As filed with the Securities and Exchange Commission on January 27, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
WHITNEY HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
LOUISIANA 6711 72-6017893
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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228 St. Charles Avenue
New Orleans, Louisiana 70130
(504) 586-7117
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive office)
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Joseph S. Schwertz, Jr., Esq. Copies to: Copies to:
Secretary Patrick J. Butler, Jr., Esq. Carl J. Chaney, Esq.
Whitney Holding Corporation Milling, Benson, Woodward, Watkins Ludlam & Stennis, P.A.
228 St. Charles Ave. - Room 622 Hillyer, Pierson & Miller, L.L.P. 633 North State Street
New Orleans, LA 70130 909 Poydras Street, Suite 2300 Jackson, Mississippi 39202
(504) 586-3474 New Orleans, LA 70112
(Name, address, including zip code, and
telephone number, including area code, of
agent for service)
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Approximate Date of Commencement of Proposed Sale to the Public:
Upon submission of the Plan of Merger described in this registration statement
for the vote of shareholders of Merchants Bancshares, Inc. and Merchants Bank
& Trust Company
-------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of each class of Amount maximum maximum Amount of
securities to be registered to be offering price aggregate registration
registered(1) per share(2) offering price(2) fee
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Common stock, no par value 1,727,133 shares $10.10 $17,441,370 $5,285.26
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(1) Based on the $30.00 minimum closing sales price of a share of Whitney
Holding Corporation common stock that may be applied pursuant to the pricing
formula described herein, assuming an aggregate acquisition price of
$51,814,000. There is also registered hereby a currently indeterminate
number of additional shares that may be issued in the transaction described
herein that may result from application of the pricing formula described
herein.
(2) Calculated in accordance with Rule 457(f)(1), based on the book value, as of
December 31, 1996 of the common stock of Merchants Bancshares, Inc. and of
the common stock of Merchants Bank & Trust Company to be cancelled by reason
of the mergers described herein, and included herein solely for purposes of
calculating the registration fee.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
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WHITNEY HOLDING CORPORATION
CROSS REFERENCE SHEET
Item of Form S-4 Location in Prospectus
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A. Information About the Transaction
1. Forepart of Registration Statement and Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Cover; Table of Contents
of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Summary
Charges and Other Information
4. Terms of the Transaction Summary; The Plan of Merger
5. Pro Forma Financial Information Unaudited Pro Forma Condensed Combined
Financial Information
6. Material Contacts with the Company Being The Plan of Merger - Background; The Plan
Acquired of Merger - Reasons for the Plan of Merger;
The Plan of Merger - Recommendation of the
Company's and the Bank's Board of
Directors
7. Additional Information Required for *
Reoffering by Persons and Parties Deemed
to be Underwriters
8. Interests of Named Experts and Counsel *
9. Disclosure of Commission Position on *
Indemnification for Securities Act Liabilities
B. Information About the Registrant
10. Information with Respect to S-3 Registrants Inside Cover; Summary; Information about
Whitney
11. Incorporation of Certain Information by Information about Whitney; Incorporation of
Reference Certain Documents by Reference
12. Information with Respect to S-2 or S-3 *
Registrants
13. Incorporation of Certain Information by *
Reference
14. Information with Respect to Registrants *
other than S-2 or S-3 Registrants
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<PAGE>
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WHITNEY HOLDING CORPORATION
CROSS REFERENCE SHEET
Item of Form S-4 Location in Prospectus
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<S> <C> <C>
C. Information About the Company Being Acquired
15. Information with Respect to S-3 Companies *
16. Information with Respect to S-2 or S-3 *
Companies
17. Information with Respect to Companies Information about the Company and the
other than S-2 or S-3 Companies Bank
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited
(1) Date, Time and Place Information The Meetings - General
(2) Revocability of Proxy The Meetings - Solicitation, Voting and
Revocation of Proxies
(3) Dissenters' Rights of Appraisal Dissenters' Rights
(4) Persons Making Solicitation The Meetings - General; The Meetings -
Solicitation, Voting and Revocation of
Proxies
(5) Interests of Certain Persons in Summary - Interests of Certain Persons in the
Matters to be Acted upon; Voting Mergers; The Plan of Merger - Interests of
Securities and Principal Holders Certain Persons in the Mergers; Information
Thereof About the Company and the Bank - Security
Holdings of Principal Shareholders and
Management
(6) Vote Required for Approval The Meetings - Shares Entitled to Vote;
Quorum; Vote Required
(7) Directors and Executive Officers; Information About the Company and the
Executive Compensation; Certain Bank
Relationships and Related
Transactions
19. Information if Proxies, Consents or *
Authorizations are not to be Solicited or in
an Exchange Offer
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*Not applicable or answer is in the negative.
<PAGE>
MERCHANTS BANCSHARES, INC.
MERCHANTS BANK & TRUST COMPANY
1300 25th Avenue
Gulfport, Mississippi 39501
February ____, 1997
Dear Shareholder:
You are cordially invited to attend joint special meetings of
shareholders of Merchants Bancshares, Inc. (the "Company") and Merchants Bank &
Trust Company (the "Bank"), to be held in the main office of the Bank, 1300 25th
Avenue, Gulfport, Mississippi 39501, on ___________, _____________________, 1997
at ________, local time.
The purpose of the special meetings will be to consider and vote upon
an Agreement and Plan of Merger dated November 14, 1996 and related merger
agreements (collectively, the "Plan of Merger") among the Company, the Bank,
Whitney Holding Corporation ("Whitney") and its wholly-owned subsidiary Whitney
National Bank of Mississippi ("WNB-Mississippi"). Pursuant to the Plan of
Merger, the Company will merge into Whitney, the Bank will merge into
WNB-Mississippi, and each outstanding share of common stock of the Company and
each outstanding share of common stock of the Bank not owned by the Company will
be converted into shares of Whitney common stock as more fully described in the
attached Proxy Statement-Prospectus. You are urged to read the enclosed Proxy
Statement-Prospectus in its entirety for a more complete description of the
terms of the Plan of Merger.
The Boards of Directors of the Company and the Bank have unanimously
approved the Plan of Merger and believe it is in the best interests of the
Company's and the Bank's shareholders. Upon consummation of the Plan of Merger,
you would receive common stock of Whitney, one of the largest Louisiana-based
bank holding companies, and as a new shareholder of Whitney, you would own stock
that is publicly traded on the NASDAQ Stock Market. It is a condition to the
consummation of the mergers that the Company and Whitney receive an opinion that
the mergers will qualify as a tax-free reorganization for federal income tax
purposes. Through WNB-Mississippi, a national bank subsidiary of Whitney formed
to facilitate the proposed mergers, we believe Whitney will be able to offer a
broad range of banking services in our market area and may be able to compete
more effectively in the changing economic and legal environment facing all
financial institutions.
The accompanying Notices of Special Meeting and Proxy
Statement-Prospectus contain information about the proposed mergers. Please read
carefully these materials and the documents incorporated therein by reference,
copies of which are available as indicated under the caption "Incorporation of
Certain Documents by Reference."
The Boards of Directors recommend that you vote FOR the Plan of Merger
and urge you to sign and date the enclosed proxy and return it promptly in the
accompanying envelope in order to ensure that your vote is represented. Of
course, if you attend the special meetings, you nevertheless may vote in person,
even though you previously returned your proxy.
Very truly yours,
Guy C. Billups, Jr.
Chairman, Merchants Bancshares, Inc. and
Merchants Bank & Trust Company
<PAGE>
MERCHANTS BANCSHARES, INC.
1300 25th Avenue
Gulfport, Mississippi 39501
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___________, _____________________, 1997
To the Holders of Common Stock of Merchants Bancshares, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Company Meeting") of Merchants Bancshares, Inc. (the "Company") will be held at
the main office of its subsidiary, Merchants Bank & Trust Company (the
"Bank"),1300 25th Avenue, Gulfport, Mississippi 39501, on __________,
_______________, 1997, at ______, local time, for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and
Plan of Merger dated November 14, 1996 between Whitney Holding
Corporation ("Whitney"), the Company and the Bank and the related
Joint Agreement of Merger between the Company and Whitney
(collectively, the "Plan of Merger") pursuant to which, among
other things: (a) the Company would merge into Whitney, (b) the
Bank would merge into Whitney National Bank of Mississippi, a
newly formed, wholly-owned bank subsidiary of Whitney, and (c)
each outstanding share of common stock of the Company would be
converted into shares of Whitney common stock as determined in
accordance with the terms of the Plan of Merger, all as more
fully described in the attached Proxy Statement-Prospectus.
2. To transact such other business as may properly come before the
Company Meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on ______________,
1997 are entitled to notice of and to vote at the Company Meeting or any
adjournment or postponement thereof. Dissenting shareholders who comply with the
procedural requirements of Article 13 of the Mississippi Business Corporation
Act are or may be entitled to assert dissenters' rights under that Act.
Shareholders are cordially invited to attend the Company Meeting in
person. Whether or not you plan to attend the Company Meeting, you are urged to
complete, date and sign the enclosed proxy and to return it promptly.
By order of the Board of Directors
of Merchants Bancshares, Inc.
W. Dale Stognet
Secretary
Gulfport, Mississippi
February ____, 1997
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I M P O R T A N T
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE COMPANY MEETING
REGARDLESS OF THE NUMBER THAT YOU HOLD. PLEASE PROMPTLY COMPLETE, SIGN AND MAIL
THE ENCLOSED PROXY IN THE ACCOMPANYING POST-PAID ENVELOPE, WHETHER OR NOT YOU
INTEND TO BE PRESENT AT THE COMPANY MEETING. YOU MAY REVOKE YOUR PROXY AT ANY
TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY
OF THE COMPANY OR BY EXECUTION OF A PROXY OF A LATER DATE FILED WITH THE
SECRETARY OF THE COMPANY AT OR BEFORE THE COMPANY MEETING. IN ADDITION, IF YOU
ATTEND THE COMPANY MEETING, YOU MAY REVOKE YOUR PROXY BY VOTING IN PERSON.
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<PAGE>
MERCHANTS BANK & TRUST COMPANY
1300 25th Avenue
Gulfport, Mississippi 39501
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ___________, _____________________, 1997
To the Holders of Common Stock of Merchants Bank & Trust Company:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Bank Meeting") of Merchants Bank & Trust Company (the "Bank") will be held at
its main office, 1300 25th Avenue, Gulfport, Mississippi 39501, on __________,
_______________, 1997, at ______, local time, for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and
Plan of Merger dated November 14, 1996 between Whitney Holding
Corporation ("Whitney"), Merchants Bancshares, Inc. (the
"Company") and the Bank and the related Agreement of Merger
between the Bank and Whitney National Bank of Mississippi ("WNB-
Mississippi") (collectively, the "Plan of Merger") pursuant to
which, among other things: (a) the Company would merge into
Whitney, (b) the Bank would merge into WNB-Mississippi, a newly
formed, wholly-owned bank subsidiary of Whitney, and (c) each
outstanding share of common stock of the Bank not owned by the
Company would be converted into shares of Whitney common stock as
determined in accordance with the terms of the Plan of Merger,
all as more fully described in the attached Proxy Statement-
Prospectus.
2. To transact such other business as may properly come before the
Bank Meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on ______________,
1997 are entitled to notice of and to vote at the Bank Meeting or any
adjournment or postponement thereof. Dissenting shareholders who comply with the
procedural requirements of 12 U.S.C. ss.215a will be entitled to receive payment
of the cash value of their shares based upon the appraisal prescribed by 12
U.S.C. ss.215a.
Shareholders are cordially invited to attend the Bank Meeting in
person. Whether or not you plan to attend the Bank Meeting, you are urged to
complete, date and sign the enclosed proxy and to return it promptly.
By order of the Board of Directors
of Merchants Bank & Trust Company
George E. Estes, Jr.
Secretary
Gulfport, Mississippi
February ____, 1997
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I M P O R T A N T
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE BANK MEETING REGARDLESS
OF THE NUMBER THAT YOU HOLD. PLEASE PROMPTLY COMPLETE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING POST-PAID ENVELOPE, WHETHER OR NOT YOU INTEND
TO BE PRESENT AT THE BANK MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE
IT IS VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE BANK
OR BY EXECUTION OF A PROXY OF A LATER DATE FILED WITH THE SECRETARY OF THE BANK
AT OR BEFORE THE BANK MEETING. IN ADDITION, IF YOU ATTEND THE BANK MEETING, YOU
MAY REVOKE YOUR PROXY BY VOTING IN PERSON.
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<PAGE>
MERCHANTS BANCSHARES, INC.
MERCHANTS BANK & TRUST COMPANY
PROXY STATEMENT FOR SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ___________, _____________________, 1997
WHITNEY HOLDING CORPORATION
PROSPECTUS
Common Stock, No Par Value
This Proxy Statement-Prospectus is being furnished to holders of common
stock, par value $5.00 per share ("Company Common Stock"), of Merchants
Bancshares, Inc. (the "Company") and to holders of common stock, par value $5.00
per share ("Bank Common Stock"), of Merchants Bank & Trust Company (the "Bank")
in connection with the solicitation of proxies by the Company's and the Bank's
Boards of Directors for use at joint Special Meetings of Shareholders of the
Company (the "Company Meeting") and the Bank (the "Bank Meeting") to be held on
__________, _______________, 1997, at ______, local time, at the Bank's main
office, 1300 25th Avenue, Gulfport, Mississippi 39501, and at any adjournment or
postponement thereof. The purpose of the Company Meeting and the Bank Meeting is
to consider and vote upon a proposal to approve an Agreement and Plan of Merger
and related agreements of merger (collectively, the "Plan of Merger") between
the Company and the Bank, on the one hand, and Whitney Holding Corporation
("Whitney") and Whitney National Bank of Mississippi ("WNB-Mississippi"), on the
other hand. The Plan of Merger provides for, among other things, the merger of
the Company into Whitney (the "Company Merger") and the merger of the Bank into
WNB-Mississippi (the "Bank Merger" and, collectively with the Company Merger,
the "Mergers"). Upon consummation of the Mergers, except as described herein,
each outstanding share of Company Common Stock and each outstanding share of
Bank Common Stock that is not owned by the Company would be converted into
shares of common stock, no par value, of Whitney ("Whitney Common Stock") in the
manner described herein, with cash being paid for any fractional share
interests. See "The Plan of Merger - Description of the Plan of Merger --
Conversion of Common Stock." Consummation of the Company Merger requires the
approval of the holders of at least two-thirds of the outstanding shares of
Company Common Stock entitled to vote at the Company Meeting; consummation of
the Bank Merger requires the approval of the holders of at least two-thirds of
the outstanding shares of Company Common Stock entitled to vote at the Bank
Meeting. Directors and executive officers of the Company beneficially owning an
aggregate of approximately 56.6% of the Company Common Stock have agreed,
subject to certain conditions, to vote their shares in favor of the Plan of
Merger. Consummation of the Mergers is also subject to the satisfaction of
certain other conditions, including obtaining necessary regulatory approvals.
This Proxy Statement-Prospectus covers up to 1,727,813 shares of
Whitney Common Stock that may be issued upon consummation of the Mergers, as
determined on the basis of the pricing formula described herein. The actual
number of shares of Whitney Common Stock to be issued will be determined in
accordance with the terms of the Plan of Merger. See "The Plan of Merger -
Description of the Plan of Merger -- Conversion of Common Stock." The
outstanding shares of Whitney Common Stock are, and the shares of Whitney Common
Stock offered hereby will be, included for quotation on the NASDAQ National
Market System. The closing price per share of Whitney Common Stock on the NASDAQ
National Market System on _______________, 1997 was $_________.
This Proxy Statement-Prospectus, and the accompanying Notices of
Special Meeting and forms of proxy, are being first mailed to shareholders of
the Company and the Bank on or about February ____, 1997.
-------------------------
THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE PROPOSED
MERGERS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCU-
RACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS
OF ANY BANK OR NON-BANK SUBSIDIARY OF WHITNEY AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE
FUND OR ANY OTHER GOVERNMENTAL AGENCY.
-------------------------
This Proxy Statement-Prospectus is dated February ____, 1997
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Proxy Statement-Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by Whitney,
the Company or the Bank. This Proxy Statement-Prospectus shall not constitute an
offer to sell or exchange or the solicitation of an offer to purchase any
security, or the solicitation of a proxy, nor shall there be any such sale,
exchange or solicitation in any jurisdiction in which, or to any person to whom,
it is unlawful to make such an offer, solicitation of an offer or proxy
solicitation. Neither the delivery of this Proxy Statement-Prospectus nor any
distribution of securities made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof or that there has been no change in the affairs of Whitney,
the Company or the Bank since the date hereof.
All information contained herein with respect to the Company and the
Bank has been provided by the Company and the Bank, and Whitney is relying on
the accuracy of that information. All information contained herein with respect
to Whitney has been provided by Whitney, and the Company and the Bank are
relying on the accuracy of that information.
AVAILABLE INFORMATION
Whitney is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith is
required to file reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, together with proxy statements and
other information filed by Whitney, can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and they are also
available to the public at the web site maintained by the Commission at
"http://www.sec.gov." In addition, Whitney Common Stock is included for
quotation on the NASDAQ National Market System (Symbol: WTNY), and such reports,
proxy statements and other information concerning Whitney can be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
Whitney has filed with the Commission a Registration Statement on Form
S-4 ("Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Whitney Common Stock offered by this Proxy
Statement-Prospectus. This Proxy Statement-Prospectus does not contain all of
the information set forth in the Registration Statement or the exhibits thereto.
Such additional information can be inspected and copied as set forth above.
Statements contained in this Proxy Statement-Prospectus as to the contents of
any documents are necessarily summaries of the documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission. For further information with respect to Whitney and
the transactions described herein, reference is made to the Registration
Statement, including the exhibits thereto and any documents incorporated by
reference therein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SEE "INFORMATION ABOUT
WHITNEY -- INCORPORATION OF CERTAIN INFORMATION BY REFERENCE." THESE DOCUMENTS
ARE AVAILABLE UPON REQUEST TO WHITNEY HOLDING CORPORATION, ATTENTION: EDWARD
B. GRIMBALL, CHIEF FINANCIAL OFFICER, 228 ST. CHARLES AVENUE, NEW ORLEANS,
LOUISIANA 70130 (TELEPHONE: (504) 586-7252). IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY _________________, 1997. Whitney
hereby undertakes to provide copies of any such documents, other than exhibits
to such documents that are not specifically incorporated by reference therein,
without charge to any person, including any beneficial owner of Company or Bank
Common Stock, to whom this Proxy Statement-Prospectus is delivered, upon the
written or oral request of such person to Whitney's Chief Financial Officer at
the address and telephone number written above.
<PAGE>
TABLE OF CONTENTS
SUMMARY......................................................................iii
Parties to the Mergers..............................................iii
Whitney ..................................................iii
The Company and the Bank...................................iii
The Special Meetings.................................................iv
General ...................................................iv
Purpose of the Meetings.....................................iv
Vote Required........................................................iv
Reasons for the Plan of Merger.......................................iv
Recommendation of the Company's and the Bank's Boards of Directors...iv
The Plan of Merger....................................................v
General ....................................................v
Conversion of Common Stock...................................v
Exchange of Certificates....................................vi
Regulatory Approvals and Other Conditions to
Consummation of the Mergers..............................vii
Waiver, Amendment and Termination..........................vii
Accounting Treatment...............................................viii
Certain Federal Income Tax Consequences............................viii
Dissenters' Rights.................................................viii
Interests of Certain Persons.......................................viii
Market Prices........................................................ix
Comparative Rights of Shareholders...................................ix
Selected Financial Data of the Company................................x
Selected Financial Data of Whitney...................................xi
Comparative Per Share Data..........................................xii
THE MEETINGS...................................................................1
General .............................................................1
Purpose of the Meetings...............................................1
Shares Entitled to Vote; Quorum; Vote Required........................1
Solicitation, Voting and Revocation of Proxies........................2
THE PLAN OF MERGER.............................................................2
General .............................................................2
Background............................................................3
Reasons for the Plan of Merger........................................3
General ....................................................3
Whitney ....................................................3
The Company and the Bank.....................................3
Recommendation of the Company's and the Bank's Boards of Directors....4
Description of the Plan of Merger.....................................4
General ....................................................4
Conversion of Common Stock...................................4
Exchange of Certificates.....................................6
Transfer and Exchange Agents.................................7
Regulatory Approvals and Other Conditions of the Mergers.....7
Effective Date...............................................7
Conduct of Business Prior to the Effective Date..............7
Waiver, Amendment and Termination............................9
Expenses ....................................................9
Interests of Certain Persons..........................................9
Employee Benefits............................................9
i
<PAGE>
Management..................................................10
Indemnification and Insurance...............................10
Status Under Federal Securities Laws; Certain Restrictions
on Resales ........................................................10
Accounting Treatment.................................................11
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................................12
DISSENTERS' RIGHTS............................................................13
The Company..........................................................13
The Bank ............................................................15
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION....................................16
INFORMATION ABOUT THE COMPANY AND THE BANK....................................24
Description of Business..............................................24
Market Prices and Dividends..........................................24
Employees............................................................25
Security Holdings of Principal Shareholders and Management...........25
THE COMPANY'S MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS OPERATION ENDING SEPTEMBER 30, 1996 AND 1995............27
THE COMPANY'S MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS DECEMBER 31, 1995, 1994.......................................29
INFORMATION ABOUT WHITNEY.....................................................38
General ............................................................38
Recent Developments..................................................38
Market Prices of and Dividends Declared on Whitney Common Stock .....39
Incorporation of Certain Information by Reference....................39
COMPARATIVE RIGHTS OF SHAREHOLDERS............................................40
Description of Whitney Common Stock..................................40
Comparison of Whitney Common Stock and Company and Bank
Common Stock.......................................................44
LEGAL MATTERS.................................................................48
EXPERTS.......................................................................48
OTHER MATTERS.................................................................48
MERCHANTS CONSOLIDATED FINANCIAL STATEMENTS..................................F-1
Appendix A - Agreement and Plan of Merger...........................A-1
Appendix B - Article 13 of the Mississippi Business Corporation
Act and Selected Provisions of 12 U.S.C. ss.215a.................B-1
ii
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified
in its entirety by the more detailed information appearing elsewhere in this
Proxy Statement-Prospectus, the appendices hereto and the documents incorporated
herein by reference. Shareholders are urged to read carefully all such material.
Parties to the Mergers
Whitney. Whitney Holding Corporation, a Louisiana corporation
("Whitney"), is a multi-bank holding company registered pursuant to the Bank
Holding Company Act of 1956. Whitney became an operating entity in 1962 with
Whitney National Bank ("Whitney Bank") as its only significant subsidiary.
Whitney Bank, which has its headquarters in Orleans Parish, Louisiana, has been
engaged in general banking business in the City of New Orleans since 1883. It
currently operates 61 branches in south Louisiana and a foreign branch on Grand
Cayman in the British West Indies. In December 1994, Whitney established the
Whitney Bank of Alabama and, through this new banking subsidiary, acquired the
Mobile area operations of The Peoples Bank, Elba, Alabama on February 17, 1995.
Whitney Bank of Alabama operates 10 branches and one loan production office
serving metropolitan Mobile and Montgomery, Alabama and the Alabama Gulf Coast
region. On October 25, 1996, Whitney acquired Liberty Bank and American Bank and
Trust, both of Pensacola, Florida, through mergers of those institutions into
Whitney National Bank of Florida ("Whitney Bank-Florida"), a wholly-owned
subsidiary of Whitney formed for that purpose. Whitney Bank-Florida operates
five branches serving Pensacola, Florida and surrounding areas.
Whitney National Bank of Mississippi ("WNB-Mississippi") is a
wholly-owned subsidiary of Whitney that was organized under the National Banking
Act to facilitate the mergers described herein.
Whitney and its subsidiaries are sometimes referred to collectively
herein as "Whitney's consolidated group." At September 30, 1996, Whitney had
total consolidated assets of approximately $3.5 billion and total consolidated
deposits of approximately $2.7 billion. Whitney's principal executive offices
are at 228 St. Charles Avenue, New Orleans, Louisiana 70130, and its telephone
number is (504) 586-7117. See "Information About Whitney."
On October 11, 1996, Whitney entered into an Agreement and Plan of
Merger with First National Bankshares, Inc. ("FNB") and its wholly-owned
subsidiary, First National Bank of Houma ("FNBH"), pursuant to which FNB would
merge into Whitney and, in due course, FNBH would merge into Whitney Bank. Upon
consummation of the merger of FNB into Whitney, which is subject to regulatory
approval and other customary conditions, the shareholders of FNB would receive,
in the aggregate, shares of Whitney common stock having a value of approximately
$41 million. FNB has total consolidated assets of approximately $219 million.
Whitney intends to account for this acquisition as a pooling of interests. See
"Information About Whitney - Recent Developments."
The Company and the Bank. Merchants Bancshares, Inc., a Mississippi
corporation ("the Company"), is a bank holding company that owns 98.91% of the
outstanding stock of Merchants Bank & Trust Company (the "Bank"). At September
30, 1996, the Company had total consolidated assets of approximately $205.7
million, total consolidated deposits of approximately $187.8 million and total
shareholders equity of approximately $17.3 million. The Company and the Bank are
sometimes referred to herein collectively as "the Company's consolidated group."
Merchants Bank & Trust Company, a Mississippi state-chartered bank (the
"Bank"), is a full-service commercial bank doing business through its offices in
Hancock and Harrison Counties, Mississippi. At September 30, 1996, the Bank had
total assets of approximately $205.7 million, total deposits of approximately
$187.8 million and total shareholders equity of approximately $17.3 million.
The Company's and the Bank's principal executive offices are located at
1300 25th Avenue, Gulfport, Mississippi 39501, and their telephone number is
601-864-7332. See "Information About the Company and the Bank."
iii
<PAGE>
The Special Meetings
General. Special meetings of the shareholders of the Company (the
"Company Meeting") and of the Bank (the "Bank Meeting") will be held on
____________, __________________, 1997 at the time and place set forth in the
accompanying Notices of Special Meeting of Shareholders. Only record holders of
the common stock, $5.00 par value per share, of the Company ("Company Common
Stock") and of the common stock, $5.00 par value per share, of the Bank ("Bank
Common Stock") at the close of business on ________________, 1997 are entitled
to notice of and to vote at the applicable Meeting. On that date, there were
184,356 shares of Company Common Stock and 93,190 shares of Bank Common Stock
issued and outstanding, each of which is entitled to one vote on each matter
properly to come before the respective Meetings. The Company Meeting and the
Bank Meeting are sometimes referred to as the "Meetings."
Purpose of the Meetings. The purpose of the Meetings is to vote upon a
proposal to approve an Agreement and Plan of Merger dated November 14, 1996, and
the related merger agreements (collectively, the "Plan of Merger"), copies of
which are attached hereto as Appendix A, pursuant to which, among other things,
the Company will merge into Whitney (the "Company Merger") and the Bank will
merge into WNB-Mississippi (the "Bank Merger" and, together with the Company
Merger, collectively, the "Mergers"), with the result that shareholders of the
Company and the Bank will receive shares of Whitney Common Stock (and cash in
lieu of fractional shares) as described below under " - The Plan of Merger --
Conversion of Common Stock." See "The Meetings - Purpose of the Meetings."
Vote Required
The Plan of Merger must be approved by the affirmative vote of holders
of at least two-thirds of the outstanding shares of Company Common Stock
entitled to vote at the Company Meeting and by the holders of at least
two-thirds of the outstanding shares of Bank Common Stock entitled to vote at
the Bank Meeting. Directors and executive officers of the Company and the Bank
and such persons' affiliates hold an aggregate of 104,390 shares, or
approximately 56.6%, of the outstanding shares of Company Common Stock. Such
directors and executive officers have agreed, subject to certain conditions, to
vote their shares in favor of the Plan of Merger at the Company Meeting. The
Company, as the holder of 98.91% of the outstanding Bank Common Stock, has
agreed, subject to certain conditions (including approval of the Company Merger
by shareholders of the Company), to vote in favor of the Plan of Merger at the
Bank Meeting. Whitney, as the sole shareholder of WNB-Mississippi, must approve
the Plan of Merger. Under Louisiana law, shareholders of Whitney are not
required to approve the Plan of Merger. See "The Meetings - Shares Entitled to
Vote; Quorum; Vote Required."
Reasons for the Plan of Merger
The Boards of Directors of the Company and the Bank believe that the
approval of the Plan of Merger is in the best interests of the Company, the Bank
and their respective shareholders. In reaching their decision, the Boards
considered a number of factors, including the market for the Bank's services and
the competitive pressures existing in the Bank's market area, the outlook for
the Bank in the financial institutions industry, the opportunity to provide
liquidity to the Company's and the Bank's shareholders, recent changes in the
regulatory environment that will result in the Bank facing additional
competitive pressures in its market area from other financial institutions, the
ability to offer additional products and services to the Bank's customers and
the price to be received by the Company's and the Bank's shareholders and the
substantial premium that such price represented over recent sales prices of the
Company Common Stock and the book value of the Company and Bank Common Stock.
See "The Plan of Merger - Background" and "The Plan of Merger - Reasons for the
Plan of Merger."
Recommendation of the Company's and the Bank's Boards of Directors
THE BOARDS OF DIRECTORS OF THE COMPANY AND THE BANK HAVE UNANIMOUSLY
APPROVED THE PLAN OF MERGER AND RECOMMEND THAT THEIR SHAREHOLDERS VOTE FOR
APPROVAL OF THE PLAN OF MERGER.
iv
<PAGE>
The Plan of Merger
General. Pursuant to the Plan of Merger, if all conditions are
satisfied or waived, on the effective date of the Mergers the Company will be
merged into Whitney, and the separate existence of the Company will cease, and
the Bank will be merged into WNB-Mississippi, and the separate existence of the
Bank will cease. In consideration of the Mergers, the outstanding Company Common
Stock and Bank Common Stock not owned by the Company will be converted into an
aggregate number of shares (the "Total Shares") of common stock, no par value,
of Whitney ("Whitney Common Stock") equal to the sum of $51,814,000 plus the
Retained Net Income After Tax, as defined below, of the Company (the "Purchase
Price"), divided by the average of the closing per share trading prices of
Whitney Common Stock (adjusted appropriately for any stock split, stock
dividend, recapitalization, reclassification or similar transaction that is
effected, or for which a record date occurs) on the 40 trading days preceding
the fifth trading day immediately prior to the effective date of the Company
Merger (the "Average Market Price"), provided, however, that if the Average
Market Price so determined is less than $30.00, than the divisor shall be
$30.00, and if such Average Market Price is greater than $36.00, then the
divisor shall be $36.00.
