferred Stock shall have the right, voting as a class, to elect one or more
directors, the terms of the director or directors elected by such holders shall
expire at the next succeeding annual meeting of shareholders and vacancies
created may be filled in the manner specified by such series of Preferred Stock.
COMMUNITY BANK. The Articles of Incorporation of Community Bank provide
that the number of directors shall not be fewer than five (5). The Bylaws
provide that the Board of Directors shall consist of ten (10) directors elected
annually by the shareholders. The number of directors may be changed by
amendment to the Bylaws. In the election of directors, each shareholder of
Community Bank has the right to cumulate his or her votes, giving one candidate
as many votes as the number of directors to be elected multiplied by the number
of his or her shares, or to distribute such votes among as many candidates for
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director as the shareholder shall choose. Vacancies occurring on the Board of
Directors shall be filled by a majority of the members of the board to serve
until the next annual meeting of shareholders or a special meeting of
shareholders called for the purpose of filling such vacancy.
REMOVAL OF DIRECTORS
BARNETT. Directors of Barnett may be removed at any time, but only for
cause and only by the affirmative vote, at a meeting of the shareholders called
for that purpose, of the holders of 80% or more of the voting power of all the
then outstanding shares of Barnett's capital stock entitled to vote on the
election of directors, voting together as a single class. However, except as
otherwise required by law, the foregoing does not apply to directors elected by
holders of Preferred Stock.
COMMUNITY BANK. A director of Community Bank may be removed, with or
without cause, by the shareholders; provided, however that a director may not be
removed if votes sufficient to elect him or her under cumulative voting are
voted against his or her removal. A director may be removed at a meeting of
shareholders, provided the notice of the meeting states that the purpose, or one
of the purposes, of the meeting is removal of the director.
SHAREHOLDER NOMINATIONS
BARNETT AND COMMUNITY BANK. Neither Barnett nor Community Bank have
provisions in their respective Articles of Incorporation or Bylaws regarding the
ability of shareholders to nominate individuals for election to the Board of
Directors.
CONFLICT OF INTEREST TRANSACTIONS
BARNETT AND COMMUNITY BANK. The Articles of Incorporation and Bylaws of
neither Barnett nor Community Bank contain provisions governing transactions
between the respective corporation and interested directors and officers. Under
Florida law, transactions involving a Florida corporation and an interested
director or officer of that corporation are permitted if: (i) the fact of the
relationship or interest is disclosed or known to the Board of Directors or a
committee of the Board which authorizes, approves or ratifies the transaction by
a vote or consent sufficient for that purpose without counting the votes or
consents of the interested director(s); (ii) the fact of the relationship or
interest is disclosed or known to the shareholders entitled to vote and they
authorize, approve or ratify such contract or transaction by vote or written
consent; or (iii) the transaction is fair and reasonable to the corporation at
the time the Board, committee or shareholders authorize, approve or ratify the
transaction or contract. Florida law permits a Florida corporation to
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loan money, guarantee obligations or otherwise assist an officer or director
whenever, in the Board of Director's judgment, such loan, guaranty or assistance
may reasonably be expected to benefit the corporation.
MEETINGS OF SHAREHOLDERS
BARNETT. Under Barnett's Articles of Incorporation, any acts required or
permitted to be taken by the shareholders of Barnett must be effected at a duly
called annual or special meeting of shareholders. No actions may be effected by
any consent in writing by such shareholders. Special meetings of the
shareholders may be called only by Barnett's Chairman or President, or by a
majority of the members of the Board of Directors acting with or without a
meeting, or by the persons who hold not less than thirty-five percent of shares
outstanding and entitled to vote on any proposal to be submitted at such
meeting. The Articles of Incorporation also establish certain procedures for
giving notice of the meeting to shareholders.
COMMUNITY BANK. Action required or permitted to be taken by the
shareholders of Community Bank may be taken without a meeting, without notice
and without a vote if the action is taken by the holder of Community Bank's
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. In order to be effective, such
action must be evidenced by one or more written consents describing the action
taken, dated and signed by the approving shareholders having the requisite
number of votes. Special meetings of the shareholders may be called at any time
by the Board of Directors, any two or more directors, or by the holders of not
less than ten percent (10%) of the stock entitled to vote at the special
meeting. The Articles of Incorporation of Community Bank also establish certain
procedures for giving notice of the meeting to shareholders.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
BARNETT. Barnett's Articles of Incorporation were amended in April 1985 to
add a "fair price provision" that would require the vote of the holders of at
least 80% of the voting power of the then outstanding shares of capital stock of
Barnett entitled to vote generally in an election of directors for approval of
certain business combinations, including certain mergers, asset sales, security
issuances, recapitalizations and liquidations, involving Barnett or its
subsidiaries and certain acquiring persons (namely a person, entity or specified
group which beneficially owns more than 10% of the voting power of the then
outstanding shares of capital stock of Barnett entitled to vote generally in an
election of directors), unless the "fair price" and other procedural
requirements of the amendment are
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met, or unless approved by a majority of directors who are not affiliated with
the acquiring party.
Furthermore, Barnett's Articles of Incorporation require the affirmative
vote of at least 80% of the voting power of the then outstanding shares of
capital stock of Barnett entitled to vote generally in an election of directors
in order to authorize Barnett to directly or indirectly acquire the equity
securities of a person who has owned five percent of the class of securities
being acquired for less than a period of two years. The affirmative vote of 80%
of the class is not necessary if the acquisition of such person's securities is
part of a tender or exchange offer made by Barnett on the same terms to all
holders of such securities.
COMMUNITY BANK. The Articles of Incorporation and Bylaws of Community Bank
make no special provisions as to the vote required for authorization of certain
actions such as mergers, asset sales, security issuances, recapitalizations, and
liquidations.
AMENDMENT OF CORPORATE CHARTER AND BYLAWS
BARNETT. The alteration, amendment, or repeal of Article V (relating to
the Board of Directors), Article VII (relating to Business Combinations) and
Article X (relating to special meetings of shareholders) of Barnett's Articles
of Incorporation require the affirmative vote of 80% or more of the voting power
of the then outstanding shares of capital stock of Barnett entitled to vote
generally in an election of directors, voting together as a single class. The
Barnett Bylaws may be amended by a majority vote of the Board of Directors at
any regular or special meeting.
COMMUNITY BANK. Amendment of the Articles of Incorporation of Community
Bank requires that the amendment be recommended to the shareholders by the Board
of Directors and, if a quorum of shareholders exists, approved by votes cast in
favor of the amendment exceeding the votes cast opposing the amendment. The
Bylaws of Community Bank may be amended or repealed by the Board of Directors,
except to the extent that such power is reserved to the shareholders by statute.
PURCHASE RIGHTS PLAN
BARNETT. Barnett has distributed to each holder of Barnett Common Stock
one Right for each outstanding share of Barnett Common Stock. The Rights
entitle the shareholder to certain rights in the event of certain transactions
involving Barnett. See "-- Description of Barnett Capital Stock; Rights to
Purchase Junior Participating Preferred Stock."
COMMUNITY BANK. Community Bank has no purchase rights plan.
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STATE ANTITAKEOVER STATUTE
BARNETT AND COMMUNITY BANK. The Articles of Incorporation and Bylaws of
neither Barnett nor Community Bank contain provisions to "opt out" of the
Florida statute on control share acquisitions.
CONSTITUENCIES
BARNETT. Barnett's Articles of Incorporation provide that the Board of
Directors, when evaluating a proposal (other than a proposal made by Barnett
itself) to (i) make a tender or exchange offer for any equity security of
Barnett; (ii) merge or consolidate Barnett with another person; or (iii)
purchase or otherwise acquire substantially all the property or assets of
Barnett, shall, in exercising its business judgment in determining the best
interests of Barnett and its shareholders, give due consideration to several
relevant factors. These factors include: (i) the consideration being offered
in relation to the current market prices and the current value of Barnett in a
freely negotiated transaction and in relation to the Board of Director's
estimate of the future value of Barnett as an independent entity; (ii) the
social and economic effects on the employees, customers, suppliers, depositors,
creditors, and any other constituents and on the communities in which Barnett
and its subsidiaries operate or are located; (iii) the desirability of
maintaining an independence from any other entity; (iv) the business condition,
financial condition and earnings prospects of the acquiring person including,
but not limited to, debt service and other existing or likely financial
obligations of the acquiring person, and the possible effect of such conditions
upon Barnett and its subsidiaries; and (v) the competence, experience, and
integrity of the acquiring person and its management.
COMMUNITY BANK. In discharging his or her duties, a director of Community
Bank may consider such factors as the director deems relevant, including the
long-term prospects and interests of the corporation and its shareholders, and
the social, economic, legal or other effects of any action on the employees,
suppliers, customers, the communities and society in which Community Bank
operates, and the economy of the state and the nation.
VOTE ON CHANGE IN CONTROL PAYMENT
This section of the Proxy Statement-Prospectus describes the Change in
Control Payment, a payment which will be made to Mr. James G. Lowman, Chairman
of Community Bank, upon consummation of the Merger.
Under sections 280G and 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), the payor corporation is prohibited from deducting, and
the recipient individual must pay a 20% excise tax on, any so-called "excess
parachute payment." A "parachute payment" is generally defined to mean:
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(a) a payment in the nature of compensation;
(b) which is paid to certain officers, shareholders or highly-
compensated employees of a corporation;
(c) which is contingent on a change in ownership of the corporation;
provided that
(d) the present value (as of the time of the ownership change) of all
such payments made or to be made to the particular individual
equals or exceeds three times the individual's "base amount"
(i.e., his or her average taxable compensation from the
corporation for the five calendar years preceding the year in
which the ownership change occurs).
An individual's "parachute payments" are generally treated as "excess parachute
payments" to the extent the present value of such payments exceeds the greater
of (a) one times the individual's base amount or (b) the amount that is
established by clear and convincing evidence to be reasonable compensation for
services rendered by the individual prior to the ownership change. Section 280G
and proposed Treasury Regulations issued thereunder provide a number of
exceptions from the definitions of "parachute payment" and "excess parachute
payment."
Under one of the exceptions, a payment to an individual is not treated as a
parachute payment if the following requirements are met:
(a) immediately before the ownership change, the corporation
undergoing the ownership change has no outstanding stock readily
tradeable on an established securities market or otherwise;
(b) the payment was approved by a vote of the persons who owned,
immediately before the ownership change, more than 75% of the
voting power of the corporation's stock (excluding stock held by
persons receiving payments that would be parachute payments if
the shareholder approval exception were not met);
(c) adequate disclosure of the material facts concerning all payments
to the individual which, but for the shareholder approval
exception, would be parachute payments is made to all
shareholders; and
(d) the shareholder vote determines the individual's right to receive
or retain the payment.
Attempting to apply the golden parachute rules to a particular case is made
difficult by a number of factors, including the complexity
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of the rules, the lack of final Treasury Regulations or other definitive
guidance interpreting the rules, and the subjective nature of certain of the
rules. Accordingly, it is often difficult to determine whether, and to what
extent, payments made to executives in connection with an ownership change may
be treated as excess parachute payments.
Nonetheless, because the Change in Control Payment to be made to James G.
Lowman will occur in connection with an ownership change of Community Bank, Mr.
Lowman may be treated as having received a parachute payment. Community Bank
believes, however, that Community Bank Common Stock is not readily tradeable on
an established securities market or otherwise. Accordingly, this Change in
Control Payment should not be treated as a parachute payment if the shareholders
of Community Bank who own, immediately before the ownership change, more than
75% of the Community Bank Common Stock (excluding stock held by Mr. Lowman)
approve the portion of the Change in Control Payment to Mr. Lowman that is in
excess of one dollar ($1.00) less than three (3) times Mr. Lowman's average
taxable compensation from Community Bank for the five calendar years preceding
the year in which the ownership change occurs (the "Excess Change in Control
Payment"). The Excess Change in Control Payment has tentatively been
calculated as $22,100. If the shareholders
of Community Bank do not approve the Change in Control Payment to Mr. Lowman,
the Change in Control Payment to Mr. Lowman will be reduced by an amount equal
to the Excess Change in Control Payment so the Change in Control Payment is an
amount equal to one dollar ($1.00) less than three (3) times Mr. Lowman's
average taxable compensation from Community Bank for the five calendar years
preceding the year in which the ownership change occurs.
COMMUNITY BANK'S BOARD OF DIRECTORS (WITH MR. LOWMAN ABSTAINING)
UNANIMOUSLY RECOMMENDS THAT COMMUNITY BANK SHAREHOLDERS VOTE FOR APPROVAL OF THE
CHANGE IN CONTROL PAYMENT TO JAMES G. LOWMAN.
AMENDMENT OF THE ARTICLES OF INCORPORATION OF COMMUNITY BANK
This section of the Proxy Statement-Prospectus describes certain amendments
to Community Bank's Articles of Incorporation upon consummation of the Merger.
Specifically, Barnett has applied to the Florida Department of Banking and
Finance, on behalf of Community Bank, for authority to offer trust services at
Community Bank following consummation of the Merger. Such trust powers are
desirable since the need exists in the Sanibel and Captiva Islands market to
offer competitive trust services. Community Bank anticipates offering a
variety of trust services to its customers upon approval of the Amendment,
including investment advisory services, trusteeships and estate planning and
administration. In order to offer trust services, Community Bank is required
to amend its Articles of Incorporation to authorize the exercise of trust
powers. The Board of Directors of Community Bank has approved the Amendment to
the Articles of Incorporation of Community Bank in order to authorize Community
Bank to exercise trust powers following the Merger. The text of the Amendment,
in the form of the Amended and Restated Articles of Incorporation of Community
Bank, is attached hereto as Appendix D. This
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Amendment is being submitted to the shareholders of Community Bank for approval
pursuant to this Proxy Statement and, in accordance with Florida law, such
amendment will be approved if the votes cast at the Special Meeting in favor of
the Amendment exceed the votes cast opposing the Amendment. See "The Merger--
Regulatory Approvals".
COMMUNITY BANK'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT COMMUNITY BANK
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT OF COMMUNITY BANK'S ARTICLES OF
INCORPORATION AS DESCRIBED ABOVE.
INFORMATION ABOUT COMMUNITY BANK
BUSINESS OF COMMUNITY BANK
Community Bank was organized as a state bank under Florida law in February
1988 to serve the needs of the rapidly growing island communities of Sanibel and
Captiva, Florida. Community Bank provides a broad range of retail and
commercial banking services, primarily to customers located in the area.
Community Bank's main office is located in the heart of the Sanibel business and
retail district. Community Bank also has a small branch office on the eastern
end of Sanibel Island. Because of the excellent market in which it operates and
strict underwriting procedures, Community Bank has a high quality loan
portfolio, with no non-accrual loans as of year-end 1994. Most of Community
Bank's loans are real estate loans secured by first or second mortgages on
residential or commercial property. Community Bank's primary marketing strategy
is to offer personalized banking services to members of the community. It holds
approximately 45% of deposits in the Sanibel/Captiva market.
Sanibel and Captiva, the location of premier destination resorts and
upscale residential communities, are barrier islands in the Gulf of Mexico
connected to the mainland by a three-mile causeway. The permanent year-round
population is approximately 6,500, swelling to 22,000 from November to May from
tourists and winter residents and to over 12,000 during most of the rest of the
year. As a result, Community Bank's deposits vary significantly, from a low of
$69.6 million in October 1994, to a high of $79.0 million in April 1994. At
December 31, 1994, Community Bank had total deposits of $75.1 million and net
loans of $58.3 million.
MARKET AND DIVIDEND INFORMATION REGARDING COMMUNITY BANK COMMON STOCK
There is not an established trading market in the shares of Community Bank
Common Stock. Community Bank is not aware of any transfers of Community Bank
Common Stock which have occurred in arm's length transactions in the last two
years. In 1993, 1994 and 1995, Community Bank paid dividends per share of
Community Bank Common Stock of $3.00, $2.00 and $0.00, respectively, to its
shareholders.
-54-
<PAGE>
PRINCIPAL HOLDERS OF COMMUNITY BANK COMMON STOCK
No person is known by Community Bank to own beneficially more than 5% of
Community Bank's outstanding Common Stock. The following table sets forth as of
SEPTEMBER 1, 1995, certain information as to shares of Community Bank
Common Stock owned beneficially by each director and by all directors and
executive officers of Community Bank as a group:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name Ownership(1) of Class(5)
---- ----------------- -----------
<S> <C> <C>
Francis P. Bailey 17,875 3.4
Lyman H. Frank 21,725(2) 4.2
Mary R. Goss 5,706 1.1
Myton W. Ireland 17,875 3.4
Stanley E. Johnson, Jr. 21,120(3) 4.1
John K. Kontinos 21,120 4.1
Thomas R. Louwers 6,518(4) 1.3
James G. Lowman 20,970 4.0
Jerrold A. Muench 8,140 1.6
Allen G. TenBroek 21,120(5) 4.1
All directors and executive 165,854 32.0
officers as a group (12 persons)
- -----------------------
<FN>
(1) Unless otherwise noted, all shares are owned directly with sole voting and
dispositive power.
(2) These shares are held jointly with Mr. Frank's wife, Nancy H. Frank, who
shares voting and dispositive power with Mr. Frank.
(3) Held by Mr. Johnson and his wife as co-trustees, who share voting and
dispositive power.
(4) Held jointly with Mr. Louwers' wife, who shares voting and dispositive
power.
(5) Includes 7,920 shares subject to immediately exercisable stock options.
</TABLE>
-55-
<PAGE>
As of [SEPTEMBER 8, 1995], there were _____ holders of record of
Community Bank Common Stock.
FINANCIAL INFORMATION REGARDING COMMUNITY BANK
COMMUNITY BANK OF THE ISLANDS
BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
March 31,
Assets 1995
------ --------------
<S> <C>
Cash and due from banks $4,429,781
Federal funds sold 12,500,000
Securities held to maturity (fair value $11,930,000) 11,951,868
Loans receivable, net of allowance for loan losses of $620,555 61,166,124
Other real estate owned 17,486
Accrued interest receivable 399,303
Property and equipment, net 1,580,129
Other assets 288,886
--------------
$92,333,577
--------------
--------------
<CAPTION>
Liabilities and Stockholders' Equity
------------------------------------
<S> <C>
Deposits $83,942,977
Other liabilities 531,812
--------------
Total liabilities 84,474,789
Stockholders' equity:
Common stock, $3 par value. Authorized 600,000 shares;
issued and outstanding 510,784 shares 1,532,352
Capital surplus 2,200,270
Undivided profits 4,126,166
--------------
Total stockholders' equity 7,858,788
$92,333,577
--------------
--------------
</TABLE>
See accompanying notes to financial statements.