"Retained Net Income After Tax" is defined as the consolidated retained
net income of the Company for the period October 1, 1996 through the end of the
calendar month immediately preceding the effective date of the Company Merger,
as agreed to by Whitney and the Company, based on normal banking net income,
less appropriate income taxes and dividends declared and/or paid and excluding
any unusual or nonrecurring additions to net income such as reversals of loan
loss or other valuation reserves and gains on the sale of investments or other
assets. For the period October 1, 1996 through December 31, 1996, on an
unaudited basis, the Company had Retained Net Income After Tax of approximately
$162,244. This figure has not been reviewed by Whitney, and because the
determination of Retained Net Income After Tax is dependent upon the facts as of
the end of the month immediately preceding the effective date of the Mergers, it
is not possible to estimate the amount of Retained Net Income After Tax, if any,
with certainty at this time.
Conversion of Common Stock. By reason of the Company Merger, each
outstanding share of Company Common Stock (other than shares as to which
dissenters' rights have been perfected and not withdrawn) will be converted into
a number of shares of Whitney Common Stock equal to the quotient of (a) the
Company Percentage (as defined below) of the Total Shares divided by (b) the
total number of shares of Company Common Stock outstanding on the effective date
of the Company Merger. By reason of the Bank Merger, each outstanding share of
Bank Common Stock not owned by the Company (other than shares as to which
dissenters' rights have been perfected and not withdrawn) will be converted into
a number of shares of Whitney Common Stock equal to the quotient of (a) the Bank
Percentage (as defined below) of the Total Shares divided by (b) the total
number of shares of Bank Common Stock outstanding on the effective date of the
Bank Merger. Shares of Company Common Stock and Bank Common Stock that are held
by the Company or the Bank (other than shares held by the Bank in a fiduciary
capacity other than for the Company) will not be considered outstanding and will
be cancelled (and not converted) by virtue of the Mergers. As of
________________, 1997, there were outstanding 184,356 shares of Company Common
Stock and 1,012 shares of Bank Common Stock not owned by the Company.
The term "Bank Percentage" means the percentage obtained by dividing
(a) the dollar amount obtained by multiplying (i) the Purchase Price, minus the
book value of all assets of the Company other than the Bank Common Stock held by
it, by (ii) the percentage of the outstanding shares of Bank Common Stock owned
by persons other than the Company, by (b) the total Purchase Price. The book
value of all assets of the Company other than the Bank Common Stock held by it
was $5,946 as of December 31, 1996. The term "Company Percentage" means the
result obtained by subtracting the Bank Percentage from 100%.
The following table sets forth examples of the number of shares of
Whitney Common Stock into which each share of Company Common Stock and Bank
Common Stock would be converted on the effective date of the Mergers, assuming
that the Average Market Price for Whitney Common Stock is as specified below.
The table does not reflect any Retained Net Income After Tax, which would
increase the number of shares of Whitney Common Stock in each case.
v
<PAGE>
<TABLE>
<CAPTION>
Total Number of
Shares of
Assumed Average Whitney Number of Whitney Number of Whitney
Market Price of Whitney Common Common Stock Shares Per Shares Per Bank
Stock To Be Issued Company Share(1) Share(1)
------------------------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
$30.00(2) 1,727,133 9.2667 18.5316
33.00 1,570,121 8.4243 16.8478
36.00(3) 1,439,278 7.7223 15.4437
</TABLE>
- --------------------------
(1) Based on 184,356 shares of Company Common Stock and 1,012 shares of Bank
Common Stock, the number of shares outstanding (and not owned by the
Company), respectively, on _________________, 199__, and a book value of
$5,946 for the assets of the Company other than Bank Common Stock as of
such date. Due to fluctuations in such book value, in the trading prices
of Whitney Common Stock and in the amount, if any, of Retained Net
Income After Tax, the actual number of shares to be received by the
Company's and the Bank's shareholders, respectively, cannot currently be
determined.
(2) Minimum "Average Market Price" under the terms of the Plan of Merger.
(3) Maximum "Average Market Price" under the terms of the Plan of Merger.
-------------------------
On _________________, 1997, the closing trading price for a share of
Whitney Common Stock was $____________, and if such date had been the effective
date of the Mergers, the Average Market Price would have been
$---------.
Inasmuch as the consideration to be paid by Whitney in the Mergers will
be based on the "Average Market Price" of Whitney Common Stock as defined in the
Plan of Merger, the actual value on the effective date of the Mergers of the
shares to be received by the holders of Company Common Stock and Bank Common
Stock may be more or less than the Average Market Price of those shares as
calculated in accordance with the Plan of Merger.
In lieu of issuing any fractional share of Whitney Common Stock, each
shareholder of the Company or the Bank who would otherwise be entitled thereto
will receive a cash payment (without interest) equal to such fractional share
multiplied by the Average Market Price.
See "The Plan of Merger - Description of the Plan of Merger" and "The
Plan of Merger - Description of the Plan of Merger -- Conversion of Common
Stock."
For information regarding restrictions on the transfer of Whitney Common
Stock received pursuant to the Plan of Merger applicable to certain of the
Company's and the Bank's shareholders, see "Status Under Federal Securities
Laws; Certain Restrictions on Resales."
Exchange of Certificates. Upon consummation of the Mergers, a letter of
transmittal, together with instructions for the exchange of certificates
representing shares of Company or Bank Common Stock for certificates
representing shares of Whitney Common Stock, will be mailed to each person who
was a shareholder of record of the Company or the Bank on the effective date of
the Mergers. Shareholders are requested not to send in their stock certificates
until they have received a letter of transmittal and further written
instructions.
vi
<PAGE>
Shareholders of the Company or the Bank who cannot locate their stock
certificates are urged to contact promptly:
Mr. W. R. Allison
Merchants Bancshares, Inc./Merchants Bank & Trust Company
1300 25th Avenue
Gulfport, Mississippi 39501
(601) 864-7332
A new stock certificate will be issued to replace the lost certificate(s) only
upon execution by the shareholder of an affidavit certifying that his
certificate(s) cannot be located and containing an agreement to indemnify the
Company, the Bank and Whitney against any claim that may be made against the
Company, the Bank or Whitney by the owner of the certificate(s) alleged to have
been lost or destroyed. The Company, the Bank or Whitney may also require the
shareholder to post a bond in such sum as is sufficient to support the
shareholder's agreement to indemnify the Company, the Bank and Whitney. See "The
Plan of Merger - Description of the Plan of Merger -- Exchange of Certificates."
Regulatory Approvals and Other Conditions to Consummation of the
Mergers. In addition to approval by the shareholders of the Company and the
Bank, consummation of the Mergers is conditioned upon, among other things, (i)
the accuracy on the date of closing of the representations and warranties, and
the compliance with covenants, made in the Plan of Merger by each party, and the
absence of any material adverse change in the financial condition, results of
operations, business or prospects of the other party's consolidated group, (ii)
the receipt by Whitney and WNB- Mississippi of required regulatory approvals,
(iii) the receipt by Whitney of assurances that the Mergers may be accounted for
as a pooling-of-interests, (iv) the receipt by Whitney and the Company of
opinions as to the qualification of the Mergers as a tax-free reorganization
under applicable law and (v) certain other conditions customary for agreements
of this sort. The parties intend to consummate the Mergers as soon as
practicable after all of the conditions to the Mergers have been met or waived.
On January 14, 1997, Whitney filed an application seeking approval of
the Bank Merger and an interim bank charter for WNB-Mississippi from the Office
of the Comptroller of the Currency (the "Comptroller"). Whitney has also filed
applications with the Board of Governors of the Federal Reserve System (the
"Reserve Board") and the Mississippi Department of Banking and Consumer Finance
seeking approval of the Company Merger and with the Reserve Board and the
Federal Deposit Insurance Corporation in connection with the formation of
WNB-Mississippi. There can be no assurance that these approvals will be obtained
prior to the Meetings, or that this or the other conditions to consummation of
the Mergers will be satisfied by such date or at all. See "The Plan of Merger -
Description of the Plan of Merger -- Regulatory Approvals and Other Conditions
of the Mergers."
Waiver, Amendment and Termination. The Plan of Merger provides that each
of the parties to the Plan of Merger may waive any of the conditions to its
obligation to consummate the Mergers other than approval by the shareholders of
the Company and the Bank, the absence of a stop order suspending the
effectiveness of the Registration Statement of which this Proxy
Statement-Prospectus forms a part, the receipt of all necessary regulatory
approvals, and the satisfaction of all requirements prescribed by law for
consummation of the Mergers.
The Plan of Merger may be amended, at any time before or after its
approval by the shareholders of the Company and the Bank, by the mutual
agreement of the Boards of Directors of the parties to the Plan of Merger;
provided that, under the Louisiana Business Corporation Law any amendment made
subsequent to shareholder approval of the Company Merger may not alter the
amount or type of shares into which the Company Common Stock will be converted,
alter any term of the Articles of Incorporation of Whitney as the surviving
entity in the Company Merger, or alter any term or condition of the Plan of
Merger in a manner that would adversely affect any shareholder of the Company.
The Plan of Merger may be terminated at any time prior to the effective
date (i) by the mutual consent of Whitney and the Company; (ii) by either
Whitney or the Company in the event of a breach by any member of the other's
consolidated group of any representation, warranty or covenant in the Plan of
Merger that cannot be cured by the earlier
vii
<PAGE>
of 15 days after written notice of such breach or June 30, 1997; (iii) by either
Whitney or the Company if the Mergers have not occurred by June 30, 1997; (iv)
by Whitney if the number of shares of Company and Bank Common Stock as to which
the holders thereof are, on the effective date, legally entitled to assert
dissenting shareholders rights plus the number of shares to which the holders
thereof are entitled to receive cash payments in lieu of fractional shares,
exceeds that number of shares of Company and Bank Common Stock that would
preclude pooling-of-interests accounting for the Mergers (i.e., if, after the
Meetings, more than 10% of the Company and Bank Common Stock would be subject to
exchange for cash rather than Whitney Common Stock as the result of holders
exercising dissenters' rights or receiving cash in lieu of fractional shares);
(v) by the Company if the Company receives a written offer with respect to
another acquisition transaction and the Board of Directors of the Company
determines in good faith, after consultation with its financial advisers and
counsel, that such transaction is more favorable to the Company's shareholders
than the transactions contemplated by the Plan of Merger; or (vi) on the basis
of certain other grounds specified in the Plan of Merger. The Plan of Merger
provides for a termination fee of $2,500,000 payable to Whitney if the Company
terminates the Plan of Merger under the circumstances described in clause (v) of
the preceding sentence. See "The Plan of Merger - Description of the Plan of
Merger -- Waiver, Amendment and Termination."
Accounting Treatment
Whitney intends to account for the Mergers as a pooling of interests,
and it is a condition to Whitney's obligation to consummate the Mergers that (i)
it receive certain assurances from the Company's independent public accountants
that the Mergers may be accounted for as a pooling of interests and (ii) neither
Whitney's independent public accountants nor the Commission shall have taken the
position that the transactions contemplated by the Plan of Merger do not qualify
for pooling-of-interests accounting treatment. See "The Plan of Merger -
Accounting Treatment."
Certain Federal Income Tax Consequences
Consummation of the Mergers is conditioned upon receipt by Whitney and
the Company of an opinion from Arthur Andersen LLP to the effect that, among
other things, each of the Mergers will qualify as a tax-free reorganization
under applicable law and that each Company or Bank shareholder who receives
Whitney Common Stock pursuant to the Mergers will not recognize gain or loss
except with respect to the receipt of cash (i) in lieu of fractional shares of
Whitney Common Stock or (ii) pursuant to the exercise of dissenters' rights.
Because of the complexity of the tax laws, each shareholder should consult his
tax advisor concerning the applicable federal, state and local income tax
consequences of the Mergers. See "Certain Federal Income Tax Consequences."
Dissenters' Rights
Shareholders of the Company and minority shareholders of the Bank who
perfect dissenters' rights will not receive Whitney Common Stock but will
instead be entitled to receive the fair cash value of their shares of Company
Common Stock, as determined under Article 13 of the Mississippi Business
Corporation Act (in the case of the Company), or the value of their shares of
Bank Common Stock in cash, as determined under 12 U.S.C. ss.215a (in the case of
the Bank). Failure to comply with statutory procedures in the exercise of
dissenters' rights will nullify such rights. See "Dissenters' Rights."
Interests of Certain Persons
The executive officers and members of the Boards of Directors of the
Company and the Bank have interests in the Mergers that are in addition to their
interest as shareholders of the Company. These interests include, among others,
payments and other benefits to be received by one of the Bank's executive
officers pursuant to an agreement with the Bank; Whitney's agreement to appoint
one of the Company's directors to Whitney's Board of Directors; the continued
employment of certain executive officers by Whitney after the effective date of
the Mergers; Whitney's agreement to assume the premium payment obligations under
life insurance policies insuring the lives of certain executive officers; and
provisions in the Plan of Merger relating to indemnification of directors and
officers of the Company and the Bank and continuation of directors and officers
liability insurance. A director of the Company currently receives (and will
continue to receive after the Mergers) rent payments on three of the Bank's
offices totalling approximately $135,000 per year. See "The Plan of Merger -
Interests of Certain Persons."
viii
<PAGE>
Market Prices
On November 13, 1996, the last trading day preceding the date that
Whitney and the Company publicly announced that they had entered into the Plan
of Merger, the closing sales price for a share of Whitney Common Stock, as
quoted on the NASDAQ National Market System, was $33.00. No assurance can be
given as to the market price of Whitney Common Stock on the effective date of
the Company Merger. On _______________, 1997, the closing sales price for a
share of Whitney Common Stock was $_________, and if such date had been the
effective date of the Mergers, the Average Market Price would have been
$_________.
Neither the Company Common Stock nor the Bank Common Stock is traded on
any exchange, and there is no established public trading market for such stock.
There are no bid or asked prices available for Company or Bank Common Stock.
Other than trades of 550 shares in January 1996 at $91 per share, 30 shares in
February 1996 at $95 per share and 332 shares in May 1996 at $90 per share (all
in Company Common Stock), neither the Company nor the Bank is aware of any
transactions in Company or Bank Common Stock since January 1, 1994. No assurance
can be given that these trades were effected on an arm's-length basis. See
"Information About the Company and the Bank Market Prices and Dividends."
Comparative Rights of Shareholders
If the Mergers are consummated, shareholders of the Company and minority
shareholders of the Bank, other than those exercising dissenters' rights, will
become shareholders of Whitney, and their rights will be governed by and be
subject to Whitney's Articles of Incorporation and Bylaws rather than those of
the Company and the Bank. Whitney's Articles of Incorporation contain provisions
that are different from those of the Company and the Bank, some of which may
have the effect of discouraging a third party from seeking to obtain control of
Whitney in a transaction not approved by Whitney's Board of Directors. See
"Comparative Rights of Shareholders."
ix
<PAGE>
Selected Financial Data of the Company
The following selected financial data with respect to each of the fiscal
years in the five-year period ended December 31, 1995 have been derived from the
Company's audited consolidated financial statements. The selected financial data
for the nine months ended September 30, 1996 and 1995 have been derived from the
Company's unaudited financial statements, which, in the opinion of the Company's
management, reflect all adjustments that are necessary for a fair presentation
of the results of operations for the interim periods presented. The results of
operations for the nine-month period ended September 30, 1996 are not
necessarily indicative of the results to be expected for the entire year. The
information set forth below should be read in conjunction with the Company's
consolidated financial statements and notes thereto appearing elsewhere in this
Proxy Statement-Prospectus.
<TABLE>
<CAPTION>
Nine months ended
September 30 Years ended December 31,
-------------------- --------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- -------
(In thousands, except per share data, unaudited)
Average Balance Sheet Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets........................ $194,819 $195,113 $194,143 $200,865 $174,893 $151,243 $130,254
Total earning assets................ 176,385 176,749 175,949 180,575 154,980 142,761 117,798
Total loans......................... 79,966 73,676 74,616 67,178 61,064 58,064 55,872
Total investment in securities...... 77,984 91,765 88,984 92,499 84,877 72,397 54,363
Interest bearing deposits........... 145,599 147,902 147,088 147,968 130,936 121,148 99,456
Noninterest bearing deposits........ 31,620 30,715 30,531 37,618 29,789 17,407 18,920
Shareholders' equity................ 16,600 15,511 15,634 14,477 13,366 11,932 11,090
Income Statement Data:
Total interest income............... $9,926 $9,746 $12,994 $12,404 $11,542 $11,136 $10,957
Net interest income................. 5,801 5,457 7,247 7,535 7,210 6,375 5,122
Provision for possible loan losses.. 275 335 420 576 397 472 582
Non-interest income................. 1,931 1,577 2,432 1,972 1,743 1,716 1,660
Non-interest expense................ 5,456 4,855 6,920 6,684 5,556 5,265 4,901
Net income.......................... 1,355 1,228 1,569 1,442 2,007 1,587 954
Per Share Data:
Primary earnings per share.......... $7.35 $6.67 $8.52 $7.84 $10.91 $8.64 $5.20
Fully diluted earnings per share.... 7.35 6.67 8.52 7.84 10.91 8.64 5.20
Cash dividends per share............ 1.95 1.50 2.50 2.50 2.20 3.20 4.00
Book value per share, end of period. 92.70 86.45 87.30 81.29 75.95 67.25 61.45
Key Ratios:
Net income as a percent of
average assets.................... .93% .84% .81% .72% 1.15% 1.05% .74%
Net income as a percent of
average equity.................... 10.89% 10.56% 10.04% 9.97% 15.02% 13.31% 8.61%
Net interest margin................. 4.39% 4.12% 4.12% 4.17% 4.65% 4.47% 4.35%
Allowance for loan losses as
a percent of loans and leases
at period end..................... 1.32% 1.46% 1.39% 1.58% 1.41% 1.42% 1.23%
Average equity as a percent
of average total assets........... 8.53% 7.95% 8.06% 7.21% 7.65% 7.89% 8.52%
Dividend payout ratio............... 26.54% 22.49% 29.92% 31.89% 20.17% 32.41% 38.47%
</TABLE>
x
<PAGE>
Selected Financial Data of Whitney
The following selected financial data with respect to each of the
fiscal years in the five-year period ended December 31, 1995 and for the nine
months ended September 30, 1996 and 1995 have been derived from the consolidated
financial statements of Whitney's consolidated group and should be read in
conjunction with the information concerning Whitney that has been incorporated
by reference in this Proxy Statement-Prospectus. The selected financial data for
the nine months ended September 30, 1996 and 1995 have been derived from
Whitney's unaudited financial statements, which, in the opinion of Whitney's
management, reflect all adjustments that are necessary for a fair presentation
of the results of operations for the interim periods presented. The results of
operations for the nine-month period ended September 30, 1996 are not
necessarily indicative of the results to be expected for the entire year.
Selected financial data for the years 1991 through 1995 have been restated to
reflect the merger, effective March 8, 1996, of First Citizens Bankstock, Inc.
into Whitney (the "Citizens Acquisition"), which was accounted for as a
pooling-of-interests. On January 16, 1997, Whitney announced 1996 annual
earnings of $40.6 million, or $2.26 per share, with fourth quarter 1996 earnings
of $11.1 million, or $0.61 per share, in each case after the recognition of
non-recurring merger-related expenses (net of tax) of $3.45 million and $1.17
million, respectively.
<TABLE>
<CAPTION>
Nine months ended
September 30, Years ended December 31,
------------------------ -----------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- ----------- ------------ -----------
(In thousands, except per share data, unaudited)
Average Balance Sheet Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets.................... $3,443,521 $3,161,339 $3,188,930 $3,182,674 $3,117,512 $3,061,976 $3,031,841
Total earning assets............ 3,123,305 2,855,426 2,880,631 2,877,898 2,817,526 2,761,104 2,717,010
Total loans..................... 1,661,418 1,271,942 1,321,533 1,096,672 1,056,679 1,225,546 1,450,497
Total investment in securities.. 1,437,898 1,525,965 1,505,492 1,704,687 1,637,619 1,362,006 1,096,086
Interest bearing deposits....... 1,886,518 1,807,628 1,813,093 1,860,866 1,855,153 1,871,189 1,858,429
Noninterest bearing deposits.... 821,231 805,557 811,616 792,448 765,457 723,932 681,233
Shareholders' equity............ 374,715 335,803 339,145 298,142 239,663 193,280 184,530
Income Statement Data:
Total interest income........... $172,907 $156,228 $213,295 $192,750 $186,105 $195,079 $223,303
Net interest income............. 109,294 103,625 141,428 135,247 131,424 122,321 107,314
Provision for (reduction in)
reserve for possible loan losses - (9,750) (9,400) (26,004) (59,625) 4,415 46,692
Non-interest income............. 27,232 25,083 33,205 34,175 33,216 29,557 28,341
Non-interest expense............ (95,030) (88,620) (119,481) (112,394) (108,237) (120,615) (112,303)
Net income (loss)............... 28,512 34,073 44,349 56,198 79,228 22,415 (3,181)
Per Share Data:
Primary earnings (loss) per
share........................ $ 1.66 $ 2.02 $ 2.61 $ 3.39 $ 4.81 $ 1.37 $(0.19)
Fully diluted earnings (loss)
per share..................... 1.66 2.00 2.60 3.39 4.81 1.37 (0.19)
Cash dividends per share........ 0.72 0.56 0.77 0.60 0.41 0.09 0.02
Book value per share, end of
period........................ 22.40 21.08 21.69 19.29 17.07 12.46 11.17
Key Ratios:
Net income (loss) as a percent
of average assets............ 1.10% 1.44% 1.39% 1.77% 2.54% 0.73% (0.10%)
Net income (loss) as a percent
of average equity............. 10.14% 13.53% 13.08% 18.85% 33.06% 11.60% (1.72%)
Net interest margin............. 4.81% 4.99% 5.05% 4.85% 4.79% 4.54% 4.06%
Allowance for loan losses as
a percent of loans and leases
at period end................. 2.41% 2.58% 2.48% 3.06% 4.28% 8.74% 7.94%
Average equity as a percent
of average total assets....... 10.88% 10.62% 10.63% 9.37% 7.69% 6.31% 6.09%
Dividend payout ratio........... 43.37% 28.00% 29.50% 17.70% 8.52% 6.57% -
</TABLE>
xi
<PAGE>
Comparative Per Share Data
The following table presents certain information for Whitney, the
Company and the Bank on an historical, unaudited pro forma combined and
unaudited pro forma equivalent basis. The unaudited pro forma combined
information is based upon the historical financial condition and results of
operations of Whitney, the Company and the Bank and adjustments directly
attributable to the Plan of Merger based on estimates derived from information
currently available. This information does not purport to be indicative of the
results that would actually have been obtained if the Mergers had been
consummated on the date or for the periods indicated below, or the results that
may be obtained in the future. Whitney expects to account for the Mergers using
the pooling-of-interests method applied in accordance with generally accepted
accounting principles. Historical Whitney amounts for 1995 and prior periods
have been restated to reflect the Citizens Acquisition. See "- Selected
Financial Data of Whitney."
<TABLE>
<CAPTION>
Historical
--------------------------------- Pro Forma Company Bank
Whitney Company Bank Combined(1)(2) Equivalent(3) Equivalent(4)
-------- ------- --------- ------------- ------------ ------------
Earnings per common share:
Years ended:
<S> <C> <C> <C> <C> <C> <C>
December 31, 1995................. $ 2.61 $ 8.52 $ 17.08 $2.48 $20.89 $41.78
December 31, 1994................. $ 3.39 $ 7.84 $ 17.51 $3.18 $26.79 $53.58
December 31, 1993................. $ 4.81 $ 10.91 $ 21.87 $4.51 $38.00 $75.98
Nine months ended September 30, 1996 $ 1.66 $ 7.35 $ 14.75 $1.60 $13.48 $26.96
Dividends declared per common share:
Years ended:
December 31, 1995................. $ 0.77 $ 2.50 $ 5.03 $0.73 $6.15 $12.30
December 31, 1994................. $ 0.60 $ 2.50 $ 5.04 $0.57 $4.80 $9.60
December 31, 1993................. $ 0.41 $ 2.20 $ 4.40 $0.40 $3.37 $6.74
Nine months ended September 30, 1996 $ 0.72 $ 1.95 $ 3.95 $0.68 $5.73 $11.46
Book value per common share:
As of September 30, 1996.............. $22.40 $ 92.70 $ 185.33 $21.48 $180.95 $361.89
As of December 31, 1995............... $21.69 $ 87.30 $ 174.54 $20.55 $173.11 $346.22
</TABLE>
(1) Assumes an Average Market Price of Whitney Common Stock of $33.00, no
Retained Net Income After Tax included in the Purchase Price, and the
issuance of 1,570,121 shares of Whitney Common Stock to effect the
Mergers, including 17,050 shares of Whitney Common Stock issued to the
shareholders of the Bank, other than the Company, in the Bank Merger.
(2) Includes the pro forma combined operations of Whitney and the Company.
(3) The Company Equivalent is calculated by multiplying the amount in the
pro forma combined column by an exchange ratio of 8.4243 at the assumed
Average Market Price of $33.00 and no Retained Net Income After Tax
included in the Purchase Price.
(4) The Bank Equivalent is calculated by multiplying the amount in the pro
forma combined column by an exchange ratio of 16.8478 at the assumed
Average Market Price of $33.00 and no Retained Net Income After Tax
included in the Purchase Price.
In October 1996 Whitney completed mergers with Liberty Holding Company,
its majority-owned subsidiary, Liberty Bank, and American Bank and Trust, all of
Pensacola, Florida. Whitney has also entered into a definitive agreement to
acquire First National Bankshares, Inc. and its subsidiary, First National Bank
of Houma. It is intended that these transactions will be accounted for as
poolings of interests, but they are not considered material to Whitney for
purposes of presenting pro forma financial information. Therefore, information
regarding these transactions is not included in the foregoing table, and Whitney
historical amounts have not been restated to reflect the completed acquisitions.
See "Unaudited Pro Forma Condensed Combined Financial Information.
xii
<PAGE>
THE MEETINGS
General
This Proxy Statement-Prospectus is furnished to shareholders of
Merchants Bancshares, Inc. (the "Company") and to shareholders of Merchants Bank
& Trust Company (the "Bank") in connection with the solicitation of proxies on
behalf of their respective Board of Directors for use at a special meeting of
shareholders of the Company (the "Company Meeting") and a special meeting of
shareholders of the Bank (the "Bank Meeting," and together with the Company
Meeting, the "Meetings") to be held on the date and at the time and place
specified in the accompanying Notices of Special Meeting of Shareholders, or any
adjournments thereof.
The Company and Whitney Holding Corporation ("Whitney") have each
supplied all information included herein with respect to it and its consolidated
subsidiaries. The Company and its subsidiary are sometimes collectively referred
to herein as "the Company's consolidated group" and Whitney and its subsidiaries
are sometimes collectively referred to herein as "Whitney's consolidated group."
Purpose of the Meetings
The purpose of the Meetings is to consider and vote upon a proposal to
approve an Agreement and Plan of Merger dated November 14, 1996 between Whitney
and its newly-formed, wholly-owned banking subsidiary Whitney National Bank of
Mississippi ("WNB-Mississippi"), on the one hand, and the Company and the Bank,
on the other hand, a related Joint Agreement of Merger between Whitney and the
Company (the "Company Merger Agreement"), and a related Agreement of Merger
between WNB-Mississippi and the Bank (the "Bank Merger Agreement" and, together
with the Agreement and Plan of Merger and the Company Merger Agreement, the
"Plan of Merger"). Pursuant to the Plan of Merger, the Company will merge into
Whitney (the "Company Merger"), and the Bank will merge into WNB- Mississippi
(the "Bank Merger," and, together with the Company Merger, collectively, the
"Mergers"). In consideration of the Mergers, each outstanding share of common
stock, $5.00 par value, of the Company ("Company Common Stock") and common
stock, $5.00 par value, of the Bank ("Bank Common Stock") not owned by the
Company will be converted into a number of shares of common stock, no par value,
of Whitney ("Whitney Common Stock") as described under the heading captioned
"The Plan of Merger - Description of the Plan of Merger -- Conversion of Common
Stock."
Shares Entitled to Vote; Quorum; Vote Required
Only holders of record of Company Common Stock and Bank Common Stock at
the close of business on _________________, 1997 are entitled to notice of and
to vote at the respective Meeting. On that date there were 184,356 shares of
Company Common Stock and 93,190 shares of Bank Common Stock outstanding, each of
which is each entitled to one vote on each matter properly brought before the
respective Meetings.
With respect to consideration of the Plan of Merger and any other
matter properly brought before each Meeting, the presence at the Meeting, in
person or by proxy, of the holders of a majority of the outstanding shares of
Company Common Stock or Bank Common Stock, as the case may be, is necessary to
constitute a quorum. The Plan of Merger must be approved by the affirmative vote
of the holders of at least two-thirds of the outstanding shares of Company
Common Stock entitled to vote at the Company Meeting and by the affirmative vote
of the holders of at least two-thirds of the outstanding shares of Bank Common
Stock entitled to vote at the Bank Meeting. Abstentions and broker non- votes
will have the effect of votes against the Plan of Merger but will cause a
shareholder otherwise entitled to dissenters' rights to forfeit any claim to
such rights. Broker non-votes will be counted for purposes of determining the
presence of a quorum.
Directors and executive officers of the Company beneficially owning an
aggregate of 104,390 shares, or approximately 56.6% of the outstanding Company
Common Stock, have agreed, subject to certain conditions, to vote their shares
in favor of the Plan of Merger at the Company Meeting. The Company, as the
holder of approximately 98.91% of the outstanding shares of Bank Common Stock,
has agreed, subject to approval of the Plan of Merger by the shareholders of the
Company, to vote in favor of the Plan of Merger at the Bank Meeting.
1
<PAGE>
Louisiana law does not require that shareholders of Whitney approve the
Plan of Merger. Whitney, as the sole shareholder of WNB-Mississippi, must
approve the Bank Merger Agreement.