-56-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1995 1994
--------------------------
<S> <C> <C>
Interest income:
Interest on loans $1,388,054 $1,060,460
Interest on federal funds sold 98,331 98,274
Interest on investment securities and interest-bearing deposits 210,523 121,966
--------------------------
Total interest income 1,696,908 1,280,700
Interest on deposits 559,456 453,766
--------------------------
Net interest income before provision for loan losses 1,137,452 826,934
Provision for loan losses 31,000 -
--------------------------
Net interest income 1,106,452 826,934
Other income:
Service charges on deposit accounts 43,989 41,227
Service charges on merchant credit card accounts 9,805 13,302
Other 19,453 26,371
--------------------------
Total other income 73,247 80,900
Other expenses:
Compensation 240,706 234,894
Occupancy 41,001 39,867
Equipment 21,020 19,769
Marketing 4,133 5,076
Professional 4,500 17,333
Insurance 6,635 6,512
Data processing services 39,339 22,748
Supplies 8,356 6,712
Deposit insurance premiums 45,998 43,161
Other 54,278 45,036
--------------------------
Total other expenses 465,966 441,108
--------------------------
Income before income taxes 713,733 466,726
Income tax expense 268,590 164,003
--------------------------
Net income $445,143 $302,723
--------------------------
Earnings per share $ 0.86 $ 0.59
Average number of shares 516,052 516,052
--------------------------
--------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-57-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Total
Common Capital Undivided Stockholders'
Stock Surplus Profits Equity
----------------------------------------------------
<S> <C> <C> <C> <C>
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1994
Balance at December 31, 1993 $1,532,352 $2,200,270 $3,366,338 $7,098,960
Net income 302,723 302,723
----------------------------------------------------
Balance at March 31, 1994 $1,532,352 $2,200,270 $3,669,061 $7,401,683
----------------------------------------------------
----------------------------------------------------
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1995
Balance at December 31, 1994 $1,532,352 $2,200,270 $3,681,023 $7,413,645
Net income 445,143 445,143
----------------------------------------------------
Balance at March 31, 1995 $1,532,352 $2,200,270 $4,126,166 $7,858,788
----------------------------------------------------
----------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-58-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1995 1994
---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $445,143 $302,723
Adjustments to reconcile net income to net cash flows
from operations:
Depreciation 23,680 24,201
Provision for loan losses 31,000 -
Deferred income taxes - (16,430)
Net deferred loan origination fees 1,744 (6,784)
Net accretion of discounts and amortization of premiums on
investment securities (41,993) 9,702
Decrease (increase) in accrued interest receivable 51,393 (32,681)
Increase other assets (68,964) (70,131)
Increase in other liabilities 36,301 (12,524)
Increase in income taxes payable 198,810 162,030
---------------------------
Net cash provided by operating activities 677,114 360,106
---------------------------
Cash flows from investing activities:
(Increase) decrease in loans, net (2,879,095) 2,716,943
Capital expenditures - (5,106)
Purchase of investment securities and interest-bearing deposits (2,128,064) (3,931,739)
Proceeds from maturities and principal repayments of investment
securities and interest-bearing deposits 1,775,000 1,000,000
---------------------------
Net cash (used in) provided by investing activities (3,232,159) (219,902)
---------------------------
Cash flows from financing activities:
Increase in demand deposits, NOW and money market
accounts, and savings accounts 5,662,871 6,914,209
Increase (decrease) in certificates of deposit 3,167,494 (282,169)
---------------------------
Net cash provided by financing activities 8,830,365 6,632,040
---------------------------
Net increase in cash and cash equivalents 6,275,320 6,772,244
Cash and cash equivalents at beginning of period $10,654,461 $12,643,320
---------------------------
---------------------------
Cash and cash equivalents at end of period $16,929,781 $19,415,564
---------------------------
---------------------------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $539,073 $448,578
---------------------------
---------------------------
Cash paid during the period for income taxes $69,780 $18,403
---------------------------
---------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-59-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
AVERAGE BALANCES, YIELDS AND RATES
DECEMBER 31,
<TABLE>
<CAPTION>
1994 1993
Average Average Average Average
Balance Interest Yield or Rate Balance Interest Yield or Rate
------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Loans (before deduction of unearned income):
Commercial $6,029,264 $495,082 8.21% $6,273,967 $489,208 7.80%
Mortgage 48,744,083 3,943,613 8.09% 49,124,946 3,829,756 7.80%
Consumer 746,313 72,958 9.78% 703,932 75,128 10.67%
------------------------------------------------------------------------------------
Total loans 55,519,660 4,511,653 8.13% 56,102,845 4,394,092 7.83%
Federal funds sold 10,522,671 402,902 3.83% 6,678,836 201,139 3.01%
Securities held to maturity 9,981,251 632,253 6.33% 8,927,690 591,608 6.63%
------------------------------------------------------------------------------------
Total earning assets 76,023,582 $5,546,808 7.30% 71,709,371 5,186,839 7.23%
Cash and due from banks 3,333,679 3,594,809
Other assets 1,563,799 1,732,759
-------------- --------------
Total assets $80,921,060 $77,036,939
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
NOW and money market accounts $31,995,427 $683,907 2.14% $31,748,411 $686,492 2.16%
Savings accounts 8,722,761 217,100 2.49% 7,136,353 176,832 2.48%
Certificates of deposits 22,402,125 990,519 4.42% 23,140,102 1,033,720 4.47%
------------------------------------------------------------------------------------
Total interest-bearing liabilities 63,120,313 $1,891,526 3.00% 62,024,866 1,897,044 3.06%
Demand deposits 10,229,971 7,953,245
Other liabilities 341,442 374,383
Stockholders' equity 7,229,334 6,684,445
-------------- --------------
Total liabilities and equity $80,921,060 $77,036,939
-------------- --------------
-------------- --------------
SPREAD AND NET YIELD
Interest rate spread 4.30% 4.17%
Cost of funds supporting earning assets 2.49% 2.64%
Net yield on earning assets $3,655,282 4.81% $3,289,795 4.59%
-------------------------- -------------------------
-------------------------- ------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
COMMUNITY BANK OF THE ISLANDS
RATIOS
DECEMBER 31, 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C>
Return on equity................................... 18.48% 16.95%
Return on assets................................... 1.65% 1.47%
Dividend payout ratio.............................. 77.22% 135.14%
Equity to assets................................... 8.93% 8.68%
Earnings per share................................. $2.59 $2.22
Average number of shares........................... 516,052 509,676
- ------------------------------------------------------------------------
</TABLE>
-60-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
The accounting and reporting policies of Community Bank conform to
generally accepted accounting principles and to predominant practices within
the banking industry. Community Bank has not changed its accounting and
reporting policies from those disclosed in its Financial Statements for the
years ended December 31, 1994 and 1993.
In the opinion of Community Bank's management, all adjustments necessary to
fairly present the financial position as of March 31, 1995, the results of
operations and cash flows for the periods ended March 31, 1995 and 1994, all of
which are of a normal and recurring nature, have been included.
The results of operations for the three-month period ended March 31, 1995
may not be indicative of operating results for the year ending December 31,
1995.
In May 1995, Community Bank reached a definitive agreement to be
acquired by Barnett Banks, Inc. for $17.2 million in common stock. The
transaction is expected to close by November 1, 1995.
2. LOANS RECEIVABLE, NET
Loans at March 31, 1995 are summarized as follows:
<TABLE>
<S> <C>
Commercial loans $6,846,141
Mortgage loans 54,363,622
Consumer loans 719,322
-----------------
61,929,085
Deferred loan fees (142,406)
Allowance for loan losses (620,555)
-----------------
$61,166,124
-----------------
-----------------
</TABLE>
The following is a summary of the activity in the allowance for loan losses
for the three-month period ended March 31, 1995:
<TABLE>
<S> <C>
Balance, beginning of period $589,360
Provision for loan losses 31,000
Charge-offs -
Recoveries 195
-----------------
Balance, end of period $620,555
-----------------
-----------------
</TABLE>
-61-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. DEPOSIT ACCOUNTS
Deposit accounts as of March 31, 1995 are as follows:
<TABLE>
<S> <C>
Demand deposits $14,370,172
NOW and money market accounts 33,378,307
Regular savings accounts 8,950,036
Certificates of deposits 27,244,462
-----------------
$83,942,977
-----------------
-----------------
</TABLE>
-62-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Statements of Financial Condition
December 31, 1994 and 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1994 1993
------ ---- ----
<S> <C> <C>
Cash and due from banks $ 3,604,461 3,693,320
Federal funds sold 7,050,000 8,950,000
Securities held to maturity (approximate fair value $11,376,394
and $7,593,672 in 1994 and 1993, respectively) (note 2) 11,556,811 7,381,749
Loans receivable, net of allowance for loan losses of $589,360
and $573,914 in 1994 and 1993, respectively) (note 3) 58,319,773 56,435,186
Other real estate owned 17,486 17,486
Accrued interest receivable 450,696 331,913
Property and equipment, net (note 4) 1,603,809 1,667,457
Deferred tax asset (note 6) 174,123 116,576
Other assets 45,799 62,062
---------- ----------
$ 82,822,958 78,655,749
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits (note 5) $ 75,112,612 71,328,701
Income taxes payable (note 6) 92,873 2,827
Other liabilities 203,828 225,261
---------- ----------
Total liabilities 75,409,313 71,556,789
---------- ----------
Stockholders' equity (notes 8, 9, 10 and 11):
Common stock, $3 par value. Authorized 600,000 shares;
issued and outstanding 510,784 and 510,784 in
1994 and 1993, respectively 1,532,352 1,532,352
Capital surplus 2,200,270 2,200,270
Undivided profits 3,681,023 3,366,338
---------- ----------
Total stockholders' equity 7,413,645 7,098,960
Commitments and contingencies (notes 4 and 7) ---------- ----------
$ 82,822,958 78,655,749
---------- ----------
---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
-63-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Statements of Operations
Years Ended December 31, 1994 and 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Interest income:
Interest on loans $ 4,511,653 4,394,092
Interest on federal funds sold 402,902 201,139
Interest on investment securities and interest-bearing deposits 632,253 591,608
----------- ----------
Total interest income 5,546,808 5,186,839
Interest on deposits (note 5) 1,891,526 1,897,044
----------- ----------
Net interest income before provision for loan losses 3,655,282 3,289,795
Provision for loan losses (note 3) 15,000 15,000
----------- ----------
Net interest income 3,640,282 3,274,795
----------- ----------
Other income:
Service charges on deposit accounts 175,925 166,192
Service charges on merchant credit card accounts 41,321 42,396
Other 78,092 88,844
----------- ----------
Total other income 295,338 297,432
----------- ----------
Other expenses:
Compensation 967,018 932,374
Occupancy (note 4) 161,464 161,103
Equipment 78,180 79,513
Marketing 22,861 35,115
Professional 56,060 50,015
Insurance 28,788 27,446
Data processing services 127,770 126,013
Supplies 46,320 40,924
Deposit insurance premiums 179,813 176,124
Other 143,555 155,878
----------- ----------
Total other expenses 1,811,829 1,784,505
----------- ----------
Income before income taxes and cumulative effect
of accounting change 2,123,791 1,787,722
Income tax expense (note 6) 787,538 671,165
----------- ----------
Income before cumulative effect of accounting change 1,336,253 1,116,557
Cumulative effect of accounting change (note 6) -- 16,706
----------- ----------
Net income $ 1,336,253 1,133,263
----------- ----------
----------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
-64-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Statements of Stockholders' Equity
Years Ended December 31, 1994 and 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total
Common Capital Undivided Stockholders'
Stock Surplus Profits Equity
----- ------- ------- ------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $ 1,319,991 1,621,168 3,765,427 6,706,586
Exercise of stock options
(70,787 shares) (note 9) 212,361 579,102 -- 791,463
Dividends paid (note 10) -- -- (1,532,352) (1,532,352)
Net income -- -- 1,133,263 1,133,263
--------- --------- --------- ---------
Balance at December 31, 1993 1,532,352 2,200,270 3,366,338 7,098,960
Dividends paid (note 10) -- -- (1,021,568) (1,021,568)
Net income -- -- 1,336,253 1,336,253
--------- --------- --------- ---------
Balance at December 31, 1994 $ 1,532,352 2,200,270 3,681,023 7,413,645
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
-65-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Statements of Cash Flows
Year Ended December 31, 1994 and 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,336,253 1,133,263
Adjustments to reconcile net income to net cash flows
from operations:
Depreciation 95,300 100,312
Provision for loan losses 15,000 15,000
Deferred income taxes (57,547) (19,229)
Net deferred loan origination fees 52,687 (7,628)
Net accretion of discounts and amortization of
premiums on investment securities 28,773 74,435
(Increase) decrease in accrued interest receivable (118,783) 89,087
(Increase) decrease in other assets 16,263 (28,477)
Increase (decrease) in other liabilities (21,433) 36,706
Increase (decrease) in income taxes payable 90,046 (59,064)
Gain on sale of other real estate owned (2,400) (10,406)
Loss on disposal of property and equipment 259 --
---------- ----------
Net cash provided by operating activities 1,434,418 1,323,999
---------- ----------
Cash flows from investing activities:
Increase in loans, net (2,025,274) (1,903,787)
Capital expenditures (31,911) (14,731)
Purchase of investment securities and interest-bearing deposits (11,202,812) (2,537,579)
Proceeds from maturities and principal repayments of
investment securities and interest-bearing deposits 6,998,977 5,225,868
Proceeds from sale of other real estate owned 75,400 1,179,802
Capital expenditures on other real estate owned -- (473,249)
---------- ----------
Net cash provided by (used in) investing activities (6,185,620) 1,476,324
---------- ----------
Cash flows from financing activities:
Increase in demand deposits, NOW and money market
accounts, and savings accounts 2,045,741 3,076,234
Increase (decrease) in certificates of deposit 1,738,170 (2,013,038)
Cash dividends paid (1,021,568) (1,532,352)
Exercise of stock options -- 791,463
---------- ----------
Net cash provided by financing activities 2,762,343 322,307
---------- ----------
Net increase (decrease) in cash and cash equivalents (1,988,859) 3,122,630
Cash and cash equivalents at beginning of year 12,643,320 9,520,690
---------- ----------
Cash and cash equivalents at end of year $ 10,654,461 12,643,320
---------- ----------
---------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 1,887,103 1,910,748
---------- ----------
---------- ----------
Cash paid during the year for income taxes $ 738,609 732,752
---------- ----------
---------- ----------
Supplemental disclosures of non-cash activities:
Transfer of loans to other real estate owned $ 73,000 503,826
---------- ----------
---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
-66-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
December 31, 1994 and 1993
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a description of the basis of presentation and the
significant accounting and reporting policies which Community Bank of
the Islands (the "Bank") follows in preparing and presenting its
financial statements.
(a) ACCOUNTING PRINCIPLES
The financial statements have been prepared in conformity with
generally accepted accounting principles.
(b) SECURITIES HELD TO MATURITY
The Bank accounts for investments in debt and equity securities
in accordance with Financial Accounting Standard ("FAS") No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities." FAS 115 requires the reporting of certain
securities at fair value except for those securities which the
Bank has the positive intent and ability to hold to maturity.
Securities that management has the intent and the Bank has the
ability at the time of purchase or origination to hold until
maturity are classified as securities held to maturity.
Securities in this category are carried at amortized cost
adjusted for accretion of discounts and amortization of premiums
using the level yield method over the estimated life of the
securities. If a security has a decline in fair value below its
amortized cost that is other than temporary, then the security
will be written down to its new cost basis by recording a loss in
the statements of operations.
(c) ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision
for loan losses charged against operations. Loans are charged
against the allowance for loan losses when management believes
that the collectibility of the principal is unlikely. The
allowance for loan losses is the amount that management believes
will be adequate to absorb possible losses on existing loans that
may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. While
management uses the best information available to recognize
losses on loans, future additions to the allowance may be
necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for
losses on loans and real estate owned. Such agencies may require
the Bank to recognize additions to the allowance based on their
judgments of information available to them at the time of their
examination.
Accrual of interest is discontinued on a loan when management
believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition is
such that collection of interest is doubtful.
(CONTINUED)
- --------------------------------------------------------------------------------
-67-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
(d) PROPERTY AND EQUIPMENT
Office property and equipment is stated at cost less accumulated
depreciation. Depreciation is provided on a straight-line basis
over the estimated useful lives of the related assets. Estimated
lives are 31-1/2 years on the Bank's building, ten years for land
improvements, and five to twelve years for furniture, fixtures
and equipment.
Maintenance and repairs are charged to expense as incurred and
improvements are capitalized. The costs and accumulated
depreciation relating to property and equipment retired or
otherwise disposed of are eliminated from the accounts and any
resulting gains and losses are credited or charged to income.
(e) LOAN ORIGINATION AND
COMMITMENT FEES
The Bank accounts for loan fees in accordance with the rules
under Financial Accounting Standard No. 91. This standard limits
the immediate recognition of loan origination fee income to the
amount of incremental direct loan origination costs and the
remainder is deferred and amortized over the estimated loan life
as an adjustment of yield. This standard had no effect upon the
actual amount of fee income received from borrowers or upon the
costs associated with the origination of loans, but deals solely
with the timing of reporting such fees.
(f) OTHER REAL ESTATE OWNED
Real estate acquired in the settlement of loans is initially
recorded at the lower of cost (principal balance of the former
loan plus costs of obtaining title and possession) or estimated
fair value at the date of acquisition. Subsequently, such real
estate acquired is carried at the lower of cost or estimated net
realizable value. Costs relating to development and improvement
of the property are capitalized, whereas those relating to
holding the property are charged to operations.
(g) INCOME TAXES
The Bank accounts for income taxes in accordance with Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 109 ("Statement 109"), "Accounting for
Income Taxes." Under the asset and liability method of Statement
109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period
that included the enactment date.
Effective January 1, 1993, the Bank adopted Statement 109 and has
reported the cumulative effect of that change in the method of
accounting for income taxes in the 1993 statement of operations.
(CONTINUED)
- --------------------------------------------------------------------------------
-68-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
(h) FINANCIAL INSTRUMENTS WITH
OFF-BALANCE SHEET RISK
In the ordinary course of business, the Bank is a party to
financial instruments with off-balance sheet risk to meet the
financing needs of its customers. These financial instruments
include commitments to extend credit at both fixed and variable
rates and standby letters of credit. Those instruments involve,
to varying degrees, elements of credit risk in excess of the
amount recognized, if any, in the statement of financial
condition. The Bank's exposure to credit loss for commitments to
extend credit and standby letters of credit is represented by the
contractual amount of those instruments. The Bank uses the same
credit policies in making commitments and conditional obligations
as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each
customer's credit worthiness on a case-by-case basis.
Standby letters of credit are conditional commitments issued by
the Bank to guarantee the performance of a customer to a third
party. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan
facilities to customers.
(i) STATEMENT OF CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and federal funds
sold.
(2) SECURITIES HELD TO MATURITY
The amortized cost and estimated fair values of securities held to
maturity as of December 31, 1994 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
DESCRIPTION COST GAINS LOSSES VALUE
----------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
United States Treasury securities $ 3,705,377 -- (35,692) 3,669,685
United States government residential
mortgage securities 2,130,740 4,017 (69,071) 2,065,686
United States government agencies 5,175,694 5,262 (76,632) 5,104,324
Other securities 545,000 -- (8,301) 536,699
----------- ----- ---------- ----------
$11,556,811 9,279 (189,696) 11,376,394
----------- ----- ---------- ----------
----------- ----- ---------- ----------
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
-69-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
The amortized cost and estimated fair values of securities held to
maturity as of December 31, 1993 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
DESCRIPTION COST GAINS LOSSES VALUE
----------- ---- ----- ------ -----
<S> <C> <C> <C> <C>
United States Treasury securities $1,502,964 13,286 -- 1,516,250
United States government residential
mortgage securities 1,379,930 58,402 -- 1,438,332
United States government agencies 3,953,855 123,193 (11,650) 4,065,398
Other securities 545,000 28,692 -- 573,692
---------- ------- -------- ---------
$7,381,749 223,573 (11,650) 7,593,672
---------- ------- -------- ---------
---------- ------- -------- ---------
</TABLE>
The following table shows the maturity distribution of the securities
held to maturity portfolio at amortized cost and fair value at
December 31, 1994:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- -----
<S> <C> <C>
Due in one year or less $ 4,481,983 4,476,582
Due after one year through five years 3,944,088 3,857,626
Due after five years through ten years 1,000,000 976,500
----------- ---------
9,426,071 9,310,708
Mortgage-backed securities 2,130,740 2,065,686
----------- ---------
$11,556,811 11,376,394
----------- ---------
----------- ---------
</TABLE>
There were no sales of debt securities during 1994 or 1993.
Securities held to maturity with a carrying amount of approximately
$1.4 million and $1.5 million at December 31, 1994 and 1993,
respectively, were pledged to secure certain deposit accounts.
(CONTINUED)
- --------------------------------------------------------------------------------
-70-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
(3) LOANS RECEIVABLE, NET
Loans at December 31, 1994 and 1993 are summarized as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Commercial loans $ 6,970,944 6,185,052
Mortgage loans 51,316,919 50,176,126
Consumer loans 761,933 735,898
----------- ----------
59,049,796 57,097,076
Deferred loans fees (140,663) (87,976)
Allowance for loan losses (589,360) (573,914)
----------- ----------
$58,319,773 56,435,186
----------- ----------
----------- ----------
</TABLE>
The following is a summary of the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance, beginning of year $573,914 558,914
Provision for loan losses 15,000 15,000
Charge-offs -- --
Recoveries 446 --
-------- -------
Balance, end of year $589,360 573,914
-------- -------
-------- -------
</TABLE>
At December 31, 1994 and 1993, the Bank was servicing loans for the
benefit of others amounting to approximately $987,000 and $1,009,000,
respectively.
The aggregate amount of loans and lines of credit outstanding to the
Bank's executive officers, directors and associates at December 31,
1994 and 1993 was approximately $4,489,000 and $5,863,000,
respectively.
At December 31, 1994 and 1993, there were no loans on which the
accrual of interest was discontinued or reduced.
The Bank has defined its primary market area as Sanibel and Captiva
Islands, and the majority of commercial and mortgage loans are granted
to customers residing in this area. Generally, commercial loans are
secured by real estate, and mortgage loans are secured by either first
or second mortgages on residential or commercial property. As of
December 31, 1994, substantially all of the Bank's loan portfolio was
secured.
(CONTINUED)
- --------------------------------------------------------------------------------
-71-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
(4) PROPERTY AND EQUIPMENT, NET
A summary of property and equipment at December 31, 1994 and 1993
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Land $ 779,087 779,087
Land improvements 121,275 121,275
Building 780,867 780,867
Furniture, fixtures and equipment 435,316 427,638
Leasehold improvements 46,428 46,428
---------- ---------
2,162,973 2,155,295
Less accumulated depreciation (559,164) (487,838)
---------- ---------
$1,603,809 1,667,457
---------- ---------
---------- ---------
</TABLE>
The Bank has entered into an agreement to lease its branch office. Future
minimum lease payments under this noncancelable operating lease as of
December 31, 1994 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1995 $ 9,990
1996 11,024
1997 11,024
1998 8,268
-------
$40,306
-------
-------
</TABLE>
Total rental expense in 1994 and 1993 under this lease was
approximately $9,646 and $9,600, respectively.
(5) DEPOSIT ACCOUNTS
Deposit accounts as of December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Demand deposits $10,824,350 9,014,920
NOW and money market accounts 33,160,721 32,050,372
Regular savings accounts 7,050,573 7,924,611
Certificates of deposit 24,076,968 22,338,798
----------- ----------
$75,112,612 71,328,701
----------- ----------
----------- ----------
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
-72-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
Included in interest-bearing deposits are certificates of deposit
issued in amounts of $100,000 or more. These certificates totaled
$9,461,018 and $8,555,990 as of December 31, 1994 and 1993,
respectively. Interest on certificates of deposit of $100,000 or more
for 1994 and 1993 was approximately $402,000 and $393,000,
respectively.
(6) INCOME TAXES
As discussed in note 1, the Bank adopted Statement 109 as of
January 1, 1993. The cumulative effect of this change in accounting
for income taxes was $16,706, determined as of January 1, 1993, and is
reported separately in the statement of operations for the year ended
December 31, 1993. Prior years' financial statements have not been
restated to apply the provisions of Statement 109.
The provision for income taxes for 1994 and 1993 consists of the
following:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -----
<S> <C> <C> <C>
Year ended December 31, 1994:
Federal $744,974 (51,996) 692,978
State 100,111 (5,551) 94,560
-------- ------- -------
$845,085 (57,547) 787,538
-------- ------- -------
-------- ------- -------
Year ended December 31, 1993:
Federal $580,603 (2,280) 578,323
State 93,085 (243) 92,842
-------- ------- -------
$673,688 (2,523) 671,165
-------- ------- -------
-------- ------- -------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1994 and 1993 are presented below.
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred tax assets:
Loans receivable, due to allowance for loan losses $153,191 141,734
Deferred loan fees 52,931 39,178
Other 788 4,531
-------- -------
Total deferred tax assets 206,910 185,443
Less valuation allowance -- --
-------- -------
Net deferred tax assets 206,910 185,443
-------- -------
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
-73-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred tax liabilities:
Property and equipment, due to differences in
depreciation methods and useful lives $(18,845) (42,505)
Cash to accrual conversions (13,942) (26,362)
-------- -------
Total deferred tax liabilities (32,787) (68,867)
-------- -------
Net deferred tax asset $174,123 116,576
-------- -------
-------- -------
</TABLE>
The Bank believes that it has paid sufficient taxes in prior carryback
years which will enable it to recover the net deferred tax asset, and
therefore, no valuation allowance, as defined by Statement 109, is
required at December 31, 1994 or 1993.
Income tax expense of the Bank differs from the amount computed by
applying the federal income tax rate of 34 percent to income before
income taxes because of the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Income tax expense at statutory federal rate 34.0% 34.0%
State income taxes, net of federal income
tax benefits 2.9 3.0
Other, net .2 .5
---- ----
37.1% 37.5%
---- ----
---- ----
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
In the normal course of business, various commitments and contingent
liabilities are outstanding, such as commitments to extend credit and
standby letters of credit, which are not reflected in the financial
statements. No losses are anticipated as a result of these
transactions.
At December 31, 1994 and 1993, the Bank had commitments to customers
of approximately $378,000 and $276,000 for standby letters of credit,
respectively, $2,078,000 and $3,399,000 available on approved lines of
credit, respectively, and $4,906,000 and $1,294,000 for unfunded loan
commitments, respectively.
(CONTINUED)
- --------------------------------------------------------------------------------
-74-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
(8) REGULATORY MATTERS (UNAUDITED)
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) was signed into law on December 19, 1991. Regulations
implementing the prompt corrective action provisions of FDICIA became
effective on December 19, 1992. In addition to the prompt corrective
action requirements, FDICIA includes significant changes to the legal
and regulatory environment for insured depository institutions,
including reductions in insurance coverage for certain kinds of
deposits, increased supervision by the Federal regulatory agencies,
increased reporting requirements for insured institutions, and new
regulations concerning internal controls, accounting, and operations.
The prompt corrective action regulations define specific capital
categories based on an institution's capital ratios. The capital
categories, in declining order, are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized,"
and "critically undercapitalized." Institutions categorized as
"undercapitalized" or worse are subject to certain restrictions,
including the requirement to file a capital plan with its primary
Federal regulator, prohibitions on the payment of dividends and
management fees, restrictions on executive compensation, and increased
supervisory monitoring, among other things. Other restrictions may be
imposed on the institution by the FDIC, including requirements to
raise additional capital, sell assets, or sell the entire institution.
Once an institution becomes "critically undercapitalized" it must
generally be placed in receivership or conservatorship within 90 days.
The following table summarizes the capital thresholds for each prompt
corrective action capital categories. An institution's capital
category is based on whether it meets the threshold for all three
capital ratios within the category.
<TABLE>
<CAPTION>
TIER 1 TOTAL
LEVERAGE RISK-BASED RISK-BASED
CATEGORIES RATIO RATIO RATIO
---------- ----- ----- -----
<S> <C> <C> <C>
"Well capitalized" 5% or higher 6% or higher 10% or higher
"Adequately capitalized" 4% or higher 4% or higher 8% or higher
"Under capitalized" less than 4% less than 4% less than 8%
"Significantly undercapitalized" less than 3% less than 3% less than 6%
"Critically undercapitalized" An institution is considered "critically undercapitalized"
if its ratio of tangible equity to total assets is 2% or less.
</TABLE>
At December 31, 1994, the Bank's total leverage ratio was 9.0%, Tier 1
risk-based ratio was 16.3%, and total risk-based ratio was 17.6%.
Management believes the Bank is in the "well capitalized" category.
(CONTINUED)
- --------------------------------------------------------------------------------
-75-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
(9) STOCK OPTION PLAN
The Bank's stock option plan was approved at the annual meeting of
stockholders on April 19, 1989. Under the terms of the plan, 88,000
shares of authorized common stock of the Bank were reserved for
issuance. The plan provides for the grant of incentive as well as
compensatory stock options to directors, officers, and employees at an
option price at least equal to the fair market value of such shares on
the date the option is granted. Options granted under the plan are
exercisable for a term no longer than ten years, are not transferable
other than by will, and terminate within a period of time following
termination of employment with the Bank.
On December 31, 1994, 7,920 options were outstanding. No stock
options have been granted in 1994 or 1993. No stock options were
exercised during 1994. Total stock options of 70,787 were exercised
during 1993 resulting in proceeds of $791,463. The options
outstanding range in price from $9.89 to $11.84 per share.
(10) DIVIDENDS
During 1994, the Board of Directors of the Bank declared a $2.00 per
share, or $1,021,568, cash dividend to all shareholders of record as
of June 20, 1994, which was distributed on July 1, 1994. The Board of
Directors of the Bank declared a $3.00 per share, or $1,532,352, cash
dividend to all shareholders of record as of April 21, 1993, which was
distributed on May 3, 1993.
(11) BOOK VALUE OF COMMON STOCK (UNAUDITED)
The following table sets forth the book value per share of the Bank's
common stock by quarter:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
March 31 $14.49 15.89
June 30 13.10 12.80
September 30 13.72 13.34
December 31 14.51 13.89
----- -----
----- -----
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
-76-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Community Bank of the Islands:
We have audited the accompanying statements of financial condition of
Community Bank of the Islands as of December 31, 1994 and 1993, and the
related statements of operations, stockholders' equity and cash flows for
each of the years then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Community Bank of the
Islands as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for each of the years then ended, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Tampa, Florida
January 20, 1995
-77-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF COMMUNITY BANK
The following discussion should be read in conjunction with the financial
statements of Community Bank and related notes appearing elsewhere in this Proxy
Statement-Prospectus.
GENERAL
Community Bank's primary business is commercial banking which consists
of attracting deposits from the general public and applying these funds to
the origination of commercial, consumer and real estate loans. Community Bank's
profitability depends largely on net interest income, which is the difference
between interest income generated from interest-earning assets (i.e., loans
and investments) less the interest expense incurred on interest-bearing
liabilities (i.e., deposits and borrowings). Net interest income is affected
by the relative amounts of interest-earning assets and interest-bearing
liabilities, and the interest rates earned and paid on these balances. Net
interest income is dependent upon Community Bank's interest rate spread,
which is the difference between the average yield earned on its
interest-earning assets and the average rate paid on its interest-bearing
liabilities. When interest-earning assets approximate or exceed
interest-bearing liabilities, any positive interest rate spread will generate
interest income. The interest rate spread is impacted by interest rates,
deposit flows and loan demand. Additionally, and to a lesser extent,
Community Bank's profitability is affected by such factors as the level of
other income and expenses, the provision for loan losses and the effective
tax rate. Other income consists primarily of fees derived from Community
Bank's retail operations as well as income from the sale of loans and other
investments. Other expenses consist of compensation and benefits, deposit
insurance premiums paid to the FDIC and other operating expenses.
SUMMARY
Net income for the first quarter of 1995 of $445,143 increased 47% from
net income of $302,723 in the first quarter of 1994. This increase primarily
reflects a 130 basis point increase in the net yield on interest-earning
assets.
Net income of $1,336,253 for the year ended December 31, 1994 increased
18% from 1993 net income of $1,133,263. This increase primarily reflects a
22 basis point increase in the net yield on interest-earning assets from 1993
to 1994.
NET INTEREST INCOME
Net interest income, the primary source of net income at Community Bank,
is affected by changes in volume and rates earned or paid on interest-earning
assets and interest-bearing deposits. During the first quarter of 1995, net
interest income of $1,137,452 increased 38% from $826,934 generated in the
same period in 1994, primarily reflecting a 115 basis point increase in the
interest rate spread.
COMMUNITY BANK OF THE ISLANDS
TABLE 1 CHANGE IN NET INTEREST INCOME
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1994 1993
------------------------------------ -----------------------------------
CHANGE FROM CHANGE FROM
PREVIOUS PREVIOUS
YEAR DUE TO: YEAR DUE TO:
------------------------------------ -----------------------------------
TOTAL TOTAL
DOLLARS IN THOUSANDS VOLUME RATE (1) CHANGE VOLUME RATE (1) CHANGE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans......................................... $ (44.2) $ 161.8 $ 117.6 $ 378.9 $ (570.7) $ (191.8)
Securities.................................... 69.8 (29.2) 40.6 (123.6) (120.0) (243.6)
Federal funds sold............................ 115.8 86.0 201.8 39.0 (38.9) 0.1
- -----------------------------------------------------------------------------------------------------------------------------
Total interest income............... 141.4 218.6 360.0 294.3 (729.6) (435.3)
- -----------------------------------------------------------------------------------------------------------------------------
Interest expense:
NOW and Money Market accounts................. 0.1 (2.7) (2.6) 105.0 (244.2) (139.2)
Savings....................................... 39.3 1.0 40.3 22.6 (53.8) (31.2)
Certificates of deposit....................... (33.0) (10.2) (43.2) (134.1) (251.3) (385.4)
- -----------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits..... 6.4 (11.9) (5.5) (6.5) (549.3) (555.8)
- -----------------------------------------------------------------------------------------------------------------------------
Federal funds purchased.......................... -- -- -- (0.1) -- (0.1)
- -----------------------------------------------------------------------------------------------------------------------------
Total interest expense.............. 6.4 (11.9) (5.5) (6.6) (549.3) (555.9)
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income................. $ 135.0 $ 230.5 $ 365.5 $ 300.9 $ (180.3) $ 120.6
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes changes in interest income and expense not due soley to volume or
rate changes.
</TABLE>
- -------------------------------------------------------------------------------
Interest income increased 32% from the first quarter of 1994 to the
first quarter of 1995, due to a 10% increase in average loans combined with
an increase in the average rate earned on loans from 7.60% to 9.07%. This
increase primarily reflects increases in the federal reserve rate as
approximately 90% of Community Bank's loans in 1994 were adjustable rate
loans which reprice at least annually.
-78-
<PAGE>
Interest expense on deposits increased 23% in the first quarter of 1995
from the first quarter of 1994, primarily due to a 15% increase in average
certificates of deposits compounded by a 90 basis point increase in average
rates paid on these deposits from 4.28% in the first quarter of 1994 to 5.18% in
the first quarter of 1995.
Net interest income in 1994 increased 11% from 1993, reflecting a 13 basis
point increase in the interest rate spread and a 6% increase in average earning
assets. The net yield on earning assets
grew to 4.81% in 1994 from 4.59% in 1993.
Interest income in 1994 grew 7% from 1993, primarily due to a 30 basis
point increase in the average yield earned on such loans from 7.83% to 8.13%
as well as an increase in average federal funds sold and securities balances.
This average yield increase primarily reflects increased mortgage interest
rates as 90% of Community Bank's loans in 1994 were adjustable rate loans
which reprice at least annually.
Interest expense during 1995 declined slightly from 1994 due to a favorable
change in deposit mix.
NON-INTEREST EXPENSE
The overhead ratio, the ratio of non-interest expense to total revenues,
declined to 38.5% in the first quarter of 1995 from 48.6% in the first quarter
of 1994. This favorable variance resulted as the 6% increase in non-interest
expense was more than offset by growth in net interest income.
The overhead ratio also decreased for the year ended December 31, 1994 to
45.9% from 49.8% in 1993. This decline reflects the increase in net interest
income described above, offset slightly by a 2% increase in non-interest
expenses from 1993 to 1994.
ASSET-LIABILITY MANAGEMENT
Community Bank's business consists primarily of deposit gathering and
lending activities. Accordingly, Community Bank's results of operations are
affected by its ability to manage interest rate risk effectively and maximize
net interest income. Community Bank continuously monitors its exposure to
changing interest rates.
One measure of Community Bank's interest rate sensitivity is its
interest rate sensitivity gap, or the difference between assets and
liabilities scheduled to mature or reprice within a specified timeframe. As
of March 31, 1995, Community Bank had a short-term negative gap, which is an
excess of liabilites over assets maturing or repricing within a given time
period. This negative gap has left Community Bank's earnings vulnerable to
periods of rising interest rates, in that during such periods the interest
expense paid on liabilities will generally increase more rapidly than the
interest income earned on assets. Conversely, in a falling interest rate
environment, the total expense paid on liabilities will generally decrease
more rapidly than the decrease in interest income earned on assets.
The interest rate sensitivity gap does not measure all potential changes
in net interest income due to changes in market rates. The timing of rate
changes is very important. Experience has shown that due to competition,
changes in deposit rates do not always mirror changes in the national market
rates that serve as an index for most rate sensitive assets. Another factor
that will have a significant impact on the estimate of loan volume repricing
is the expected levels of prepayments on loans in a given rate environment.
Community Bank's assets/liabilities strategy is to reduce its negative
gap by diversifying the loan portfolio into higher yielding commercial and
consumer loans which are more interest rate sensitive than long-term
residential mortgage loans. On the liability side, Community Bank seeks to
add demand deposit accounts while reducing interest rate sensitive
certificates of deposit. The strategy met with limited success during 1994.
Although Community Bank succeeded in greater diversification of its portfolio
as commercial and consumer loans increased 12% compared to mortgage loan
growth of 2% in 1994 from 1993, it was not as successful on the liability
side as certificates of deposit increased 8% while demand deposit accounts
increased only 4% in 1994 from 1993. As a result, at December 31, 1994,
Community Bank had a six-month negative gap of 18% and a one year positive
gap of 13%.
EARNING ASSETS
LOANS. Average loans grew $5,428,697 or 10%, from the first quarter of
1994 to the first quarter of 1995. This growth was
-79-
<PAGE>
primarily driven by a $4,185,645 increase in mortgage loans. Commercial loans
increased by $1,197,859.
Annual average loans decreased 1% from 1993 to 1994. This decrease
reflects lower commercial and mortgage loan balances, offset in part by higher
consumer installment loan balances.
ASSET QUALITY AND NON-PERFORMING LOANS. Community Bank has established
an allowance for loan losses through a provision for loan losses charged
against operations. Loans are charged against the allowance for loan losses
when management believes that the collectibility of the principal is unlikely.
During the first quarter of 1995, $31,000 was charged to provision
expense. No provision was recorded during the first quarter of 1994.
Provision expense was $15,000 during each of the years ended December 31,
1994 and 1993. There were no significant charge-offs or recoveries during
1993, 1994 or the first quarters of 1994 and 1995. The reserve for loan
losses was $620,555 and $573,914 as of March 31, 1995 and 1994, respectively.
The reserve was $589,360 and $573,914 as of December 31, 1994 and 1993,
respectively.
At March 31, 1995 and December 31, 1994, there were no non-accrual loans 90
days past due. Other real estate owned stood at $17,486 at March 31, 1995 and
December 31, 1994.
COMMUNITY BANK OF THE ISLANDS
<TABLE>
<CAPTION>
TABLE 2 LOAN MATURITY
LOANS MATURING OVER
ONE YEAR WITH:
------------------------
Total Fixed Floating
DECEMBER 31 - DOLLARS IN THOUSANDS loans rates rates
1994
<S> <C> <C> <C>
Within one year...................... $ 55,638
Over one year to five years.......... 3,379 $ 3,064 $ 315
After five years..................... 33 33
--------------------------------------
Total........................... $ 59,050 $ 3,097 $ 315
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1993
Within one year...................... $ 53,203
Over one year to five years.......... 3,894 $ 3,461 $ 433
After five years..................... -- -- --
--------------------------------------
Total........................... $ 57,097 $ 3,461 $ 433
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
INVESTMENT SECURITIES. Community Bank invests primarily in
high-quality, short-term debt securities. Unrealized losses on debt
securities are considered to be temporary. Community Bank plans to hold all
of its investment securities until maturity.
Investment securities at March 31, 1995 were $11,951,868, up only $395,057
from $11,556,811 at December 31, 1994, as monies from increased deposit balances
were used primarily to fund loans and to purchase federal funds sold.
Investment securities increased from $7,381,749 at December 31, 1993 to
$11,556,811 at December 31, 1994, reflecting increased funds from deposits and
sales of federal funds sold, offset in part by funding of new loans.
-80-
<PAGE>
COMMUNITY BANK OF THE ISLANDS
TABLE 3 MATURITY OF INVESTMENT SECURITIES HELD TO MATURITY
<TABLE>
<CAPTION>
DECEMBER 31 , 1994 1993
----------------------------------------- ----------------------------------------
AMORTIZED FAIR YEAR-END AMORTIZED FAIR YEAR-END
COST VALUE YIELD COST VALUE YIELD
----------------------------------------- ----------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury. . . . . . . . . . . . . . . $ 3,705,377 $ 3,669,685 4.76 % $ 1,502,964 1,516,250 4.88%
Mortgage-backed securities . . . . . . . . 2,130,740 2,065,686 7.58 1,379,930 1,438,332 6.93
U.S. Government agencies . . . . . . . . . 5,175,694 5,104,324 7.42 3,953,855 4,065,398 7.45
Other Securities . . . . . . . . . . . . . 545,000 536,699 5.00 545,000 573,692 5.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total securities . . . . . . . . . . . $ 11,556,811 $ 11,376,394 6.33 % $ 7,381,749 $ 7,593,672 6.63%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DEPOSITS
Average deposits for the first quarter of 1995 were $77,522,119, up from
$73,611,187 for the same period of the prior year. This increase was primarily
due to certificate of deposit balances which increased $3.4 million as customers
responded to higher interest rates offered on these deposits in 1995.