Solicitation, Voting and Revocation of Proxies
Forms of proxy for use at the Meetings accompany this Proxy
Statement-Prospectus and will permit each holder of record of Company Common
Stock and Bank Common Stock, as the case may be, on the record date for the
Meetings to vote the shares held by him at the appropriate Meeting. A
shareholder may use a proxy whether or not he intends to attend either Meeting
in person. Duly executed proxies will authorize the persons named therein to
vote on all other matters that properly come before the Company Meeting and the
Bank Meeting, as applicable, or any adjournments or postponements thereof. Where
a shareholder specifies his choice on the proxy with respect to the proposal to
approve the Plan of Merger, the shares represented by the proxy will be voted in
accordance with such specification. If no such specification is made, the shares
will be voted in favor of the Plan of Merger. If a Company shareholder returns a
proxy and does not specify on the proxy an instruction to vote against the Plan
of Merger, he will not be able to exercise dissenters' rights with respect to
the Company Merger unless he revokes that proxy and gives written notice to the
Company at or prior to the Company Meeting of his intent to demand payment for
his shares if the Company Merger is effectuated. If a Bank shareholder returns a
proxy and does not specify on the proxy an instruction to vote against the Plan
of Merger, he will not be able to exercise dissenters' rights with respect to
the Bank Merger unless he either attends the Bank Meeting in person and votes
against the Plan of Merger or gives written notice at or prior to the Bank
Meeting to the presiding officer that he dissents from the Plan of Merger. See
"Dissenters' Rights." A proxy may be revoked by (i) giving written notice of
revocation at any time before its exercise to the Secretary of the Company or
the Bank, as the case may be, or (ii) executing and delivering to the Secretary
at any time before its exercise a later dated proxy. In addition, shareholders
who attend either Meeting may revoke their proxies by voting in person.
In addition to soliciting proxies by mail, directors, officers and
employees of the Company and the Bank, without receiving additional compensation
therefor, may solicit proxies by telephone and in person. Arrangements will also
be made with brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares of Company and
Bank Common Stock, and the Company will reimburse such parties for reasonable
out-of-pocket expenses incurred in connection therewith. The Bank will pay the
cost of soliciting proxies.
THE PLAN OF MERGER
General
The transactions contemplated by the Plan of Merger are to be effected
in accordance with the terms and conditions set forth in the Plan of Merger,
which is incorporated herein by reference. The following brief description does
not purport to be complete and is qualified in its entirety by reference to the
Plan of Merger, a copy of which is attached hereto as Appendix A.
The ultimate result of the transactions contemplated by the Plan of
Merger will be that the business, properties, debts and liabilities of the
Company will become the business, properties, debts and liabilities of Whitney;
the business, properties, debts and liabilities of the Bank will become the
business, properties, debts and liabilities of WNB- Mississippi; and the
shareholders of the Company and the minority shareholders of the Bank will
become shareholders of Whitney. The steps taken to achieve this result involve
the following transactions: (i) the Company will merge into Whitney and the
separate existence of the Company will cease; (ii) the Bank will merge into
WNB-Mississippi and the separate existence of the Bank will cease and (iii)
shareholders of the Company and the Bank will receive the consideration
described below under the heading captioned " - Description of the Plan of
Merger -- Conversion of Common Stock."
2
<PAGE>
Background
In September 1996 representatives of Whitney called the Company's
management to inquire about arranging a meeting to discuss the possibility and
interest of the Company in a merger with Whitney. Certain members of the
Company's and the Bank's management met with representatives of Whitney at that
time and discussed the philosophies and future of Whitney, the Company and the
Bank. In late September, representatives of Whitney requested a second meeting
with Company management. At this point, the Company engaged legal counsel to
assist in such discussions. At the second meeting, the Company's management and
legal counsel met with representatives of Whitney and discussed potential terms
of the Mergers.
On October 10, 1996, the Company's and the Bank's Boards of Directors
met and discussed Whitney's interest in acquiring the Company. The Boards voted
to pursue the negotiations with Whitney and established a committee to further
negotiate the terms of the merger with Whitney on behalf of the Boards.
The committee, consisting of W. R. Allison, Guy C. Billups, Jr. and Guy
C. Billups, III, along with legal counsel negotiated the terms of the merger
with Whitney and presented the Plan of Merger to the Boards of Directors of the
Company and the Bank on November 14, 1996. The Boards voted unanimously in favor
of the Plan of Merger.
Reasons for the Plan of Merger
General. The financial and other terms of the Plan of Merger are the
result of arm's-length negotiations between representatives of the Company, the
Bank and Whitney. Determination of the consideration to be received by
shareholders of the Company and the Bank was based upon many factors considered
by the Boards of Directors of Whitney, the Company and the Bank, including the
comparative financial condition, historical results of operations, current
business and future prospects of Whitney, the Company and the Bank, the market
price and historical earnings per share of the Whitney Common Stock, and the
desirability of combining the financial and managerial resources of Whitney and
the Company to pursue consumer and commercial banking business in the markets
currently served by the Bank.
Whitney. Whitney's business strategy includes expansion eastward along
the Interstate 10 corridor to Panama City, Florida. One component of this
strategy is the development of a significant banking presence on the Mississippi
Gulf Coast. Because the Bank is located in Gulfport, Mississippi, with 13
branches located on the Mississippi Gulf Coast from Bay St. Louis near the
Louisiana border to Biloxi near Alabama, Whitney's management identified the
Bank as an institution that fit well in its eastward expansion strategy. The
acquisition of the Company and the Bank would complement Whitney's currently
existing presence in Louisiana to the west and in Alabama and Florida to the
east.
In deciding to pursue an acquisition of the Company and the Bank,
Whitney's management and the Executive Committee of Whitney's Board of Directors
noted, among other things, (i) the Bank's existing 13-branch network, (ii) its
well-developed retail customer base and good reputation in the small business
market and (iii) a determination that Whitney and the Company and the Bank had
compatible operating and business philosophies.
The Company and the Bank. In reaching their decision to enter into the
Plan of Merger, the Boards of Directors of the Company and the Bank concluded
that the Plan of Merger was in the best interests of the Company and the Bank
and their shareholders because it would permit the shareholders to exchange on a
favorable terms their ownership interest in the Company and the Bank for
participation in the ownership of a regional banking organization operating on a
multi-state basis. The Boards of Directors also concluded that the shareholders
of the Company and the Bank would benefit additionally from the Mergers in that
they would attain greater liquidity in their investments by obtaining shares of
stock of a corporation whose securities are more widely held and significantly
more actively traded.
The Boards of Directors considered a number of factors, including the
market for the Bank's services and the competitive pressures existing in the
Bank's market area, the outlook for the Bank in the financial institutions
industry, the fact that the Whitney Common Stock to be received pursuant to the
Plan of Merger will be included for quotation on the NASDAQ National Market and
should provide the Company's and the Bank's shareholders with liquidity that is
currently unavailable to them, recent changes in the regulatory environment that
will result in the Bank facing
3
<PAGE>
additional competitive pressures in its market area from other financial
institutions with greater financial resources capable of offering a broad array
of financial services, and the ability to offer additional products and services
to the Bank's customers. However, the most significant factor in reaching their
decision was the price to be received by the Company's and the Bank's
shareholders and the substantial premium that such price represented over recent
sales prices of the Company Common Stock and the book value of the Company and
the Bank Common Stock. More specifically, the limited recent sales prices of
Company Common Stock of which management is aware have ranged from a high of $95
to a low of $90 from 1993 to the present. The price offered per share of Company
Common Stock pursuant to the Plan of Merger equals approximately three times
book value of the Company and Bank Common Stock, or approximately $278 per share
of Company Common Stock and approximately $556 per share of Bank Common Stock
not owned by the Company. In view of this substantial premium, the Boards
determined that it was not necessary or cost-effective to engage a financial
advisor to render an opinion as to the fairness, from a financial point of view,
of the consideration to be received by Company and Bank shareholders in the
Mergers.
The discussion of the information and factors considered and given
weight by the Boards of Directors of the Company and the Bank is not intended to
be exhaustive. In view of the variety of factors considered in connection with
their evaluation of the Plan of Merger, the Boards did not quantify or otherwise
assign relative weights to the specific factors considered in reaching their
determination. In addition, individual members of the Boards may have given
different weights to different factors.
Recommendation of the Company's and the Bank's Boards of Directors
THE BOARDS OF DIRECTORS OF THE COMPANY AND THE BANK HAVE UNANIMOUSLY
APPROVED THE PLAN OF MERGER AND UNANIMOUSLY RECOMMEND THAT THE COMPANY'S AND THE
BANK'S SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN OF MERGER.
Description of the Plan of Merger
General. Pursuant to the Plan of Merger, if all conditions are
satisfied or waived, on the effective date of the Mergers the Company will be
merged into Whitney, and the separate existence of the Company will cease, and
the Bank will be merged into WNB-Mississippi, and the separate existence of the
Bank will cease. In consideration of the Mergers, the outstanding Company Common
Stock and Bank Common Stock not owned by the Company will be converted into an
aggregate number of shares of Whitney Common Stock (the "Total Shares") equal to
the sum of $51,814,000 plus the Retained Net Income After Tax, as defined below,
of the Company (the "Purchase Price"), divided by the average of the closing per
share trading prices of Whitney Common Stock (adjusted appropriately for any
stock split, stock dividend, recapitalization, reclassification or similar
transaction that is effected, or for which a record date occurs) on the 40
trading days preceding the fifth trading day immediately prior to the effective
date of the Company Merger (the "Average Market Price"), provided, however, that
if the Average Market Price so determined is less than $30.00, than the divisor
shall be $30.00, and if such Average Market Price is greater than $36.00, then
the divisor shall be $36.00.
"Retained Net Income After Tax" is defined as the consolidated retained
net income of the Company for the period October 1, 1996 through the end of the
calendar month immediately preceding the effective date of the Company Merger,
as agreed to by Whitney and the Company, based on normal banking net income,
less appropriate income taxes and dividends declared and/or paid and excluding
any unusual or nonrecurring additions to net income such as reversals of loan
loss or other valuation reserves and gains on the sale of investments or other
assets. For the period October 1, 1996 through December 31, 1996, on an
unaudited basis, the Company had Retained Net Income After Tax of approximately
$162,244. This figure has not been reviewed by Whitney, and because the
determination of Retained Net Income After Tax is dependent upon the facts as of
the end of the month immediately preceding the effective date of the Mergers, it
is not possible to estimate the amount of Retained Net Income After Tax, if any,
with certainty at this time.
Conversion of Common Stock. By reason of the Company Merger, each
outstanding share of Company Common Stock (other than shares as to which
dissenters' rights have been perfected and not withdrawn) will be converted into
a number of shares of Whitney Common Stock equal to the quotient of (a) the
Company Percentage (as
4
<PAGE>
defined below) of the Total Shares divided by (b) the total number of shares of
Company Common Stock outstanding on the effective date of the Company Merger. By
reason of the Bank Merger, each outstanding share of Bank Common Stock not owned
by the Company (other than shares as to which dissenters' rights have been
perfected and not withdrawn) will be converted into a number of shares of
Whitney Common Stock equal to the quotient of (a) the Bank Percentage (as
defined below) of the Total Shares divided by (b) the total number of shares of
Bank Common Stock outstanding on the effective date of the Bank Merger. Shares
of Company Common Stock and Bank Common Stock that are held by the Company or
the Bank (other than shares held by the Bank in a fiduciary capacity other than
for the Company) will not be considered outstanding and will be cancelled (and
not converted) by virtue of the Mergers. As of ________________, 1997, there
were outstanding 184,356 shares of Company Common Stock and 1,012 shares of Bank
Common Stock not owned by the Company.
The term "Bank Percentage" means the percentage obtained by dividing
(a) the dollar amount obtained by multiplying (i) the Purchase Price, minus the
book value of all assets of the Company other than the Bank Common Stock held by
it, by (ii) the percentage of the outstanding shares of Bank Common Stock owned
by persons other than the Company, by (b) the total Purchase Price. The book
value of all assets of the Company other than the Bank Common Stock held by it
was $5,946 as of December 31, 1996. The term "Company Percentage" means the
result obtained by subtracting the Bank Percentage from 100%.
The following table sets forth examples of the number of shares of
Whitney Common Stock into which each share of Company Common Stock and Bank
Common Stock would be converted on the effective date of the Mergers, assuming
that the Average Market Price for Whitney Common Stock is as specified below.
The table does not reflect any Retained Net Income After Tax, which would
increase the number of shares of Whitney Common Stock in each case.
<TABLE>
<CAPTION>
Total Number of
Shares of
Assumed Average Whitney Number of Whitney Number of Whitney
Market Price of Whitney Common Common Stock Shares Per Shares Per Bank
Stock To Be Issued Company Share(1) Share(1)
------------------------------ -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
$30.00(2) 1,727,133 9.2667 18.5316
33.00 1,570,121 8.4243 16.8478
36.00(3) 1,439,278 7.7223 15.4437
<FN>
(1) Based on 184,356 shares of Company Common Stock and 1,012 shares of Bank
Common Stock, the number of shares outstanding (and not owned by the
Company), respectively, on _________________, 199__, and a book value of
$5,946 for the assets of the Company other than Bank Common Stock as of
such date. Due to fluctuations in such book value, in the trading prices
of Whitney Common Stock and in the amount, if any, of Retained Net
Income After Tax, the actual number of shares to be received by the
Company's and the Bank's shareholders, respectively, cannot currently be
determined.
(2) Minimum "Average Market Price" under the terms of the Plan of Merger.
(3) Maximum "Average Market Price" under the terms of the Plan of Merger.
</FN>
</TABLE>
On _________________, 1997, the closing trading price for a share of
Whitney Common Stock was $____________, and if such date had been the effective
date of the Mergers, the Average Market Price would have been
$---------.
Inasmuch as the consideration to be paid by Whitney in the Mergers will
be based on the "Average Market Price" of Whitney Common Stock as defined in the
Plan of Merger, the actual value on the effective date of the Mergers
5
<PAGE>
of the shares to be received by the holders of Company Common Stock and Bank
Common Stock may be more or less than the Average Market Price of those shares
as calculated in accordance with the Plan of Merger.
In lieu of issuing any fractional share of Whitney Common Stock, each
shareholder of the Company or the Bank who would otherwise be entitled thereto
will receive a cash payment (without interest) equal to such fractional share
multiplied by the Average Market Price (subject to the limitations described
above).
For information regarding restrictions on the transfer of Whitney Common
Stock received pursuant to the Plan of Merger applicable to certain of the
Company's and the Bank's shareholders, see "Status Under Federal Securities
Laws; Certain Restrictions on Resales."
Exchange of Certificates. On the effective date of the Mergers, each
Company and Bank shareholder will cease to have any rights as a shareholder of
the Company or the Bank and his sole rights will pertain to the shares of
Whitney Common Stock into which his shares of Company or Bank Common Stock have
been converted pursuant to the Mergers, except for any such shareholder who is
entitled to statutory dissenters' rights pursuant to Article 13 of the
Mississippi Business Corporation Act or 12 U.S.C. ss.215a and except for the
right to receive cash for any fractional shares. See "Dissenters' Rights."
Promptly after the consummation of the Mergers, Whitney is required (a)
to deposit with the exchange agent selected by Whitney for the Mergers
certificates representing the shares of Whitney Common Stock and the cash in
lieu of fractional shares to be issued and paid in exchange for shares of
Company and Bank Common Stock and (b) send or cause to be sent to each person
who was a shareholder of record of the Company or the Bank on the effective date
of the Mergers (excluding holders of shares as to which dissenters' rights have
been perfected and not withdrawn or otherwise forfeited under applicable law) a
letter of transmittal, together with instructions for the exchange of
certificates representing shares of Company and Bank Common Stock for
certificates representing shares of Whitney Common Stock.
Shareholders are requested not to send in their Company or Bank Common
Stock certificates until they have received a letter of transmittal and further
written instructions after the effective date of the Mergers. Please do NOT send
in your stock certificates with your proxy.
After the effective date of the Mergers and until surrendered,
certificates representing Company or Bank Common Stock will be deemed for all
purposes, other than the payment of dividends or other distributions, if any, in
respect of Whitney Common Stock, to represent the number of whole shares of
Whitney Common Stock into which such shares have been converted. Whitney, at its
option, may decline to pay former shareholders of the Company and the Bank who
become holders of Whitney Common Stock pursuant to the Mergers any dividends or
other distributions that may have become payable to holders of record of Whitney
Common Stock following the effective date of the Mergers until they have
surrendered their certificates evidencing ownership of shares of Company or Bank
Common Stock, at which time any such dividends or other distributions will be
paid, without interest.
Shareholders of the Company or the Bank who cannot locate their stock
certificates are urged to contact promptly:
Mr. W. R. Allison
Merchants Bancshares, Inc./Merchants Bank & Trust Company
1300 25th Avenue
Gulfport, Mississippi 39501
(601) 864-7332
A new stock certificate will be issued to replace the lost certificate(s) only
upon execution by the shareholder of an affidavit certifying that his
certificate(s) cannot be located and containing an agreement to indemnify the
Company, the Bank and Whitney against any claim that may be made against the
Company, the Bank or Whitney by the owner of the certificate(s) alleged to have
been lost or destroyed. The Company, the Bank or Whitney may also require the
6
<PAGE>
shareholder to post a bond in such sum as is sufficient to support the
shareholder's agreement to indemnify the Company, the Bank and Whitney.
Transfer and Exchange Agents. Boatmen's Trust Company serves as Transfer
Agent and Registrar for Whitney Common Stock and will act as Exchange Agent in
connection with the Mergers. The Bank acts as Transfer Agent and Registrar for
the Company and Bank Common Stock.
Regulatory Approvals and Other Conditions of the Mergers. In addition to
approval by the shareholders of the Company and the Bank and satisfaction of the
other conditions described below, consummation of the Mergers will require the
approvals of the Board of Governors of the Federal Reserve System (the "Reserve
Board"), the Mississippi Department of Banking and Consumer Finance (the
"Department") and the Office of the Comptroller of the Currency (the
"Comptroller"). On January 14, 1997, Whitney filed an application seeking the
approval of the Bank Merger and an interim bank charter for WNB-Mississippi from
the Comptroller, which was accepted on ________________, 1997. On
_______________, 1997, Whitney received preliminary approval from the
Comptroller of an interim bank charter for WNB-Mississippi, and the Comptroller
accepted WNB-Mississippi's organization certificate and articles of association
on _________________, 1997, at which time WNB-Mississippi's corporate existence
began.
Whitney has also filed applications with the Reserve Board and the
Department seeking approval of the Company Merger and with the Reserve Board and
the Federal Deposit Insurance Corporation (the "FDIC") in connection with the
formation of WNB-Mississippi.
Whitney is currently awaiting final approval of each of the foregoing
applications; however, there can be no assurance that they will be obtained
prior to the Meetings or at all.
The obligations of the parties to the Plan of Merger are also subject to
other conditions set forth in the Plan of Merger, including, among others: (i)
the accuracy on the date of closing of the representations and warranties, and
the compliance with covenants, made in the Plan of Merger by each party, and the
absence of any material adverse change in the financial condition, results of
operations, business or prospects of the other party's consolidated group, (ii)
the receipt by Whitney and WNB-Mississippi of required regulatory approvals,
(iii) the receipt by Whitney of assurances that the Mergers may be accounted for
as a pooling-of-interests, (iv) the receipt by Whitney and the Company of
opinions as to qualification of the Mergers as a tax-free reorganization under
applicable law and (v) certain other conditions customary for agreements of this
sort.
The parties intend to consummate the Mergers as soon as practicable
after all of the conditions to the Mergers have been met or waived; however,
there can be no assurance that the conditions to the Mergers will be satisfied.
Effective Date. As soon as practicable after shareholder and regulatory
approval is obtained and all other conditions to the consummation of the Plan of
Merger have been satisfied or waived, the Company Merger Agreement will be
executed by Whitney and filed for recordation with the Secretary of State of
Louisiana, and the Bank Merger Agreement will be executed on behalf of
WNB-Mississippi and the Bank and filed with the Comptroller. Articles of Merger
respecting the Company Merger will also be filed with the Mississippi Secretary
of State. The Company Merger will be effective at the date and time specified in
a certificate issued by the Louisiana Secretary of State, and the Bank Merger
will be effective at the time and date specified in a certificate or other
written record issued by the Comptroller. It is intended that the Bank Merger
will be consummated immediately after consummation of the Company Merger.
Whitney, the Company and the Bank are not able to predict the effective date of
the Company Merger or the Bank Merger and no assurance can be given that the
transactions contemplated by the Plan of Merger will be effected at any time.
See "- Regulatory Approvals and Other Conditions of the Mergers."
Conduct of Business Prior to the Effective Date. The Company and the
Bank have agreed pursuant to the Plan of Merger that, prior to the effective
date, each will conduct its business only in the ordinary course consistent with
past practices and that, without the prior written consent of the chief
executive officer of Whitney or his duly authorized designee, and except as
otherwise provided in the Plan of Merger, each will not, among other things, (a)
declare or pay any dividend, declare or make any distribution on or directly or
indirectly combine, redeem, reclassify, purchase or otherwise acquire any shares
of capital stock or authorize the creation or issuance of or issue any
additional shares of
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capital stock or securities or obligations convertible into or exchangeable
therefor except the payment of (i) regular quarterly dividends by the Company in
the amount of $.65 per share for the first three quarters of 1996 and 1997 and
the normal and customary fourth quarter dividend of $1.30 per share and (ii)
regular quarterly dividends by the Bank in the amount of $1.30 per share for the
first three quarters of 1996 and 1997 and the normal and customary fourth
quarter dividend of $2.60 per share; (b) amend its Articles of Incorporation or
Association or By-Laws or adopt or amend any resolution or agreement concerning
indemnification of directors or officers; (c) enter into or modify any agreement
requiring the payment of any salary, bonus, extra compensation, pension or
severance payment to any of its current or former directors, officers or
employees except (i) such agreements as are terminable at will without penalty
or other payment by it, (ii) such written agreements between the Bank and
certain officers as were approved by Whitney prior to the Company's delivery of
its schedule of exceptions to the Plan of Merger, and (iii) after consultation
with Whitney's chief executive officer, bonuses to employees in an aggregate
amount not exceeding $100,000; (d) except in the ordinary course of business
consistent with past practices, place or suffer to exist on any of its assets or
properties any mortgage, pledge, lien, charge or other encumbrances (except as
allowed under the Plan of Merger) or cancel any material indebtedness owing to
it or any claims it may have possessed, or waive any right of substantial value
or discharge or satisfy any material non-current liability; (e) acquire another
business or merge or consolidate with another entity or sell or otherwise
dispose of a material part of its assets except in the ordinary course of
business consistent with past practices; (f) commit any act that is intended or
reasonably may be expected to result in any of its representations and
warranties becoming untrue in any material respect or in any of the conditions
to the Mergers not being satisfied or in a violation of any provision of the
Plan of Merger, except as may be required by applicable law; (g) commit or fail
to take any act, which act or omission is intended or reasonably may be expected
to result in a material breach or violation of any applicable law, statute,
rule, governmental regulation or order; (h) fail to maintain its books, accounts
and records in the usual manner on a basis consistent with that previously
employed; (i) fail to pay or to make adequate provision in all material respects
for the payment of all taxes, interest payments and penalties due and payable,
except those being contested in good faith by appropriate proceedings and for
which sufficient reserves have been established; (j) dispose of investment
securities in amounts or in a manner inconsistent with past practices, or make
investments in non-investment grade securities or that are inconsistent with
past investment practices; (k) enter into any new line of non-banking business;
(l) charge off (except as required by law or regulatory authorities or generally
accepted accounting principles consistently applied) or sell (except for a price
not materially less than the value thereof) any of its portfolio of loans,
discounts or financing leases, or sell any asset held as other real estate or
other foreclosed assets for an amount materially less than 100% of its book
value as of September 30, 1996; (m) make any extension of credit that, when
added to all other extensions of credit to a borrower and its affiliates, would
exceed the Company's or the Bank's applicable regulatory lending limits; (n)
take or cause to be taken any action that would disqualify the Mergers as a
"pooling of interests" for accounting purposes or as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code; or (o) agree or
commit to do any of the foregoing.
In addition, the Company and the Bank have agreed that neither of them
will, without the prior approval of Whitney, solicit or initiate inquiries or
proposals with respect to, or, except to the extent determined by the Company's
Board of Directors in good faith, after consultation with its financial advisors
and legal counsel, to discharge properly the directors' fiduciary duties to the
Company's consolidated group and its shareholders, furnish any information
relating to, or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of its assets, or of a
substantial equity interest in it, or any business combination with it (other
than as contemplated by the Plan of Merger) or withdraw its recommendation of
the Mergers to the Company's shareholders. The Company and the Bank have also
agreed that in no event will any such information be supplied except pursuant to
a confidentiality agreement in form and substance substantially the same as the
confidentiality agreement previously executed between the Company and Whitney,
that they will each instruct their respective officers, directors, agents and
affiliates to refrain from doing any of the foregoing and that they will notify
Whitney immediately if any such inquiries or proposals are received by, any such
information is requested from or any discussions or negotiations are sought to
be initiated with, the Company, the Bank or any of their officers, directors,
agents or affiliates. Notwithstanding the foregoing, nothing contained in the
Plan of Merger shall be deemed to prohibit any officer or director of the
Company or the Bank from taking any action that the Board of Directors of the
Company or the Bank, as the case may be, determines, in good faith after
consultation with and receipt of an opinion of counsel, is required by law or is
required to discharge his fiduciary duties to the Company's consolidated group
and its shareholders.
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Waiver, Amendment and Termination. The Plan of Merger provides that the
parties thereto may waive any of the conditions to their respective obligations
to consummate the Mergers other than approval by the shareholders of the Company
or the Bank, the absence of a stop order suspending the effectiveness of the
Registration Statement of which this Proxy Statement-Prospectus forms a part,
the receipt of all necessary regulatory approvals, and the satisfaction of all
requirements prescribed by law for consummation of the Mergers. A waiver must be
in writing.
The Plan of Merger, including all related agreements, may be amended or
modified at any time, before or after approval by the shareholders of the
Company and the Bank, by the mutual agreement in writing of the Boards of
Directors of the parties to the Plan of Merger; provided that, under the
Louisiana Business Corporation Law ("LBCL"), any amendment made subsequent to
shareholder approval of the Company Merger may not alter the amount or type of
shares into which the Company Common Stock will be converted, alter any term of
the Articles of Incorporation of Whitney as the surviving entity, or alter any
term or condition of the Plan of Merger in a manner that would adversely affect
any shareholder of the Company. Additionally, the Plan of Merger may be amended
at any time by the sole action of the chief executive officers of the respective
parties to the Plan of Merger to correct typographical errors or to change
erroneous references or cross-references, or in any other manner that is not
material to the substance of the transactions contemplated by the Plan of
Merger.
The Plan of Merger may be terminated at any time prior to the effective
date of the Company Merger by (i) the mutual consent of the respective Boards of
Directors of Whitney and the Company; (ii) the Board of Directors of either
Whitney or the Company in the event of a breach by any member of the
consolidated group of the other of them of any representation, warranty or
covenant in the Plan of Merger that cannot be cured by the earlier of 15 days
after written notice of such breach or June 30, 1997; (iii) the Board of
Directors of either Whitney or the Company if by June 30, 1997 all the
conditions to closing required by the Plan of Merger have not been met or waived
or cannot be met, or if the Mergers have not occurred, by June 30, 1997; (iv)
Whitney, if the number of shares of Company and Bank Common Stock as to which
the holders thereof are, on the effective date of the Mergers, legally entitled
to assert dissenting shareholders rights plus the number of shares to which the
holders thereof are entitled to receive cash payments in lieu of fractional
shares, exceeds that number of shares of Company and Bank Common Stock that
would preclude pooling-of-interests accounting for the Mergers (i.e., if , after
the Meetings, more than 10% of the Company and Bank Common Stock would be
subject to exchange for cash rather than Whitney Common Stock as the result of
holders exercising dissenters' rights or receiving cash in lieu of fractional
shares); (v) Whitney if the Plan of Merger fails to receive the requisite vote
of the Company's or the Bank's shareholders; (vi) Whitney if the Company's or
the Bank's Board of Directors (A) withdraws, modifies or changes its
recommendation to its shareholders as contained herein or resolves to do so, (B)
recommends to its shareholders any other merger, consolidation, share exchange,
business combination or other similar transaction, any sale, lease, transfer or
other disposition of all or substantially all of the assets of any member of the
Company's consolidated group or any acquisition of 15% or more of any class of
the Company's capital stock or (C) makes any announcement of a proposal, plan or
intention to do any of the foregoing; or (vii) the Company, if the Company
receives a written offer with respect to any transaction described in (vi) above
and the Board of Directors of the Company determines in good faith, after
consultation with its financial advisors and counsel, that such transaction is
more favorable to the Company's shareholders than the transactions contemplated
by the Plan of Merger. The Plan of Merger provides for a termination fee of
$2,500,000 payable to Whitney if the Company terminates the Plan of Merger under
the circumstances described in clause (vii) of the preceding sentence. The
provisions in the Plan of Merger regarding confidentiality, payment of the
termination fee and certain miscellaneous matters will survive any termination
of the Plan of Merger.
Expenses. The Plan of Merger provides that regardless of whether the
Mergers are consummated, expenses incurred in connection with the Plan of Merger
and the transactions contemplated thereby shall be borne by the party that has
incurred them.
Interests of Certain Persons
Employee Benefits. Whitney has agreed that, at the effective time of
the Mergers, all persons then employed by the Company and the Bank shall be
eligible for such employee benefits as are generally available to employees of
Whitney's Louisiana and Alabama banking subsidiaries having like tenure, officer
status and compensation levels, except that (a) all executive and senior level
management bonuses, stock options, restricted stock and similar benefits
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will be at the discretion of WNB-Mississippi's Compensation Committee, and (b)
all Company and Bank employees who are employed at the effective time of the
Mergers will be given full credit for all prior service as employees of the
Company or the Bank, provided, however, that all such employees shall be treated
as newly hired WNB-Mississippi employees for all purposes of Whitney's or
Whitney's Louisiana or Mississippi banking subsidiaries' Defined Benefit Pension
Plan (i.e., prior service credit with the Company and the Bank will not be
considered in determining future benefits under Whitney's or Whitney's Louisiana
or Mississippi banking subsidiaries' Defined Benefit Pension Plan).
Management. The Bank has assumed the obligation under an agreement with
Pete Moran, an executive officer of the Bank, to pay Mr. Moran $50,000 if the
Bank is sold before October 1, 2003. The consummation of the Mergers with
Whitney will trigger this payment obligation.
Pursuant to the terms of the Plan of Merger, four executive officers of
the Bank, Guy C. Billups, Jr., Guy C. Billups, III, W. R. Allison, and Walter
Billups, will execute employment agreements with WNB-Mississippi whereby they
will receive certain guaranteed terms of continued employment and other
benefits, including guaranteed salary amounts and increases. Such salary amounts
are substantially equivalent to the salary amounts received by persons holding
similar positions at Whitney's other non-Louisiana banking subsidiaries. Whitney
has also agreed to assume the premium payment obligations under three life
insurance policies insuring the life of Guy C. Billups, Jr. and two life
insurance policies insuring the life of William R. Allison.