Average deposits for the year ended December 31, 1994 were $73,350,284
up from $69,978,111 in 1993, primarily reflecting growth in demand deposits as
average rates paid on interest-bearing deposits generally decreased from 1993
to 1994.
COMMUNITY BANK OF THE ISLANDS
TABLE 4 MATURITY OF CDs OVER $100,000
<TABLE>
<CAPTION>
DECEMBER 31 - DOLLARS IN THOUSANDS BALANCE PERCENT
1994
<S> <C> <C>
Three months or less....................... $ 4,491 48%
Over three to 12 months.................... 2,660 28
More than 12 months........................ 2,310 24
- ----------------------------------------------------------------------
Total............................ $ 9,461 100%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
1993
Three months or less....................... $ 3,025 35%
Over three to 12 months.................... 2,801 33
More than 12 months........................ 2,730 32
- ----------------------------------------------------------------------
Total............................ $ 8,556 100%
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
</TABLE>
LIQUIDITY
Liquidity refers to the ability of a bank to meet its cash-flow
requirements, operating needs, and the borrowing needs and withdrawal
requirements of customers on a timely basis. A bank may achieve its desired
liquidity objectives from management of assets and liabilities, and from
funds provided through operations. The high concentration of its mortgage
loans provides a contingent source of liquidity through securitization
programs that exist today.
Cash provided by operating activities was $677,114 and $360,106 during
the quarters ended March 31, 1995 and 1994, respectively. During 1994 and
1993, $1,434,418 and $1,323,999, respectively, was generated by operating
activities, primarily net interest income.
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<PAGE>
Community Bank believes that the level of liquidity is sufficient to
meet current and future liquidity needs.
CAPITAL
The increase in stockholders' equity from $7,413,645 at December 31, 1994
to $7,858,788 at March 31, 1995 represents net income for the first quarter of
1995. During 1994, net income added $1,336,253 to stockholders' equity while
$1,021,568 of dividends paid reduced equity. Stockholders' equity to total
assets was 8.5% and 9.0% at March 31, 1995 and December 31, 1994, respectively.
As a member of the Federal Deposit Insurance Corporation ("FDIC"),
Community Bank is subject to certain capital level requirements. The rules
require a bank to have a minimum total risk-based capital ratio of 8.00%,
with at least half of total capital in the form of Tier I capital. The
minimum leverage ratio, defined as Tier I capital divided by quarterly
average assets, is 4%. See note 8 to Community Bank financial statements.
At March 31, 1995 and December 31, 1994, Community Bank significantly
exceeded all of these ratios and, in conjunction with regulatory guidelines,
was considered "well capitalized" by management.
REGULATORY MATTERS
GENERAL
As a bank holding company, Barnett is subject to regulation and
supervision by the Federal Reserve Board under the BHC Act. The various bank
subsidiaries of Barnett are subject to regulation and supervision by the
state banking authorities of the states in which they are organized (in the
case of state chartered banks), the Federal Reserve Board (in the case of
state chartered banks that are members of the Federal Reserve System), the
Office of the Comptroller of the Currency (the "OCC") (in the case of
national banks), and the FDIC.
Barnett's nonbanking activities are also supervised by the Federal Reserve
Board. In addition, Barnett Banks Insurance, Inc. is subject to insurance laws
and regulations of the Florida Department of Insurance. The activities of
Barnett Securities, Inc. are governed by the Commission, the National
Association of Securities Dealers (the "NASD"), state securities laws and the
Federal Reserve Board.
Barnett's banking subsidiaries are subject to restrictions under federal
law which limit the transfer of funds by the subsidiary banks to Barnett and its
nonbanking subsidiaries, whether in the form of loans, extensions of credit,
investments or asset purchases. Such transfers by any subsidiary bank to Barnett
or any nonbanking subsidiary are limited in amount to 10% of the bank's capital
and
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surplus and, with respect to Barnett and all such nonbanking subsidiaries, to an
aggregate of 20% of such bank's capital and surplus. Furthermore, such loans and
extensions of credit are required to be secured in specified amounts.
Under Federal Reserve Board policy, Barnett is expected to act as a source
of financial strength to each subsidiary bank and to commit resources to support
such subsidiary bank in circumstances where Barnett might not do so absent such
policy. In addition, any capital loans by Barnett to any of the subsidiary banks
would also be subordinate in right of payment to deposits and to certain other
obligations of such subsidiary bank, including any liabilities of such bank to
the FDIC under the "cross-guarantee" provisions described below.
As a result of the enactment of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 ("FIRREA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(i) the default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to a commonly controlled FDIC-insured
depository institution in danger of default. "Default" is defined generally as
the appointment of a conservator or receiver and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
"default" is likely to occur in the absence of regulatory assistance.
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), after December 31, 1994, the FDIC may not take any action that
would have the effect of increasing the losses to a deposit insurance fund by
protecting depositors for more than the insured portion of deposits (generally,
$100,000) or creditors other than depositors. The FDIC is also authorized by
FDICIA to settle all uninsured and unsecured claims in the insolvency of an
insured bank by making a final settlement payment after the declaration of
insolvency. Such a payment would constitute full payment and disposition of the
FDIC's obligations to claimants. The rate of such final settlement payments is
to be a percentage rate determined by the FDIC reflecting an average of the
FDIC's receivership recovery experience.
As a result of the provisions of law described above, in the event of the
insolvency of a subsidiary bank, the FDIC could limit or prohibit dividends
payable to Barnett by such Subsidiary and the Debt Securities could be treated
differently from, and holders of Debt Securities could receive significantly
less than holders of, deposit obligations of such a subsidiary.
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FEDERAL DEPOSITOR PREFERENCE LEGISLATION
On August 10, 1993, the Federal Deposit Insurance Act was amended to
provide that in the event of the liquidation or other resolution of an insured
depository institution occurring on or after such date, the claims of depositors
of such institution (including claims by the FDIC as subrogee of insured
depositors) are entitled to priority in payment over the claims of any other
senior or general creditors of the institution, including any obligations to
shareholders of such depository institution in their capacity as such.
DIVIDENDS
The principal source of funds for Barnett is dividends paid to it by its
subsidiaries. Various federal and state statutory provisions limit the amount of
dividends the subsidiary banks can pay to Barnett. The approval of the OCC is
required for any dividend by a national bank if the total of all dividends
declared by the bank in any calendar year would exceed the total of its net
income, as defined by the OCC, for that year to date combined with its retained
net income for the preceding two years less any required transfers to surplus or
a fund for the retirement of any preferred stock. A similar provision is imposed
on Florida state banks by the Florida Banking Code and on Georgia state banks by
the Financial Institutions Code of Georgia. In addition, a national bank may not
pay a dividend in an amount greater than its undivided profits then on hand.
Under these provisions, Barnett's subsidiary banks could have declared, as of
March 31, 1995, aggregate dividends of approximately $107 million. The
payment of dividends by subsidiary banks is affected by various factors, such as
the maintenance of adequate capital for such subsidiary banks as described more
fully below. The Federal Reserve Board, the OCC and the FDIC have indicated that
as a general matter dividends should be paid by banks only to the extent of
earnings from continuing operations.
CAPITAL
The Federal Reserve Board's risk-based capital guidelines for state member
banks and bank holding companies were fully phased in at the end of 1992. Under
those guidelines, the minimum ratio of total capital to risk-weighted assets is
8%. At least half of the total capital is to be comprised of common equity,
retained earnings and qualifying perpetual preferred stock, after subtracting
goodwill and other intangibles (with certain limited exceptions), as described
below ("Tier 1 capital"). The remainder ("Tier 2 capital") may consist of
perpetual debt, mandatorily convertible debt securities, a limited amount of
subordinated debt, term preferred stock and a limited amount of loan loss
reserves. Barnett's national banking subsidiaries are subject to similar capital
requirements adopted by the OCC. In addition, the Federal Reserve Board requires
a minimum leverage ratio
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(Tier 1 capital to total average assets, excluding goodwill and other ineligible
intangibles) of 3% for bank holding companies that meet certain specified
criteria, including having the highest regulatory rating. The rule indicates
that the minimum leverage ratio should be at least 1-2% higher for bank holding
companies that do not have the highest rating or that are undertaking major
expansion programs. The OCC has adopted substantially identical minimum leverage
ratio requirements. On March 31, 1995, Barnett had a Tier 1 risk-based capital
ratio of 8.69% and a total risk-based capital ratio of 11.39%. At that date,
Barnett had a leverage ratio of 6.25%.
Under the Federal Reserve Board's guidelines, the only types of intangible
assets that may be included in (i.e., not deducted from) a bank holding
company's capital are readily marketable purchased mortgage servicing rights
("PMSRs") and purchased credit card relationships ("PCCRs"), provided that, in
the aggregate, the total amount of PMSRs and PCCRs included in capital does not
exceed 50% of Tier 1 capital. PCCRs are subject to a separate sublimit of 25% of
Tier 1 capital. The amount of PMSRs and PCCRs that a bank holding company may
include in its capital is limited to the lesser of (i) 90% of such assets' fair
market value (as determined under the guidelines) or (ii) 100% of such assets'
book value, each determined quarterly. Identifiable intangible assets (i.e.,
intangible assets other than goodwill) other than PMSRs and PCCRs, including
core deposit intangibles, acquired on or before February 19, 1992 (the date the
Federal Reserve Board issued its original proposal for public comment) generally
will not be deducted from capital for supervisory purposes, although they will
continue to be deducted for purposes of evaluating applications filed by bank
holding companies.
On September 14, 1993, the Federal Reserve Board, the FDIC and the OCC
issued a joint notice of proposed rulemaking, soliciting comments on a proposal
to revise their risk-based capital standards to take account of interest rate
risk. The notices propose alternative approaches for determining the additional
amount of capital, if any, that may be required to compensate for interest rate
risk. The first approach would reduce a depository institution's risk-based
capital ratios by an amount based on its measured exposure to interest rate risk
in excess of a specified threshold. The second approach would assess the need
for additional capital on a case-by-case basis, considering both the level of
measured exposure and qualitative risk factors. Barnett cannot assess at this
point the impact, if any, that such proposals would have on its capital ratios.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991, enacted
in December 1991 ("FDICIA"), specifies, among other things, the following
capital standard categories for depository institutions: well capitalized,
adequately capitalized, undercapitalized, significantly
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<PAGE>
undercapitalized and critically undercapitalized. FDICIA imposes progressively
more restrictive constraints on operations, management and capital distributions
depending on the category in which an institution is classified. Each of the
federal banking agencies has issued final uniform regulations that became
effective December 19, 1992, which, among other things, define the capital
levels described above. Under the final regulations, a bank is considered "well
capitalized" if it (i) has a total risk-based capital ratio of 10% or greater,
(ii) has a Tier 1 risk-based capital ratio of 6% or greater, (iii) has a
leverage ratio of 5% or greater and (iv) is not subject to any order or written
directive to meet and maintain a specific capital level for any capital measure.
An "adequately capitalized" bank is defined as one that has (i) a total
risk-based capital ratio of 8% or greater, (ii) a Tier 1 risk-based capital
ratio of 4% or greater and (iii) a leverage ratio of 4% or greater (or 3% or
greater in the case of a bank with a composite CAMEL rating of 1). A bank is
considered (A) "undercapitalized" if it has (i) a total risk-based capital ratio
of less than 8%, (ii) a Tier 1 risk-based capital ratio of less than 4% or
(iii) a leverage ratio of less than 4% (or 3% in the case of a bank with a
composite CAMEL rating of 1); (B) "significantly undercapitalized" if the bank
has (i) a total risk-based capital ratio of less than 6%, (ii) a Tier 1
risk-based capital ratio of less than 3% or (iii) a leverage ratio of less than
3%; and (C) "critically undercapitalized" if the bank has a ratio of tangible
equity to total assets equal to or less than 2%. The applicable federal
regulatory agency for a bank that is "well capitalized" may reclassify it as
"adequately capitalized," or subject an "adequately capitalized" or
"undercapitalized" institution to the supervisory actions applicable to the next
lower capital category, if it determines that the bank is in an unsafe or
unsound condition or deems the bank to be engaged in an unsafe or unsound
practice and not to have corrected the deficiency. As of March 31, 1995, each of
Barnett's subsidiary banks met the definition of a "well capitalized"
institution.
"Undercapitalized" depository institutions, among other things, are subject
to growth limitations, are prohibited, with certain exceptions, from making
capital distributions, are limited in their ability to obtain funding from a
Federal Reserve Bank and are required to submit a capital restoration plan. The
federal banking agencies may not accept a capital plan without determining,
among other things, that the plan is based on realistic assumptions and is
likely to succeed in restoring the depository institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan and provide appropriate assurances of
performance. If a depository institution fails to submit an acceptable plan,
including if the holding company refuses or is unable to make the guarantee
described in the previous sentence, it is treated as if it is "significantly
undercapitalized." Failure to submit or implement an acceptable capital plan
also is grounds for the
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<PAGE>
appointment of a conservator or a receiver. "Significantly undercapitalized"
depository institutions may be subject to a number of additional requirements
and restrictions, including orders to sell sufficient voting stock to become
adequately capitalized, requirements to reduce total assets and cessation of
receipt of deposits from correspondent banks. "Critically undercapitalized"
institutions, among other things, are prohibited from making any payments of
principal and interest on subordinated debt, and are subject to the appointment
of a receiver or conservator.
Under FDICIA, the FDIC is permitted to provide financial assistance to an
insured bank before appointment of a conservator or receiver only if (i) such
assistance would be the least costly method of meeting the FDIC's insurance
obligations, (ii) grounds for appointment of a conservator or a receiver exist
or are likely to exist, (iii) it is unlikely that the bank can meet all capital
standards without assistance and (iv) the bank's management has been competent,
has complied with applicable laws, regulations, rules and supervisory directives
and has not engaged in any insider dealing, speculative practice or other
abusive activity.
FDICIA also contains a variety of other provisions that may affect the
operations of Barnett including new reporting requirements, regulatory standards
for real estate lending, "truth in savings" provisions, and the requirement that
a depository institution give 90 days prior notice to customers and regulatory
authorities before closing any branch. FDICIA also contains a prohibition on the
acceptance or renewal of brokered deposits by depository institutions that are
not "well capitalized" or are "adequately capitalized" and have not received a
waiver from the FDIC.
FDICIA provides the federal banking agencies with significantly expanded
powers to take enforcement action against institutions which fail to comply with
capital or other standards. Such action may include the termination of deposit
insurance by the FDIC or the appointment of a receiver or conservator for the
institution.
The foregoing necessarily is a general description of certain provisions of
FDICIA and does not purport to be complete. The provisions of FDICIA are
implemented through regulations issued by the various federal banking agencies.
Although certain of those regulations were adopted in final form in 1994, others
remain in proposed form. Accordingly, the effect of FDICIA on Barnett is not
yet fully ascertainable.
INTERSTATE BANKING LEGISLATION
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 was
enacted into law on September 29, 1994. The law provides that, among other
things, substantially all state law barriers to the
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acquisition of banks by out-of-state bank holding companies will be eliminated
effective as of September 29, 1995. The law will also permit interstate
branching by banks effective as of June 1, 1997, subject to the ability of
states to opt-out completely or to set an earlier effective date. Barnett
anticipates that the effect of the new law will be to increase competition
within the markets in which it now operates, although Barnett cannot predict the
extent to which competition will increase in such markets or the timing of such
increase.
ANTICOMPETITIVE EFFECTS OF THE MERGER
It is possible that the Federal Reserve Board or the United States
Department of Justice may request that Barnett or Community Bank divest certain
operations in order to alleviate what such agency believes would otherwise be an
adverse competitive effect. Although Barnett and Community Bank regard a
request for divestiture as unlikely, neither can predict whether such
divestitures will be required, or if required, what the aggregate amount of any
such divestitures may be. The application to the Federal Reserve Board has not
proposed any such divestiture.
EXPERTS
The audited consolidated financial statements of Barnett incorporated by
reference in the Proxy Statement-Prospectus incorporated in this Form S-4
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP and Price Waterhouse LLP,
independent certified public accountants and are incorporated by reference
herein on reliance upon the authority of said firms as experts in giving said
reports.
The financial statements of Community Bank as of December 31, 1994 and
1993, and for each of the years then ended, have been included herein in
reliance on the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of
said firm as experts in accounting and auditing.
Representatives of KPMG Peat Marwick LLP are expected to be available at
the Community Bank Special Meeting. These representatives will have an
opportunity to make statements if they so desire and will be available to
respond to appropriate questions.
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LEGAL OPINION
The validity of the shares of Barnett Common Stock to be issued to the
shareholders of Community Bank pursuant to the Merger will be passed upon by
Mahoney Adams & Criser, P.A. (a professional corporation, Jacksonville,
Florida), counsel for Barnett. Marshall M. Criser, a director of Barnett, is a
member of the firm of Mahoney Adams & Criser, P.A.
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APPENDIX A
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AND RELATED DOCUMENTS
BY AND AMONG
BARNETT BANKS, INC.,
PHANTOM BANK
and
COMMUNITY BANK OF THE ISLANDS
Dated as of May 30, 1995
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Document Tab
- -------- ---
Agreement and Plan of Merger, by and among
Barnett Banks, Inc., Phantom Bank and
Community Bank of the Islands, dated
as of May 30, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bank Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 2
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . 3
Form of Affiliate Letter . . . . . . . . . . . . . . . . . . . . . . . . . 4
<PAGE>
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BARNETT BANKS, INC.,
PHANTOM BANK
and
COMMUNITY BANK OF THE ISLANDS
Dated as of May 30, 1995
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER
1.1. The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Effective Time; Effects of the Merger . . . . . . . . . . . . . . . . 2
1.3. Conversion of Bank Common Stock . . . . . . . . . . . . . . . . . . . 2
1.4. Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5. Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.6. Conversion of Phantom Bank Common Stock . . . . . . . . . . . . . . . 8
1.7. Articles of Incorporation, By-laws. . . . . . . . . . . . . . . . . . 8
1.8. Directors and Executive Officers. . . . . . . . . . . . . . . . . . . 8
ARTICLE II
EXCHANGE OF SHARES
2.1. Parent to Make Shares Available . . . . . . . . . . . . . . . . . . . 9
2.2. Exchange of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BANK
3.1. Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . 14
3.2. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3. Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . 16
3.4. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . 18
3.5. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.6. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 20
3.7. Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.8. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . 22
3.9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.11. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.12. Bank Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.13. Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . . 28
3.14. Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.15. Agreements with Regulatory Agencies . . . . . . . . . . . . . . . . . 30
3.16. Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . 31
3.17. State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.18. Call Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
4.1. Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . 32
4.2. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.3. Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . 35
i
<PAGE>
4.4. Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . 38
4.5. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 38
4.6. Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . 40
4.7. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.8. Parent Information. . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1. Covenants of the Bank . . . . . . . . . . . . . . . . . . . . . . . . 42
5.2. Covenants of Parent . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.2. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . 51
6.3. Stockholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.4. Legal Conditions to Merger. . . . . . . . . . . . . . . . . . . . . . 54
6.5. Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.6. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . 56
6.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.8. Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.9. Certain Revaluations, Changes and Adjustments . . . . . . . . . . . . 58
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation To Effect the Merger. . . . . . 59
7.2. Conditions to Obligations of Parent and Phantom Bank. . . . . . . . . 60
7.3. Conditions to Obligations of the Bank . . . . . . . . . . . . . . . . 63
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.2. Effect of Termination; Expenses . . . . . . . . . . . . . . . . . . . 70
8.3. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.4. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE IX
GENERAL PROVISIONS
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2. Alternative Structure . . . . . . . . . . . . . . . . . . . . . . . . 73
ii
<PAGE>
9.3. Nonsurvival of Representations, Warranties and Agreements . . . . . . 73
9.4. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.6. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.7. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.8. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.11. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.12. Assignment; No Third Party Beneficiaries. . . . . . . . . . . . . . . 77
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 30, 1995, by and among
Barnett Banks, Inc., a Florida corporation ("Parent"), a corporation to be orga-
nized under the laws of the State of Florida as a wholly owned subsidiary of
Parent ("Phantom Bank") and Community Bank of the Islands, a corporation orga-
nized under the laws of the State of Florida (the "Bank"). The Bank's main
office is located at 2450 Periwinkle Way, Sanibel, Florida and has one branch
office located at 1037 Periwinkle Way, Sanibel, Florida. Phantom Bank, upon its
formation, will be located at 2450 Periwinkle Way, Sanibel, Florida. As of
March 31, 1995, the Bank has capital surplus of $3,732,622 and undivided profits
of $4,126,165.
ARTICLE I
THE MERGER
1.1. THE MERGER. (a) Subject to the terms and conditions of this
Agreement, in accordance with the applicable provisions of the Florida Banking
Code (the "FBC"), at the Effective Time (as defined in Section 1.2 hereof),
Phantom Bank shall merge with and into the Bank (the "Merger"). The Bank shall
be the surviving corporation (hereinafter sometimes called the "Surviving Corpo-
ration") in the Merger, and shall continue its
<PAGE>
existence as a corporation under the laws of the State of Florida. The name of
the Surviving Corporation shall be Community Bank of the Islands. Upon consum-
mation of the Merger, the separate existence of Phantom Bank shall terminate.
(b) The main office of the Surviving Corporation shall be
located at 2450 Periwinkle Way, Sanibel, Florida, and the Surviving Corporation
shall have one branch office located at 1037 Periwinkle Way, Sanibel, Florida.
The Surviving Corporation shall have trust powers.
1.2. EFFECTIVE TIME; EFFECTS OF THE MERGER. The Merger shall become
effective as set forth in the certificate of merger (the "Certificate of
Merger") which shall be issued by the Department of Banking and Finance of the
State of Florida (the "Department") in accordance with the provisions of Section
658.45 of the FBC. The term "Effective Time" shall be the date and time when
the Merger becomes effective, as set forth in the Certificate of Merger,
PROVIDED, HOWEVER, that notwithstanding anything to the contrary contained
herein, the Effective Time shall not occur prior to November 1, 1995. At and
after the Effective Time, the Merger shall have the effects set forth in Section
658.45 of the FBC.
1.3. CONVERSION OF BANK COMMON STOCK.
2
<PAGE>
(a) At the Effective Time, subject to Section 1.3(b) and Section
2.2(e) hereof, each share of the common stock, par value $3.00 per share, of the
Bank (the "Bank Common Stock") issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares (as such term is defined in Section
1.3(c) hereof)) shall, by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into and exchangeable for the number of
shares (the "Exchange Ratio") of the common stock, par value $2.00 per share, of
Parent ("Parent Common Stock") (together with the number of Parent Rights (as
defined in Section 4.2 hereof) associated therewith), determined by dividing
$33.16 by the Average Closing Price (as defined below); PROVIDED, HOWEVER, that
(I) if the Average Closing Price is equal to or greater than $51.00, the Ex-
change Ratio shall be .6502 (the "Minimum Exchange Ratio") and (II) subject to
the provisions of the next sentence, if the Average Closing Price is equal to or
less than $43.00 (the "Minimum Price"), the Exchange Ratio shall be .7712 (the
"Maximum Exchange Ratio"). If the Average Closing Price is less than the
Minimum Price, the Bank may elect, by action of its Board of Directors within
two business days following the Valuation Period, to forego the right of the
Bank's stockholders to receive Parent Common Stock in the Merger, and, in lieu
thereof, each share of Bank
3
<PAGE>
Common Stock otherwise exchangeable into Parent Common Stock pursuant to this
Section 1.3(a) shall instead be converted into and exchangeable for the right to
receive $33.16 in cash (the "Cash Consideration"), without any interest thereon.
At the close of business on the last day of the Valuation Period, Parent shall
notify the Bank of the Average Closing Price. As used herein, the term "Average
Closing Price" means the average closing sales price per share of Parent Common
Stock on the New York Stock Exchange ("NYSE") (as reported by THE WALL STREET
JOURNAL) for the 20 consecutive NYSE trading days (the "Valuation Period")
ending on the fifth business day prior to the date which is scheduled to be the
Closing Date. All of the shares of Bank Common Stock converted into Parent
Common Stock (or cash) pursuant to this Article I shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist, and each certifi-
cate (each a "Certificate") previously representing any such shares of Bank
Common Stock shall thereafter only represent the right to receive (i) the number
of whole shares of Parent Common Stock and (ii) the cash in lieu of fractional
shares, or the Cash Consideration (such shares of Parent Common Stock and cash
in lieu of fractional shares, or Cash Consideration, as appropriate, the "Merger
Consideration"), into which the shares of Bank Common Stock represented by such
Certificate have
4
<PAGE>
been converted pursuant to this Agreement. Certificates previously representing
shares of Bank Common Stock shall be exchanged for Merger Consideration upon the
surrender of such Certificates in accordance with Section 2.2 hereof, without
any interest thereon. If prior to the Effective Time Parent should split or
combine its common stock, or pay a dividend or other distribution in such common
stock, then the Exchange Ratio, the Minimum Exchange Ratio, the Maximum Exchange
Ratio and the Minimum Price shall be appropriately adjusted to reflect such
split, combination, dividend or distribution.
(b) Notwithstanding anything to the contrary contained in
Section 1.3(a) hereof, if at any time prior to the Closing Date, Parent
reasonably determines that the transaction contemplated hereby may not, for any
good faith reason (including without limitation as a result of actions taken by
Parent or any of its affiliates prior to, on or subsequent to the date of this
Agreement) qualify as a pooling of interests under generally accepted accounting
principles ("GAAP"), Parent may at its option elect to pay to the holders of
Bank Common Stock the Cash Consideration in lieu of the consideration otherwise
provided for in Section 1.3(a) hereof.
(c) Notwithstanding anything in this Agreement to the contrary,
shares of Bank Common Stock which are outstanding immediately prior to the
Effective
5
<PAGE>
Time and which are held by any stockholder who either shall have voted such
shares against the Merger or shall have delivered to the Bank, at or prior to
the meeting of its stockholders for the purpose of voting on the Merger, a writ-
ten notice of such stockholder's intent to dissent from the Merger with respect
to such shares ("Dissenting Shares") shall not be converted into the right to
receive, or be exchangeable for, Parent Common Stock and cash in lieu of
fractional shares, but, instead, the holders thereof shall be entitled to
payment of the value of such Dissenting Shares in accordance with the provisions
of Section 658.44 of the FBC.
1.4. STOCK OPTIONS. (a) At the Effective Time, each option granted
by the Bank to purchase shares of Bank Common Stock pursuant to any stock option
plan or plans of the Bank (collectively, the "Bank Stock Plan") which is
outstanding and unexercised immediately prior thereto shall be converted
automatically into an option to purchase shares of Parent Common Stock in an
amount and at an exercise price determined as provided below (and otherwise be
subject to the terms of the Bank Stock Plan):
(i) The number of shares of Parent Common Stock to be subject to
the new option shall be equal to the product of the number of shares
of Bank Common Stock subject to the original op-
6
<PAGE>
tion and the Exchange Ratio, provided that any fractional shares of
Parent Common Stock resulting from such multiplication shall be roun-
ded down to the nearest share; and
(ii) The exercise price per share of Parent Common Stock under
the new option shall be equal to the exercise price per share of Bank
Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest
cent.
The duration and other terms of the new option shall be the same as
the original option, except that all references to the Bank shall be deemed to
be references to Parent.
(b) Prior to the Effective Time and assuming compliance by
Parent with its obligations under this Section 1.4, if requested by Parent, the
Bank shall obtain the consent of each holder of Bank Options to ensure that fol-
lowing the Effective Time no holder of Bank Options shall have any right to
acquire any equity securities of the Bank.
1.5. PARENT COMMON STOCK. The shares of Parent Common Stock issued
and outstanding immediately prior to the Effective Time shall be unaffected by
the
7
<PAGE>
Merger and at the Effective Time, such shares shall remain issued and outstand-
ing.
1.6. CONVERSION OF PHANTOM BANK COMMON STOCK. At the Effective Time,
each of the _______ shares of common stock, par value $___ per share, of Phantom
Bank issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger, automatically and without any action on the part of
Parent, become and be converted into one share of common stock, par value $___
per share, of the Bank.
1.7. ARTICLES OF INCORPORATION, BY-LAWS. At the Effective Time, the
Articles of Incorporation and By-laws of the Bank, as in effect at the Effective
Time, shall be the Articles of Incorporation and By-laws of the Surviving Corpo-
ration. The Articles of Incorporation of the Surviving Corporation are attached
hereto as Exhibit 1.7.
1.8. DIRECTORS AND EXECUTIVE OFFICERS. The directors and executive
officers of the Bank immediately prior to the Effective Time shall be the direc-
tors and executive officers of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and By-Laws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified. The names and addresses of each such director
8
<PAGE>
and executive officer are set forth on Exhibit 1.8 hereto.
ARTICLE II
EXCHANGE OF SHARES
2.1. PARENT TO MAKE SHARES AVAILABLE. At or prior to the Effective
Time, Parent shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Parent) (the "Exchange Agent"), selected
by Parent and reasonably satisfactory to the Bank, for the benefit of the hold-
ers of Certificates, for exchange in accordance with this Article II,
appropriate Merger Consideration (such cash and/or certificates for shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 1.3 and paid pursuant to Section 2.2(a) in exchange for out-
standing shares of Bank Common Stock.
2.2. EXCHANGE OF SHARES. (a) As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and instructions
for
9
<PAGE>
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration into which the shares of Bank Common Stock represented by such
Certificate shall have been converted pursuant to this Agreement. Upon surren-
der of a Certificate for exchange and cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on the cash and unpaid dividends and distributions, if any,
payable to holders of Certificates.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After such surrender, the record holder thereof shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Parent Common Stock represented by such Certificate. No holder of an unsur-
10
<PAGE>
rendered Certificate shall be entitled, until the surrender of such Certificate,
to vote the shares of Parent Common Stock into which his Bank Common Stock shall
have been converted.
(c) If any certificate representing shares of Parent Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Parent Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not pay-
able.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of the Bank of the shares of Bank Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent,
11
<PAGE>
they shall be cancelled and exchanged for certificates representing shares of
Parent Common Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein,
no certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to voting rights or to any other rights of a share-
holder of Parent. In lieu of the issuance of any such fractional share, Parent
shall pay to each former stockholder of the Bank who otherwise would be entitled
to receive a fractional share of Parent Common Stock an amount in cash deter-
mined by multiplying (i) the Average Closing Price by (ii) the fraction of a
share of Parent Common Stock to which such holder would otherwise be entitled to
receive pursuant to Section 1.3 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by
the stockholders of the Bank for six months after the Effective Time shall be
paid to Parent. Any stockholders of the Bank who have not theretofore complied
with this Article II shall thereafter look only to Parent for payment of their
Merger Consideration
12
<PAGE>
deliverable in respect of each share of Bank Common Stock such stockholder holds
as determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Parent, the Bank, the Exchange
Agent or any other person shall be liable to any former holder of shares of Bank
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if the value of such
Certificate is in excess of $5,000, the posting by such person of a bond in an
amount equal to such value as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank hereby represents and warrants to Parent and Phantom Bank as
follows:
13
<PAGE>
3.1. CORPORATE ORGANIZATION. The Bank is a bank duly organized,
validly existing and in good standing under the laws of the State of Florida.
The Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or qualifica-
tion necessary, except where the failure to be so licensed or qualified would
not have a Material Adverse Effect (as defined below) on the Bank. The deposit
accounts of the Bank are insured by the Federal Deposit Insurance Corporation
(the "FDIC") through the Bank Insurance Fund to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection there-
with have been paid when due by the Bank. The Bank has no Subsidiaries. As
used in this Agreement, the term (i) "Material Adverse Effect" means, with re-
spect to Parent, the Bank or Phantom Bank, as the case may be, a material ad-
verse effect on the business, properties, assets, liabilities, results of opera-
tions or financial condition of such party and its Subsidiaries, if any, taken
as a whole, other than any such effect attributable to or resulting from any
change in law, rule, regulation, GAAP or regulatory ac-
14
<PAGE>
counting principles, which in each case affects banking institutions or their
holding companies generally, except to the extent any such condition or change
affects the referenced party to a materially greater extent than banking insti-
tutions or their holding companies generally and (ii) "Subsidiary" when used
with respect to any party means any corporation, partnership or other organi-
zation, whether incorporated or unincorporated, which is consolidated with such
party for financial reporting purposes.
3.2. CAPITALIZATION. The authorized capital stock of the Bank
consists of 600,000 shares of Bank Common Stock and no shares of preferred
stock. As of the date of this Agreement, there are (x) 510,784 shares of Bank
Common Stock issued and outstanding and no shares of Bank Common Stock held in
the Bank's treasury and (y) no shares of Bank Common Stock reserved for issuance
upon exercise of outstanding stock options or otherwise except for 7,920 shares
of Bank Common Stock reserved for issuance pursuant to the Bank Option Plans and
described in Section 3.2 of the Disclosure Schedule which is being delivered to
Parent concurrently herewith (the "Bank Disclosure Schedule"). All of the
issued and outstanding shares of Bank Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Except as
referred to
15
<PAGE>
above or reflected in Section 3.2 of the Bank Disclosure Schedule, the Bank does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Bank Common Stock or preferred stock or any other
equity security of the Bank or any securities representing the right to purchase
or otherwise receive any shares of Bank Common Stock or any other equity securi-
ty of the Bank. The names of the optionees, the date of each option to purchase
Bank Common Stock granted, the number of shares of Bank Common Stock subject to
each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the applicable Bank Option Plan
are set forth in Section 3.2 of the Bank Disclosure Schedule.
3.3. AUTHORITY; NO VIOLATION. (a) The Bank has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by not less than a majority of the entire Board of Directors of
the Bank. The Board of Directors of the Bank has directed that this Agreement
and the transactions contemplated hereby be submitted to the Bank's stockholders
for
16
<PAGE>
approval at a meeting of such stockholders and, except for the adoption of this
Agreement by the requisite vote of the Bank's stockholders, no other corporate
proceedings on the part of the Bank are necessary to approve this Agreement and
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Bank and (assuming due authoriza-
tion, execution and delivery by Parent and Phantom Bank) constitutes a valid and
binding obligation of the Bank, enforceable against the Bank in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the Bank Disclosure
Schedule, neither the execution and delivery of this Agreement by the Bank nor
the consummation by the Bank of the transactions contemplated hereby nor compli-
ance by the Bank with any of the terms or provisions hereof will (i) violate any
provision of the Articles of Incorporation or By-laws of the Bank, or (ii)
assuming that the consents and approvals referred to in Section 3.4 hereof are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Bank
17
<PAGE>
or any of its properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termi-
nation or cancellation under, accelerate the performance required by, or result
in the creation of any lien, pledge, security interest, charge or other encum-
brance upon any of the properties or assets of the Bank under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Bank is
a party, or by which it or any of its properties or assets may be bound or af-
fected, except (in the case of clause (y) above) for such violations, conflicts,
breaches or defaults which, either individually or in the aggregate, would not
have or be reasonably likely to have a Material Adverse Effect on the Bank.
3.4. CONSENTS AND APPROVALS. Except for (a) the filing of
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Company Act of 1956, as amended (the "BHC Act") and approval of such applica-
tions and notices, (b) the filing of applications with the FDIC or the Federal
Reserve
18
<PAGE>
Board as Parent deems necessary or appropriate, under the Bank Merger Act and
approval of such applications, (c) the filing of an application with the Depart-
ment (the "State Banking Approval"), (d) the approval of this Agreement by the
requisite vote of the stockholders of the Bank, (e) the filing of the Certif-
icate of Merger with the Department pursuant to the FBC and (f) such filings,
authorizations or approvals as may be set forth in Section 3.4 of the Bank
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any third
party are necessary in connection with the execution and delivery by the Bank of
this Agreement and the consummation by the Bank of the Merger and the other
transactions contemplated hereby.
3.5. REPORTS. The Bank has timely filed all material reports, regis-
trations and statements, together with any amendments required to be made with
respect thereto, that it was required to file since December 31, 1991 with (i)
the FDIC, (ii) the Department and (iii) any other self-regulatory organization
("SRO"), and all other material reports and statements required to be filed by
it since December 31, 1991, including, without limitation, any report or state-
ment required to be filed pursuant to the laws, rules or regulations of the
United
19
<PAGE>
States, the FDIC, the Department or any SRO, and has paid all fees and assess-
ments due and payable in connection therewith. Except for normal examinations
conducted by a Governmental Entity in the regular course of the business of the
Bank, except as set forth in Section 3.5 of the Bank Disclosure Schedule, no
Governmental Entity has initiated any proceeding or, to the best knowledge of
the Bank, investigation into the business or operations of the Bank since Decem-
ber 31, 1991. There is no unresolved material violation, criticism, or
exception by any Governmental Entity with respect to any report or statement
relating to any examinations of the Bank.
3.6. FINANCIAL STATEMENTS. The Bank has previously delivered to
Parent copies of (a) the statements of financial condition of the Bank as of
December 31 for the fiscal years 1993 and 1994, and the related statements of
operations, stockholders' equity and cash flows for the fiscal years 1992
through 1994, inclusive, in each case accompanied by the audit report of KPMG
Peat Marwick LLP, independent public accountants with respect to the Bank, and
(b) the unaudited statements of financial condition of the Bank as of March 31,
1995 and March 31, 1994 and the related unaudited statements of operations for
the three month periods then ended. The December 31, 1994 balance sheet of the
Bank (including the related notes, where applicable) fairly presents the
20
<PAGE>
financial position of the Bank as of the date thereof, and the other financial
statements referred to in this Section 3.6 (including the related notes, where
applicable) fairly present, and the financial statements of the Bank to be
included in the S-4 (as defined in Section 3.12) will fairly present (subject,
in the case of the unaudited statements, to recurring audit adjustments normal
in nature and amount), the results of the operations and financial position of
the Bank for the respective fiscal periods or as of the respective dates therein
set forth; each of such statements (including the related notes, where applica-
ble) comply, and the financial statements of the Bank to be included in the S-4
will comply, in all material respects with applicable accounting requirements;
and each of such statements (including the related notes, where applicable) has
been, and the financial statements of the Bank to be included in the S-4 will
be, prepared in accordance with GAAP consistently applied during the periods in-
volved. The books and records of the Bank have been, and are being, maintained
in all material respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions.
3.7. BROKER'S FEES. Neither the Bank nor any of its officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees,
21
<PAGE>
commissions or finder's fees in connection with any of the transactions contem-
plated by this Agreement, except that the Bank has engaged, and will pay a fee
or commission to, Allen C. Ewing & Co. in accordance with the terms of a letter
agreement between Allen C. Ewing & Co. and the Bank, a true, complete and cor-
rect copy of which has been previously delivered by the Bank to Parent.
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. 1. Since December 31,
1994, except as disclosed in the Bank's financial statements as of and for the
three month period ended March 31, 1995 (copies of which were previously
delivered to Parent) (i) the Bank has not incurred any material liability,
except in the ordinary course of business consistent with past practice, and
(ii) no event, circumstance or condition has occurred or has failed to occur
which has caused, or is reasonably likely to cause, individually or in the
aggregate, a Material Adverse Effect on the Bank.
(b) Since December 31, 1994, the Bank has carried on its busi-
ness in the ordinary course consistent with past practice.
(c) Except as set forth in Section 3.8(c) of the Bank Disclosure
Schedule, since December 31, 1994, the Bank has not increased the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable
to any executive officer, employee, or director
22
<PAGE>
from the amount thereof in effect as of December 31, 1994 (which amounts have
been previously disclosed to Parent), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus other than year-end bonuses for fiscal 1994 as previously
disclosed to Parent in writing.
3.9. LEGAL PROCEEDINGS. Except as set forth in Section 3.9 of the
Bank Disclosure Schedule, the Bank is not a party to any, and there are no
pending or, to the best of the Bank's knowledge, threatened, legal, administra-
tive, arbitral or other proceedings, claims, actions or governmental or
regulatory investigations of any nature against the Bank or challenging the
validity or propriety of the transactions contemplated by this Agreement as to
which there is a reasonable probability of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect on the Bank. There is no
injunction, order, judgment, decree, or regulatory restriction imposed upon the
Bank or any of the assets of the Bank which has had, or could reasonably be ex-
pected to have, a Material Adverse Effect on the Bank.