Pursuant to the terms of the Plan of Merger, Whitney has agreed to
appoint Guy C. Billups, Jr. to the Board of Directors of Whitney and will
continue to nominate Mr. Billups for re-election to the Board for a term of not
less than the next five years succeeding the effective date of the Mergers. Mr.
Billups is 69 years of age and has served as Chairman of the Board of the
Company and the Bank as his principal employment since 1966. For at least the
last five years he has also been Vice President of Thrifty Three, Inc., a real
estate holding company, Vice Chairman of First State Bank of East Baton Rouge
(Baker, Louisiana) and of Community State Bank (Hammond, Louisiana) and a
partner of Billups Farms and Billups Plantation, which are engaged in the
business of farming.
Mitch Salloum, a director of the Company, receives rent payments on the
Bank's principal executive office and two branch offices, all located in
Gulfport, Mississippi, in total amounts equaling approximately $135,000 per
year. Mr. Salloum will continue to receive rent payments after the Mergers.
Indemnification and Insurance. Whitney has agreed that all rights to
indemnification and all limitations of liability existing in favor of
indemnified parties under the Company's Articles of Incorporation and By-Laws
and in the Articles of Incorporation and By-Laws of the Bank (as the case may
be) as in effect on November 14, 1996 with respect to matters occurring prior to
or on the later of the effective date of the Company Merger or the Bank Merger
will survive for three years following such applicable effective time. Whitney
has also agreed to use its best efforts to cause those persons serving as
officers and directors of the Company and the Bank at the effective time of the
Company Merger (in the case of the Company) and the effective time of the Bank
Merger (in the case of the Bank) to be covered for three years thereafter by the
directors and officers liability insurance policy maintained by the Company and
the Bank (or a substitute policy) with respect to acts or omissions occurring
prior to or at the respective effective times, subject to certain conditions. In
addition, Whitney has agreed to indemnify, under certain conditions, the
Company's and the Bank's directors, officers and controlling persons against
certain expenses and liabilities, including certain liabilities arising under
federal securities laws.
No director or executive officer of the Company or the Bank owns any
shares of Whitney Common Stock. No director or executive officer of Whitney has
any personal interest in the Mergers other than by reason of his holdings of
Whitney Common Stock, nor do such directors or executive officers own any shares
of the Company or Bank Common Stock.
Status Under Federal Securities Laws; Certain Restrictions on Resales
The shares of Whitney Common Stock to be issued to shareholders of the
Company and the Bank pursuant to the Plan of Merger have been registered under
the Securities Act of 1933 (the "Securities Act"), thereby allowing such shares
to be freely traded without restriction by persons who will not be "affiliates"
(as that term is defined in the
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Securities Act and the rules and regulations thereunder) of Whitney or who were
not "affiliates" of the Company or the Bank.
Directors and certain officers and shareholders of the Company and the
Bank may be deemed to be "affiliates" of the Company or the Bank. Such persons
may resell Whitney Common Stock received by them pursuant to the Mergers only if
the shares are registered for resale under the Securities Act or an exemption
from the registration requirements of the Securities Act is available. All such
persons should carefully consider the limitations imposed by Rules 144 and 145
promulgated under the Securities Act prior to effecting any resales of Whitney
Common Stock. Each such affiliate has entered into an agreement not to sell
shares of Whitney Common Stock received by him in violation of the Securities
Act.
Further, in accordance with the requirements for using the
pooling-of-interests method of accounting, shareholders of the Company and the
Bank who may be deemed "affiliates" of the Company or the Bank have agreed not
to sell the shares of Whitney Common Stock received by them in the Mergers until
at least 30 days of post-closing combined earnings of Whitney and the Company
have been published by Whitney. Whitney has agreed to publish such an earnings
release as promptly as practicable following receipt of such financial results.
Accounting Treatment
It is a condition to Whitney's obligation to consummate the Mergers
that (a) it receive certain assurances from the Company's independent public
accountants that the Mergers may be accounted for as a pooling-of-interests
under the requirements of Opinion No. 16 of the Accounting Principles Board of
the American Institute of Certified Public Accountants and the published rules
and regulations of the Securities and Exchange Commission (the "Commission") for
accounting and financial reporting purposes and (b) neither Whitney's
independent public accountants nor the Commission shall have taken the position
that the transactions contemplated by the Plan of Merger do not qualify for
pooling-of-interests accounting treatment. Under the pooling-of-interests method
of accounting, after certain adjustments necessary to conform the basis of
presentation of the Whitney and Company information, the recorded assets and
liabilities of Whitney and the Company will be carried forward to Whitney's
consolidated financial statements at their recorded amounts, the consolidated
earnings of Whitney will include earnings of Whitney and the Company for the
entire fiscal year in which the Company Merger occurs and the reported earnings
of Whitney and the Company for prior periods will be combined and restated as
consolidated earnings of Whitney. Similar treatment will be given to any other
acquisitions that are accounted for as poolings of interests and that are
consummated during the fiscal year. See "- Description of the Plan of Merger --
Regulatory Approvals and Other Conditions of the Mergers" and "- Status Under
Federal Securities Laws; Certain Restrictions on Resales."
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the opinion of Arthur Andersen LLP that
Whitney and the Company expect to receive concerning the material federal income
tax consequences to holders of Company and Bank Common Stock resulting from the
Plan of Merger. Consummation of the Mergers is conditioned upon receipt by
Whitney and the Company of such opinion dated the date set for consummation of
the Plan of Merger. The following is based upon applicable federal law and
judicial and administrative interpretations on the date hereof, any of which is
subject to change at any time, and representations of management of Whitney and
of the Company.
(a) The Company Merger will qualify as a reorganization under Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"); the
Bank Merger will qualify as a reorganization under Section 368 of the Code; and,
the Company, the Bank, Whitney and WNB-Mississippi each will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the Company, the Bank,
Whitney or WNB-Mississippi as a result of the Mergers.
(c) No gain or loss will be recognized by a shareholder of the Company
or the Bank on the receipt solely of Whitney Common Stock in exchange for his
shares of Company or Bank Common Stock.
(d) The tax basis of the shares of Whitney Common Stock to be received
by shareholders of the Company and the Bank pursuant to the Mergers will be the
same as the basis of the shares of Company or Bank Common Stock surrendered in
exchange therefor, decreased by the amount of basis allocated to any cash
received in lieu of fractional shares that are hypothetically received by the
shareholder and redeemed for cash.
(e) The holding period of the shares of Whitney Common Stock to be
received by shareholders of the Company and the Bank pursuant to the Mergers
will, in each instance, include the holding period of the respective shares of
Company or Bank Common Stock exchanged therefor, provided that the shares of
Company or Bank Common Stock are held as capital assets on the effective date of
the Mergers.
(f) The payment of cash to shareholders of the Company and the Bank in
lieu of fractional share interests of Whitney Common Stock will be treated as if
the fractional shares were distributed as part of the exchange and then redeemed
by Whitney. These cash payments will be treated as having been received as a
distribution in redemption of that fractional share interest subject to the
conditions and limitations of Section 302 of the Code. If a fractional share of
Whitney Common Stock would constitute a capital asset in the hands of a
redeeming shareholder, any resulting gain or loss will be characterized as
capital gain or loss in accordance with the provisions and limitations of
Subchapter P of Chapter 1 of the Code.
(g) A shareholder of the Company or the Bank who perfects his statutory
right to dissent to the Mergers and who receives solely cash in exchange for his
Company or Bank Common Stock will be treated as having received such cash
payment as a distribution in redemption of his shares of Company or Bank Common
Stock, subject to the provisions and limitations of Section 302 of the Code.
After such distribution, if the former shareholder of the Company or the Bank
does not actually or constructively own any Company or Bank Common Stock, the
redemption will constitute a complete termination of interest and be treated as
a distribution in full payment in exchange for the Company or Bank Common Stock
redeemed.
The opinion of Arthur Andersen LLP is not binding on the Internal
Revenue Service, which could take positions contrary to the conclusions in such
opinion.
As a result of the complexity of the tax laws, and because the tax
consequences to any particular shareholder may be affected by matters not
discussed herein, it is recommended that each shareholder of the Company and the
Bank consult his personal tax advisor concerning the applicable federal, state
and local income tax consequences of the Mergers.
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DISSENTERS' RIGHTS
The following summaries do not purport to be complete statements of the
procedures to be followed by Company or Bank shareholders desiring to exercise
their dissenters' rights and are qualified in their entirety by reference to the
provisions of Article 13 of the Mississippi Business Corporation Act (in the
case of Company shareholders), and 12 U.S.C. ss.215a (in the case of Bank
shareholders), the full texts of which are attached as Appendix B to this Proxy
Statement-Prospectus. Since the preservation and exercise of dissenters' rights
require strict adherence to the provisions of these laws, Company and Bank
shareholders who might desire to exercise such rights should review such laws
carefully, timely consult their own legal advisors and strictly follow the
provisions of applicable law. A Company or Bank shareholder's failure to follow
any of the applicable procedures may result in termination or waiver of his
dissenters' rights.
Whitney has the right to terminate the Plan of Merger if the number of
shares of Company and Bank Common Stock as to which the holders thereof, on the
effective date of the Company Merger, legally entitled to assert dissenting
shareholders' rights plus the number of shares to which the holders thereof are
entitled to receive cash payments in lieu of fractional shares, exceeds that
number of shares of Company and Bank Common Stock that would preclude
pooling-of-interests accounting for the Mergers. See "The Plan of Merger -
Description of the Plan of Merger -- Waiver, Amendment and Termination."
The Company
Under Sections 79-4-13.01 et seq. of the Mississippi Business
Corporation Act ("MBCA") (a copy of which is included in Appendix B to this
Proxy Statement-Prospectus), any holder of record of shares of Company Common
Stock who files a written objection to the Company Merger prior to or at the
Meeting at which the vote on the Company Merger is taken, and who does not vote
in favor of the Company Merger, may demand in writing that the Company pay to
such shareholder the fair cash value of such shares ("Company Dissenters'
Rights"). A person who is a beneficial owner, but not a registered owner, of
shares of Company Common Stock who wishes to exercise the rights of a dissenting
shareholder under the MBCA must submit to the Company the record shareholder's
written consent to the dissent not later than the time the beneficial owner
asserts Company Dissenters' Rights and he must do so with respect to all shares
of which he is the beneficial shareholder.
Any shareholder of record contemplating making a demand for appraisal
is urged to review carefully the provisions of Section 79-4-13.21 of the MBCA,
particularly the procedural steps required to perfect Company Dissenters' Rights
thereunder. Company Dissenters' Rights will be lost if the procedural
requirements of Section 79-4-13.21 are not fully satisfied.
Set forth below is a summary of the procedures relating to the exercise
of Company Dissenters' Rights. The following summary does not purport to be a
complete statement of the provisions of Article 13 of the MBCA and is qualified
in its entirety by reference to Appendix B hereto and to any amendments to such
sections as may be adopted after the date of this Proxy Statement-Prospectus.
Filing Written Objection and Vote Against the Company Merger. Before
the shareholders' vote is taken on the proposal to approve the Company Merger, a
shareholder of record who intends to exercise Company Dissenters' Rights (a
"Company Dissenter") must deliver to the Company a written notice of his intent
to demand payment for his share if the proposed Company Merger is effectuated
and must not vote the shares of Company Common Stock held by such Company
Dissenter (the "Shares") in favor of the proposed Company Merger. Such written
notice may be sent to the Company at 1300 25th Avenue, Gulfport, Mississippi
39501, telephone number (601) 864-7332 to the attention of W. R. Allison. The
return of a proxy by a Company Dissenter with instructions to vote the Shares
represented thereby against the Mergers (or abstaining from voting) is not
sufficient to satisfy the requirement of delivering written objection to the
Company. The submission of a signed blank proxy will serve to waive Company
Dissenters' Rights.
Notice by the Company. Within ten (10) days after the effective date of
the Company Merger, the Company will notify each Company Dissenter who has
purported to comply with the provision of Section 79-4-13.21 of the MBCA that
the Company Merger has become effective (the "Company Notice"). The Company
Notice shall be sent
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by registered mail, addressed to the Company Dissenter at such Company
Dissenter's last address on the Company's record immediately prior to the
effective date of the Company Merger.
Written Demand. Within thirty (30) days after the delivery to the
Company Dissenter of the Company Notice, any Company Dissenter must file with
the Company a demand for payment (the "Demand") for his Shares as of the day
prior to the Company Meeting. The Demand must comply with the provisions of
Article 13 and must specify the Company Dissenter's name and mailing address,
the number of shares of Company Common Stock owned and state that the Company
Dissenter is demanding payment of his or her Shares. The Company Dissenter must
also certify that the Company Dissenter had beneficial ownership of the Shares
before the date set forth in the Company Notice, which is , , the date of the
first announcement of the proposed Company Merger to the new media.
Simultaneously with the filing of the Demand, the Company Dissenter shall also
deposit the certificate(s) representing such Shares in accordance with the terms
of the Company Notice. A Company Dissenter who fails to satisfy any of the
foregoing conditions within the proper time periods will conclusively be
presumed to have acquiesced in the Company Merger and will lose his Company
Dissenters' Rights. Following the Company Merger, the Demand may be sent to
Joseph S. Schwertz, Jr., Secretary, Whitney Holding Corporation, 228 St. Charles
Avenue, New Orleans, Louisiana 70130, telephone number (504) 586-3596.
Payment. Upon receipt of the Demand, the Company shall pay Company
Dissenters who complied with Article 13 the amount the Company estimates to be
the fair value of the Company Dissenters' Shares plus accrued interest. Certain
financial information concerning the Company, its estimate of the value of the
Shares, an explanation of how interest was calculated, and a statement of rights
to demand payment along with a copy of Article 13, must accompany such offer or
payment.
Appraisal. A Company Dissenter may notify the Company in writing of his
own estimate of the fair value of his Shares and amount of interest due, and
demand payment of his estimate or a Company Dissenter may reject the Company's
payment and demand in writing payment based on his own estimate of the fair
value of his Shares and amount of interest due. To be entitled to such rights,
the Company Dissenter must notify the Company of his demand in writing within
thirty (30) days after the Company made payment for the Shares. If a Company
Dissenter had rejected the Company's payment and demanded payment of the fair
market value of the Shares and interest due and the demand for payment remains
unsettled, the Company shall commence a judicial proceeding within sixty (60)
days after receiving the payment demand and petition an appropriate court, as
described in Article 13, to determine the fair value of the Shares and accrued
interest. If the Company does not commence such action within the required sixty
(60) day period, it shall pay each Company Dissenter whose demand remains
unsettled the amount demanded.
The Company shall make all Company Dissenters whose demands remain
unsettled parties to the proceeding and all parties must be served with a copy
of the petition. Each Company Dissenter made a party to the proceeding is
entitled to judgment for either the amount by which the court finds the fair
value of his Shares, plus interest, exceeds the amount paid by the Company or
for the fair value of his Shares, plus accrued interest, after acquired shares
for which the Company elected to withhold payment under Section 79-4-13.27.
Company Dissenters considering exercising Company Dissenters' Rights
should bear in mind that the fair cash value of their Shares determined under
Section 79-4-13.30 of the MBCA could be more than, the same as or less than the
consideration they would otherwise receive pursuant to the Plan of Merger if
they do not seek appraisal of their Shares.
Costs. The court in an appraisal proceeding shall determine all coasts
of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. Additionally, the court may asses fees of
legal counsel and of experts for the respective parties. The court shall assess
the costs against the Company, except that the court may assess costs against
all or some of the Company Dissenters to the extent the court finds the Company
Dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment under Article 13, or the court may assess counsel fees against the
Company Dissenters who were benefited.
14
<PAGE>
ANY COMPANY SHAREHOLDER WHO DESIRES TO EXERCISE COMPANY DISSENTERS'
RIGHTS SHOULD CAREFULLY REVIEW THE MBCA AND IS URGED TO CONSULT SUCH
SHAREHOLDER'S LEGAL ADVISOR BEFORE EXERCISING OR ATTEMPTING TO EXERCISE SUCH
RIGHTS.
The Bank
Each shareholder of the Bank entitled to vote on the Plan of Merger who
objects to the Plan of Merger shall be entitled to the rights and remedies of
dissenting shareholders provided under the Bank Merger Act, 12 U.S.C. ss.215a
("Section 215a"), a copy of which is included in Appendix B to this Proxy
Statement-Prospectus, and any such shareholder who follows the procedures
specified in Section 215a will be entitled to receive the value of his shares of
Bank Common Stock in cash. A Bank shareholder must comply strictly with the
procedures set forth in Section 215a.
To exercise the right of dissent, a Bank shareholder (a) must vote
against the Plan of Merger or otherwise notify the Secretary of the Bank in
writing at or prior to the Bank Meeting that he dissents from the Plan of Merger
and (b) must also, within thirty days after the effective date of the Bank
Merger, deliver to Whitney a written request for the value of his shares of Bank
Common Stock in cash accompanied by the surrender of his certificates
representing such shares of Bank Common Stock. Such written requests should be
delivered either in person or by mail (certified mail, return receipt requested,
being the recommended form of transmittal) to Joseph S. Schwertz, Jr.,
Secretary, Whitney Holding Corporation, 228 St. Charles Avenue, New Orleans,
Louisiana 70130.
The value of the shares of Bank Common Stock held by a dissenting
shareholder will be determined, as of the effective date of the Bank Merger, by
an appraisal made by three appraisers, one to be selected by the holders of a
majority of the Bank Common Stock the owners of which have exercised their
dissenters' rights, one to be selected by the directors of Whitney, and one to
be selected by the two appraisers so selected. The valuation agreed upon by any
two of the three appraisers will govern. If the value so fixed is not
satisfactory to any dissenting Bank shareholder who has requested payment, that
Bank shareholder may, within five days after being notified of the appraised
value of his shares, appeal to the Comptroller, which will cause a reappraisal
to be made that will be final and binding as to the value of the shares of such
shareholder. If for any reason one or more of the appraisers are not selected,
or the appraisers so selected fail to determine the value of the Bank Common
Stock within ninety days after the effective date of the Bank Merger, the
Comptroller will cause an appraisal of such shares to be made upon the written
request of any interested party, and such appraisal will be final and binding on
all parties. Whitney will pay the expenses of the Comptroller in making any
appraisal or reappraisal described above.
The value of the shares of Bank Common Stock held by dissenting
shareholders ascertained as described above will be promptly paid to the
dissenting shareholders. The shares of Whitney Common Stock that would have been
delivered to the dissenting Bank shareholders had they not requested payment in
accordance with Section 215a must be sold at an advertised public auction, and
Whitney has the right to purchase any or all of such shares. If the shares of
Whitney Common Stock are sold at the public auction at a price greater than the
amount paid to the dissenting Bank shareholders, the excess in such sale price
must be paid to such dissenting shareholders.
Prior to the effective date of the Bank Merger, dissenting shareholders
of the Bank should send any communications regarding their rights to W. R.
Allison, President of Merchants Bank & Trust Company, 1300 25th Avenue,
Gulfport, Mississippi 39501. On or after the effective date of the Bank Merger,
dissenting shareholders of the Bank should send any communications regarding
their rights to Joseph S. Schwertz, Jr., Secretary, Whitney Holding Corporation,
228 St. Charles Avenue, New Orleans, Louisiana 70130. All such communications
should be signed by or on behalf of the dissenting Bank shareholder in the form
in which his shares are registered on the Bank's books.
15
<PAGE>
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial
information gives effect to the proposed merger of the Company into Whitney and
of the Bank into WNB-Mississippi using the pooling-of-interests method of
accounting and should be read in conjunction with the consolidated financial
statements and notes thereto of Whitney's consolidated group incorporated herein
by reference and of the Company's consolidated group included elsewhere in this
Proxy Statement-Prospectus. The pro forma information is presented for
illustrative purposes only, and is not necessarily indicative of the operating
results or financial position that would have occurred if the Mergers had been
consummated in accordance with the assumptions set forth under "Notes to
Unaudited Pro Forma Condensed Combined Financial Statements," nor is it
necessarily indicative of future operating results or financial position.
Under the terms of the Plan of Merger, shareholders of the Company and
minority shareholders of the Bank will receive shares of Whitney Common Stock
with a value of approximately $51,814,000, plus the amount of any Retained Net
Income After Tax (as defined elsewhere in this Proxy Statement-Prospectus under
the heading "The Plan of Merger - Description of the Plan of Merger --
Conversion of Common Stock"). For purposes of the following pro forma financial
information, Retained Net Income After Tax has been assumed to be zero. There
can be no assurance as to the actual amount, if any, of Retained Net Income
After Tax that will be realized by the Company and included in calculating the
final Purchase Price in the Mergers; however, Whitney and the Company believe
that excluding this component from the assumed Purchase Price does not have a
material effect on the following pro forma financial information. The exact
number of shares will be determined at the time the Company Merger is effected.
See "The Plan of Merger - Description of the Plan of Merger -- Conversion of
Common Stock."
On March 8, 1996, Whitney completed a merger with First Citizens
BancStock, Inc. ("Citizens") and its wholly-owned subsidiary, The First National
Bank in St. Mary Parish, which was accounted for as a pooling-of-interests;
accordingly, Whitney's financial statements have been restated to include the
operations of Citizens.
On October 25, 1996, Whitney completed mergers with Liberty Holding
Company, its majority-owned subsidiary, Liberty Bank, and American Bank and
Trust (all of Pensacola, Florida). These mergers (collectively referred to as
the "Florida acquisitions") will be accounted for as poolings of interest.
Whitney has also entered into a definitive agreement dated October 11, 1996 with
First National Bankshares, Inc., a Louisiana corporation ("FNB") and its
wholly-owned subsidiary, First National Bank of Houma ("FNBH"), pursuant to
which FNB would merge into Whitney and, in due course, FNBH would merge into
Whitney Bank in transactions that are expected to qualify for a pooling-of-
interest accounting treatment. See "Information about Whitney - General" and
"Information about Whitney - Recent Developments." These acquisitions are not
considered material to Whitney for purposes of presenting pro forma financial
information; therefore, information regarding FNB, FNBH and the Florida
acquisitions is not included in the following pro forma financial statements,
and Whitney's historical financial statements have not been restated to reflect
the completed Florida acquisitions.
The unaudited pro forma condensed combined balance sheet at September
30, 1996, set forth below, gives effect to the Mergers under the
pooling-of-interests accounting method as if the Mergers had occurred on
September 30, 1996. The unaudited pro forma condensed combined statements of
income for the years ended December 31, 1995, 1994 and 1993 and the nine months
ended September 30, 1996 and 1995 combine the historical statements of income of
Whitney and the Company as if the Mergers had been effective as of January 1,
1993. The cost associated with the Mergers, estimated to be approximately
$____________, will be accounted for as a current period expense upon
consummation of the Mergers and has not been reflected in the following pro
forma financial statements.
16
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
September 30, 1996
(In Thousands)
<TABLE>
<CAPTION>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ----------
ASSETS
<S> <C> <C> <C>
Cash and due from financial institutions........ $ 210,320 $ 13,724 $ 224,044
Securities available for sale................... 124,497 -- 124,497
Securities held to maturity..................... 1,249,120 76,756 1,325,876
Federal funds sold.............................. 300 25,300 25,600
Loans and leases................................ 1,795,725 83,367 1,879,092
Less: reserve for possible loan losses.......... 43,198 1,099 44,297
----------- ----------- -----------
Net loans and leases............................ 1,752,527 82,268 1,834,795
Bank premises and equipment (net)............... 101,575 4,292 105,867
Other real estate owned (net)................... 2,837 1,113 3,950
Other assets.................................... 74,113 2,229 76,342
----------- ----------- -----------
TOTAL ASSETS............................. $ 3,515,289 $ 205,682 $ 3,720,971
=========== =========== ===========
LIABILITIES
Deposits........................................ 2,696,506 187,806 2,884,312
Federal funds purchased and other
borrowings............................. 404,696 0 404,696
Accrued expenses and other liabilities.......... 29,622 599 30,221
----------- ----------- -----------
TOTAL LIABILITIES........................ 3,130,824 188,405 3,319,229
Minority interest in Merchants Bank............. 187 (187) -
EQUITY
Capital stock.............................. 2,800 922 (922) 2,800
Capital surplus............................ 67,628 9,243 1,109 77,980
Retained earnings.......................... 322,305 6,925 329,230
Net unrealized holding gains on available-
for-sale securities..................... (165) - (165)
Less: Treasury stock............................ 8,103 - (8,103)
----------- ----------- ------------ -----------
TOTAL EQUITY............................. 384,465 17,090 187 401,742
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY..................... $ 3,515,289 $ 205,682 - $ 3,720,971
=========== =========== ============ ===========
</TABLE>
See accompanying notes.
17
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Nine Months Ended September 30, 1996
(In Thousands, except for share data)
<TABLE>
<CAPTION>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income................................... $ 172,907 $ 9,926 $ 182,833
Interest expense.................................. 63,613 4,125 67,738
--------- -------- ---------
Net interest income............................... 109,294 5,801 115,095
Provision for (reduction in) reserves for possible
loan losses.................................... - 275 275
--------- -------- ---------
Net interest income after provision
for possible loan losses....................... 109,294 5,526 114,820
Non-interest income............................... 27,232 1,931 29,163
Non-interest expense.............................. 95,030 5,456 100,486
Minority interest in income of Merchants Bank..... - (16) 16 -
--------- -------- ---------
Income before income taxes........................ 41,496 1,985 16 43,497
Income taxes...................................... 12,984 630 13,614
--------- -------- ---------
Net income........................................ $ 28,512 $ 1,355 16 $ 29,883
========= ======== =========
Weighted average shares outstanding:
Primary......................................... 17,143,567 1,570,121 18,713,688
Fully diluted................................... 17,178,788 1,570,121 18,748,909
Earnings per share:
Primary......................................... $1.66 $0.86 $1.60
Fully diluted................................... $1.66 $0.86 $1.59
</TABLE>
See accompanying notes.
18
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Nine Months Ended September 30, 1995
(In Thousands, except for share data)
<TABLE>
<CAPTION>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
------------- -------------- ------------ --------------
<S> <C> <C> <C>
Interest income................................... $ 156,228 $ 9,746 $ 165,974
Interest expense.................................. 52,603 4,289 56,892
--------- -------- ---------
Net interest income............................... 103,625 5,457 109,082
Provision for (reduction in) reserves for possible
loan losses.................................... (9,750) 335 (9,415)
--------- -------- ---------
Net interest income after provision
for possible loan losses....................... 113,375 5,122 118,497
Non-interest income............................... 25,083 1,577 26,660
Non-interest expense.............................. 88,620 4,855 93,475
Minority interest in income of Merchants Bank..... - (20) 20 -
--------- -------- ---------
Income before income taxes........................ 49,838 1,824 20 51,682
Income taxes...................................... 15,765 596 16,361
--------- -------- ---------
Net income........................................ $ 34,073 $ 1,228 20 $ 35,321
========= ======== =========
Weighted average shares outstanding:
Primary......................................... 16,793,048 1,570,121 18,363,169
Fully diluted................................... 16,793,048 1,570,121 18,363,169
Earnings per share:
Primary......................................... $2.02 $0.78 $1.92
Fully diluted................................... $2.02 $0.78 $1.92
</TABLE>
See accompanying notes.
19
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Year Ended December 31, 1995
(In Thousands, except for share data)
<TABLE>
<CAPTION>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income................................... $ 213,295 $ 12,993 $ 226,288
Interest expense.................................. 71,867 5,746 77,613
--------- -------- ---------
Net interest income............................... 141,428 7,247 148,675
Provision for (reduction in) reserves for possible
loan losses..................................... (9,400) 420 (8,980)
--------- -------- ---------
Net interest income after provision
for possible loan losses....................... 150,828 6,827 157,655
Non-interest income............................... 33,205 2,431 35,636
Non-interest expense.............................. 119,481 6,920 126,401
Minority interest in income of Merchants Bank..... - (18) 18 -
--------- -------- ---------
Income before income taxes........................ 64,552 2,320 18 66,890
Income taxes...................................... 20,203 751 20,954
--------- -------- ---------
Net income........................................ $ 44,349 $ 1,569 18 $ 45,936
========= ======== =========
Weighted average shares outstanding:
Primary......................................... 16,971,801 1,570,121 18,541,922
Fully diluted................................... 17,049,308 1,570,121 18,619,429
Earnings per share:
Primary......................................... $2.61 $1.00 $2.48
Fully diluted................................... $2.60 $1.00 $2.47
</TABLE>
See accompanying notes.
20
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Year Ended December 31, 1994
(In Thousands, except for share data)
<TABLE>
<CAPTION>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ------------ ---------
<S> <C> <C> <C> <C>
Interest income................................... $ 192,750 $ 12,404 $ 205,154
Interest expense.................................. 57,503 4,869 62,372
--------- -------- ---------
Net interest income............................... 135,247 7,535 142,782
Provision for (reduction in) reserves for possible
loan losses..................................... (26,004) 576 (25,428)
--------- -------- ---------
Net interest income after provision
for possible loan losses....................... 161,251 6,959 168,210
Non-interest income............................... 34,175 1,973 36,102
Non-interest expense.............................. 112,394 6,684 119,078
Minority interest in income of Merchants Bank..... - (18) 18 -
--------- -------- ---------
Income before income taxes........................ 83,032 2,230 18 85,234
Income tax expense (benefit)...................... 26,834 788 27,576
--------- -------- ---------
Net income........................................ $ 56,198 $ 1,442 18 $ 57,658
========= ======== =========
Weighted average shares outstanding:
Primary......................................... 16,588,783 1,570,121 18,158,904
Fully diluted................................... 16,588,783 1,570,121 18,158,904
Earnings per share:
Primary......................................... $3.39 $0.92 $3.18
Fully diluted................................... $3.39 $0.92 $3.18
</TABLE>
See accompanying notes.