3.10. TAXES. (a) Except as set forth in Section 3.10(a) of the
Bank Disclosure Schedule, the Bank
23
<PAGE>
has (i) duly and timely filed or will duly and timely file (including applicable
extensions granted without penalty) all Tax Returns (as hereinafter defined) re-
quired to be filed at or prior to the Effective Time, and such Tax Returns which
have heretofore been filed are, and those to be hereinafter filed will be, true,
correct and complete and (ii) paid in full or have made adequate provision for
on the financial statements of the Bank (in accordance with GAAP) all Taxes (as
hereinafter defined) and will pay in full or make adequate provision for all
Taxes. There are no material liens for Taxes upon the assets of the Bank except
for statutory liens for current Taxes not yet due. Except as set forth in Sec-
tion 3.10(a) of the Bank Disclosure Schedule, the Bank has not requested any
extension of time within which to file any Tax Returns in respect of any fiscal
year which have not since been filed and no request for waivers of the time to
assess any Taxes are pending or outstanding. The federal and state income Tax
Returns of the Bank have been audited by the Internal Revenue Service or
appropriate state tax authorities with respect to those periods and jurisdic-
tions set forth on Section 3.10(a) of the Bank Disclosure Schedule. Except as
set forth in Section 3.10(a) of the Bank Disclosure Schedule, the Bank (i) is
not a party to any agreement providing for the allocation or sharing of Taxes
(other than the allocation of federal
24
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income taxes as provided by Regulation 1.1552-1(a)(1) under the Code; (ii) is
not required to include in income any adjustment pursuant to Section 481(a) of
the Code, by reason of the voluntary change in accounting method (nor has any
taxing authority proposed in writing any such adjustment or change of accounting
method); and (iii) has not filed a consent pursuant to Section 341(f) of the
Code.
(b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto.
(c) For purposes of this Agreement, "Tax Return" shall mean any
return, report, information return or other document (including any related or
supporting information) with respect to Taxes.
3.11. EMPLOYEES. (a) Section 3.11(a) of the Bank Disclosure
Schedule sets forth a true and complete list of each employee benefit plan,
arrangement or agreement that is maintained or contributed to or required to
be contributed to as of the date of this Agreement (the "Plans") by the Bank or
by any trade or business, whether
25
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or not incorporated (an "ERISA Affiliate"), all of which together with the Bank
would be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for the
benefit of any employee or former employee of the Bank or any ERISA Affiliate.
(b) The Bank has heretofore delivered to Parent true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial report for such Plan (if applicable) for each
of the last two years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Bank Disclo-
sure Schedule, (i) each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code, (ii) no Plan is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA), (iii) no Plan provides benefits,
including without limitation death or medical benefits (whether or not insured),
with respect to current or former employees of the Bank or any ERISA Affiliate
beyond their retirement or other termination of service, (iv) neither the Bank
nor any ERISA Affiliate has engaged in a transaction in connection with which
the Bank or any
26
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ERISA Affiliate could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (v) there are no pending, or, to the best knowledge of the Bank,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto and (vi) the
consummation of the transactions contemplated by this Agreement will not (y)
entitle any current or former employee or officer of the Bank or any ERISA
Affiliate to severance pay, termination pay or any other payment, except as ex-
pressly provided in this Agreement or (z) accelerate the time of payment or
vesting or increase the amount of compensation due any such employee or officer.
3.12. BANK INFORMATION. The information relating to the Bank to be
contained in the proxy statement of the Bank relating to the meeting of the
Bank's stockholders to be held in connection with the transactions contemplated
hereby (the "Proxy Statement") and in the registration statement on Form S-4
(the "S-4") of which the Proxy Statement will be included as a prospectus, or in
any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein,
27
<PAGE>
in light of the circumstances in which they are made, not misleading.
3.13. COMPLIANCE WITH APPLICABLE LAW. The Bank holds, and has at all
times held, all material licenses, franchises, permits and authorizations neces-
sary for the lawful conduct of its business under and pursuant to all, and has
complied with and is not in default in any respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of any Governmental
Entity relating to the Bank, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default would not,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect on the Bank, and the Bank has no knowledge of, and has
received no notice of, any material violations of any of the above.
3.14 CERTAIN CONTRACTS. (a) Except as set forth in Section 3.14(a)
of the Bank Disclosure Schedule, the Bank is not a party to or bound by any con-
tract, arrangement, commitment or understanding (whether written or oral) (i)
with respect to the employment of any directors, officers, employees or
consultants, (ii) which, upon the consummation of the transactions contemplated
by this Agreement will (either alone or upon the occurrence of any additional
acts or events) result in any payment
28
<PAGE>
(whether of severance pay or otherwise) becoming due from Parent, the Bank, the
Surviving Corporation or any of their respective Subsidiaries to any director,
officer or employee thereof, (iii) which is a contract or agreement not termi-
nable on 60 days or less notice involving the payment of more than $50,000 per
annum, (iv) which materially restricts the conduct of any line of business by
the Bank or (v) (including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan) any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement, or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. Each contract, arrangement,
commitment or understanding of the type described in this Section 3.14(a),
whether or not set forth in Section 3.14(a) of the Bank Disclosure Schedule, is
referred to herein as a "Bank Contract". The Bank has previously delivered to
Parent true and correct copies of each Bank Contract.
(b) Except as set forth in Section 3.14(b) of the Bank
Disclosure Schedule, (i) each Bank Contract is valid and binding and in full
force and effect, (ii) the Bank has in all material respects performed all obli-
gations required to be performed by it to
29
<PAGE>
date under each Bank Contract, except where such noncompliance, individually or
in the aggregate, would not have or be reasonably likely to have a Material Ad-
verse Effect on the Bank, (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a material default
on the part of the Bank under any such Bank Contract, except where such default,
individually or in the aggregate, would not have or be reasonably likely to have
a Material Adverse Effect on the Bank and (iv) no other party to such Bank
Contract is, to the best knowledge of the Bank, in default in any respect
thereunder.
3.15. AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in
Section 3.15 of the Bank Disclosure Schedule, the Bank is not subject to any
cease-and-desist or other order issued by, is not a party to any written
agreement, consent agreement or memorandum of understanding with, is not a party
to any commitment letter or similar undertaking to, is not subject to any order
or directive by, is not a recipient of any extraordinary supervisory letter
from, and has not adopted any board resolutions at the request of (each, whether
or not set forth on Section 3.15 of the Bank Disclosure Schedule, a "Regulatory
Agreement"), any Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit poli-
30
<PAGE>
cies, its management or its business, nor has the Bank been advised by any Gov-
ernmental Entity that it is considering issuing or requesting any Regulatory
Agreement.
3.16. UNDISCLOSED LIABILITIES. Except (a) as set forth in Section
3.16 of the Bank Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the balance sheet of the Bank as of December
31, 1994 and (c) for liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1994 that, either alone or when
combined with all similar liabilities, have not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Bank, the Bank has not
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due).
3.17. STATE TAKEOVER LAWS. The Bank has taken all such actions so
that the provisions of Section 607.0901 of the Florida Business Corporation Act
(the "FBCA") will not apply to this Agreement or any of the transactions contem-
plated hereby, and no other state takeover law imposes requirements on such
Agreement or transactions which have not been satisfied.
3.18 CALL REPORTS. The Bank has previously delivered to Parent
copies of its Consolidated Reports of Condition and Income for the fiscal year
ended December
31
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31, 1994 and for the three-month period ended March 31, 1995 and, prior to the
Closing will have delivered to Parent all such reports for subsequent periods
simultaneously with the filing by the Bank of such reports with the FDIC (col-
lectively, the "Call Reports"). The financial information contained in the Call
Reports fairly presents (or will fairly present) the financial position of the
Bank as of the respective dates therein set forth (in the case of balance sheet
information) and the results of the operations of the Bank for the respective
fiscal periods (in the case of income statement information).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to the Bank as follows:
4.1. CORPORATE ORGANIZATION. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida. Parent has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or
32
<PAGE>
leased by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have a Material Adverse Effect
on Parent. Parent is duly registered as a bank holding company under the BHC
Act.
(b) Each of Parent's Subsidiaries that is a "Significant
Subsidiary" (as such term is defined in Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its incor-
poration. Each Significant Subsidiary of Parent has the corporate power and au-
thority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect on Parent.
4.2. CAPITALIZATION. As of the date of this Agreement, the autho-
rized capital stock of Parent consists of 200,000,000 shares of Parent Common
Stock and 20,000,000 shares of preferred stock, par value $0.10 per share
("Parent Preferred Stock"). As of March 31, 1995,
33
<PAGE>
there were 97,127,142 shares of Parent Common Stock and 4,312,289 shares of
Parent Preferred Stock issued and outstanding, of which 2,000,000 shares have
been designated as Series A Preferred Stock, 12,289 shares have been designated
as Series B Preferred Stock and 2,300,000 shares have been designated as
Series C Preferred Stock. As of the date of this Agreement, no shares of Parent
Common Stock or Parent Preferred Stock were reserved for issuance, except that
3,150,864 shares of Parent Common Stock were reserved for issuance pursuant to
Parent's Shareholder Investment Plan, Employee Stock Purchase Plan, BEST Plan,
Management Plan and Retirement Plan and described in Section 4.2 of the Disclo-
sure Schedule which is being delivered by Parent to the Bank herewith (the
"Parent Disclosure Schedule"), 8,998,711 shares of Parent Common Stock were re-
served for issuance upon the exercise of stock options pursuant to the Parent
1989 Long Term Incentive Plan (the "Parent Stock Plan"), 750,000 shares of
Parent Junior Participating Preferred Stock were reserved for issuance upon
exercise of the rights (the "Parent Rights") distributed to holders of Parent
Common Stock pursuant to the Shareholder Rights Agreement, dated as of February
21, 1990, between Parent and The Bank of New York, as Rights Agent (the "Parent
Shareholder Rights Agreement"), and 6,717,066 shares of Common Stock were re-
served for issuance upon conversion of issued and out-
34
<PAGE>
standing shares of Parent Preferred Stock. All of the issued and outstanding
shares of Parent Common Stock and Parent Preferred Stock have been duly autho-
rized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as referred to above or
reflected in Section 4.2 of the Parent Disclosure Schedule and the Parent Share-
holder Rights Agreement, Parent does not have and is not bound by any out-
standing subscriptions, options, warrants, calls, commitments or agreements of
any character calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity securities of Parent
or any securities representing the right to purchase or otherwise receive any
shares of Parent Common Stock or Parent Preferred Stock. The shares of Parent
Common Stock to be issued pursuant to the Merger will be duly authorized and
validly issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
4.3. AUTHORITY; NO VIOLATION. (a) Parent has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agree-
35
<PAGE>
ment and the consummation of the transactions contemplated hereby have been duly
and validly approved by not less than a majority of the Board of Directors of
Parent, and no other corporate proceedings on the part of Parent are necessary
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Parent and (assuming due authoriza-
tion, execution and delivery by the Bank) constitutes a valid and binding obli-
gation of Parent, enforceable against Parent in accordance with its terms,
except as enforcement may be limited by general principles of equity whether ap-
plied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 4.3(c) of the Parent
Disclosure Schedule, neither the execution and delivery of this Agreement by
Parent or Phantom Bank, nor the consummation by Parent or Phantom Bank of the
transactions contemplated hereby, nor compliance by Parent or Phantom Bank with
any of the terms or provisions hereof, will (i) violate any provision of the
Certificate of Incorporation or By-Laws of Parent, or the articles of incorpora-
tion or by-laws or similar governing documents of Phantom Bank or any of
Parent's Significant Subsidiaries or (ii) assuming that the consents and approv-
als referred to in Section 4.4 are duly obtained, (x)
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<PAGE>
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Parent, Phantom Bank or any of Parent's
Significant Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
Parent, Phantom Bank or any of Parent's Significant Subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
Parent, Phantom Bank or any of Parent's Significant Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations, con-
flicts, breaches or defaults which either individually or in the aggregate will
not have or be reasonably likely to have a Material Adverse Effect on Parent.
37
<PAGE>
4.4. CONSENTS AND APPROVALS. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board under
the BHC Act and approval of such applications and notices, (b) the filing of
applications with the FDIC or the Federal Reserve Board as Parent deems
necessary or appropriate, under the Bank Merger Act and approval of such
applications, (c) the State Banking Approval and the approval of the formation
of Phantom Bank by the Department, (d) the filing with the SEC of the S-4, (e)
the filing of the Certificate of Merger with the Department, (f) such filings
and approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of the shares
of Parent Common Stock pursuant to this Agreement, and (g) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the Parent
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with the execution and delivery by Parent and Phantom Bank of this Agreement and
the consummation by Parent and Phantom Bank of the transactions contemplated
hereby.
4.5. FINANCIAL STATEMENTS. Parent has previously delivered to the
Bank copies of (a) the consolidated statements of financial condition of Parent
and its
38
<PAGE>
Subsidiaries as of December 31, 1994 and 1993 and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
years as reported in Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 filed with the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in each case accompanied by the audit
report of Arthur Andersen LLP, independent public accountants with respect to
Parent, and (b) the unaudited consolidated statement of financial condition of
Parent and its Subsidiaries as of March 31, 1995 and March 31, 1994 and the
related unaudited consolidated statements of income, changes in shareholders'
equity and cash flows for the three-month periods then ended as reported in
Parent's Quarterly Report on Form 10-Q for the period ended March 31, 1995 filed
with the SEC under the Exchange Act. The December 31, 1994 consolidated
statement of financial condition of Parent (including the related notes, where
applicable) fairly presents the consolidated financial position of Parent and
its Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 4.5 (including the related notes, where applicable)
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount) the results of the consolidated
operations and changes in shareholders'
39
<PAGE>
equity and consolidated financial position of Parent and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been
prepared in accordance with GAAP consistently applied during the periods in-
volved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The books and records of Parent and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
4.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as may be set
forth in Section 4.6 of the Parent Disclosure Schedule, or as disclosed in
Parent's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (a
true, complete and correct copy of which has previously been delivered to the
Bank), since December 31, 1994, no event, circumstance or condition has occurred
or has failed to occur which has caused, or is
40
<PAGE>
reasonably likely to cause, individually or in the aggregate, a Material Adverse
Effect on Parent.
4.7. SEC REPORTS. Parent has previously made available to the Bank
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1991 by Parent with the SEC pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act (the "Parent Reports") and
(b) communication mailed by Parent to its shareholders since January 1, 1991,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. Parent has timely filed
all Parent Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Parent Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.8. PARENT INFORMATION. The information relating to Parent and its
Subsidiaries to be contained
41
<PAGE>
in the Proxy Statement and the S-4, or in any other document filed with any
regulatory agency in connection herewith, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The S-4 (except for such portions thereof that relate only to the
Bank) will comply in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF THE BANK. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
Parent, the Bank shall carry on its business in the ordinary course consistent
with past practice and consistent with prudent banking practice. The Bank will
use its best efforts to (x) preserve its business organization intact, (y) keep
available to itself and Parent the present services of the employees of the Bank
and (z) preserve for itself and Parent the goodwill of the customers of the Bank
and others with whom business relationships exist. Without limiting the
generality of the
42
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foregoing, and except as set forth on Section 5.1 of the Bank Disclosure Sched-
ule or as otherwise contemplated by this Agreement or consented to in writing by
Parent, the Bank shall not:
(a) declare or pay any dividends on, or make other distributions
in respect of, any of its capital stock;
(b) (i) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock except
upon the exercise or fulfillment of rights or options issued or existing
pursuant to employee benefit plans, programs or arrangements, all to the extent
outstanding and in existence on the date of this Agreement and in accordance
with their present terms, or (ii) repurchase, redeem or otherwise acquire any
shares of the capital stock of the Bank, or any securities convertible into or
exercisable for any shares of the capital stock of the Bank;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of the
foregoing, other than the
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issuance of Bank Common Stock pursuant to stock options or similar rights to
acquire Bank Common Stock granted pursuant to the Bank Stock Plans and outstand-
ing prior to the date of this Agreement, in each case in accordance with their
present terms;
(d) amend its Articles of Incorporation, By-laws or other
similar governing documents;
(e) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which constitutes, a "take-
over proposal" (as defined below), or, except to the extent legally required for
the discharge of the fiduciary duties of the Board of Directors of the Bank,
recommend or endorse any takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information, relating
to any such inquiry or proposal or otherwise facilitate any effort or attempt to
make or implement a takeover proposal; PROVIDED, HOWEVER, that the Bank may
communicate information about any such takeover proposal to its stockholders if,
in the judgment of the Bank's Board of Directors, based upon the advice of
outside counsel, such communication is required under applicable law. The Bank
will immediately cease and cause to be terminated any existing activities,
discussions or negotiations previ-
44
<PAGE>
ously conducted with any parties other than Parent with respect to any of the
foregoing. The Bank will take all actions necessary or advisable to inform the
appropriate individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 5.1(e). The Bank will notify Parent
immediately if any such inquiries or takeover proposals are received by, any
such information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Bank, and the Bank will inform
Parent immediately in writing of all of the relevant details with respect to the
foregoing. As used in this Agreement, "takeover proposal" shall mean any tender
or exchange offer, proposal for a merger, consolidation or other business
combination involving the Bank or any proposal or offer to acquire in any manner
a substantial equity interest in, or a substantial portion of the assets of, the
Bank other than the transactions contemplated or permitted by this Agreement;
(f) make any capital expenditures other than expenses which (i)
are made in the ordinary course of business or are necessary to maintain
existing assets in good repair and (ii) in any event are in an amount of no more
than $25,000 individually and $50,000 in the aggregate;
(g) enter into any new line of business;
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<PAGE>
(h) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, which would be material, individually or in the
aggregate, to the Bank, other than in connection with foreclosures, settlements
in lieu of foreclosure or troubled loan or debt restructuring in the ordinary
course of business consistent with prudent banking practices;
(i) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article VII not being satisfied, or in
a violation of any provision of this Agreement, except, in every case, as may be
required by applicable law;
(j) change its methods of accounting in effect at December 31,
1994, except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Bank's independent auditors;
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<PAGE>
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or
any agreement, arrangement, plan or policy between the Bank and one or more of
its current or former directors, officers or employees or (ii) except for normal
increases in the ordinary course of business consistent with past practice or
except as required by applicable law, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares);
(l) take or cause to be taken any action which would disqualify
the Merger as a "pooling of interests" for accounting purposes or a tax free
reorganization under Section 368 of the Code;
(m) other than activities in the ordinary course of business
consistent with prior practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
47
<PAGE>
(n) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity;
(o) commit any act or omission which constitutes a material
breach or default by the Bank under any Regulatory Agreement or under any
material contract or material license to which the Bank is a party or by which
it or its properties is bound;
(p) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructuring in the ordinary course of business consistent with
prudent banking practices;
(q) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the Bank is a party or by
which the Bank or its properties is bound;
(r) take any action which would cause the termination or
cancellation by the FDIC of insurance in respect of the Bank's deposits; or
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<PAGE>
(s) agree to do any of the foregoing.
5.2. COVENANTS OF PARENT. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
the Bank, and except as set forth on Section 5.2 of the Parent Disclosure Sched-
ule, Parent shall not, and shall not permit any of its Subsidiaries to, take any
action that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law,
PROVIDED, HOWEVER, that nothing contained herein shall preclude Parent or any of
its affiliates from taking in good faith any action which would preclude the
Merger from qualifying as a pooling of interests or a tax-free reorganization
under Section 368 of the Code if Parent elects to pay Cash Consideration
pursuant to Section 1.3 hereof.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. REGULATORY MATTERS. (a) Unless Parent shall elect to pay Cash
Consideration pursuant to Section 1.3 hereof, the Bank and Parent shall promptly
prepare and file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Bank and Parent shall use all reasonable
efforts to have the S-4 declared effective under the Securities Act as promptly
as practicable after such filing, and the Bank shall thereafter mail the Proxy
Statement to its stockholders. Unless Parent shall elect to pay Cash Consider-
ation pursuant to Section 1.3 hereof, Parent shall also use reasonable efforts
to obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement, and the
Bank shall furnish all information concerning the Bank and the holders of Bank
Common Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and
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Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (it being understood that any amend-
ments to the S-4 or a resolicitation of proxies as consequence of a subsequent
proposed merger, stock purchase or similar acquisition by Parent or any of its
Subsidiaries shall not violate this covenant). The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) Parent and the Bank shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, the
Bank or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
6.2. ACCESS TO INFORMATION. (a) Upon reasonable notice and subject
to applicable laws relating to
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the exchange of information, the Bank shall afford to the officers, employees,
accountants, counsel and other representatives of Parent, access, during normal
business hours during the period prior to the Effective Time, to all its proper-
ties, books, contracts, commitments, records, officers, employees, accountants,
counsel and other representatives and, during such period, the Bank shall make
available to Parent (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of applicable Federal or state banking laws (other than reports or
documents which the Bank is not permitted to disclose under applicable law) and
(ii) all other information concerning its business, properties and personnel as
Parent may reasonably request. The Bank shall not be required to provide access
to or to disclose information where such access or disclosure would violate or
prejudice the rights of the Bank's customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) All information furnished by the Bank to Parent or its
representatives pursuant hereto shall be
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treated as the sole property of the Bank and, if the Merger shall not occur,
Parent and its representatives shall return to the Bank all of such written
information and all documents, notes, summaries or other materials containing,
reflecting or referring to, or derived from, such information. Parent shall,
and shall use its best efforts to cause its representatives to, keep confiden-
tial all such information, and shall not directly or indirectly use such
information for any competitive or other commercial purpose. The obligation to
keep such information confidential shall continue for five years from the date
the proposed Merger is abandoned and shall not apply to (i) any information
which (x) was already in Parent's possession prior to the disclosure thereof by
the Bank; (y) was then generally known to the public; or (z) was disclosed to
Parent by a third party not known by Parent to be bound by an obligation of
confidentiality or (ii) disclosures made as required by law. It is further
agreed that, if in the absence of a protective order or the receipt of a waiver
hereunder Parent is nonetheless, in the opinion of its counsel, compelled to
disclose information concerning the Bank to any tribunal or governmental body or
agency or else stand liable for contempt or suffer other censure or penalty,
Parent may disclose such information to such tribunal or governmental body or
agency without liability hereunder.
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(c) No investigation by Parent or its representatives shall affect
the representations, warranties, covenants or agreements of the Bank set forth
herein.
6.3. STOCKHOLDER MEETING. The Bank shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its stockholders to be
held as soon as is reasonably practicable after the date on which the S-4
becomes effective for the purpose of voting upon the approval of this Agreement
and the consummation of the transactions contemplated hereby. The Bank will,
through its Board of Directors, except to the extent legally required for the
discharge of the fiduciary duties of such board, recommend to its respective
stockholders approval of this Agreement and the transactions contemplated hereby
and such other matters as may be submitted to its stockholders in connection
with this Agreement.
6.4. LEGAL CONDITIONS TO MERGER. Each of Parent and the Bank shall,
and shall cause its Subsidiaries to, use their best efforts (a) 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 with respect to the Merger and, subject to the conditions set forth
in Article VII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent,
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authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by the Bank or
Parent or any of their respective Subsidiaries in connection with the Merger and
the other transactions contemplated by this Agreement (it being understood that
the Bank shall be responsible for obtaining all such consents, authorizations,
orders or approvals from such parties with whom it is in contractual privity),
and to comply with the terms and conditions of such consent, authorization,
order or approval; PROVIDED, HOWEVER, that neither Parent nor the Bank shall be
obligated to take any action pursuant to the foregoing if the taking of such
action or such compliance or the obtaining of such consent, authorization, order
or approval constitutes, or is likely, in the reasonable opinion of Parent, to
result in the imposition of, a Burdensome Condition.
6.5. AFFILIATES. The Bank shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling-of-interests" accounting treatment) of the Bank to deliver to
Parent, as soon as practicable after the date of this Agreement, and in any
event prior to the date of the stockholders meeting
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called by the Bank to approve this Agreement, a written agreement, in the form
of Exhibit 6.5 hereto.
6.6. EMPLOYEE BENEFIT PLANS
Parent agrees to use its best efforts to provide to all eligible
employees of the Bank who remain employees of the Surviving Corporation
following the Effective Time ("Continuing Employees") employee welfare and
pension benefits substantially equivalent (in the aggregate) to those uniformly
provided to employees of Parent and its Subsidiaries from time to time, PRO-
VIDED, HOWEVER, that Parent shall not be required to give credit to any such
Continuing Employees in respect of past service with the Bank prior to the
Effective Time for any purposes under any employee benefit plan or arrangement
of Parent, except for purposes of eligibility and participation (but not for
purposes of vesting or benefit accrual) in Parent's 401(k), pension and flexible
benefits plans and for purposes of determining vacation benefits under Parent's
vacation plan. Parent shall use its best efforts to ensure that any Continuing
Employees and their eligible dependents who have coverage under the Bank's
existing medical plan will not be subject to any pre-existing condition re-
quirement under Parent's medical insurance plan, except to the extent that such
Continuing Employees and eligible dependents are currently subject to any such
pre-existing condition.
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6.7. INDEMNIFICATION. (a) Following the Effective Time, Parent
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former officers, directors and employees of the Bank (each, an
"Indemnified Party") after the Effective Time against all losses, expenses,
claims, damages or liabilities 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 full extent then permitted under Florida
law and by the Articles of Incorporation and Bylaws of the Bank as in effect on
the date hereof, including provisions relating to advances of expenses incurred
in the defense of any action or suit. Parent shall guarantee the obligations of
the Surviving Corporation under this Section 6.7(a) for a period of three (3)
years following the Effective Time. Thereafter, the Surviving Corporation shall
be solely liable for such obligations.
(b) The provisions of this Section 6.7 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6.8. ADVICE OF CHANGES. Parent and the Bank shall promptly advise
the other party of any change or event having a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or
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constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time (and
on the date prior to the Closing Date), each party will promptly supplement or
amend the Disclosure Schedules delivered in connection with the execution of
this Agreement to reflect any matter which, if existing, occurring or known at
the date of this Agreement, would have been required to be set forth or de-
scribed in such Disclosure Schedules or which is necessary to correct any
information in such Disclosure Schedules which has been rendered inaccurate
thereby. No supplement or amendment to such Disclosure Schedules shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Sections 7.2(a) or 7.3(a) hereof, as the case may be, or the compliance by
the Bank or Parent, as the case may be, with the respective covenants and agree-
ments of such parties contained herein.
6.9. CERTAIN REVALUATIONS, CHANGES AND ADJUSTMENTS. Prior to the
Effective Time, the Bank shall, consistent with GAAP, make such additional ac-
counting entries, accruals and adjustments as may be requested by Parent to
conform the Bank's accounting practices and methods to those of Parent (as such
practices and methods are to be applied to the Bank from and after the Closing
Date) and Parent's plan with respect to the conduct of
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the Bank's business following the Merger and otherwise to reflect Merger-related
expenses and costs incurred by the Bank.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of at least a
majority of the outstanding shares of Bank Common Stock entitled to vote there-
on.
(b) NYSE LISTING. Unless Parent or the Bank shall have elected
pursuant to Section 1.3 for the Merger Consideration to consist entirely of
cash, the shares of Parent Common Stock which shall be issued to the stock-
holders of the Bank upon consummation of the Merger shall have been authorized
for listing on the NYSE, subject to official notice of issuance.
(c) OTHER APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain
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in full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. Unless Parent or the Bank shall have elected pursuant
to Section 1.3 for the Merger Consideration to consist entirely of cash, the S-4
shall have become effective under the Securities Act and no stop order suspend-
ing the effectiveness of the S-4 shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the consumma-
tion of the Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order, injunction
or decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND PHANTOM BANK. The obli-
gations of Parent and Phantom Bank to effect the Merger are also subject to the
satisfaction
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or waiver by Parent at or prior to the Effective Time of the following condi-
tions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Bank set forth in this Agreement shall be true and correct in
all material respects as of the date of this 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 and as of the Closing Date; PROVIDED, HOWEVER,
that for purposes of determining the satisfaction of the condition contained in
this Section 7.2(a), no effect shall be given to any exception in such represen-
tations and warranties relating to materiality or a Material Adverse Effect, and
PROVIDED, FURTHER, HOWEVER, that, for purposes of this Section 7.2(a), such
representations and warranties shall be deemed to be true and correct in all
material respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate, repre-
sent a material adverse change from the business, properties, assets, liabili-
ties, financial condition or results of operations of the Bank as represented in
the manner contemplated by this Section 7.2(a). Parent shall have received a
certificate signed on behalf of the Bank by the Chief Executive Officer and the
Chief Financial Officer of the Bank to the foregoing effect.
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(b) PERFORMANCE OF OBLIGATIONS OF THE BANK. The Bank shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Bank by the Chief Executive
Officer and the Chief Financial Officer of the Bank to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each person (other than the Governmental Entities referred to in Section
7.1(c)) whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Bank under any loan or credit agreement,
note, mortgage, indenture, lease, license or other agreement or instrument shall
have been obtained, except where the failure to obtain such consent, approval or
waiver would not so materially adversely affect the economic or business
benefits of the transactions contemplated by this Agreement to Parent as to
render inadvisable, in the reasonable good faith judgment of Parent, the consum-
mation of the Merger.
(d) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
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(e) POOLING OF INTERESTS. Unless Parent or the Bank shall have
elected pursuant to Section 1.3 for the Merger Consideration to consist entirely
of cash, Parent shall have received a letter from Arthur Andersen LLP, addressed
to Parent, to the effect that the Merger will qualify for "pooling of interests"
accounting treatment.
(f) NO BURDENSOME CONDITION. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon Parent, the Bank,
the Surviving Corporation or any of their respective Subsidiaries that Parent,
in good faith, reasonably determines would so materially adversely affect the
economic or business benefits of the transactions contemplated by this Agreement
to Parent as to render inadvisable in the reasonable good faith judgment of
Parent the consummation of the Merger (a "Burdensome Condition").
(g) NON-COMPETE AGREEMENTS. Prior to the Effective Time, the
directors of the Bank and Nancy Frank shall have entered into non-compete agree-
ments in form and substance satisfactory to Parent prohibiting such individuals
from competing with the Surviving Corporation on Sanibel Island and Captiva
Island for a period of three years following the Effective Time.
7.3. CONDITIONS TO OBLIGATIONS OF THE BANK. The obligation of the
Bank to effect the Merger is also
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subject to the satisfaction or waiver by the Bank at or prior to the Effective
Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Parent set forth in this Agreement shall be true and correct in
all material respects as of the date of this 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 and as of the Closing Date; PROVIDED, HOWEVER,
that for purposes of determining the satisfaction of the condition contained in
this Section 7.3(a), no effect shall be given to any exception in such
representations and warranties relating to materiality or a Material Adverse
Effect, and PROVIDED, FURTHER, HOWEVER, that, for purposes of this Section
7.3(a), such representations and warranties shall be deemed to be true and
correct in all material respects unless the failure or failures of such
representations and warranties to be so true and correct, individually or in the
aggregate, represent a material adverse change from the business, properties,
assets, liabilities, financial condition or results of operations of Parent and
its Subsidiaries taken as a whole as represented in the manner contemplated by
this Section 7.3(a) and PROVIDED FURTHER, HOWEVER, that if Parent or the Bank
shall elect pursuant to Section 1.3 for the Merger Consideration to consist
entirely of cash, for purposes of
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this Section 7.3(a) Parent shall be deemed not to have made the representations
and warranties contained in Sections 4.2, 4.5, 4.6, 4.7 and 4.8 hereof. The
Bank shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer (or other appropriate
executive officers reasonably satisfactory to the Bank) of Parent to the forego-
ing effect.
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and the Bank shall have
received a certificate signed on behalf of Parent by the Chief Executive Officer
and the Chief Financial Officer (or other appropriate executive officers
reasonably satisfactory to the Bank) of Parent to such effect.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each person (other than the Governmental Entities referred to in Section
7.1(c)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
Parent or any of its Subsidiaries is a party or is otherwise bound, except those
for which failure to obtain such
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consents and approvals would not, individually or in the aggregate, have a
material adverse effect on the business, operations or financial condition of
Parent and its Subsidiaries taken as a whole (after giving effect to the
transactions contemplated hereby), shall have been obtained.
(d) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated by
any Governmental Entity seeking an Injunction shall be pending.
(e) FEDERAL TAX OPINION. Unless Parent or the Bank shall have
elected pursuant to Section 1.3 for the Merger Consideration to consist entirely
of cash, the Bank shall have received an opinion of the Bank's Counsel, in form
and substance reasonably satisfactory to the Bank, dated as of the Effective
Time, substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a reorgani-
zation within the meaning of Section 368(a) of the Code and that accordingly for
federal income tax purposes:
(i) No gain or loss will be recognized by the Bank as a
result of the Merger;
(ii) No gain or loss will be recognized by the share-
holders of the Bank who exchange all of their Bank Common Stock
solely
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for Parent Common Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in Parent Common
Stock); and
(iii) The aggregate tax basis of the Parent Common Stock
received by shareholders who exchange all of their Bank Common
Stock solely for Common Stock pursuant to the Merger will be the
same as the aggregate tax basis of the Bank Common Stock surren-
dered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received).
In rendering such opinion, the Bank's Counsel may require and rely upon
representations and covenants contained in certificates of officers of Parent,
the Bank and others, including certain shareholders of the Bank.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the stockholders of the Bank:
(a) by mutual consent of the Bank and Parent in a written
instrument, which consent in the case
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of the Bank shall require a determination to do so by a vote of a majority of
the members of the Bank's entire Board of Directors;
(b) by either Parent or the Bank upon written notice to the
other party (i) 60 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, PROVIDED, HOWEVER, that no party shall
have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the consummation of any
of the transactions contemplated by this Agreement;
(c) by either Parent or the Bank if the Merger shall not have
been consummated on or before January 31, 1996, unless the failure of the
Closing to
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occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
(d) by either Parent or the Bank (provided that the Bank shall
not be in material breach of any of its obligations under Section 6.3) if any
approval of the stockholders of the Bank required for the consummation of the
Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of such stockholders or at any adjournment
or postponement thereof;
(e) by either Parent or the Bank (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; PROVIDED, HOWEVER, that neither
party shall have the right to terminate this Agreement pursuant to this Section
8.1(e) unless the breach of representation or warranty, together with all other
such breaches, would entitle the party receiving such repre-
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sentation not to consummate the transactions contemplated hereby under Section
7.2(a) (in the case of a breach of representation or warranty by the Bank) or
Section 7.3(a) (in the case of a breach of representation or warranty by
Parent);
(f) by either Parent or the Bank (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the other party, which breach shall not have been cured within thirty days fol-
lowing receipt by the breaching party of written notice of such breach from the
other party hereto; or
(g) by Parent, if the Board of Directors of the Bank does not
publicly recommend in the Proxy Statement that the Bank's stockholders approve
and adopt this Agreement or if, after recommending in the Proxy Statement that
stockholders approve and adopt this Agreement, the Board of Directors of the
Bank shall have withdrawn, modified or amended such recommendation in any
respect materially adverse to Parent.
8.2. EFFECT OF TERMINATION; EXPENSES. In the event of termination of
this Agreement by either Parent or the Bank as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect except
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(i) Section 6.2(b) and Sections 8.2 and 9.4 shall survive any termination of
this Agreement and (ii) that notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released from any liabilities
or damages arising out of its willful breach of any provision of this Agreement.
8.3. AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of the
Bank; PROVIDED, HOWEVER, that after any approval of the transactions
contemplated by this Agreement by the Bank's stockholders, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the Bank stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.4. EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other
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acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or condi-
tions contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1. CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on a
date to be specified by the parties, which shall be the first day which is (a)
the first or last business day of a month and (b) at least two business days
after the satisfaction or waiver (subject to applicable law) of the latest to
occur of the conditions set forth in Article VII hereof (the "Closing Date"), at
the offices of Parent unless another time, date or place is agreed to in writing
by
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the parties hereto, PROVIDED, HOWEVER, that the Closing Date shall not be a date
earlier than November 1, 1995.
9.2. ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, subject to the Bank's consent, which consent shall
not be unreasonably withheld, prior to the Effective Time, Parent shall be enti-
tled to revise the structure of the Merger and related transactions provided
that each of the transactions comprising such revised structure shall (i) not
subject any of the stockholders of the Bank to materially adverse tax conse-
quences or change the amount of consideration to be received by such stockhold-
ers (in each case, other than in a manner which causes Parent to pay Cash
Consideration in accordance with the terms of this Agreement), (ii) be capable
of consummation in as timely a manner as the structure contemplated herein and
(iii) not otherwise be prejudicial to the interests of the stockholders of the
Bank. This Agreement and any related documents shall be appropriately amended
in order to reflect any such revised structure.
9.3. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein which by
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their terms apply in whole or in part after the Effective Time.
9.4. EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, PROVIDED, HOWEVER, that the costs and expenses of
printing and mailing the Proxy Statement to the stockholders of the Bank, and
all filing and other fees paid to the SEC or any other Governmental Entity in
connection with the Merger and the other transactions contemplated hereby, shall
be borne equally by Parent and the Bank, and PROVIDED, FURTHER, HOWEVER, that
nothing contained herein shall limit either party's rights to recover any
liabilities or damages arising out of the other party's willful breach of any
provision of this Agreement, and PROVIDED FURTHER, HOWEVER, that in the event
that, following the public announcement of a takeover proposal (as defined in
Section 5.1(e) hereof),(x) the Bank's stockholders fail to approve the Merger at
a duly held meeting of such stockholders or at any adjournment or postponement
thereof or (y) the Bank fails to duly hold a meeting of its stockholders for the
purpose of voting on the Merger, then the Bank will promptly reimburse Parent
and its Subsidiaries for all out-of-pocket costs and expenses incurred by Parent
or any of its Subsidiaries in connection with entering into this
74
<PAGE>
Agreement and carrying out any and all acts contemplated hereunder.
9.5. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent, to:
Barnett Banks, Inc.
50 North Laura Street
Jacksonville, Florida 32202
Attn: Hinton F. Nobles, Jr.
with a copy to:
Skadden, Arps Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Fred B. White, III, Esq.
and
(b) if to the Bank, to:
Community Bank of the Islands
2450 Periwinkle Way
Sanibel, Florida 33957-3207
Attn: Lyman H. Frank, III
with a copy to:
Foley & Lardner
200 Laura St.
Jacksonville, Florida 32202
Attn: Luther F. Sadler, Jr., Esq.
75
<PAGE>
9.6. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The phrases
"the date of this Agreement", "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to May 30, 1995.
9.7. COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.8. ENTIRE AGREEMENT. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
9.9. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida, without regard to any
applicable conflicts of law.
9.10. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any
76
<PAGE>
jurisdiction shall, as to that 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, the provision shall be interpreted to be only so broad as is
enforceable.
9.11. PUBLICITY. Except as otherwise required by law, so long as
this Agreement is in effect, the Bank shall not issue or cause the publication
of any press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement without the consent of Parent, which consent shall not be unreasonably
withheld.
9.12. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. Neither this Agree-
ment nor any of the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Except
as otherwise expressly provided
77
<PAGE>
herein, this Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
78
<PAGE>
IN WITNESS WHEREOF, Parent, Phantom Bank and the Bank have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
BARNETT BANKS, INC.
By /s/ Hinton F. Nobles, Jr.
-------------------------------------
Name: Hinton F. Nobles, Jr.
Title: Executive Vice President
Attest:
/s/ Catherine C. Cosby
- ---------------------------
Name: Catherine C. Cosby
PHANTOM BANK
By /s/ Hinton F. Nobles, Jr.
-------------------------------------
Name: Hinton F. Nobles, Jr.