21
<PAGE>
WHITNEY HOLDING CORPORATION
PRO FORMA CONDENSED COMBINED INCOME STATEMENT
(Unaudited)
Year Ended December 31, 1993
(In Thousands, except for share data)
<TABLE>
<CAPTION>
Whitney Company Pro Forma Pro Forma
(Consolidated) (Consolidated) Adjustments Combined
-------------- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Interest income................................... $ 186,105 $ 11,542 $ 197,647
Interest expense.................................. 54,681 4,333 59,014
--------- -------- ---------
Net interest income............................... 131,424 7,209 138,633
Provision for (reduction in) reserves for possible
loan losses..................................... (59,625) 397 (59,228)
--------- -------- ---------
Net interest income after provision
for possible loan losses....................... 191,049 6,812 197,861
Non-interest income............................... 33,216 1,743 34,959
Non-interest expense.............................. 108,237 5,556 113,793
Minority interest in income of Merchants Bank..... - (25) 25 -
--------- -------- ---------
Income before income taxes and cumulative
effect of changes in accounting principles...... 116,028 2,974 25 119,027
Income tax expense................................ 37,145 967 38,112
--------- -------- ---------
Income before cumulative effect of changes
in accounting principles........................ 78,883 2,007 25 80,915
Cumulative effect of changes in accounting
principles...................................... 345 0 345
--------- -------- ---------
Net income........................................ $ 79,228 $ 2,007 25 $ 81,260
========= ======== =========
Weighted average shares outstanding:
Primary......................................... 16,456,782 1,570,121 18,026,903
Fully diluted................................... 16,456,782 1,570,121 18,026,903
Earnings per share:
Primary......................................... $4.81 $1.28 $4.51
Fully diluted................................... $4.81 $1.28 $4.51
</TABLE>
See accompanying notes.
22
<PAGE>
WHITNEY HOLDING CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
To calculate pro forma information, it has been assumed that the number
of outstanding shares of Whitney Common Stock includes shares to be issued upon
consummation of the Mergers. In connection with the Mergers, Whitney will issue
shares of Whitney Common Stock to the shareholders of the Company and to the
minority shareholders of the Bank.
Under the terms of the Plan of Merger, Whitney will issue Whitney
Common Stock with an aggregate value at the date of the Mergers of approximately
$51,814,000 (calculated based on the Average Market Price and assuming no
Retained Net Income After Tax). The number of shares of Whitney Common Stock to
be exchanged in the Mergers will be determined by the Average Market Price of
Whitney Common Stock, which will be no less than $30.00 per share nor more than
$36.00 per share. For purposes of the accompanying pro forma financial
statements, the Whitney Common Stock is assumed to have an Average Market Price
in the Mergers of $33.00 per share, resulting in the issuance of 1,553,071
shares of Whitney Common Stock for all the common stock of the Company (an
exchange ratio of 8.4243) and 17,050 shares of Whitney Common Stock for all the
common stock of the Bank held by shareholders other than the Company (an
exchange ratio of 16.8478).
The historical earnings per share and weighted average shares
outstanding amounts for the Company reflect the equivalent shares of Whitney
Common Stock expected to be exchanged in connection with the Mergers based on an
assumed Average Market Price of $33.00 per share of Whitney Common Stock.
There is no stated par value of Whitney Common Stock. In accordance
with the pooling-of-interests method of accounting, the historical equities of
the merged companies are combined.
23
<PAGE>
INFORMATION ABOUT THE COMPANY AND THE BANK
Description of Business
The Company. The Company is a Mississippi corporation incorporated on
July 28, 1987 for the purpose of becoming a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), and acquiring a majority
of the stock of the Bank through an exchange offer that was effected on February
11, 1988. Since that time, the Bank has been the Company's only subsidiary. The
Company's executive office is located at 1300 25th Avenue, Gulfport, Mississippi
and its telephone number is (601) 864-7332. At September 30, 1996, the Company
had total consolidated assets of approximately $205.7 million and shareholder's
equity of approximately $17.3 million.
The Bank. The Bank, which was organized on October 14, 1903, provides
traditional consumer and commercial deposit and loan services in Harrison and
Hancock Counties, including the cities of Bay St. Louis, Waveland, Long Beach,
Gulfport, Biloxi and Diamondhead, Mississippi. The Bank's services are delivered
through a network of ten full service locations, including an office in Bay St.
Louis, three branch offices in Gulfport, two branches in Long Beach, two
branches in Waveland and a branch in Diamondhead and Biloxi. The Bank also has
three drive-up auto bank branches, two of which are in Gulfport and one in Bay
St. Louis. In addition to traditional bank services, the Bank offers mortgage
loans and VISA/Mastercard. The Bank's deposits are insured by the FDIC. At
September 30, 1996, the Bank had total assets of approximately $205.7 million
and total deposit liabilities of approximately $187.5 million. The Bank is
domiciled in Bay St. Louis, with its principal executive office located at 1300
25th Avenue, Gulfport, Mississippi 39501, and its telephone number is (601)
864-7332.
Competition. The Bank competes in Hancock and Harrison Counties,
Mississippi. Competition among banks for loan customers is generally governed by
such factors as loan terms, including interest charges, restrictions on
borrowers and compensating balances, and other services offered by such banks.
The Bank competes with numerous other commercial banks, savings and loan
associations and credit unions for customer deposits, including Bank of
Mississippi, Hancock Bank, Peoples Bank and Keesler Federal Credit Union, as
well as with a broad range of financial institutions in consumer and commercial
lending activities. In addition to thrift institutions, other businesses in the
financial services industry compete with the Bank for retail and commercial
deposit funds and for retail and commercial loan business.
Seasonality of Business and Customers. The Bank's deposits represent a
cross-section of the area's economy and there is no material concentration of
deposits from any single customer or group of customers. No significant portion
of the Bank's loans is concentrated within a single industry or group of related
industries. Historically, the business of the Bank has not been seasonal in
nature and management of the Bank does not anticipate any seasonal trends in the
future. The Bank does not rely on foreign sources of funds or income.
Legal Proceedings. The Company and the Bank normally are parties to and
have pending routine litigation arising from their regular business activities
of furnishing financial services, including providing credit and collecting
secured and unsecured indebtedness. In some instances, such litigation involves
claims or counterclaims against the Company and the Bank, or either of them. As
of September 30, 1996, neither the Company nor the Bank had any litigation
pending other than ordinary routine litigation incidental to their business
which was not material in amount in relation to the Company's assets on a
consolidated basis.
Market Prices and Dividends
Neither the Company Common Stock nor the Bank Common Stock is traded on
any exchange, and there is no established public trading market for such stock.
There are no bid or asked prices available for Company or Bank Common stock. The
Company Common Stock has sold at a high of $95 to a low of $90 from 1993 to the
date of this Proxy Statement-Prospectus, and other than trades of 550 shares in
January 1996 at $91 per share, 30 shares in February 1996 at $95 per share and
332 shares in May 1996 at $90 per share (all in Company Common Stock), neither
the Company nor the Bank is aware of any transactions in Company or Bank Common
Stock since January 1, 1996. No assurance can be given that these trades were
effected on an arm's-length basis.
24
<PAGE>
The following table sets forth, for the periods indicated, the
dividends declared by the Company and by the Bank. The Company's ability to
declare and pay dividends after November 14, 1996 is subject to the Plan of
Merger. See "The Plan of Merger - Description of the Plan of Merger -- Conduct
of Business Prior to the Effective Date."
<TABLE>
<CAPTION>
Dividends Declared
Company Bank
------- -----
<S> <C> <C>
1994
First Quarter.............................................. $0.50 $1.05
Second Quarter............................................. 0.50 1.00
Third Quarter.............................................. 0.50 1.00
Fourth Quarter............................................. 1.00 2.00
1995
First Quarter.............................................. $0.50 $1.03
Second Quarter............................................. 0.50 1.00
Third Quarter.............................................. 0.50 1.00
Fourth Quarter............................................. 1.00 2.00
1996
First Quarter.............................................. $0.65 $1.35
Second Quarter............................................. 0.65 1.30
Third Quarter.............................................. 0.65 1.30
Fourth Quarter............................................. 1.30 2.60
</TABLE>
As of _____________, 1997, there were 268 record shareholders of the
Company (with a total of 184,356 issued and outstanding shares) and 29 record
shareholders of the Bank, other than the Company (with a total of 93,190 issued
and outstanding shares, 1,012 of which are held by shareholders other than the
Company).
Employees
The Bank employs approximately 130 persons full time and seven persons
part time and considers its relationship with its employees to be good.
Security Holdings of Principal Shareholders and Management
The following tables set forth certain information as of December 31,
1996, with respect to the beneficial ownership of the outstanding shares of
Company Common Stock by (i) all persons who beneficially own more than 5% of the
outstanding shares and (ii) all directors and executive officers of the Company.
Each person has sole voting and investment power with regard to the shares
listed opposite his or her name unless otherwise noted. The directors of the
Company are also the directors of the Bank. The Company owns 98.91% of the
outstanding shares of Bank Common Stock, and no director or executive officer of
the Company or the Bank beneficially owns any other shares of Bank Common Stock.
<TABLE>
<CAPTION>
PRINCIPAL SHAREHOLDERS
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned Percent of Class
---------------------------- ------------------- ----------------
<S> <C> <C>
Guy C. Billups, Jr. 77,192(1) 41.87%
124 Allan Drive
Gulfport, Mississippi 39507
- ------------------------------
<FN>
1) Includes 414 shares held by Mr. Billups' spouse.
</FN>
</TABLE>
25
<PAGE>
DIRECTORS & EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
-------------------------- -------------------- ----------------
<S> <C> <C>
W. R. Allison 2,060(1) 1.10%
Roy Anderson, Jr. 5,806 3.15%
Roy Anderson III 120 *
Guy C. Billups, Jr. 77,192(2) 41.87%
Guy C. Billups, III 9,092 4.93%
James F. Cooper 800 *
George E. Estes 2,798 1.52%
G. B. Flagg, M.D. 1,262 *
B. J. Garner 960(3) *
E. C. Milner 358 *
A. J. M. Oustalet, Jr. 88 *
Mitchell Salloum 3,644 1.98%
David A. Treutel 200(4) *
All directors and executive officers
as a group (14 persons) 104,390 56.62%
- ----------------------------
* Indicates less than one percent.
<FN>
(1) Includes 60 shares owned with Mr. Allison's grandchild.
(2) Includes 414 shares held by Mr. Billups' spouse.
(3) Includes 200 shares held by Mr. Garner's spouse.
(4) Includes 150 shares held by a corporation in which Mr. Treutel is the
president and a director.
</FN>
</TABLE>
Four persons, Alan O. Clark, Richard G. Matheny, Pete E. Moran and Charley
E. Rhodes, are executive officers of the Bank but not directors of the Company.
These persons beneficially own, in the aggregate, less than one percent of the
Company Common Stock.
26
<PAGE>
THE COMPANY'S MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS OPERATION ENDING SEPTEMBER 30, 1996 AND 1995
The following discussion should be read in conjunction with the
consolidated financial statements of the Company and related Notes appearing
elsewhere in the Proxy Statement-Prospectus.
The following discussion provides certain information concerning the
financial condition and results of operations of the Company for the periods
ending September 30, 1996 and 1995. The financial position and results of
operations of the Company were due primarily to its banking subsidiary, the
Bank. Management's discussion and analysis should be read in conjunction with
the financial statements.
Overview. Net income through September 30, 1996 totaled $1,355,000
compared to $1,228,000 for the same period 1995. Return on average assets was
approximately .93% and return on average equity was approximately 10.89% through
September 30, 1996, compared to .84% and 10.56% respectively for September 30,
1995. The major contributing factor in the increase in income from 1996 to 1995
was the increase in net interest income.
Assets at September 30, 1996 increased by $18,669,000 or 9.98% from
December 31, 1995, caused by some increase in deposits and increase in equity
during the period.
Net interest income increased slightly from 1995 to 1996. The net
margin, the percentage of net interest income to net earning assets, increased
slightly from 1995 to 1996.
Investment securities at September 30, 1996 were $76,756,000 compared
to $78,576,000 at December 31, 1995. Loans totaled $83,367,000 at September 30,
1996 compared to $76,027,000 at December 31, 1995. This increase was caused by
an increase in the loan demand in the Bank's marketing area.
Provision for Possible Loan Losses. The provisions for loan losses
charged to operating expenses is the result of a continuing review and
assessment of the loan portfolio, taking into consideration the history of
charge-offs in the loan portfolio by category, the current economic conditions
in the lending area, the payment history, ability to repay, and strength of
collateral of specific borrowers and other relevant factors. The 1996 provision
through September 30 was $275,000 compared to $335,000 for the comparable period
of 1995. Recoveries through September 30, 1996 were $69,000 compared to $104,000
for the comparable period of 1995. Loans charged-off declined from the September
30, 1995 figure of $437,000 to $300,000 through September 30, 1996. The loan
loss allowance as a percentage of outstanding loans decreased from 1.37% at
December 31, 1995 to 1.32% at September 30, 1996. Loans past due ninety (90)
days or more and non-accrual loans decreased to $337,000 at September 30, 1996
compared to $509,000 at December 31, 1995.
Other Operating Income. Other operating income for the nine months
ended September 30, 1996 totaled $1,931,000 compared to $1,577,000 for the
comparable period of 1995. The increase was caused mostly by the increase in
service charges and other related fees on deposit accounts.
Other Operating Expenses. Other operating expenses increased $601,000
or 12.38% for the comparable periods of 1995 to 1996. This increase was caused
by an increase in salaries and employees' benefits.
Investment Securities. In May 1993 the FASB issued SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities." This
standard required the Company to classify its securities portfolio into
securities held for trading, securities held to maturity and securities
available for sale. The Company adopted this accounting method effective
December 31, 1993; however, the adoption had no effect on the financial position
of the Company in 1995 or 1996 because all investments were classified to be
held until maturity. The investments decreased in 1996 to $76,756,000 at
September 30, 1996, from $78,576,000 at December 31, 1995. The decrease from
1995 to 1996 is reflected by an increase in loans.
27
<PAGE>
Security Portfolio. The carrying amount of securities at the dates
indicated is set forth in the table below:
<TABLE>
<CAPTION>
HELD TO MATURITY SECURITIES
(In Thousands)
September 30, 1996 December 31, 1995
---------------------------- ----------------------------
<S> <C> <C>
U.S. Treasury $ 10,973 $ 11,956
U.S. Gov't. Agencies 63,304 64,091
State & Political Subd. 2,479 2,529
---------------------------- ----------------------------
Total $ 76,756 $ 78,576
============================ ============================
</TABLE>
LOANS
Loans outstanding at September 30, 1996 totaled $82,268,000 net of the allowance
for loan losses compared to $74,972,000 at December 31, 1995.
Non-Accrual Loans. Non-accrual loans are loans on which the accrual of
interest income has been discontinued and previously accrued interest has been
reversed because the borrower's financial condition has deteriorated to the
extent that the collection of principal and interest is doubtful. Until the loan
is returned to performing status, generally as the result of the full payment of
all past due principal and interest, interest income is recorded on the cash
basis. Non- accrual loans totaled $153,000 at September 30, 1996 compared to
$186,000 at December 31, 1995.
Other Real Estate Owned. Foreclosed properties held in the other real
estate owned account decreased from $1,912,000 at December 31, 1995 to
$1,113,000 at September 30, 1996. The 1996 balance represents .54% of assets
compared to 1.02% of assets in 1995.
Summary of Loan Loss Experience. The loan loss experience for the two
periods ending September 30, 1996 and 1995 is summarized in the following table:
<TABLE>
<CAPTION>
(In Thousands)
September 30, 1996 September 30, 1995
-------------------- -------------------
<S> <C> <C>
Balances at beginning of period $ 1,055 $ 1,100
Provision charged to expense 275 335
Loans charged off -300 -437
Recoveries 69 104
-------------------- -------------------
Balance at end of period $ 1,099 $ 1,102
==================== ===================
</TABLE>
Deposits. Total deposits at September 30, 1996 were $187,806,000 up
$17,794,000 from December 31, 1995. There were no significant changes in the
core deposits of the Company from 1995 to 1996.
Capital Resources. The Company maintains adequate capital for
regulatory purposes and believes it has sufficient capital to absorb the risks
inherent in its business. Risk-based capital requirements have been established
that weight different assets according to the level of risk associated with that
type of assets.
28
<PAGE>
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Risk-based capital ratios:
Tier 1 capital 8.97% 8.61%
Total capital 9.54% 9.12%
Leverage ratio 8.97% 8.61%
</TABLE>
THE COMPANY'S MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS DECEMBER 31, 1995, 1994 AND 1993
The following discussion provides certain information concerning the
financial condition and results of operations of the Company for the years ended
December 31, 1995, 1994 and 1993. The financial position and results of
operations of the Company were due primarily to its banking subsidiary, the
Bank. Management's discussion should be read in conjunction with the financial
statements and accompanying notes for the years ended December 31, 1995 and 1994
included elsewhere herein.
Overview. Net income for 1995 totaled $1,569,334, compared to
$1,441,681 for 1994 and $2,006,709 for 1993. Return on average assets was .81%
and return on average equity was 10.04% for 1995, compared to .72% and 9.97%,
respectively, for 1994 and 1.15% and 15.02%, respectively, for 1993.
Assets in 1995 increased by $1,739,412, or .94%, from 1994 caused by a
increase in customer deposits of $2,514,536, or 1.5%. The increase was caused
basically from a increase in the amount of time deposits on deposit at the
year-end and the repayment of federal funds sold at December 31, 1994.
Net interest income decreased from 1994 to 1995 and increased from 1993
to 1994. The net margin, the percentage of net interest income to net earning
assets, decreased slightly in 1995, an indication of the continual low interest
rates on earning assets and increased rates on deposits. Average earning assets
comprised 90.63% and 89.99% of total average assets in 1995 and 1994,
respectively, and 88.61% in 1993.
Net Interest Income. Net interest income for 1995 was $7,247,229,
compared to $7,535,718 for 1994 and $7,209,806 for 1993.
Investment securities at December 31, 1995 were $78,576,184, compared
to $97,442,366 at December 31, 1994. This change was caused by a shift in funds
from government securities to loans and Federal Funds sold from 1994 to 1995.
Loans totaled $76,027,123 at December 31, 1995 and averaged 43.21% of earning
assets in 1995. The remaining earnings assets of the Company was its position in
Federal Funds sold. The net yield on investment securities declined 3.23% from
1994 to 1995. The net yield on loans increased 3.0% during the same period.
Loan demand continued to improve in 1995. Net loans increased by
$6,374,331 from 1994 to 1995.
Interest Rate Sensitivity. The Company's interest rate sensitivity is
modeled in the GAP Analysis Table. The table depicts a management measurement of
the balance sheet interest rate sensitivity GAP at December 31, 1995. Interest
rate sensitivity results from the timing differences at which assets and
liabilities may be repriced as market rates change. The Company also utilizes
other measurement techniques to analyze interest rate sensitivity. The table
indicates the Company is positioned, at December 31, 1995, at negative gaps in
the 90 and 365 day ranges. In a rising interest situation within these ranges,
the Company would theoretically reprice more liabilities than assets; therefore,
decreasing net interest income.
29
<PAGE>
<TABLE>
<CAPTION>
GAP ANALYSIS TABLE
(Amounts in Thousands)
0-90 90-365 1+ Non Interest
Days Days Years Bearing Total
-------------- ------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Federal funds sold $ 11,300 $ $ $ $ 11,300
Securities 4,000 9,035 65,541 78,576
Loans 17,621 12,187 46,219 76,027
Other assets 21,112 21,112
------------- ------------- ------------- ------------------ --------------
Total assets $ 32,921 $ 21,222 $ 111,760 $ 21,112 $ 187,015
============= ============= ============= ================== ==============
LIABILITIES:
Money market, NOW
and savings $ 76,448 $ $ $ $ 76,448
Time deposits 30,949 18,172 10,781 59,902
Non interest-
bearing demand 33,662 33,662
Other liabilities and
equity 17,003 17,003
------------- ------------- ------------- ------------------ --------------
Total liabilities
and equity $ 107,397 $ 18,172 $ 10,781 $ 50,665 $ 187,015
============= ============= ============= ================== ==============
Periodic gap $ -74,476 $ 3,050 $ 100,979 $ -29,553
Cumulative gap -74,476 -71,426 29,553
Percent of total earning
assets 44.9% 43.1% 17.8%
</TABLE>
30
<PAGE>
Provision for Possible Loan Losses. The provision for loan losses
charged to operating expenses is the result of a continuing review and
assessment of the loan portfolio, taking into consideration the history of
charge-offs in the loan portfolio by category, the current economic conditions
in the lending area, the payment history, ability to repay, and strength of
collateral of specific borrowers, and other relevant factors. The 1995 provision
was $420,000, compared to $576,322 in 1994 and $397,000 in 1993. Recoveries in
1995 were $158,261, compared to $135,846 in 1994 and $137,611 in 1993. Loans
charged off increased from the 1994 figure of $514,259 to $623,180 in 1995.
Loans charged off in 1993 was $433,579.
The Company maintains an allowance for loan losses which it believes is
adequate to absorb reasonably foreseeable losses in the loan portfolio. The
allowance for loan losses decreased $130,433 from December 31, 1994 to 1995.
Coupled with the increase in loans, the allowance for loan losses as a
percentage of total loans declined from 1.58% at year-end 1994 to 1.39% at
year-end 1995. The percentage at December 31, 1993 was 1.42%.
Non-interest Income. Non-interest income in 1995 totaled $2,431,513,
compared to $1,973,492 in 1994 and $1,742,881 in 1993. The increase was caused
mostly by the increase in service charges and related fees on deposit accounts.
Non-interest Expense. Non-interest expenses increased $235,505, or
3.52%, from 1994 levels and $1,128,679 from 1993. Salaries and employee benefits
increased by $467,250, or 12.8%, caused entirely by salary adjustments and
increased hospitalization insurance for 1995 and the increase from 1993 to 1994
was $382,045 or 11.7%. Occupancy expenses increased by $86,757 from year-end
1994 to 1995 and $157,299 from 1993 to 1994. This increase was caused by a
increase in depreciation expense on bank facilities due to the addition of a new
computer system and other fixed assets.
Analysis of Financial Condition
Investment Securities. In May 1993, the FASB issued SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities." This
standard required the Company to classify its securities portfolio into
securities held for trading, securities held to maturity, and securities
available for sale. The Company adopted this accounting method effective
December 31, 1993; however, the adoption had no effect on the financial position
of the Company because all investments were classified to be held for maturity.
In 1995 investment securities decreased by $18,866,182 from 1994. The
total value of the investment securities at December 31, 1995, was 78,576,184.
The decrease from 1994 to 1995 is reflected by an increase in net loans of
$6,374,331 from 1994 to 1995 and federal funds sold of $11,300,000.
Securities Portfolio. The carrying amount of securities at the dates
indicated is set forth in the table below:
<TABLE>
<CAPTION>
HELD TO MATURITY SECURITIES
December 31,
----------------------------------------
1995 1994
------------------ -----------------
<S> <C> <C>
U.S. Treasury $ 11,956,408 $ 12,934,923
U.S. Agencies 64,090,325 82,349,339
State & Political Subd. 2,529,451 2,158,104
------------------ -----------------
Total $ 78,576,184 $ 97,442,366
================== =================
</TABLE>
31
<PAGE>
Investment Securities Maturity Distribution. At December 31, 1995,
held to maturity securities at cost were scheduled to mature as follows:
<TABLE>
<CAPTION>
After One
Within But Within
One Year Five Years
--------------------------------- ---------------------------------
Amount Yield Amount Yield
----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
U.S. Treas'y & Gov't
Agencies $ 12,997,395 5.72% $ 63,049,338 6.05%
State & Political Subd. 38,000 7.61 2,491,451 5.04
----------------- ------------- ----------------- -------------
Total $ 13,035,395 5.73% $ 65,540,789 5.84%
================= ============= ================= =============
</TABLE>
Loans. Loans outstanding at December 31, 1995, totaled $74,972,042 net
of the allowance for loan losses and unearned discount. The following table
shows the amounts of loans outstanding according to the type of loan for each of
the periods rendered.
<TABLE>
<CAPTION>
(In Thousands)
December 31,
-----------------------------------------------------------------
1995 1994
------------------------------ --------------------------------
Amount Percent Amount Percent
----------------- -------- -------------- --------
<S> <C> <C> <C> <C>
Real estate $ 40,202 52.05% $ 35,798 50.51%
Commercial & Industrial 11,819 15.30 12,636 17.83
Installment loans to
individuals 21,998 28.48 21,352 30.13
Obligations of state and
political subdivisions 2,760 3.57 836 1.18
Other 464 .60 246 .35
Unearned discount -1,216 -1,170
----------------- -------- -------------- -------
Net loans $ 76,027 100.00% $ 69,698 100.00%
================= ======= ============== =======
</TABLE>
Real estate loans comprise 52.05% and commercial and industrial loans 15.30% of
the loan portfolio at December 31, 1995. These percentages are consistent with
1994. The portfolio consists of mostly of fixed rate loans.
Non-performing Assets. Non-accrual loans and foreclosed assets are
included in non-performing assets. Non- performing assets increased $1,605,136,
during 1995 to $2,098,487 at December 31, 1995. Other real estate increased from
$289,000 in 1994 to $1,912,311, while non-accrual loans decreased from $203,861
to $186,176 from 1994 to 1995. Non-accrual loans were $315,553 in 1993 and other
real estate was $362,771.
Non-accrual loans are loans on which the accrual of interest income has
been discontinued and previously accrued interest has been reversed because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past-due
principal and interest, interest income is recorded on the cash basis. Interest
income that would have been recognized on non-accrual loans had those loans been
on accrual status at contractual terms throughout 1995, 1994 and 1993 was
$20,572, $26,021 and $40,008, respectively.
On January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures." As of
December 31, 1995, the amount of impaired loans and disclosures related thereto
were not material.
32
<PAGE>
Summary of Loan Loss Experience. The loan loss experience for the three
years ended December 31, 1995, 1994 and 1993 is summarized in the following
table.
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ------------------ -----------------
<S> <C> <C> <C>
Balances at beginning of year $ 1,100,000 $ 902,091 $ 801,059
Provision charged to expense 420,000 576,322 397,000
Loans charged off -623,180 -514,259 -433,579
Recoveries 158,261 135,846 137,611
------------------ ------------------ -----------------
Balance at end of year $ 1,055,081 $ 1,100,000 $ 902,091
================== ================== =================
Ratio of net charge offs to average
loans outstanding .62% .56% .48%
</TABLE>
Deposits. Total deposits at December 31, 1995, were $170,012,442, an
increase of $2,514,536 from the December 31, 1994, total of $167,497,906. This
increase in deposits was caused by an increase in certificates of deposit.
Liquidity. Liquidity involves the Company's ability to raise funds to
support asset growth or to reduce assets, meet deposit withdrawals and other
borrowing needs, maintain reserve requirements and otherwise operate the company
on an ongoing basis.
As shown in the 1995 statement of cash flows, cash and cash equivalents
increased by $12,979,931. This increase was caused basically by the maturity of
U.S. Government securities during 1995 and the funds being reinvested in
overnight Federal Funds sold and the increase in deposits. Net income from
operations contributed $2,863,604 in 1995, $2,330,193 in 1994 and $2,656,674 in
1993. During the past three years, the Company has relied on its position in
Federal Funds sold and maturities in the investment portfolio for liquidity.
These factors are considered to maintain adequate liquidity for the Company.
Capital Resources. The Company maintains adequate capital for
regulatory purposes, and believes it has sufficient capital to absorb the risks
inherent in its business. Risk-based capital requirements have been established
that weight different assets according to the level of risk associated with that
type of assets.
The following table summarizes specific capital ratios of the Company
at December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
Minimum
Regulatory
1995 1994 1993 Guidelines
---------------- -------------------- ----------------- -----------------------
Risk-based capital ratios:
<S> <C> <C> <C> <C>
Tier 1 capital 8.61% 8.08% 7.68% 4.0%
Total capital 9.12% 8.62% 8.13% 8.0%
Leverage ratio 8.61% 8.08% 7.68% 3.0%
</TABLE>
Certain Statistical Information
The following tables present historical statistical information
concerning the Company's consolidated balance sheet items, investment
securities, loan portfolio, loan loss experience, deposits and return on equity
and assets for the periods indicated, and do not purport to be indicative of
results that may be obtained in the future.
33
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
------------------------------ ------------------------------- -------------------------------
Average Yield/ Average Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
--------- --------- -------- ---------- ---------- ---------- ---------- --------- --------
(In Thousands)
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans(1) $ 74,616 $ 6,912 9.26% $ 67,178 $ 6,037 8.99% $ 61,064 $ 5,750 9.42%
Taxable securities 86,640 5,185 5.98 90,419 5,451 6.03 82,836 5,234 6.32
Tax-exempt securities 2,344 112 4.78 2,080 113 5.43 2,041 130 6.37
Federal funds sold 12,349 785 6.36 20,898 803 3.84 9,039 428 4.74
--------- -------- --------- --------- -------- --------- --------- -------- --------
Total interest-earning assets 175,949 12,994 7.39 180,575 12,404 6.87 154,980 11,542 7.45
Noninterest-earning assets:
Cash and due from banks 12,767 15,250 11,282
Premises and equipment, net 4,390 4,039 3,663
Other assets 2,114 2,002 5,819
Less allowance for loan losses -1,077 -1,001 -851
--------- -------- --------- --------- -------- --------- -------- --------- ---------
Total $ 194,143 $200,865 $174,893
========== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Money market and NOW
accounts $ 73,561 $ 2,323 3.16% $ 87,154 $ 2,666 3.06% $ 79,375 $ 2,389 3.01%
Savings deposits 19,169 648 3.38 22,623 711 3.14 15,094 479 3.17
Time deposits 54,358 2,773 5.10 38,191 1,491 3.90 36,467 1,460 4.00
--------- -------- --------- ---------- -------- --------- --------- -------- --------
Total interest-bearing
deposits 147,088 5,744 3.91 147,968 4,868 3.29 130,936 4,328 3.31
Federal funds purchased 54 3 5.56 - - - 81 4 4.94
--------- -------- --------- ---------- -------- --------- --------- -------- --------
Total interest-bearing
liabilities 147,142 5,747 3.91 147,968 4,868 3.29 131,017 4,332 3.31
Noninterest-bearing liabilities:
Demand deposits 30,508 37,618 29,789
Other 859 802 721
--------- ---------- ---------
Total liabilities 178,509 186,388 161,527
Stockholders' equity 15,634 14,477 13,366
--------- ---------- ---------
Total $ 194,143 $200,865 $ 174,893
========= -------- ======== -------- ========= --------
Net interest income $ 7,247 $ 7,536 $ 7,210
======== --------- ======== --------- ======== ----------
Net yield on interest-earning assets 4.12% 4.17% 4.65%
========= ========= ==========
<FN>
(1) For the purpose of these computations, nonaccruing loans are included in the
average loan amounts outstanding.