Title: Executive Vice President
Attest:
/s/ Catherine C. Cosby
- ---------------------------
Name: Catherine C. Cosby
COMMUNITY BANK OF THE ISLANDS
By /s/ Lyman H. Frank, III
-------------------------------------
Name: Lyman H. Frank, III
Title: President & CEO
Attest:
/s/ Belinda Ohmer
- ---------------------------
Name: Belinda Ohmer
Vice President & Cashier
<PAGE>
APPENDIX B
[EWING OPINION - TO BE FILED BY AMENDMENT]
<PAGE>
APPENDIX C
<PAGE>
658.44 APPROVAL BY STOCKHOLDERS; RIGHTS OF DISSENTERS; PREEMPTIVE RIGHTS--
(1) The department shall not issue a certificate of merger to a resulting
state bank or trust company unless the plan of merger and merger agreement,
as adopted by a majority of the entire board of directors of each constituent
bank or trust company, and as approved by each appropriate federal regulatory
agency and by the department, has been approved:
(a) By the stockholders of each constituent national bank as provided by,
and in accordance with the procedures required by, the laws of the United
States applicable thereto, and
(b) After notice as hereinafter provided, by the affirmative vote or
written consent of the holders of at least a majority of the shares entitled
to vote thereon of each constituent state bank or state trust company, unless
any class of shares of any constituent state bank or state trust company is
entitled to vote thereon as a class, in which event as to such constituent
state bank or state trust company the plan of merger and merger agreement
shall be approved by the stockholders upon receiving the affirmative vote or
written consent of the holders of a majority of the shares of each class of
shares entitled to vote thereon as a class and of the total shares entitled
to vote thereon. Such vote of stockholders of a constituent state bank or
state trust company shall be at an annual or special meeting of stockholders
or by written consent of the stockholders without a meeting as provided in
s. 607.0704.
Approval by the stockholders of a constituent bank or trust company of a plan
of merger and merger agreement shall constitute the adoption by the
stockholders of the articles of incorporation of the resulting state bank or
state trust company as set forth in the plan of merger and merger agreement.
(2) Written notice of the meeting of, or proposed written consent action
by, the stockholders of each constituent state bank or state trust company
shall be given to each stockholder of record, whether or not entitled to
vote, and whether the meeting is an annual or a special meeting, or whether
the vote is to be by written consent pursuant to s. 607.0704, and the notice
shall state that the purpose or one of the purposes of the meeting or of the
proposed action by the stockholders without a meeting, is to consider the
proposed plan of merger and merger agreement. Except to the extent provided
otherwise with respect to stockholders of a resulting bank or trust company
pursuant to subsection (7), the notice shall also state that dissenting
stockholders will be entitled to payment in cash of the value of only those
shares held by the stockholders:
<PAGE>
(a) Which at a meeting of the stockholders are voted against the approval
of the plan of merger and merger agreement;
(b) As to which, if the proposed action is to be by written consent of
stockholders pursuant to s. 607.0704, such written consent is not given by
the holder thereof; or
(c) With respect to which the holder thereof has given written notice to
the constituent state bank or trust company, at or prior to the meeting of
the stockholders or on or prior to the date specified for action by the
stockholders without a meeting pursuant to s. 607.0704 in the notice of such
proposed action, that the stockholder dissents from the plan of merger and
merger agreement.
Hereinafter in this section, the term "dissenting shares" means and includes
only those shares, which may be all or less than all the shares of any class
owned by a stockholder, described in paragraphs (a), (b), and (c).
(3) On or promptly after the effective date of the merger, the resulting
state bank or trust company, or a bank holding company which, as set out in
the plan of merger or merger agreement, is offering shares rights,
obligations, or other securities or property in exchange for shares of the
constituent banks or trust companies, may fix an amount which it considers to
be not more than the fair market value of the shares of a constituent bank or
trust company and which it will pay to the holders of dissenting shares of
that constituent bank or trust company and, if it fixes such amount, shall
offer to pay such amount to the holders of all dissenting shares of that
constituent bank or trust company. The amount payable pursuant to any such
offer which is accepted by the holders of dissenting shares, and the amount
payable to the holders of dissenting shares pursuant to an appraisal, shall
constitute a debt of the resulting state bank or state trust company.
(4) The owners of dissenting shares who have accepted an offer made
pursuant to subsection (3) shall be entitled to receive the amount so offered
for such shares in cash upon surrendering the stock certificates representing
such shares at any time within 30 days after the effective date of the
merger, and the owners of dissenting shares, the value of which is to be
determined by appraisal, shall be entitled to receive the value of such
shares in cash upon surrender of the stock certificates representing such
shares at any time within 30 days after the value of such shares has been
determined by appraisal made on or after the effective date of the merger.
(5) The value of dissenting shares of each constituent state bank or state
trust company, the owners of which have not accepted an offer for such shares
made pursuant to subsection (3), shall be determined as of the effective date
of the merger by three appraisers, one to be selected by the owners of at
least two-thirds of such dissenting shares, one to be selected by the board
of directors of the resulting state bank, and the third to be selected by the
two so chosen. The value agreed upon by any two of the appraisers shall
control and be final and binding on all parties. If, within 90 days from the
effective date of the merger, for any reason one or more of the appraisers
is not selected as herein provided, or the appraisers fail to determine the
value of such dissenting shares, the department shall cause an appraisal of
such dissenting shares to be made which will be final and binding on all
parties. The expenses of appraisal shall be paid by the resulting state bank
or trust company.
(6) Upon the effective date of the merger, all the shares of stock of
every class of each constituent bank or trust company, whether or not
surrendered by the holders thereof, shall be void and deemed to be canceled,
and no voting or other rights of any kind shall pertain thereto or to the
holders thereof except only such rights as may be expressly provided in the
plan of merger and merger agreement or expressly provided by law.
(7) The provisions of subsection (6) and, unless agreed by all the
constituent banks and trust companies and expressly provided in the plan of
merger and merger agreement, subsections (3), (4), and (5) are not applicable
to a resulting bank or trust company or to the shares or holders of shares of
a resulting bank or trust company the cash, shares, rights, obligations, or
other securities or property of which, in whole or in part, is provided in
the plan of merger or merger agreement to be exchanged for the shares of the
other constituent banks or trust companies.
(8) The stock, rights, obligations, and other securities of a resulting
bank or trust company may be issued as provided by the terms of the plan of
merger and merger agreement, free from any preemptive rights of the holders
of any of the shares of stock or of any of the rights, obligations, or other
securities of such resulting bank or trust company or of any of the
constituent banks or trust companies.
(9) After approval of the plan of merger and merger agreement by the
stockholders as provided in subsection (1), there shall be filed with the
department, within 30 days after the time limit in s. 658.43(5), a fully
executed counterpart of the plan of merger and merger agreement as so
approved if it differs in any respect from any fully executed counterpart
thereof theretofore filed with the department, and copies of the resolutions
approving the same by the stockholders of each constituent bank or trust
company, certified by the president, or chief executive officer if other than
the president, and the cashier or corporate secretary of each constituent
bank or trust company, respectively, with the corporate seal impressed
thereon.
<PAGE>
APPENDIX D
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
COMMUNITY BANK OF THE ISLANDS
ARTICLE I
The name of the Corporation shall be COMMUNITY BANK OF THE ISLANDS and its
initial place of business shall be at 2450 Periwinkle Way in the City of
Sanibel, in the County of Lee and the State of Florida.
ARTICLE II
The general nature of the business to be transacted by this Corporation
shall be that of a general commercial banking business with trust powers and
with all the rights, powers and privileges granted and conferred by the banking
laws of the State of Florida regulating the organization, powers and management
of Florida banking corporations.
ARTICLE III
The total number of shares authorized to be issued by the Corporation shall
be Six Hundred Thousand (600,000). Such shares shall be of a single class and
shall have a par value of Three Dollars ($3.00) per share. The Corporation
shall begin business with at least Nine Hundred Thousand Dollars ($900,000.00)
in paid-in common capital stock to be divided into Three Hundred Thousand
(300,000) shares. The amount of surplus with which the Corporation will begin
business will not be less than Nine Hundred Thousand
<PAGE>
Dollars ($900,000.00), and the amount of undivided profits will be not less than
One Million Two Hundred Thirteen Thousand Five Hundred Dollars ($1,213,500.00),
all of which (capital stock, surplus and undivided profits) shall be paid in
cash.
ARTICLE IV
The term for which said Corporation shall exist shall be perpetual unless
terminated pursuant to the Florida Banking Code.
ARTICLE V
The business and affairs of this corporation shall be managed and conducted
by a board of not less than five directors who shall be elected by the
shareholders at their annual meeting to be held on such day in January,
February, March or April of each year as is specified in the bylaws of the
corporation, or at a special meeting; provided that a majority of the full board
of directors may, at any time during the year following the annual meeting of
shareholders in which such action has been authorized, increase the number of
directors by not more than two and appoint persons to fill the resulting
vacancies. The board of directors shall elect a president, who shall be a
director, and one or more vice presidents and a cashier and such other officers
as may be designated by the bylaws of the corporation.
2
<PAGE>
ARTICLE VI
The business of this corporation shall be conducted by the following named
directors:
NAME STREET ADDRESS
- ---- --------------
Francis P. Bailey, Jr. 1225 Kittiwake
Sanibel, Florida 33957
Lyman H. Frank, III 1752 Jewel Box Drive
Sanibel, Florida 33957
Mary R. Goss 3869 West Gulf Drive
Sanibel, Florida 33957
Myton W. Ireland 632 Lighthouse Way
Sanibel, Florida 33957
Stanley E. Johnson, Jr. 5260 S. Landings Drive, #1109
Fort Myers, Florida 33907
John K. Kontinos 3706 West Gulf Drive
Sanibel, Florida 33957
Thomas R. Louwers 1195 Sandcastle
Sanibel, Florida 33957
James G. Lowman 971 Black Skimmer Way
Sanibel, Florida 33957
Jerrold A. Muench 665 Anchor Drive
Sanibel, Florida 33957
Allen G. Ten Broek 1272 Isabel Drive
Sanibel, Florida 33957
ARTICLE VII
No holder of shares of any class of the capital stock of the corporation
shall have any preemptive or preferential right of subscription to any shares of
any class of stock of the corporation, convertible into stock of the
corporation, issued or sold, nor any right of subscription to any thereof other
than such, if any, as the board of directors, in its discretion, may from time
3
<PAGE>
to time determine and at such price as the board of directors may from time to
time fix.
ARTICLE VIII
Bylaws of this corporation may be adopted, amended or repealed by the board
of directors or the shareholders except that any bylaw adopted by the
shareholders shall not be amended or repealed by the board of directors if the
shareholders specifically so provide.
ARTICLE IX
The corporation shall indemnify its directors and officers to the full
extent permitted by law.
4
-71-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Articles of Incorporation, as amended, and the
Bylaws of Barnett require the indemnification of directors and officers to the
fullest extent permitted by law.
Subsection (1) of Section 607.0850 of the Florida Business Corporation Act
empowers a corporation to indemnify any person who was or is a party to any
proceeding (other than an action by, or in the right of, the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against liability incurred in connection
with such proceeding (including any appeal thereof) if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (2) of Section 607.0850 empowers a corporation to indemnify any
person who was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth in the preceding paragraph,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expenses of litigating the proceeding
to conclusion, actually and reasonably incurred in connection with the defense
or settlement of such proceeding, including appeals, provided that the person
acted under the standards set forth in the preceding paragraph. However, no
indemnification should be made for any claim, issue or matter as to which such
person is adjudged to be liable unless, and only to the extent that, the court
in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
deems proper.
Subsection (3) provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or (2) of Section 607.0850 or in the
defense of any claim, issue or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith.
Subsection (4) provides that any indemnification under subsection (1) or
(2) of Section 607.0850, unless determined by a court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsection
(1) or (2) of Section 607.0850. Such determination shall be made:
(a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) if such a quorum is not obtainable, or, even if obtainable, by
majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two
or more directors not at the time parties to the proceeding;
II-1
<PAGE>
(c) by independent legal counsel:
(1) selected by the board of directors as prescribed in
paragraph (a) or the committee selected as prescribed in paragraph
(b); or
(2) if no quorum of directors can be obtained under paragraph
(a) or no committee can be designated under paragraph (b), by a
majority vote of the full board of directors (in which directors who
are parties may participate); or
(d) by the shareholders by a majority vote of a quorum of
shareholders who were not parties to such proceedings or, if no quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
Under subsection (6), expenses incurred by a director or officer in
defending a civil or criminal proceeding may be paid by the corporation in
advance of the final disposition thereof upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it is ultimately
determined that such director or officer is not entitled to indemnification
under Section 607.0850.
Subsection (7) states that indemnification and advancement of expenses
provided under Section 607.0850 are not exclusive and empowers the corporation
to make any other or further indemnification or advancement of expenses under
any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, for actions in an official capacity and in other capacities while
holding an office. However, a corporation cannot indemnify or advance expenses
if a judgment or other final adjudication establishes that the actions or
omissions to act of the director or officer were material to the adjudicated
cause of action and the director or officer (a) violated criminal law, unless
the director or officer had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful, (b) derived an
improper personal benefit from a transaction, (c) was or is a director in a
circumstance where the liability under Section 607.0834 (relating to unlawful
distributions) applies, or (d) engaged in willful misconduct or conscious
disregard for the best interests of the corporation in a proceeding by or in
right of the corporation to procure a judgment in its favor or in a proceeding
by or in right of a shareholder.
Subsection (9) permits any director or officer who is or was a party to a
proceeding to apply for indemnification or advancement of expenses, or both, to
any court of competent jurisdiction and lists the determinations the court
should make before ordering indemnification or advancement of expenses.
Subsection (12) permits a corporation to purchase and maintain insurance
for a director or officer against any liability incurred in his official
capacity or arising out of his status as such regardless of the corporation's
power to indemnify him against such liability under Section 607.0850.
As allowed by Section 607.0850(12), Barnett Banks, Inc. maintains liability
insurance covering directors and officers.
ITEM 21. EXHIBITS.
The exhibits listed on the Exhibit Index on page II-___ of this
Registration Statement have been previously filed, are filed herewith, will be
filed by amendment, or are incorporated herein by reference to other filings.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) 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 Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
(b) 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 the provisions described under Item 20
above, 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 Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(c) 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.
(d) The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act of
1933 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 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.
(e) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, 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.
(f) 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Jacksonville, Florida,
on the 21st day of July, 1995.
BARNETT BANKS, INC. (Registrant)
By: *
------------------------------------
Charles E. Rice, Chairman and
Chief Executive Officer
By: /s/ PATRICK J. MCCANN
------------------------------------
Patrick J. McCann
Attorney-in-Fact
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
* Director July 21, 1995
- ------------------------------
Walter H. Alford
* Director July 21, 1995
- ------------------------------
Rita Bornstein
* Director July 21, 1995
- ------------------------------
James L. Broadhead
* Director July 21, 1995
- ------------------------------
Alvin R. Carpenter
* Director July 21, 1995
- ------------------------------
Marshall M. Criser
* Director July 21, 1995
- ------------------------------
Jack B. Critchfield
* Director July 21, 1995
- ------------------------------
Remedios Diaz-Oliver
* President July 21, 1995
- ------------------------------ Chief Operating
Allen L. Lastinger, Jr. Officer and Director
/s/ Patrick J. McCann Controller July 21, 1995
- ------------------------------ (Principal Accounting
Patrick J. McCann Officer)
II-5
<PAGE>
Signature Title Date
- --------- ----- ----
* Director July 21, 1995
- ------------------------------
Clarence V. McKee
Director July 21, 1995
- ------------------------------
Thompson L. Rankin
* Chief Financial July 21, 1995
- ------------------------------ Officer (Principal
Charles W. Newman Financial Officer)
* Chairman, Chief July 21, 1995
- ------------------------------ Executive Officer
Charles E. Rice and Director
(Principal Executive
Officer)
* Director July 21, 1995
- ------------------------------
Frederick H. Schultz
* Director July 21, 1995
- ------------------------------
Stewart Turley
* Director July 21, 1995
- ------------------------------
John A. Williams
/s/ Patrick J. McCann
- ------------------------------
Patrick J. McCann
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
PAGINATION/
EXHIBIT EXHIBIT NUMBERING
NUMBER DESIGNATION SYSTEM
- ------- ----------- -----------
(2) Agreement and Plan of Merger dated May 30, 1995, by Appendix A
and among Barnett Banks, Inc., Phantom Bank (now to Proxy
known as Interim Bank of the Islands) and Community Statement-
Bank of the Islands. Prospectus
(3)(a) Amended and Restated Articles of Incorporation of (incorporated
Barnett Banks, Inc. by reference
to Barnett's
Registration
Statement on
Form S-3, No.
33-59246).
(3)(b) Bylaws of Barnett Banks, Inc. (incorporated
by reference
to Exhibit
(3)(b) to
Barnett's
Annual Report
on Form 10-K
for the year
ended
December 31,
1994).
(4)(a) Rights Agreement. (incorporated
by reference
to Exhibit
(4)(c) to
Barnett's
Registration
Statement on
Form S-3, No.
33-36307).
(5)* Opinion of Mahoney Adams & Criser, P.A. as to the
legality of shares.
(8)* Opinion of Foley and Lardner, as to certain federal
income tax matters.
(23)(a) Consent of Arthur Andersen LLP (relating to
financial statements of Barnett Banks, Inc.)
(23)(b) Consent of Price Waterhouse LLP (relating to Financial
Statements of Barnett Banks, Inc.
(23)(c)* Consent of Mahoney Adams & Criser, P.A., counsel to
Barnett Banks, Inc. (included in Exhibit (5)).
(23)(d) Consent of KPMG Peat Marwick LLP (relating to financial
statements of Community Bank of the Islands)
(23)(e)* Consent of Foley & Lardner, counsel to Community
Bank of the Islands (included in Exhibit (8)).
(23)(f)* Consent of Allen C. Ewing & Co. (Opinion included as
Appendix B to Proxy Statement-Prospectus).
II-7
<PAGE>
(24) Powers of Attorney.
- ------------------------------
* To be filed by amendment
II-8
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the incor-
poration by reference in this Form S-4 registration statement of our report
dated January 11, 1995 incorporated by reference in Barnett Banks, Inc. Form
10-K for the year ended December 31, 1994 and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Jacksonville, Florida
July 20, 1995
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-4 of Barnett Banks, Inc., of our report dated January 14,
1933.
PRICE WATERHOUSE LLP
Orlando, Florida
July 21, 1995
<PAGE>
EXHIBIT 23(d)
CONSENT OF KPMG PEAT MARWICK LLP
Board of Directors
Community Bank of the Islands:
We consent to the use in the Registration on Form S-4 of Barnett Banks, Inc.
and in the Proxy-Prospectus Statement of Community Bank of the Islands of our
report dated January 20, 1995, relating to the balance sheet of Community
Bank of the Islands as of December 31, 1994 and 1993, and the related
statements of operations, stockholders' equity and cash flows for the years
then ended and to the reference to our firm under the heading "Experts" in
the Registration and Proxy-Prospectus included therein.
KPMG PEAT MARWICK LLP
Tampa, Florida
July 21, 1995
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Hinton F. Nobles, Jr.
----------------------------------------
Hinton F. Nobles, Jr.
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Charles W. Newman
----------------------------------------
Charles W. Newman
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Charles E. Rice
----------------------------------------
Charles E. Rice
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Allen L. Lastinger, Jr.
----------------------------------------
Allen L. Lastinger, Jr.
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Walter H. Alford
----------------------------------------
Walter H. Alford
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Rita Bornstein
----------------------------------------
Rita Bornstein
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ James L. Broadhead
----------------------------------------
James L. Broadhead
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Alvin R. Carpenter
----------------------------------------
Alvin R. Carpenter
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Marshall M. Criser
----------------------------------------
Marshall M. Criser
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Jack B. Critchfield
----------------------------------------
Jack B. Critchfield
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Remedios Diaz-Oliver
----------------------------------------
Remedios Diaz-Oliver
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Clarence V. McKee
----------------------------------------
Clarence V. McKee
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Frederick H. Schultz
----------------------------------------
Frederick H. Schultz
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ Stewart Turley
----------------------------------------
Stewart Turley
(SEAL)
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director or Officer of
Barnett Banks, Inc. (the "Corporation") hereby constitutes and appoints Charles
W. Newman, Hinton F. Nobles, Jr., Patrick J. McCann and each or any of them, his
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, to sign the
Corporation's Registration Statement on Form S-4 (or such other form as shall be
appropriate) and any and all amendments (including post-effective amendments)
thereto covering the issuance of up to 400,100 shares of common stock of the
Corporation, $2.00 par value, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to effectuate the above purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 19th day of July,
1995.
/s/ John A. Williams
----------------------------------------
John A. Williams
(SEAL)