</FN>
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
1995 Compared to 1994 1994 Compared to 1993
Increase (Decrease) due to (1) Increase (Decrease) due to (1)
-------------------------------- --------------------------------
Volume Rate Net Volume Rate Net
---------- -------- ---------- -------- -------- ----------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans $ 688 $ 187 $ 875 $ 549 $ -262 $ 287
Taxable securities -239 -27 -266 448 -231 217
Tax-exempt securities 12 -13 -1 2 -19 -17
Federal funds sold -216 198 -18 455 -80 375
--------- -------- --------- -------- -------- --------
Total interest-
earning assets $ 245 $ 345 $ 590 $ 1,454 $ -592 $ 862
========= ======== ========= ======== ======== ========
Interest paid on:
Money market and
NOW accounts $ -415 $ 72 $ -343 $ 237 $ 40 $ 277
Savings deposits -109 46 -63 236 -4 232
Time deposits 824 458 1,282 67 -36 31
Federal funds
purchased 3 3 -4 -4
--------- -------- --------- -------- -------- --------
Total interest-
bearing liabilities $ 303 $ 576 $ 879 $ 536 $ 0 $ 536
========= ======== ========= ======== ======== ========
<FN>
(1) The change in interest due to both volume and rate has been allocated to
volume and rate changes in proportion to the relationship of the absolute dollar
amounts of the change in each.
</FN>
</TABLE>
35
<PAGE>
This table summarizes the Company's loan loss experience for each of
the three years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
December 31,
1995 1994 1993
------------------ ------------------ ------------------
(In Thousands)
<S> <C> <C> <C>
Balances at January 1 $ 1,100 $ 902 $ 801
Charge-offs:
Commercial 351 295 234
Real estate 13 65 15
Installment 259 153 185
------------------ ------------------ -----------------
Total 623 513 434
Recoveries:
Commercial 68 78 84
Real estate 26 8
Installment 64 57 46
------------------ ------------------ -----------------
Total 158 135 138
Less net charge-offs 465 378 296
Additions charged to operations 420 576 397
------------------ ------------------ -----------------
Balance at December 31 $ 1,055 $ 1,100 $ 902
================== ================== =================
Ratio of net charge offs to average
loans outstanding .62% .56% .48%
================== ================== =================
</TABLE>
This table shows an allocation of the allowance for loan losses as of
the end of each of the last two years:
<TABLE>
<CAPTION>
Percent of Percent of
Loans In Loans In
Each Each
1995 Category To 1994 Category To
Amount Total Loans Amount Total Loans
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Commercial $ 355 34% $ 440 40%
Real estate 475 45 393 36
Installment 154 15 190 17
Other 71 6 77 7
---------------- --------------- ---------------- ---------------
Total $ 1,055 100% $ 1,100 100%
================ =============== ================ ===============
</TABLE>
36
<PAGE>
This table summarizes the Company's loan maturities for 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
------------------ -----------------
(In Thousands)
<S> <C> <C>
Due in 3 months or less $ 17,803 $ 14,626
Over 3 months through 12 months 12,187 12,481
Over 1 year through 5 years 43,260 38,072
Over 5 years 3,993 5,689
------------------ -----------------
Total $ 77,243 $ 70,868
================== =================
</TABLE>
Maturities of time deposits of $100,000 or more issued by the Company,
outstanding at December 31, 1995 are summarzed as follows:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
3 months or less $ 13,091
Over 3 months through 6 months 4,449
Over 6 months through 12 months 1,112
Over 1 year $ 3,174
-----------------
Total $ 21,826
=================
</TABLE>
Details of other income and expenses are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ------------------ -----------------
<S> <C> <C> <C>
Other Income:
Gain on sale of property $ 89,790 $ 27,896 $ 0
Other 2,370 17,039 9,028
------------------ ------------------ -----------------
Total $ 92,160 $ 44,935 $ 9,028
================== ================== =================
Other expenses:
Advertising $ 159,640 $ 148,464 $ 143,121
Insurance 197,107 164,197 152,141
Supplies 152,042 142,931 118,322
Other 932,190 1,318,844 826,418
------------------ ------------------ -----------------
Total $ 1,440,979 $ 1,774,436 $ 1,240,002
================== ================== =================
</TABLE>
37
<PAGE>
INFORMATION ABOUT WHITNEY
General
Whitney, a Louisiana corporation, is a multi-bank holding company
registered pursuant to the BHCA. It became an operating entity in 1962 with
Whitney Bank as its only significant subsidiary. Whitney Bank, a national
banking association headquartered in Orleans Parish, Louisiana, has been engaged
in the general banking business in the City of New Orleans continuously since
1883. Whitney Bank currently offers banking and trust services through 61
branches located in south Louisiana, including branches in the metropolitan
areas of New Orleans (including suburban Jefferson and St. Tammany Parishes),
Baton Rouge, Lafayette and Morgan City, and a foreign branch on Grand Cayman in
the British West Indies. In December 1994, Whitney established the Whitney Bank
of Alabama, and through this new, Alabama state-chartered banking subsidiary,
became the first Louisiana bank holding company to enter the Alabama market
through its acquisition of the Mobile area operations of The Peoples Bank, Elba,
Alabama on February 17, 1995. Whitney Bank of Alabama currently operates 10
branches and one loan production office serving metropolitan Mobile and
Montgomery, Alabama and the Alabama Gulf Coast region.
On October 25, 1996, Whitney acquired Liberty Bank and American Bank
and Trust, both of Pensacola, Florida, through mergers of those institutions
into Whitney National Bank of Florida ("Whitney Bank-Florida"), a wholly-owned
subsidiary of Whitney formed for that purpose. Whitney Bank-Florida operates
five branches serving Pensacola, Florida and surrounding areas.
Whitney Bank, Whitney Bank of Alabama and Whitney Bank-Florida
(Whitney's banking subsidiaries) are full-service commercial banks engaged in
commercial and retail banking and in the trust business, including the taking of
deposits, the making of secured and unsecured loans, the financing of commercial
transactions, the delivery of corporate, pension and personal trust and
investment services and safe deposit rentals. Whitney Bank also issues credit
cards and is active as a correspondent for other banks.
During 1995, Whitney established Whitney Community Development
Corporation ("WCDC"), a for-profit community development corporation
incorporated under the laws of the State of Louisiana. WCDC is authorized to
make equity and debt investments in corporations or projects designed primarily
to promote community welfare, including the economic rehabilitation and
development of low-income areas by providing housing, services or jobs for
residents, or promoting small businesses that service low-income areas. The
initial capitalization of WCDC was $1,000,000.
At September 30, 1996, Whitney had consolidated total assets of
approximately $3.5 billion, consolidated total deposits of approximately $2.7
billion and consolidated shareholders' equity of approximately $384 million.
Whitney's and Whitney Bank's principal executive offices are located at 228 St.
Charles Avenue, New Orleans, Louisiana 70130, and its telephone number is (504)
586-7117.
Recent Developments
Whitney has entered into a definitive agreement dated October 11, 1996,
as amended, with First National Bankshares, Inc. ("FNB") and its wholly-owned
subsidiary First National Bank of Houma ("FNBH"), pursuant to which FNB would
merge with and into Whitney and, in due course, FNBH would merge into Whitney
Bank (the "FNB Acquisition"). FNBH is a national banking association
headquartered in Houma, Louisiana, with approximately $219 million in assets and
five branches serving the Houma area.
Under the terms of the FNB agreement, shareholders of FNB would
receive, in the aggregate, shares of Whitney Common Stock having a value of
approximately $41 million, based on an assumed average market price of Whitney
Common Stock between $28.50 and $36.50 per share. As in the Company Merger, the
actual value on the effective date of the FNB Acquisition of the shares of
Whitney Common Stock to be received by FNB shareholders may be more or less than
the amount described above inasmuch as such consideration will be determined in
reference to a defined "average market price" of Whitney Common Stock that can
be no less than $28.50 or more than $36.50. The FNB Acquisition is expected to
be consummated in the first quarter of 1997, but is subject to regulatory
approval and
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other customary conditions. There can be no assurance that the FNB Acquisition
will be consummated at such time or at all.
Whitney continues to explore opportunities to acquire additional
financial institutions as part of an expansion strategy that focuses on
developing a significant banking presence along the United States Gulf Coast
from the Texas- Louisiana border through the Florida panhandle. Discussions are
continually being carried on relating to such potential acquisitions. Whitney
may, after the date of this Proxy Statement-Prospectus, enter into one or more
acquisition agreements with one or more of such institutions; however, it is not
currently known whether Whitney's discussions will result in further
acquisitions or on what terms any such acquisitions would be made.
On January 16, 1997, Whitney announced 1996 annual earnings of $40.6
million, or $2.26 per share, with fourth quarter 1996 earnings of $11.1 million,
or $0.61 per share, in each case after the recognition of non-recurring
merger-related expenses (net of tax) of $3.45 million and $1.17 million,
respectively.
Market Prices of and Dividends Declared on Whitney Common Stock
Whitney Common Stock is included for quotation in the NASDAQ National
Market System under the symbol "WTNY." The following table sets forth, for the
periods indicated the high and low reported closing sale prices per share of
Whitney Common Stock as reported on the NASDAQ National Market System and the
quarterly dividends declared for each such period.
<TABLE>
<CAPTION>
Price Range of Common Stock and Quarterly Dividends
High Low Dividend*
------ ------- ---------
<S> <C> <C> <C>
1994
First Quarter.............................................. $24 $21 1/2 $0.14
Second Quarter............................................. 27 1/4 21 3/4 0.14
Third Quarter.............................................. 28 1/2 25 3/4 0.15
Fourth Quarter............................................. 27 21 0.17
1995
First Quarter.............................................. $25 3/4 $22 $0.18
Second Quarter............................................. 27 3/8 24 0.19
Third Quarter.............................................. 34 26 3/4 0.19
Fourth Quarter............................................. 31 1/2 29 3/4 0.21
1996
First Quarter.............................................. $31 3/4 $29 3/4 $0.22
Second Quarter............................................. 31 3/4 29 3/4 0.25
Third Quarter.............................................. 30 7/8 29 1/2 0.25
Fourth Quarter............................................. 35 7/8 31 3/4 0.25
</TABLE>
- -------------------------
* Dividends per share for 1994 and 1995 have been restated to reflect the
Citizens Acquisition. See "Summary - Selected Financial Data of Whitney."
Incorporation of Certain Information by Reference
The following documents, or the indicated portions thereof, have been
filed by Whitney with the Commission, and are incorporated by reference into
this Proxy Statement-Prospectus: Whitney's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 (the "1995 10-K"); Whitney's Form 10-K/A
(Amendment No. 1 to the 1995 10-K) filed with the Commission on July 3, 1996;
Whitney's Quarterly Report on Form 10-Q for the fiscal quarter ended
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March 31, 1996; Whitney's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1996; Whitney's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996; Whitney's Current Report on Form 8-K filed
with the Commission on January 19, 1996 (the "Form 8-K"); Whitney's Current
Report on Form 8-K filed with the Commission on January 26, 1996; Whitney's
Current Report on form 8-K filed with the Commission on March 25, 1996 (the
"March 8-K"); Whitney's Form 8-K/A (Amendment No. 1 to the March 8-K) filed with
the Commission on May 21, 1996; Whitney's Current Report on Form 8-K filed with
the Commission on January 24, 1997; and the description of Whitney Common
Stock set forth in Whitney's Registration Statement under the Exchange Act, as
updated and modified in its entirety by the Form 8-K (File No. 0-1026).
In addition, all other documents that will be filed by Whitney with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") after the date of this Proxy
Statement- Prospectus and prior to the date of the Meetings shall be deemed to
be incorporated by reference in this Proxy Statement-Prospectus and to be a part
hereof from the date of their filing. See "Available Information" and
"Incorporation of Certain Documents by Reference" for information with respect
to securing copies of documents incorporated by reference in this Proxy
Statement-Prospectus.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
or in any other document subsequently filed and incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement-Prospectus.
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the shareholders of the Company and the Bank approve the Plan of
Merger and the Mergers are subsequently consummated, all shareholders of the
Company and the Bank, other than those exercising dissenters' rights, will
become shareholders of Whitney, and their rights will be governed by and be
subject to the Articles of Incorporation and Bylaws of Whitney rather than the
Articles of Incorporation and Bylaws of the Company and the Bank. The following
is a description of the Whitney Common Stock and a brief summary of certain of
the principal differences between the rights of shareholders of Whitney and
those of the Company and the Bank not described elsewhere herein.
Description of Whitney Common Stock
The authorized capital stock of Whitney consists of 40,000,000 shares
of common stock, no par value, of which 17,957,051 were outstanding on December
31, 1996. The following description of Whitney's capital stock is qualified in
its entirety by reference to Whitney's Articles of Incorporation and By-laws and
to the applicable provisions of the LBCL.
Common Stock
Voting Rights - Non-cumulative Voting. Holders of Whitney Common Stock
are entitled to one vote per share on all matters to be voted on by the
shareholders. Holders of Whitney Common Stock do not have cumulative voting
rights. As a result, the holders of more than 50% of the Whitney Common Stock
may elect all of the directors.
Dividend Rights. Holders of outstanding Whitney Common Stock are
entitled to receive such dividends, if any, as may be declared by the Board of
Directors, in its discretion, out of funds legally available therefor.
Liquidation Rights. In the event of the liquidation of Whitney, the
holders of Whitney Common Stock are entitled to receive pro rata any assets
distributable to shareholders in respect of their shares.
Preemptive Rights. Holders of Whitney Common Stock have no preemptive
rights to subscribe for additional shares of capital stock.
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Directors
The Board of Directors of Whitney is divided into five classes, as
nearly equal in number as possible, with members of each class to serve for five
years, and with one class being elected each year. Directors of Whitney must
also be shareholders of Whitney. Any director of Whitney may be removed from
office with or without cause only by the affirmative vote of at least 90% of the
voting power of Whitney present at a special meeting of the shareholders called
for that purpose. The quorum requirement for such a meeting is 90% of the total
voting power of Whitney present in person or by proxy at a special meeting
called for that purpose.
The LBCL permits corporations to (i) include provisions in their
articles of incorporation that limit the personal liability of directors and
officers for monetary damages resulting from breaches of the duty of care,
subject to certain exceptions, and (ii) indemnify directors and officers, among
others, in certain circumstances for their expenses and liabilities incurred in
connection with defending pending or threatened suits. Whitney's Articles of
Incorporation include a provision that eliminates the personal liability of
directors and officers to Whitney and its shareholders for monetary damages
resulting from breaches of the duty of care to the full extent currently
permitted by the LBCL and further provides that any amendment or repeal of that
provision will not affect the elimination or limitation of liability of an
officer or director with respect to conduct occurring prior to the time of such
amendment or appeal.
The Articles of Incorporation also provide for indemnification and
advancement of expenses of any officer, director, employee or agent of Whitney
for any action taken in good faith by that officer, director, employee or agent.
Indemnification in the case of actions by or in the right of Whitney shall be
limited to expenses actually and reasonably incurred in defense or settlement of
the action. The Board of Directors, in its discretion, may choose to provide
further indemnification to officers, directors, employees and agents of Whitney.
The Articles of Incorporation and By-laws authorize Whitney to maintain
insurance covering the actions of its officers, directors, employees and agents,
and its By-laws provide for indemnification to the fullest extent allowed under
the LBCL.
No amendment to Whitney's Articles may amend any of the provisions
thereof relating to the Board of Directors unless such amendment receives the
affirmative vote of 90% of the voting power present at a shareholders meeting
for which there is a quorum as described above; provided, however, that such 90%
vote is not required for any amendment unanimously recommended to the
shareholders by the Board of Directors at a time when there is no Related Person
(as defined below).
Supermajority and Fair Price Provisions
Supermajority Provisions. The Articles of Incorporation contain certain
provisions designed to provide safeguards for shareholders when a Related Person
(as defined below) attempts to effect a Business Combination (as defined below)
with Whitney. In general, a Business Combination between Whitney and a Related
Person must be approved by the affirmative vote of at least 90% of the voting
power of Whitney present at a shareholders meeting, at which meeting at least
90% of the total voting power of Whitney must be present in person or by proxy
to constitute a quorum, unless certain minimum price and procedural requirements
are satisfied and the Board of Directors of Whitney has the opportunity to state
its recommendations to the shareholders in a proxy statement. If these
requirements are satisfied, only the affirmative vote of two-thirds of the
voting power present or represented at a shareholders meeting of Whitney (the
quorum for which would be the presence in person or by proxy of a majority of
the total voting power of Whitney) would be required.
A "Related Person" is defined as any person who, together with certain
persons related to him or it, is the beneficial owner of 10% or more of the
outstanding shares of Whitney stock entitled to vote in elections of directors.
The term "beneficial owner" includes persons directly or indirectly owning or
having the right to acquire or vote the stock of Whitney.
A "Business Combination" includes the following transactions: (1) any
merger or consolidation involving Whitney or its principal subsidiary; (2) any
sale or lease by Whitney or its principal subsidiary of all or a substantial
part
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of its assets; or (3) any sale or lease to Whitney or any of its subsidiaries of
any assets of any Related Person in exchange for securities of Whitney or its
principal subsidiary.
Fair Price Provisions. There is no requirement that 90% of the voting
power present of Whitney approve a Business Combination between a Related Person
and Whitney if all of the requirements described below are satisfied:
(1) Minimum Price Requirement. The cash, or fair market value of other
consideration, to be received per share by shareholders of Whitney in connection
with the Business Combination must bear the same or a greater percentage
relationship to the market price of Whitney Common Stock immediately prior to
the announcement of such Business Combination as the highest per share price
(including brokerage commissions and soliciting dealers' fees) that the Related
Person has theretofore paid for any of the shares of Whitney Common Stock
already owned by it bears to the market price of the Whitney Common Stock
immediately prior to the commencement of the acquisition of Whitney Common Stock
by the Related Person. In addition, the cash, or fair market value of other
consideration, to be received per share by shareholders of Whitney in such
Business Combination must not be less than (i) the highest per share price
(including brokerage commissions and soliciting dealers' fees) paid by the
Related Person in acquiring any of its holdings of Whitney Common Stock and (ii)
the earnings per share of Whitney Common Stock for the four full consecutive
fiscal quarters immediately preceding the record date for solicitation of votes
on such Business Combination, multiplied by the then price/earnings multiple (if
any) of the Related Person as customarily computed and reported in the financial
community.
(2) Procedural Requirements. The following procedural requirements must
be satisfied at all times after the Related Person becomes a Related Person: (i)
the Related Person shall have taken steps to ensure that Whitney's Board of
Directors included at all times representation by Continuing Directors (as
defined below) proportionate to the stockholdings of Whitney's shareholders not
affiliated with the Related Person; (ii) there shall have been no reduction in
the rate of dividends paid on the shares of Whitney Common Stock unless
otherwise approved by unanimous vote of the directors (iii) the Related Person
shall not have acquired any newly issued shares of Whitney stock, directly or
indirectly, except upon conversion of convertible securities acquired by it
prior to becoming a Related Person or as a result of a prorata stock dividend or
stock split; and (iv) the Related Person shall not have acquired any additional
shares of Whitney Common Stock or securities convertible into Whitney Common
Stock except as part of the transaction by which such Related Person became a
Related Person.
A "Continuing Director" includes a person who was a member of the Board
of Directors of Whitney elected by the shareholders prior to the time that a
Related Person acquired in excess of 10% of the stock of Whitney, or a person
recommended to succeed a Continuing Director by a majority of Continuing
Directors.
(3) Actions Prior to Becoming a Related Person. The Related Person
shall not have (i) received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees, pledges
or other financial assistance or tax credits provided by Whitney; or (ii) made
any major change in Whitney's business or equity capital structure without the
unanimous approval of the Board of Directors, in either case prior to the
consummation of the Business Combination.
(4) Proxy Statement. A proxy statement responsive to the requirements
of the Exchange Act shall be mailed to all shareholders of Whitney for the
purpose of soliciting shareholder approval of the Business Combination and shall
contain at the front thereof, in a prominent place, any recommendations as to
the advisability (or inadvisability) of the Business Combination that the
Continuing Directors, or any of them, may choose to state, and if deemed
advisable by a majority of the Continuing Directors, an opinion of a reputable
investment banking firm as to the fairness (or not) of the terms of such
Business Combination from the point of view of shareholders other than the
Related Person.
(5) Vote Necessary to Amend Articles of Incorporation. The Articles of
Incorporation provide that the affirmative vote of the holders of 90% or more of
the voting power present at a shareholders meeting for which there is a quorum
as described above is required in order to amend the fair price provisions,
provided that only a vote of the holders of a majority of the total voting power
of Whitney is required if the action to amend is unanimously recommended to
shareholders by the Board of Directors if all such directors are persons who
would be eligible to serve as Continuing Directors.
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Purposes and Effect of Supermajority and Fair Price Provisions. The
fair price provisions are designed to prevent a purchaser from utilizing
two-tier pricing and similar inequitable tactics in the event of an attempted
takeover of Whitney. In the absence of the supermajority and fair price
provisions, a purchaser who acquired control of Whitney would be in a position,
by virtue of such control, to compel minority shareholders to accept a lower
price or a less desirable form of consideration than that given to other
shareholders.
The effect of the provisions is to encourage any Related Person or
potential Related Person interested in a Business Combination to negotiate the
terms of such transaction with the Board of Directors of Whitney prior to its
acquisition of a substantial amount of the capital stock of Whitney and in a
context that would provide adequate time and information so that all relevant
considerations would receive the requisite attention and, if necessary,
publicity. The Board of Directors of Whitney believes that the Continuing
Directors of Whitney are likely to be more knowledgeable than individual
shareholders in assessing the business and prospects of Whitney and are
accordingly better able to negotiate effectively with the Related Person. Also,
the provisions should help to protect those shareholders who by choice or for
lack of adequate opportunity did not sell shares in the first step of a
two-tiered offer, by ensuring that a fair price will be paid to the shareholders
in the second step of the two-tiered transaction if, but only if, the Related
Person elects to initiate a second step.
It should be noted, however, that tender offers are usually made at
premium prices above the prevailing market price of a company's stock. In
addition, acquisitions of stock by persons attempting to acquire control through
market purchases may cause the market price of the stock temporarily to reach
levels that are higher than would otherwise be the case. Because of the higher
percentage requirements for shareholder approval of any subsequent Business
Combination, and the possibility of having to pay a higher price to other
shareholders in such a Business Combination, it may become more costly for a
purchaser to acquire control of Whitney. The Articles of Incorporation may
discourage such purchases, particularly those for less than all of the shares of
Whitney, and may therefore deprive holders of the Whitney Common Stock of an
opportunity to sell their stock at a temporarily higher market price. A
potential purchaser of stock seeking to obtain control may also be discouraged
from purchasing stock because a supermajority shareholder vote would be required
in order to change or eliminate the fair price protection provisions in the
Articles of Incorporation.
Although the supermajority and fair price provisions are designed to
assure fair treatment of all shareholders in the event of a takeover, the
provisions may also adversely affect the ability of shareholders to benefit from
certain transactions that are opposed by the Board of Directors of Whitney.
In certain instances, the fair price provisions, while providing
objective pricing criteria, could be arbitrary and not indicative of value. In
addition, a Related Person may be unable, as a practical matter, to comply with
all of the procedural requirements of the Articles of Incorporation. In these
circumstances, a potential purchaser would be forced either to negotiate with
the Continuing Directors and offer terms acceptable to them or to abandon the
proposed Business Combination.
Under the fair price provisions, in certain circumstances, a Business
Combination that might be attractive to some shareholders might never be
proposed to the shareholders by a Related Person, or if proposed, might not be
consummated. Further, the provisions may, under certain circumstances, give
holders of a minority of the voting power a veto power over a Business
Combination that the majority of shareholders may believe desirable and
beneficial. To Whitney's knowledge, on December 31, 1996, directors and
executive officers of Whitney beneficially owned approximately 1,378,850 shares
(approximately 7.7%) of the Whitney Common Stock. Therefore, it may be difficult
or impossible for a Related Person to secure the necessary supermajority vote
without management's approval.
Since only the Continuing Directors will have the authority to avoid
the requirement of a supermajority shareholder vote to approve Business
Combinations if otherwise applicable, the provisions also may tend to insulate
management against the possibility of removal in the event of a takeover bid.
Further, if the Related Person were to replace all of the directors who were in
office on the date it became a Related Person (which it could not be assured of
accomplishing for at least four years because of the Board's classification),
there would be no Continuing Directors and, consequently, the 90% shareholder
vote requirement would apply to any Business Combination, unless the minimum
price and procedural requirements were satisfied.
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Federal securities laws and regulations applicable to Business
Combinations govern the disclosure required to be made to minority shareholders
in order to consummate certain Business Combinations. However, the laws and
regulations do not assure that the terms of a Business Combination will be fair
from a financial standpoint. The LBCL provides that, under certain
circumstances, the affirmative vote of the holders of at least 80% of the voting
power of a Louisiana corporation is necessary in order to approve certain types
of business combinations with a related party unless the shareholders receive a
price for their shares as set forth in the LBCL and certain other conditions are
met. While the fair price protection provisions of the LBCL would apply to any
Business Combination involving Whitney and a Related Party, the Board of
Directors of Whitney believes that the fair price provisions in the Articles of
Incorporation provide additional assurance that the shareholders of Whitney will
receive an equitable price for their shares if a Business Combination is
consummated.
Considerations in Change of Control
The LBCL authorizes the Board of Directors of Whitney, when considering
any proposal to acquire control of Whitney, to take into account, among other
enumerated factors and any other factors the Board deems relevant, the interests
of Whitney's employees, creditors and the communities in which Whitney conducts
its business, as well as purely financial interests of Whitney's shareholders.
Amendment of Articles of Incorporation
Except for the 90% vote required to amend any provision of the Articles
of Incorporation relating to the Board of Directors of Whitney or the
supermajority and fair price provisions contained therein, the affirmative vote
of at least a majority of the total voting power of Whitney (i.e., a majority of
the outstanding shares of Whitney Common Stock), at a meeting the quorum for
which is the presence in person or by proxy of a majority of the total voting
power, is required to amend the Articles of Incorporation. See " -- Directors"
and " -- Supermajority and Fair Price Provisions," above.
Amendment of By-laws
Whitney's By-Laws may be amended or repealed by the affirmative vote of
a majority of the Board of Directors of Whitney or by the affirmative vote of at
least a majority of the votes cast at a meeting of the shareholders of Whitney.
Shareholders Meetings
Shareholders holding not less than 20% of the outstanding Whitney
Common Stock may require Whitney to call a meeting of its shareholders.
Louisiana Control Share Acquisition Statute
The LBCL Control Share Acquisition Statute provides that any shares
acquired by a person or group (an "Acquiror") in an acquisition that causes such
person or group to have the power to direct the exercise of voting power in the
election of directors in excess of 20%, 33-1/3% or 50% thresholds shall have
only such voting power as shall be accorded by the holders of all shares other
than Interested Shares (as defined below) at a meeting called for the purpose of
considering the voting power to be accorded to shares held by the Acquiror.
"Interested Shares" include all shares as to which the Acquiror, any officer of
Whitney and any director of Whitney who is also an employee of Whitney may
exercise or direct the exercise of voting power. If a meeting of shareholders is
held to consider the voting rights to be accorded to an Acquiror and the
shareholders do not vote to accord voting rights to such shares, Whitney may
have the right to redeem the shares held by the Acquiror for their fair market
value.
Comparison of Whitney Common Stock and Company and Bank Common Stock
The following comparison of the rights of the holders of Whitney Common
Stock and those of holders of Company or Bank Common Stock is based on current
terms of the governing documents of the respective institutions
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and on the current provisions of the Louisiana Business Corporation Law (the
"LBCL"), applicable Mississippi corporate law, including the MBCA and the
Mississippi banking statutes. Although the Whitney Common Stock is governed by
applicable provisions of the LBCL and the Company and Bank Common Stock is
governed by applicable provisions of Mississippi corporate and banking law, the
rights of holders of such stock are similar in many respects. For example, with
respect to Whitney, the Company and the Bank: (a) each shareholder is entitled
to one vote for each share held on all matters submitted to a vote of
shareholders (other than the election of directors); and (b) shareholders of
each are entitled to receive, pro rata, any assets distributed to the
shareholders upon liquidation, dissolution or a winding up of institution's
affairs. Although it is impracticable to note all of the differences between the
applicable governing documents, the following is intended to be a summary of
certain significant differences between the rights of holders of Whitney Common
Stock and the rights of holders of Company and Bank Common Stock.
Boards of Directors. Whitney's Articles of Incorporation provide for a
board of directors consisting of not less than five nor more than 25 members
divided into five classes, with directors serving five-year staggered terms
expiring for each class of directors at successive annual meetings of
shareholders. There is only one class of directors of the Company and the Bank,
consisting of no fewer than five nor more than 25 members, and such directors
are elected for one-year terms at each annual meeting of shareholders. Directors
of Whitney must also be shareholders of Whitney. There is no requirement for
directors of the Company to own shares of Company. Under Mississippi law,
directors of the Bank must own stock of at least $200 par value. Neither
Whitney's nor the Company's governing documents or applicable law have similar
requirements.
The Bank's Bylaws provide that a quorum for a meeting of directors
shall consist of three or more members. A quorum for such a meeting of Whitney
and the Company is the presence of at least a majority of directors. The Bank's
Articles of Incorporation require that its president and vice president also be
directors of the Bank. There is no similar requirement for the Company or
Whitney. The Bank's Bylaws provide that the attorney for the Board may cast a
vote in the event of a tie vote among directors. Neither Whitney's nor the
Company's Bylaws contain a similar provision.
Under Louisiana law applicable to Whitney, the directors, even though
not constituting a quorum, may, by a majority vote, fill any vacancy on the
Board (including any vacancy resulting from an increase in the authorized number
of directors, or from failure of the shareholders to elect the full number of
authorized directors) for an unexpired term, provided that shareholders have the
right, at any special meeting called for the purpose prior to such action by the
Board, to fill the vacancy. The Company's Bylaws provide that any vacancy
occurring in the Board by death, resignation or otherwise may be filled by
election at an annual meeting of shareholders or a special meeting of
shareholders called for that purpose. Any Company directorship to be filled by
reason of an increase in the number of directors shall be filled by election by
the shareholders. There is no Mississippi banking statute concerning filling
vacancies on the Bank Board.
Cumulative Voting. Shareholders of the Company are entitled to exercise
cumulative voting in the election of directors. Shareholders of Whitney and the
Bank are not.
Removal of Directors. Whitney's Articles of Incorporation provide that
a director may be removed from office, with or without cause, only by the
affirmative vote of 90% of the voting power present at a special meeting of
shareholders called for that purpose at which a "quorum" is present. A "quorum"
for these purposes means the presence, in person or by proxy, of the holders of
90% of the total voting power of Whitney. The Company's and the Bank's Articles
and Bylaws do not contain a similar provision, and under the MBCA, shareholders
of the Company may remove directors, with or without cause, by the affirmative
vote of a majority of the shares present or represented at a duly convened
special meeting of shareholders called for that purpose, except that if the
number of votes against the removal would be sufficient to elect a director
under cumulative voting, the director is not removed. In addition, the Bank's
Bylaws provide that its Board may declare vacant the seat of any director who is
absent for three successive Board meetings and must fill that vacancy at its
next monthly meeting.
Meetings of Shareholders. Under the LBCL, special meetings of Whitney's
shareholders may be called at any time by the President or the Board of
Directors, or upon the written consent of any shareholder or shareholders
holding in the aggregate one-fifth of the total voting power of Whitney. Except
as described above, a quorum for a regular or special meeting of Whitney's
shareholders is a majority of the outstanding shares of Whitney Common Stock
entitled
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to vote, and a majority of votes cast is generally required for action by
Whitney's shareholders at such a meeting. For certain actions, as described
above, a larger quorum and an absolute majority or supermajority vote may be
required for shareholder action at a meeting. See "- Description of Whitney
Common Stock," above.
Under the MBCA, special meetings of Company shareholders may be called
at any time by a majority of the members of the Board of Directors or by persons
who hold not less than 10% of all votes entitled to be cast on any proposal to
be submitted at the meeting. The Company's Bylaws provide that the president may
also call a special meeting of Company shareholders. A quorum for any meeting of
shareholders of the Company is a majority of the outstanding shares entitled to
vote. Shareholder action can be taken by the affirmative vote of a majority of
the shares present or represented at a meeting at which a quorum is present. The
MBCA provides that quorum and voting requirements may be changed only by an
amendment to the Company's Articles of Incorporation, which requires shareholder
approval. There is no Mississippi banking statute relating to meetings of
shareholders of the Bank, and its Bylaws are silent in this regard.
The Company's Bylaws state that shareholders of record who request
items of business to be placed on the agenda for a shareholders meeting or who
wish to nominate a person for election as a director may do so only by
delivering that request in writing to the Chairman of the Board of Directors at
least 14, but no more than 50, days prior to any such shareholders meeting.
There are no similar requirements applicable to either Whitney or the Company.
Supermajority Vote Requirements. Whitney's Articles of Incorporation
contain supermajority voting requirements for certain business combinations. See
"- Description of Whitney Common Stock -- Supermajority and Fair Price
Provisions" and "-- Louisiana Control Share Acquisition Statute," above. Neither
the Bank's Articles of Incorporation nor applicable Mississippi law contain
similar provisions.
Amendment of Articles and Bylaws. Whitney's Articles of Incorporation
may be amended by the vote of the holders of a majority of the outstanding
shares of Whitney Common Stock. Whitney's Bylaws may be made and altered by its
Board of Directors, subject to the power of the shareholders to change or repeal
any Bylaws so made.
Under the MBCA, the Board of Directors of the Company must approve an
amendment to the Articles for submission to shareholders and, unless otherwise
required by the Board of Directors or Articles, such amendment must be approved
at a shareholder meeting at which a quorum is present by the affirmative vote of
a majority of the outstanding shares. The Company's Articles provide that any
amendment to the provisions of the Articles governing the vote required for a
merger or consolidation of the Company must be approved by the affirmative vote
of the holders of two-thirds of the shares entitled to vote thereon.
Notwithstanding the foregoing, under the Mississippi banking statutes, the Bank
cannot amend its Articles without receiving the written prior approval of the
Mississippi Commissioner of Banking and Consumer Finance. The Company's Bylaws
may be amended by a two-thirds vote of its directors. The Bank's Bylaws may be
amended by a vote of two-thirds of its directors.
Preemptive Rights. The Bank's Bylaws provide that whenever an increase
of stock is determined upon in accordance with the Bank's Articles of
Incorporation, the Board of Directors must cause all shareholders to be notified
of such increase, and a subscription to be opened thereof, specifying the terms
of payment agreed upon by the subscribers. Each Bank shareholder shall be
entitled to subscribe for shares of the new stock in proportion to the number of
shares he already owns; but if any shareholder fails to subscribe for such new
stock as he may be entitled to, or to pay his subscription according to
agreement, the Board of Directors shall determine what disposition shall be made
of the privileges of subscribing for the new stock not taken. Shareholders of
Whitney and the Company do not have preemptive rights to acquire shares of their
respective corporations' capital stock.
Inspection Rights. Any shareholder of Whitney, except a business
competitor, who has possessed at least 5% of the outstanding shares of Whitney
Common Stock for a minimum of six months has the right, upon five days' written
notice, to examine in person or by representative the books and records of
Whitney for any proper purpose. Two or more shareholders may aggregate their
holdings to reach the required 5% threshold. Business competitors, however, must
possess at least 25% of the outstanding shares of Whitney Common Stock for a
minimum of six months to obtain any such inspection rights.
46
<PAGE>
A shareholder of the Company is entitled to inspect and copy, in person
or by representative, the Company's articles and bylaws, its designation of the
rights and preferences of shares, a list of the names and business addresses of
its current directors and officers, its most recent annual report delivered to
the Secretary of State of Mississippi, minutes of shareholder meetings and other
shareholder action for the last three years and communications with shareholders
for the last three years, if he gives the Company five business days' written
notice of his demand. Other books and records of the Company can be so inspected
and copied upon five business days' written notice only if (a) the demand is
made in good faith and for a purpose reasonably related to the shareholder's
interest as a shareholder, (b) the shareholder describes with reasonable
particularity his purpose and the records sought, and (c) the records are
directly connected with the shareholder's purpose. No Mississippi statute
provides for shareholder inspection rights of the Bank.
Dividends and Other Distributions. Under the LBCL, Whitney may pay
dividends out of surplus, including both earned surplus and capital surplus, in
cash, property or shares of the corporation, except when the corporation is
insolvent or would thereby be made insolvent or when the declaration or payment
thereof would be contrary to any restrictions contained in Whitney's Articles of
Incorporation. In the absence of surplus, Whitney may pay dividends out of its
net profits for the then current or the preceding fiscal year, or both, unless
at the time, or as a result of such dividends, liabilities exceed assets or
Whitney's net assets are less than the amount payable upon liquidation to any
class of securities with a preferential right to participate in assets in the
event of liquidation. The payment of dividends by a bank holding company such as
Whitney is also subject to certain regulatory constraints.
The payment of dividends or distributions by the Company is subject to
the restrictions of the MCBA. Under the MCBA, a corporation may not generally
authorize and make distributions if, after giving effect thereto, it would be
unable to meet its debts as they become due in the usual course of business or
if the corporation's total assets would be less than its sum of total
liabilities plus the amount that would be needed, if it were to be dissolved at
the time of distribution, to satisfy preferential rights of shareholders whose
preferential rights are superior to those receiving the dividend or other
distribution. In the case of the Bank, the Mississippi banking statutes provide
that no dividend may be declared or paid without written approval of the
Commissioner of Banking and Consumer Finance.
Indemnification Rights. Whitney's Articles of Incorporation provide
that, in addition to any rights to indemnification that a person might have by
law or otherwise, Whitney shall indemnify any person who was or is a party or is
threatened to be made a party to any action, suit or proceeding, including any
action by or in the right of Whitney, by reason of the fact that he is or was a
director, officer, employee or agent of Whitney, or is or was serving at the
request of Whitney as a director, officer, employee or agent of another business
or enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of Whitney and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. In the case of actions
by or in the right of Whitney, the indemnification provided to employees or
agents is limited to expenses not exceeding, in the judgment of the Board of
Directors, the estimated expense of litigating the action to conclusion, but the
Board of Directors is authorized in its discretion to pay or provide additional
indemnity in particular cases and, as to directors and officers, the indemnity
in such cases is similarly limited if it would permit indemnification of an
individual for (i) the results of his willful or intentional misconduct, (ii)
breach of duty of loyalty to Whitney or the entity otherwise served by the
individual or (iii) engaging in a transaction in which the individual derived an
improper personal benefit. No indemnification may be made in respect of a claim
in which the person seeking indemnity shall have been adjudged by a court of
competent jurisdiction to be liable for willful or intentional misconduct in the
performance of its duties to Whitney unless and only to the extent that the
court shall determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, he is fairly and
reasonably entitled to indemnity for such expenses that the court shall deem
proper.
The Company's Bylaws contain similar indemnification provisions, but
there are no indemnification provisions in the Bank's Articles of Incorporation
or Bylaws.
47
<PAGE>
LEGAL MATTERS
Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P., New
Orleans, Louisiana, has rendered its opinion that the shares of Whitney Common
Stock to be issued in connection with the Mergers have been duly authorized and,
if and when issued pursuant to the terms of the Plan of Merger, will be validly
issued, fully paid and non-assessable.
EXPERTS
The consolidated financial statements of the Company and its
subsidiary, and the financial statements of the Bank, at December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995,
included in this Proxy Statement-Prospectus have been audited by Taylor, Powell,
Wilson & Hartford, P.A., independent auditors, as set forth in their reports
appearing elsewhere herein, and included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Whitney and its subsidiaries
as of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995 incorporated by reference in this Proxy Statement-
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and have been so
incorporated by reference in reliance upon the authority of such firm as experts
in accounting and auditing in giving such report.
OTHER MATTERS
At the time of the preparation of this Proxy Statement-Prospectus,
neither the Company nor the Bank had been informed of any matters to be
presented by or on behalf of the Company or the Bank or their respective
managements for action at the Meetings other than those listed in the Notices of
Special Meeting of Shareholders and referred to herein. If any other matters
properly come before the Meetings or any adjournments thereof, the persons named
in the enclosed proxies will vote on such matters according to their best
judgment.
Shareholders are urged to sign the appropriate enclosed proxy, which is
solicited on behalf of the Board of Directors of the Company or the Bank, as
applicable, and return it at once in the enclosed envelope.
BY ORDER OF THE BOARDS OF DIRECTORS
OF THE COMPANY AND THE BANK
----------------------------------------
Secretary of Merchants Bancshares, Inc.
----------------------------------------
Secretary of Merchants Bank & Trust Company
February ____, 1997
48
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1996 AND 1995
CONTENTS
PAGE
Condensed Consolidated Statements of Financial Condition F-2
Condensed Consolidated Statements of Income F-3
Consolidated Statements of Changes in Stockholders' Equity F-4
Condensed Consolidated Statements of Cash Flows F-5
Notes to Condensed Consolidated Financial Statements F-6
F-1
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995*
----------------- -------------
<S> <C> <C>
ASSETS:
Cash and due from banks (non-interest
bearing) $ 13,724 $ 13,607
Federal funds sold 25,300 11,300
Held to maturity securities (market
value of $76,266 and $79,379 76,756 78,576
Loans, net of unearned income 83,367 76,027
Less: Allowance for loan losses -1,099 -1,055
Net loans 82,268 74,972
Property & equipment, net 4,292 4,325
Other real estate 1,113 1,912
Accrued interest receivable 1,719 1,774
Other assets 510 549
------------------- -----------------
Total assets $ 205,682 $ 187,015
=================== =================
LIABILITIES & STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing demand $ 35,349 $ 33,662
Interest bearing deposit 152,457 136,350
------------------- -----------------
Total deposits 187,806 170,012
Other liabilities 598 732
------------------- -----------------
Total liabilities 188,404 170,744
------------------- -----------------
Minority Interest: 188 177
------------------- -----------------
Stockholder's equity:
Common stock 922 922
Surplus 9,243 9,243
Retained earnings 6,925 5,929
------------------- -----------------
Total stockholders' equity 17,090 16,094
------------------- -----------------
Total liabilities &
stockholders' equity $ 205,682 $ 187,015
=================== =================
</TABLE>
* The above Statement of Condition at December 31, 1995 has been taken from the
audited financial statements at that date and condensed.
See Notes to Condensed Consolidated Financial Statements.
F-2
<PAGE>
<TABLE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
NINE MONTHS ENDED SEPTEMBER 30,
<CAPTION>
1996 1995
-------------------- -----------------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 5,655 $ 5,117
Interest on investment activities:
U.S. Treasury securities and obligations of
U.S. government agencies 3,478 4,000
Obligations of states and political subdivisions 94 82
Interest on Federal funds sold 699 547
-------------------- --------------------
Total 9,926 9,746
-------------------- --------------------
INTEREST EXPENSE:
Interest on deposits 4,125 4,286
Interest on Federal funds purchased 0 3
-------------------- --------------------
Total 4,125 4,289
-------------------- --------------------
NET INTEREST INCOME 5,801 5,457
PROVISION FOR LOAN LOSSES 275 335
-------------------- --------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,526 5,122
OTHER OPERATING INCOME:
Service fees 1,879 1,494
Gain on sale of securities 0 0
Other operating income 52 83
-------------------- --------------------
Total 1,931 1,577
-------------------- --------------------
OTHER OPERATING EXPENSES:
Salaries and employee benefits 3,230 2,966
Occupancy and equipment expense 786 931
Other operating expenses 1,440 958
-------------------- --------------------
Total 5,456 4,855
-------------------- --------------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 2,001 1,844
INCOME TAX EXPENSE 630 596
-------------------- --------------------
INCOME BEFORE MINORITY INTEREST 1,371 1,248
MINORITY INTEREST IN SUBSIDIARY'S NET INCOME 16 20
-------------------- --------------------
NET INCOME $ 1,355 $ 1,228
==================== ====================
NET EARNINGS PER COMMON SHARE $ 7.35 $ 6.67
DIVIDENDS PAID PER COMMON SHARE 1.95 1.50
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 184,356 184,215
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-3
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
UNAUDITED
(AMOUNTS IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid In Retained
Shares Amount Capital Earnings Total
------- ------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 184,156 $ 921 $ 9,227 $ 4,821 $ 14,969
Stock issued 200 1 16 17
Net income 1,228 1,228
Dividends, ($1.50 per share) -276 -276
Balance, September 30, 1995 184,356 922 9,243 5,773 15,938
--------------- ------------- ------------- ------------- --------------
Balance, January 1, 1996 184,356 922 9,243 5,929 16,094
Net income 1,355 1,355
Dividends, ($1.95 per share) -359 -359
Balance, September 30, 1996 184,356 $ 922 $ 9,243 $ 6,925 $ 17,090
=============== ============= ============= ============= ==============
</TABLE>
F-4
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,271 $ 2,223
-------------------- --------------------
INVESTING ACTIVITIES:
Proceeds from maturities of held-to-maturity
securities 16,831 16,254
Purchase of held-to-maturity securities -15,006 -2,999
Net increase in loans -7,571 -6,497
Purchase of bank premises and equipment -387 -310
Proceeds of sales of other real estate 544
Net cash provided, (-)used by
investing activities -5,589 6,448
FINANCING ACTIVITIES:
Net increase, decrease(-) in deposits 17,794 16,721
Repayment of federal funds purchased -2,000
Cash dividends paid to stockholders -359 -276
Net cash provided by financing
activities 17,435 14,445
-------------------- --------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 14,117 23,116
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 24,907 11,927
-------------------- --------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 39,024 $ 35,043
==================== ====================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-5
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Summary of Significant Accounting Policies:
The accounting principles followed by Merchants Bancshares, Inc. and
Subsidiary and the methods of applying those principles conform with generally
accepted accounting principles consistently applied and generally practiced
within the banking industry. The significant accounting principles are
summarized below.
The consolidated financial statements include the accounts of Merchants
Bancshares, Inc., and its wholly owned subsidiary. All significant intercompany
transactions and balances have been eliminated in consolidation.
The accompanying Unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for interim periods are not necessarily
indicative of the results that may be expected for the entire year. For further
information, refer to the consolidated financial statements and notes thereto of
Merchants Bancshares, Inc. and Subsidiary for the years ended December 31, 1995
and 1994 included elsewhere herein.
In November 1996 the Company and the Bank entered into an agreement and
plan of merger (the "agreement") with Whitney Holding Corporation, a Louisiana
corporation ("Whitney").The agreement calls for the acquisition of the Company's
and the Bank's stock by Whitney through the exchange of the parties' common
stock. The acquisitions are expected to be completed in 1997.
F-6
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
CONTENTS
PAGE
Independent Auditor's Report F-8
Consolidated Balance Sheets F-9
Consolidated Statements of Income F-10
Consolidated Statements of Changes in Stockholders' Equity F-11
Consolidated Statements of Cash Flows F-12
Notes to Consolidated Financial Statements F-14
F-7
<PAGE>
[LETTERHEAD OF TAYLOR, POWELL, WILSON & HARTFORD, P.A.]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Merchants Bancshares, Inc.
We have audited the consolidated balance sheets of Merchants Bancshares, Inc.
and its subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the three years ended December 31, 1995, 1994 and 1993. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our 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 Merchants Bancshares, Inc. and
its subsidiary as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for the three years ended December 31, 1995,
1994 and 1993 in conformity with generally accepted accounting principles.
/s/ TAYLOR, POWELL, WILSON & HARTFORD, P.A.
February 2, 1996
F-8
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1995 1994
-------------------- --------------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 13,607,011 $ 11,927,080
Federal funds sold 11,300,000
Investment securities 78,576,184 97,442,366
Loans 77,243,333 70,867,541
Less: Unearned income -1,216,210 -1,169,830
Allowance for loan losses -1,055,081 -1,100,000
-------------------- -------------------
Net loans 74,972,042 68,597,711
Premises and equipment, net of
accumulated depreciation 4,325,026 4,455,459
Other real estate 1,912,311 289,490
Accrued interest receivable 1,774,932 1,962,218
Deferred income tax benefit 21,000 127,000
Other assets 447,871 474,834
Current income tax overpayment 79,193
------------------- -------------------
Total assets $ 187,015,570 $ 185,276,158
=================== ===================
LIABILITIES
Deposits:
Non-interest bearing deposits $ 33,662,291 $ 33,067,970
Interest bearing deposits 136,350,151 134,429,936
------------------- -------------------
Total deposits 170,012,442 167,497,906
Federal funds purchased 2,000,000
Accrued income tax payable 44,808
Accrued interest payable 482,782 334,563
Dividend payable 186,380 186,380
Other liabilities 63,000 63,152
-------------------- -------------------
Total liabilities 170,744,604 170,126,809
Minority interest 176,629 180,681
-------------------- -------------------
STOCKHOLDERS' EQUITY
Common stock, $5.00 par, 200,000 shares authorized, 184,356 and 184,156
issued and outstanding in 1995 and 1994, respectively 921,780 920,780
Additional paid-in capital 9,243,255 9,227,230
Retained earnings 5,929,302 4,820,658
------------------- -------------------
Total stockholders' equity 16,094,337 14,968,668
------------------- -------------------
Total liabilities and stockholders' equity $ 187,015,570 $ 185,276,158
=================== ===================
</TABLE>
See Notes to Consolidated Financial Statements.
F-9
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------
1995 1994 1993
----------------- ----------------- -------------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 6,911,457 $ 6,036,889 $ 5,750,387
Interest on Investment Activities:
U.S. Treasury Securities and
obligations of U.S. Government
agencies 5,185,166 5,451,140 5,234,453
Obligations of states and political
sub-divisions 111,763 113,487 129,937
Interest on federal funds sold 785,215 802,843 427,664
----------------- ----------------- ----------------
Total interest income 12,993,601 12,404,359 11,542,441
INTEREST EXPENSE:
Interest on deposits 5,743,630 4,868,641 4,327,976
Interest on borrowed money 2,742 4,659
----------------- ----------------- ----------------
Total interest expense 5,746,372 4,868,641 4,332,635
----------------- ----------------- ----------------
Net interest income 7,247,229 7,535,718 7,209,806
Provision for loan losses 420,000 576,322 397,000
----------------- ----------------- ----------------
Net interest income after provision
for loan losses 6,827,229 6,959,396 6,812,806
----------------- ----------------- ----------------
OTHER INCOME:
Service fees and commission 2,333,141 1,927,917 1,714,829
Gain on securities called 6,212 640 19,024
Other 92,160 44,935 9,028
----------------- ----------------- ----------------
Total other income 2,431,513 1,973,492 1,742,881
----------------- ----------------- ----------------
OTHER EXPENSES:
Salaries 3,328,048 3,086,346 2,699,272
Employee benefits 776,445 550,897 555,926
Occupancy expense, net of rent income 516,061 429,304 373,318
Equipment expenses 661,437 451,118 349,805
FDIC insurance assessment 197,183 392,547 337,646
Other expense 1,440,979 1,774,436 1,240,002
----------------- ----------------- ----------------
Total expense 6,920,153 6,684,648 5,555,969
----------------- ----------------- ----------------
Income before income tax and minority
interest 2,338,589 2,248,240 2,999,718
Income tax 750,988 788,919 967,127
----------------- ----------------- ----------------
Income before minority interest 1,587,601 1,459,321 2,032,591
Minority interest 18,267 17,640 25,882
----------------- ----------------- ----------------
Net income $ 1,569,334 $ 1,441,681 $ 2,006,709
================= ================= ================
Net income per share $ 8.52 $ 7.84 $ 10.91
================= ================= ================
</TABLE>
See Notes to Consolidated Financial Statements.
F-10
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid In Retained
Shares Amount Capital Earnings Total
------------ ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 183,890 $ 919,450 $ 9,209,152 $ 2,237,603 $ 12,366,205
Stock issued 236 1,180 15,805 16,985
Net income 2,006,709 2,006,709
Dividends, ($2.20 per share) -404,975 -404,975
Balance, December 31, 1993 184,126 920,630 9,224,957 3,839,337 13,984,924
Stock issued 30 150 2,273 2,423
Net income 1,441,681 1,441,681
Dividends, ($2.50 per share) -460,360 -460,360
Balance, December 31, 1994 184,156 920,780 9,227,230 4,820,658 14,968,668
--------------- ------------- ------------- ------------- --------------
Stock issued 200 1,000 16,025 17,025
Net income 1,569,334 1,569,334
Dividends, ($2.50 per share) -460,690 -460,690
Balance, December 31, 1995 184,356 $ 921,780 $ 9,243,255 $ 5,929,302 $ 16,094,337
=============== ============= ============= ============= ==============
</TABLE>
See Notes to Consolidated Financial Statements.
F-11
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994 1993
---------------- --------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,569,334 $ 1,441,681 $ 2,006,709
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 541,303 436,814 360,385
Provision for loan losses 420,000 576,322 397,000
Amortization of premium on investment
securities 20,133 38,001 67,694
Accretion of discount on investment
securities -38,733 -30,750 -27,260
Provision for losses on other real estate 84,986 49,115 61,310
Gain(-) or loss on sale of securities -6,212 -640 -19,024
Gain(-) or loss on sale of other real estate -87,279 -26,145 8,776
Gain(-) or loss on disposition of property
and equipment -2,510 -1,750 3,171
Increase(-), decrease in:
Accrued interest receivable 187,286 -211,823 -54,198
Deferred income tax benefit 106,000 -76,841 -50,159
Other assets 26,963 100,683 -118,001
Income tax overpayment -79,193
Increase, decrease(-) in:
Accrued interest payable 148,219 24,651 -31,591
Accrued income tax payable -44,808 3,061 4,508
Other liabilities -152 -9,826 21,472
Minority interest in net income of
subsidiary 18,267 17,640 25,882
---------------- --------------- -----------------
Net cash provided by operating
activities 2,863,604 2,330,193 2,656,674
---------------- --------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from calls and maturities of
investment securities 24,357,386 21,233,267 19,872,276
Purchases of investment securities -5,466,392 -32,591,233 -29,219,595
Net increase(-) in loans -8,698,529 -5,835,322 -8,541,459
Payments received on loans charged off 158,261 135,846 137,611
Proceeds from sale of other real estate 125,409 100,311 226,120
Purchase of bank premises and equipment -431,360 -1,269,051 -277,829
Proceeds from sale of premises and equipment 23,000 17,425
---------------- --------------- -----------------
Net cash provided by, used in (-)
investing activities 10,067,775 -18,208,757 -17,802,876
---------------- --------------- -----------------
</TABLE>
See Notes to Consolidated Financial Statements.
F-12
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
(Cont'd)
1995 1994 1993
----------------- ---------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits $ 2,514,536 $ 150,056 $ 19,894,002
Cash dividends paid -460,690 -460,360 -386,412
Cash dividends paid to minority interest
stockholders of subsidiary -5,294 -5,646 -5,061
Federal funds purchased 2,000,000
Federal funds repaid -2,000,000
----------------- ---------------- ----------------
Net cash provided by financing
activities 48,522 1,684,050 19,502,529
----------------- ---------------- -----------------
INCREASE, DECREASE(-) IN CASH AND
CASH EQUIVALENTS 12,979,931 -14,194,514 4,356,327
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 11,927,080 26,121,594 21,765,267
----------------- ---------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 24,907,011 $ 11,927,080 $ 26,121,594
================= ================ =================
SUPPLEMENTAL INFORMATION:
Amount paid for interest $ 5,598,153 $ 4,843,990 $ 4,364,226
================= ================ =================
Amount paid for income taxes $ 768,989 $ 862,700 $ 1,012,778
================= ================ =================
NON-CASH INVESTING ACTIVITIES:
Loans transferred to other real estate $ 1,745,937 $ 50,000 $ 122,151
================= ================ =================
Stock issued in exchange for shares
of bank subsidiary $ 17,025 $ 2,423 $ 16,985
================= ================ =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-13
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accounting and reporting policies of Merchants Bancshares, Inc. (Bancshares)
and its subsidiary, Merchants Bank and Trust Co. (Bank) conform to practices
within the banking industry and are based on generally accepted accounting
principles. A summary of the significant accounting policies consistently
applied in the preparation of the accompanying financial statements are as
follows:
Principles of Consolidation - The consolidated financial statements include the
accounts of Bancshares and Bank. All significant intercompany items have been
eliminated in consolidation. As of December 31, 1995, Bancshares owned 98.91% of
the outstanding common stock of the Bank.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Securities - Management determines the appropriate classification of securities
at the time of purchase. All securities are classified as held for investment
and are reported at cost adjusted for amortization of premium and accretion of
discount. Gains and losses are recognized when securities are sold using the
specific identification method.
Loans - Loans are stated at the amount of unpaid principal, reduced by unearned
income and an allowance for loan losses. Unearned income on installment loans is
recognized as income over the terms of the loans by a method which approximates
the interest method. Interest on other loans is calculated by using the simple
interest method on daily balances of the principal amount outstanding. The
allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is unlikely. The
allowance, which is based on evaluations of the collectibility of loans and
prior loan loss experience, is an amount that management believes will be
adequate to absorb probable losses on loans existing at the reporting date. The
evaluations take into consideration such factors as changes in the nature and
volume of the loan portfolio, overall portfolio quality, review of specific
problem loans and current economic conditions that may affect a borrower's
ability to pay. 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
principal or interest is doubtful. Loan origination fees and certain direct
origination costs are immaterial and are recognized as income when received or
expense when paid.
On January 1, 1995, the Company adopted SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan," as amended by SFAS No 118, "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures." As of December
31, 1995, the amount of impaired loans and disclosures related thereto were not
material.
Premises and Equipment - The assets are stated at cost less accumulated
depreciation and amortization, which are computed using the straight-line and
accelerated methods over the estimated useful lives of the assets. Maintenance
and repairs are charged to expense as incurred.
F-14
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Cont'd)
Other Real Estate Owned - Properties acquired through foreclosure or deed taken
in lieu of foreclosure are recorded at the lower of cost or fair value.
Write-downs from cost to fair value at the time of foreclosure are charged to
the allowance for loan losses. Subsequent write-downs, gains or losses
recognized on the sale of such properties and costs of operating and maintaining
the properties are charged to expense as incurred.
Income Taxes - Bancshares and Bank file a consolidated tax return for federal
income tax purposes. Federal income taxes are computed for each company as
though the company filed separate income tax returns. The current tax expense
recognized for financial accounting purposes by Bank is remitted to Bancshares.
Bancshares retains the difference between total taxes reflected by Bank, and the
consolidated provision for income taxes.
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Refer to Note 6 for the
detail of temporary differences which give rise to deferred tax assets and
liabilities.
Net Income Per Share - Net income per share is based on the weighted average
number of shares outstanding during each year.
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.
NOTE 2 - INVESTMENT SECURITIES:
The amortized cost and estimated market value of investment securities
classified as held-to-maturity are as follows:
<TABLE>
<CAPTION>
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Market
December 31,1995: Gains Losses Value
- ----------------- ------------------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
U.S. Treasury and other
government agencies $ 74,433,407 $ 826,366 $ 170,983 $ 75,088,790
Obligations of states and
political subdivisions 2,529,451 96,357 7,140 2,618,668
Mortgage-backed securities 1,613,326 58,112 1,671,438
------------------ ---------------- ---------------- ------------------
Total $ 78,576,184 $ 980,835 $ 178,123 $ 79,378,896
================== ================ ================ ==================
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Market
December 31,1994: Gains Losses Value
- ----------------- ------------------ ---------------- ---------------- ------------------
U.S. Treasury and other
government agencies $ 93,399,583 $ $ 4,385,543 $ 89,014,040
Obligations of states and
political subdivisions 2,158,104 37,616 96,724 2,098,996
Mortgage-backed securities 1,884,679 20,569 5,338 1,899,910
------------------ ---------------- ---------------- ------------------
Total $ 97,442,366 $ 58,185 $ 4,487,605 $ 93,012,946
================== ================ ================ ==================
</TABLE>
F-15
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 2 - INVESTMENT SECURITIES: (Cont'd)
The bank owned no securities that were classified as available-for-sale or
held-for-sale at December 31, 1995 and 1994.
Securities with aggregate book value of approximately $44,244,501 and
approximate market value of $44,525,752 were pledged to secure public funds and
for other purposes as required by law.
The amortized cost and estimated market value of securities as of December 31,
1995, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Market
Cost Value
------------------- -------------------
<S> <C> <C>
Due in one year or less $ 13,035,395 $ 13,088,963
Due after one year through five years 62,882,993 63,519,580
Due after five years through ten years 1,044,470 1,098,915
Mortgage-backed securities 1,613,326 1,671,438
------------------- -------------------
Total $ 78,576,184 $ 79,378,896
=================== ===================
</TABLE>
The market values of obligations of state and political subdivisions are based
on available market data, which often reflect transactions of a relatively small
size and are not necessarily indicative of the price at which large amounts of
particular issues could be readily sold. Management does not anticipate a
requirement to sell at a loss any of the Bank's investment securities for
liquidity or other operating purposes.
Proceeds from maturities and calls of investment securities in 1995 were
$24,357,386. Gross gains of $9,425 and losses of $3,213 were incurred on these
dispositions. Proceeds from maturities and calls of investment securities in
1994 were $21,233,267, gross gains were $640 and gross losses were $0.
NOTE 3 - LOANS:
A summary of the loan portfolio as of December 31, 1995 and 1994 is given below:
<TABLE>
<CAPTION>
December 31,
1995 1994
------------------- -------------------
<S> <C> <C>
Real estate loans:
Construction and land development $ 7,318,000 $ 8,111,000
Secured by residential properties 18,013,000 15,116,000
Other real estate loans 14,853,000 12,571,000
Loans to finance agricultural production
Commercial and industrial loans 11,819,000 12,636,000
Credit card loans 499,000 580,000
Loans to individuals for personal expenditures 20,297,000 19,602,000
Obligations of states and political subdivisions 2,760,000 836,000
Other loans 468,000 246,000
------------------- -------------------
Loans, net of unearned income $ 76,027,000 $ 69,698,000
=================== ===================
</TABLE>
F-16
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 3 - LOANS: (Cont'd)
Loans are made primarily to customers in the Mississippi Gulf Coast area.
Although the bank has a diversified loan portfolio, the ability of its debtors
to honor their contracts is to some extent dependent upon the economic
conditions in the Mississippi Gulf Coast area.
At December 31, 1995, 1994 and 1993, loans accounted for on a non-accrual basis
amounted to $186,176, $203,861 and $315,553, respectively. If interest had been
accrued on these loans, income before provision for income taxes would have
increased approximately $20,572, $26,021 and $40,008 in 1995, 1994 and 1993,
respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------- ----------------- ----------------
<S> <C> <C> <C>
Balance at January 1 $ 1,100,000 $ 902,091 $ 801,059
Provision for losses charged to expense 420,000 576,322 397,000
Loans charged off -623,180 -514,259 -433,579
Recoveries 158,261 135,846 137,611
-------------------- ----------------- ----------------
Balance at December 31 $ 1,055,081 $ 1,100,000 $ 902,091
=================== ================= ================
</TABLE>
NOTE 4 - PREMISES AND EQUIPMENT:
Major classifications of premises and equipment at December 31, 1995 and 1994
are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------------------- -----------------
<S> <C> <C>
Land $ 1,056,435 $ 1,056,435
Buildings and leasehold improvements 4,000,744 4,000,744
Furniture, fixtures and equipment 4,042,749 3,686,152
------------------- -----------------
9,099,928 8,743,331
Less accumulated depreciation and
amortization 4,774,902 4,287,872
------------------- -----------------
Premises and equipment, net $ 4,325,026 $ 4,455,459
=================== =================
</TABLE>
Depreciation and amortization of premises and equipment was $541,303 for 1995,
$436,814 for 1994 and $359,855 for 1993.
NOTE 5 - EMPLOYEE RETIREMENT PLAN:
The Company has a defined contribution profit sharing plan covering
substantially all employees with more than one year of service and who have
attained the age of 21.
The Company's contribution to the plan for 1995 was $140,129, for 1994 was
$123,169, and for 1993 was $122,853.
Employees may make voluntary contributions to the plan in amounts not to exceed
10% of compensation. The Company contributes an amount to the plan equal to
voluntary employee contributions, not to exceed 5% of the employees
compensation. In addition, the Company may make an additional contribution to
the plan from the net profits for the year, such amount to be determined by the
Board of Directors of the Bank.
F-17
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 6 - INCOME TAXES
The components of income tax expense, benefit(-) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------- ----------------- ----------------
<S> <C> <C> <C>
Currently payable $ 644,988 $ 865,760 $ 1,017,286
Deferred 106,000 -76,841 -50,159
------------------- ----------------- ----------------
Total $ 750,988 $ 788,919 $ 967,127
=================== ================= ================
</TABLE>
A reconciliation of income tax expense as reflected in the statement of income
with income tax expense calculated at the statutory rate of 34% is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------- ----------------- ----------------
<S> <C> <C> <C>
Tax at statutory rate $ 795,120 $ 764,402 $ 1,019,904
Increase, reduction(-) in tax resulting from:
Tax exempt interest -63,799 -56,596 -66,332
Non-deductible expenses 22,963 83,188 8,311
Other -3,296 -2,075 5,244
Total $ 750,988 $ 788,919 $ 967,127
=================== ================= ================
</TABLE>
Temporary differences between the financial statement carrying amounts and the
tax bases of assets and liabilities give rise to the following net deferred tax
asset:
<TABLE>
<CAPTION>
December 31,
---------------------------------------
1995 1994
------------------- -----------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Allowance for loan losses not
currently deductible $ 179,141 $ 222,430
Provision for loss on other
real estate not currently
deductible 75,995 57,311
------------------- -----------------
255,136 279,741
------------------- -----------------
DEFERRED TAX LIABILITY:
Bond discount accretion 26,382 19,710
Tax over book depreciation 205,169 130,657
Other 2,585 2,374
------------------- -----------------
234,136 152,741
------------------- -----------------
Net deferred tax asset $ 21,000 $ 127,000
=================== =================
</TABLE>
The Corporation has evaluated the need for a valuation allowance and, based on
the weight of the available evidence, has determined that it is more likely than
not that all deferred tax assets will eventually be realized.
F-18
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 7 - RELATED PARTY TRANSACTIONS:
LOANS:
In the ordinary course of business, the Corporation makes loans to its executive
officers, directors and shareholders. These loans are made on substantially the
same terms including interest rates and collateral as those prevailing at the
time for comparable transactions with unrelated persons and do not involve more
than normal risk of collectibility.
Activity in loans to directors, executive officers and their related interests
was as follows:
<TABLE>
<CAPTION>
1995 1994
------------------- -----------------
<S> <C> <C>
Total at beginning of year $ 3,636,862 $ 3,442,742
New loans 589,961 951,593
Less payments -1,208,473 -757,473
------------------- -----------------
Total at end of year $ 3,018,350 $ 3,636,862
=================== =================
</TABLE>
LEASES:
One of the Company's branch locations is leased from a director and three branch
locations are leased from entities of which a director is part owner. Rent paid
under these leases for 1995 was $127,570, rental income under subleases on these
locations was $83,339 and net lease expense was $44,231.
Future minimum payments, net of sub-lease income, under these leases are as
follows:
Twelve months ending December 31, 1996 $ 45,563
1997 5,573
1998 38,590
1999 24,840
2000 18,990
Thereafter 59,640
-----------------
Total $ 193,196
=================
OTHER:
The Company is affiliated with Community State Bank and its holding company,
Community Bancshares, Inc., Independence, LA by virtue of common ownership and
management control.
There were no significant transactions with these entities in the year ended
December 31, 1995.
F-19
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 8 - LEASES:
The following is a schedule by year of future minimum rental payments, net of
income from related subleases, required under operating leases that have initial
or remaining non-cancelable lease terms in excess of one year as of December 31,
1995.
Twelve months period to December 31, 1996 $ 61,043
1997 5,573
1998 38,590
1999 24,840
2000 18,990
Later years 59,640
-------------
Total minimum lease payments $ 208,676
=============
Rental payments were $143,290 for 1995 and rent income from related subleases
was $92,349 in 1995. The net rent expense of $50,941 for 1995, $34,579 for
1994 and $36,106 for 1993 is included in occupancy expense in the statement of
income.
Certain leases obligate the Company to pay taxes, maintenance, and repair costs.
Certain leases also contain renewal provisions. Certain leases require
adjustments to lease payments at specified times in relation to increases in the
Consumer Price Index.
NOTE 9 - COMMITMENTS AND CONTINGENCIES:
The Bank had outstanding commitments to extend credit of $2,800,850 at December
31, 1995. 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. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the customer. The Bank is also contingently liable for
outstanding letters of credit totaling $214,684 at December 31, 1995. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending a loan.
The Bank, in the normal course of business, is defendant in various legal
claims. Management and legal counsel are of the opinion that these actions will
not have a material effect on the Bank's financial position.
NOTE 10 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash, Short-term Investments and Federal Funds Sold - For those short-term
instruments, the carrying amount is a reasonable estimate of fair value.
Securities - For securities, fair value equals quoted market price, if
available. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar securities.
F-20
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 10 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS: (Cont'd)
Loans - The fair value of loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to borrowers
with similar credit ratings and for the same remaining maturities. Deposits -
The fair value of demand deposits, savings accounts, and certain money market
deposits is the amount payable on demand at the reporting date. The fair value
of fixed-maturity certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities. Commitments - The fair
value of commitments to extend credit was not significant. The estimated fair
values of the Company's financial instruments are as follows at December 31,
1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
----------------------------------- -----------------------------------
Recorded Estimated Recorded Estimated
Book Balance Fair Value Book Balance Fair Value
----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Cash, short-term investments
and federal funds sold $ 24,907 $ 24,907 $ 11,927 $ 11,927
Securities held-to-maturity 78,576 79,379 97,442 93,013
Loans, net 74,972 73,691 68,598 66,781
FINANCIAL LIABILITIES:
Deposits 170,012 170,262 167,498 166,328
Federal funds purchased 2,000 2,000
</TABLE>
NOTE 11 - SUPPLEMENTARY INFORMATION:
The following is selected supplemental information for the years ended December
31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ----------------- ---------------
<S> <C> <C> <C>
Other operating income:
Gain on sale of real estate $ 89,790 $ 27,896 $ 0
Other operating expenses:
Insurance 197,107 172,028 152,141
Telephone 122,447 103,972 88,053
Postage expense 121,331 110,837 90,897
Supplies expense 152,042 142,904 118,322
Interest paid 5,746,372 4,868,641 4,332,635
Income taxes paid 750,988 788,919 967,127
</TABLE>
F-21
<PAGE>
MERCHANTS BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THEY YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTE 12 - SUMMARIZED FINANCIAL INFORMATION OF MERCHANTS BANCSHARES, INC. (PARENT
COMPANY ONLY):
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1995 1994
----------------- -----------------
<S> <C> <C>
Assets:
Investment in subsidiary $ 16,088,293 $ 14,961,129
Other 190,400 191,695
----------------- -----------------
$ 16,278,693 $ 15,152,824
================= =================
Liabilities and Stockholders' Equity:
Dividend payable $ 184,356 $ 184,156
Stockholders' equity 16,094,337 14,968,668
----------------- -----------------
$ 16,278,693 $ 15,152,824
================= =================
STATEMENTS OF EARNINGS
Years Ended December 31,
1995 1994 1993
----------------- ----------------- --------------------
Dividends received from subsidiary $ 463,452 $ 464,963 $ 404,975
Excess equity in earnings of subsidiary
over dividends received 1,110,139 980,973 1,607,311
Other expenses -6,450 -6,448 -8,450
Income tax credit 2,193 2,193 2,873
----------------- ----------------- --------------------
Net earnings $ 1,569,334 $ 1,441,681 $ 2,006,709
================= ================= ====================
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1995 1994 1993
----------------- ----------------- --------------------
Cash flows from operating activities -
principally dividends from subsidiary $ 462,883 $ 467,835 $ 407,848
Cash flows from financing activities -
principally dividends paid 464,378 466,808 405,800
----------------- ----------------- --------------------
Net increase, decrease(-) in cash -1,495 1,027 2,048
Cash, beginning 5,346 4,319 2,271
----------------- ----------------- --------------------
Cash, ending $ 3,851 $ 5,346 $ 4,319
================= ================= ====================
</TABLE>
F-22
<PAGE>
APPENDIX A
Agreement and Plan of Merger
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made November 14,
1996, between Whitney Holding Corporation ("Whitney"), a Louisiana corporation,
on the one hand, and Merchants Bancshares, Inc.("Company"), a Mississippi
corporation, and Merchants Bank & Trust Co. ("Bank"), a Mississippi chartered
state bank, on the other hand. Whitney and Company shall be hereinafter
collectively referred to as the "Constituent Corporations".
Preamble
WHEREAS, the Boards of Directors of Whitney and Company have each
determined that it is desirable and in the best interests of their respective
corporations and shareholders that Company merge into Whitney (the "Company
Merger") on the terms and subject to the conditions set forth in this Agreement
and in the Company Merger Agreement (as hereinafter defined). The Boards of
Directors of Whitney and Bank have each determined that it is desirable and in
the best interests of each such institution and its shareholders that Bank merge
into a national banking association to be formed by Whitney (the "Bank Merger")
on the terms and subject to the conditions set forth in this Agreement and in
the Bank Merger Agreement (as hereinafter defined). The Company Merger and the
Bank Merger shall be hereinafter collectively referred to as the "Mergers".
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. The Mergers and Closing
1.01. Mergers.
(a) Following the expiration of the Review Period (as
hereinafter defined), Whitney shall, in good faith, take expeditious steps to
form a national banking association ("Acquiring Bank") as a wholly owned
subsidiary of Whitney. Upon its formation, Whitney will cause Acquiring Bank to
execute this Agreement as a party.
(b) Promptly after execution of this Agreement, the Boards of
Directors of Whitney and Company will execute the merger agreement annexed
hereto as Exhibit 1.01(b) (the "Company Merger Agreement"), pursuant to which,
on the terms set forth herein and subject to the conditions set forth in Section
6 hereof, Company will merge with and into Whitney, which will be the surviving
corporation.
(c) Promptly after the formation of Acquiring Bank, the Boards
of Directors of Acquiring Bank and Bank will execute the merger agreement
annexed hereto as Exhibit 1.01(c) (the "Bank Merger Agreement"), pursuant to
which, on the terms set forth herein and subject to the conditions set forth in
Section 6 hereof, Bank will merge with and into Acquiring Bank, which shall be
the surviving bank. The Company Merger Agreement and the Bank Merger Agreement
shall be hereinafter collectively referred to as the "Merger Agreements".
(d) Effects of Mergers. The Company Merger shall have the
effects set forth in the Louisiana Business Corporation Laws ("LBCL") and the
Mississippi Business Corporation Act ("MBCA"), as applicable. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time (as
hereinafter defined), all the property and assets, rights, privileges and all
debts, liabilities and obligations of Company will become the property and
assets, rights, privileges, debts, liabilities and obligations of Whitney as the
surviving corporation in the Company Merger. The Bank Merger shall have the
effects set forth in the National Banking Laws. Without limiting the generality
of the foregoing, and subject thereto, at the effective time of the Bank Merger,
all the property and assets, rights, privileges and all debts, liabilities and
obligations of Bank will become the property and assets, rights, privileges,
debts, liabilities and obligations of Acquiring Bank as the surviving
association in the Bank Merger.
1.02. The Closing. The "Closing" of the transactions contemplated
hereby will take place in the Board Room of Whitney, 228 St. Charles Avenue,
Second Floor, New Orleans, Louisiana 70130 (or such other place to which
A-1
<PAGE>
the parties may agree), at 10:00 a.m., New Orleans Time, on a mutually agreeable
date as soon as practicable following satisfaction of the conditions set forth
in subparagraphs (a), (b) and (d) of subsection 6.01 hereof, or if no date has
been agreed to, on any date specified by any party to the others upon 10 days
notice following satisfaction of such conditions. The date on which the Closing
occurs is herein called the "Closing Date". If all conditions set forth in
Section 6 hereof are satisfied or waived by the party entitled to grant such
waiver, at the Closing (a) the Constituent Corporations shall each provide to
the other such proof of satisfaction of the conditions set forth in Section 6 as
the party whose obligations are conditioned upon such satisfaction may
reasonably request, (b) the certificates, letters and opinions required by
Section 6 shall be delivered, (c) the appropriate officers of the parties shall
execute, deliver and acknowledge the Merger Agreements and (d) the parties shall
take such further action as is required to effect the Company Merger and the
Bank Merger and to otherwise consummate the transactions contemplated by this
Agreement and the Merger Agreements. If on any date established for the Closing
all conditions in Section 6 hereof have not been satisfied or waived by the
party entitled to grant such waiver, then any party, on one or more occasions,
may declare a delay of the Closing of such duration, not exceeding 10 business
days, as the declaring party shall select, but no such delay shall extend beyond
the date set forth in subparagraph (c) of subsection 7.01, and no such delay
shall interfere with the right of any party to terminate this Agreement pursuant
to Section 7.
1.03. The Effective Date and Time. Immediately following (or
concurrently with) the Closing, the Merger Agreements (and, as applicable,
Articles of Merger) shall be filed with and recorded by the Secretary of State
of Louisiana, the Secretary of State of Mississippi, the Mississippi Department
of Banking and Consumer Finance (the "Department of Banking") and the Office of
the Comptroller of the Currency, as appropriate, and the Company Merger and the
Bank Merger shall be effective at the dates and times specified in the Merger
Agreements. The date on which and the time at which the Company Merger becomes
effective are herein referred to as the "Effective Date" and the "Effective
Time," respectively.
1.04. Surviving Corporations. The governing documents (i.e. the
articles of incorporation or association and by-laws and equivalents) of Whitney
and Acquiring Bank in effect immediately prior to the Effective Time (or the
effective time of the Bank Merger, as the case may be) shall remain unchanged
and shall be the governing documents of Whitney and Acquiring Bank, as the
surviving entities in the Mergers, until duly amended in accordance with the
terms thereof and applicable law. The directors and officers of Whitney and Bank
in office immediately prior to the Effective Time (or the effective time of the
Bank Merger, as the case may be) shall be the directors and officers of Whitney
and Acquiring Bank, as the surviving entities in the Mergers, and shall serve in
such capacity in accordance with the articles of incorporation or association
and by-laws of the surviving entities. Each share of Whitney common stock, no
par value ("Whitney Common Stock") and capital stock of Acquiring Bank issued
and outstanding immediately prior to the Effective Time (or the effective time
of the Bank Merger, as the case may be) shall remain issued and outstanding from
and after the applicable effective time, and in the case of Acquiring Bank,
shall be the capital stock of Acquiring Bank.
1.05. Tax Consequences. It is the intention of the parties hereto that
the Mergers shall constitute reorganizations within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
this Agreement shall constitute a "plan of reorganization" for purposes of
Section 368 of the Code.
Section 2. Conversion of Stock of Company and Bank
2.01. Conversion. (a) Company Merger. Subject to the provisions of this
Section 2, at the Effective Time, by virtue of the Company Merger and without
any action on the part of the holders thereof, the shares of Company common
stock, par value $2.50 per share ("Company Common Stock"), shall be converted as
follows: Except for (i) shares issued and outstanding immediately prior to the
Effective Time as to which dissenters' rights have been perfected and not
withdrawn or otherwise forfeited under Article 13 of the MBCA ("Company
Dissenters' Shares") and (ii) shares of Company Common Stock held by Company as
treasury shares (which shall by reason of the Company Merger be canceled), and
subject to the provisions of Section 2.01(f) relating to fractional shares, each
issued and outstanding share of Company Common Stock shall be converted into and
become that number of shares of Whitney Common Stock that is equal to the
quotient obtained by dividing the Company Percentage (as hereinafter defined) of
the Maximum Deliverable Amount (as hereinafter defined), rounded up to the
nearest whole number of shares, by the total number of issued and outstanding
shares (not treasury shares) of Company Common Stock at the Effective Time.
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(b) Bank Merger. Subject to the provisions of this Section 2,
at the effective time of the Bank Merger, by virtue of the Bank Merger and
without any action on the part of the holders thereof, the shares of Bank common
stock, par value $5.00 per share ("Bank Common Stock"), shall be converted as
follows: Except for shares as to which dissenters' rights have been perfected
and not withdrawn or otherwise forfeited under 12 U.S.C. ss.215a (which shares,
collectively with the Company Dissenters' Shares, are hereinafter referred to as
the "Dissenters' Shares") and/or Article 13 of the MBCA, as applicable, subject
to the provisions of Section 2.01(f) relating to fractional shares, each
outstanding share of Bank Common Stock will be converted into and become that
number of shares of Whitney Common Stock that is equal to the quotient obtained
by dividing the Bank Percentage (as hereinafter defined) of the Maximum
Deliverable Amount, rounded up to the nearest whole number of shares, by the
total number of shares of Bank Common Stock issued and outstanding on the
effective date of the Bank Merger.
(c) For purposes of this Section 2, shares of Company Common
Stock that are held by Company or Bank (other than shares held by Bank in a
fiduciary capacity other than for Company), and shares of Bank Common Stock that
are held by Company or Bank (other than shares held by Bank in a fiduciary
capacity other than for Company), shall not be considered outstanding and shall
be cancelled (and not converted) by virtue of the Mergers.
(d) Certain Defined Terms. As used in this Section 2.01, the
following terms shall have the meanings set forth below:
(i) Purchase Price. The term "Purchase Price" means
$51,814,000 plus Retained Net Income After Tax (as hereinafter defined).
(ii) Maximum Deliverable Amount. The term "Maximum
Deliverable Amount" means the quotient obtained by dividing the Purchase Price
by the Average Market Price (as hereinafter defined).
(iii) Bank Percentage. The term "Bank Percentage"
means the percentage obtained by dividing (A) the dollar amount obtained by
multiplying (x) the Purchase Price, minus the book value of all assets of
Company other than Bank Common Stock, by (y) the percentage of the outstanding
shares of Bank Common Stock owned by persons other than Company, by (B) the
total Purchase Price.
(iv) Company Percentage. The term "Company
Percentage" means the result obtained by subtracting the Bank Percentage from
100%.
(v) Retained Net Income After Tax. The term
"Retained Net Income After Tax" means the consolidated retained net income for
the period October 1, 1996 through the end of the calendar month immediately
preceding the Effective Date, as agreed to by the Constituent Corporations,
based on normal banking net income less appropriate income taxes and dividends
declared and/or paid and excluding any unusual or nonrecurring additions to net
income such as reversals of loan loss or other valuation reserves and gains on
the sales of investments or other assets.
(e) Average Market Price. The "Average Market Price" shall be
the average of the closing per share trading prices of Whitney Common Stock
(adjusted appropriately for any stock split, stock dividend, recapitalization,
reclassification or similar transaction which is effected, or for which a record
date occurs) on the forty (40) trading days preceding the fifth trading day
immediately prior to the Effective Date, as reported in the Wall Street Journal
(corrected for typographical errors); provided, however, that if the Average
Market Price as calculated above is less than $30.00, the Average Market Price
for purposes of this Section 2.01(e) shall be $30.00 and if the Average Market
Price as calculated above is greater than $36.00 the Average Market Price for
purposes of this Section 2.01(e) shall be $36.00.
(f) Fractional Shares. In lieu of the issuance of fractional
shares of Whitney Common Stock, each shareholder of Company or Bank who would
otherwise be entitled thereto, upon surrender of his or her certificates that
immediately prior to the effective time of the applicable Merger represented
Company Common Stock or Bank Common Stock, other than Dissenters' Shares and
shares of Company Common Stock held by Company as treasury shares (which shall
by reason of the Merger be canceled), shall receive a cash payment (without
interest) equal to the fair market value at the effective time of the applicable
Merger of any fraction of a share of Whitney Common Stock to which such holder
would be entitled but for this provision. For purposes of calculating such
payment, the fair market value of a fraction
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of a share of Whitney Common Stock at the Effective Time shall be such fraction
multiplied by the Average Market Price.
(g) Exchange of Certificates. After the Effective Time, each
holder of an outstanding certificate or certificates theretofore representing a
share or shares of Company Common Stock or Bank Common Stock (other than
Dissenters' Shares), upon surrender thereof to the exchange agent selected by
Whitney (the "Exchange Agent"), together with duly executed transmittal
materials provided pursuant to Section 2.01(i) or upon compliance by the holder
or holders thereof with the procedures of the Exchange Agent with respect to
lost, stolen or destroyed certificates, shall be entitled to receive in exchange
therefor any payment due in lieu of fractional shares and a certificate or
certificates representing the number of whole shares of Whitney Common Stock
into which such holder's shares of Company Common Stock or Bank Common Stock
were converted. Until so surrendered, each outstanding Company stock certificate
and Bank stock certificate shall be deemed for all purposes, other than as
provided below with respect to the payment of dividends or other distributions
(if any) in respect of Whitney Common Stock, to represent the number of whole
shares of Whitney Common Stock into which such holder's Company Common Stock or
Bank Common Stock shall have been converted. Whitney may, at its option, refuse
to pay any dividend or other distribution to holders of unsurrendered Company
and Bank stock certificates until surrendered; provided, however, that upon the
surrender and exchange of any Company or Bank stock certificates there shall be
paid, to the extent not previously paid, to the record holders of the Whitney
stock certificates issued in exchange therefor the amount, without interest, of
accumulated dividends and distributions, if any, which have become payable with
respect to the number of whole shares of Whitney Common Stock into which the
shares of Company Common Stock or Bank Common Stock theretofore represented by
such certificates shall have been exchanged.
(h) Deposit. Promptly following the Effective Time, Whitney
shall deposit or cause to be deposited with the Exchange Agent (i) certificates
representing the shares of Whitney Common Stock and (ii) the cash in lieu of
fractional shares to be issued and paid, as the case may be, in exchange for
outstanding shares of Company Common Stock and Bank Common Stock pursuant to
this Section 2.
(i) Transmittal Materials. Promptly after the Effective Time,
Whitney shall send or cause to be sent to each former shareholder of record of
Company at the Effective Time, and to each former shareholder of record of Bank
at the effective time of the Bank Merger, excluding the holders, if any, of
Dissenters' Shares, transmittal materials for use in exchanging certificates of
Company Common Stock and Bank Common Stock, respectively, for certificates of
Whitney Common Stock.
(j) Dissenters' Shares. Holders of Dissenters' Shares shall
not be entitled to receive the shares of Whitney Common Stock and any unpaid
dividends and distributions payable thereon pursuant to this Section 2.01 and
shall only be entitled to receive payment of the fair cash value of such shares
in accordance with the provisions of Article 13 of the MBCA and 12 U.S.C.
ss.215a, as applicable, unless and until such holders fail to perfect or
effectively withdraw or lose their rights to such appraisal and payment. If,
after the Effective Time, any such holder fails to perfect or effectively
withdraws or loses such right, such shares of Company Common Stock or Bank
Common Stock will be treated as if they had been converted into, at the
effective time of the applicable Merger, the shares of Whitney Common Stock (and
cash in lieu of fractional share), and any unpaid dividends and distributions
payable thereon, pursuant to this Section 2.01, without interest thereon.
2.02. Closing Transfer Books. At the Effective Time, the stock transfer
books of Company shall be closed and no transfer of shares of Company Common
Stock shall be made thereafter. At the effective time of the Bank Merger, the
stock transfer books of Bank shall be closed and no transfer of shares of Bank
Common Stock shall be made thereafter. All shares of Whitney Common Stock
issued, and any fractional share payments paid upon surrender for exchange of
certificates representing shares of Company Common Stock or Bank Common Stock in
accordance with this Section 2 shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Company Common Stock or
Bank Common Stock theretofore represented by such certificates.
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Section 3. Representations and Warranties of Company and Bank
Company and Bank represent and warrant to Whitney and Acquiring Bank
that, as of the date on which Company delivers the Schedule of Exceptions to
Whitney and as of the Closing Date, except as set forth in the Schedule of
Exceptions:
3.01. Consolidated Group; Organization; Qualification. "Company's
consolidated group," as such term is used in this Agreement, consists of Company
and Bank. Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Mississippi, and is a bank holding
company within the meaning of the Bank Holding Company Act of 1956, as amended
(the "Bank Holding Company Act"). Bank is a Mississippi chartered state bank,
duly organized, validly existing and in good standing under the laws of the
State of Mississippi and is domiciled in the State of Mississippi. Each member
of Company's consolidated group has all requisite corporate power and authority
to own and lease its property and to carry on its business as it is currently
being conducted and to execute this Agreement and the Merger Agreements to which
it is a party and to consummate the transactions contemplated hereby, and is
qualified and in good standing as a foreign corporation in all jurisdictions in
which the failure to so qualify would have a material adverse effect on such
member's financial condition, results of operations or business.
3.02. Capital Stock; Other Interests. The authorized capital stock (i)
of Company consists of 200,000 shares of Company Common Stock, of which 184,356
shares are issued and outstanding and no shares are held in its treasury; and
(ii) of Bank consists of 93,190 shares of common stock, of which 93,190 shares
are issued and outstanding and no shares are held in its treasury. All issued
and outstanding shares of capital stock of each member of Company's consolidated
group have been duly authorized and are validly issued, fully paid and (except
as provided in 12 U.S.C. Section 55) non-assessable, and all of the outstanding
shares of Bank (other than 1,012 shares of Bank Common Stock held by persons
other than Company) are owned by Company, free and clear of all liens, charges,
security interests, mortgages, pledges and other encumbrances. No member of
Company's consolidated group has outstanding any stock options or other rights
to acquire any shares of its capital stock or any security convertible into such
shares, or has any obligation or commitment to issue, sell or deliver any of the
foregoing or any shares of its capital stock. There are no agreements by which
Company or Bank are bound or, to Company's or Bank's knowledge, among Company's
or Bank's shareholders, with respect to the voting or transfer of Company Common
Stock or Bank Common Stock and there are no agreements granting registration
rights to any holders thereof. The outstanding capital stock of each member of
Company's consolidated group has been issued in compliance with all legal
requirements and in compliance with any preemptive or similar rights. No member
of Company's consolidated group has a subsidiary (other than Bank) or direct or
indirect ownership interest exceeding 5% in any firm, corporation, partnership
or other entity.
3.03. Corporate Authorization; No Conflicts. Subject to the approval of
this Agreement and the Merger Agreements by the shareholders of Company and
Bank, respectively, in accordance with the MBCA, Mississippi state banking laws
and applicable federal law, all corporate acts and other proceedings required of
each member of Company's consolidated group for the due and valid authorization,
execution, delivery and performance of this Agreement and the Merger Agreements
and consummation of the Mergers have been validly taken. Subject to their
approval by the shareholders of Company and Bank and to such regulatory
approvals as are required by law, this Agreement and the Merger Agreements are
legal, valid and binding obligations of Company and Bank and are enforceable
against Company and Bank, respectively, in accordance with the respective terms
hereof and thereof, except that enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court decisions relating
to or affecting the enforcement of creditors' rights generally and by general
equitable principles. With respect to each member of Company's consolidated
group, neither the execution, delivery or performance of this Agreement or the
Merger Agreements, nor the consummation of the transactions contemplated hereby
or thereby will (i) violate, conflict with, or result in a breach of any
provision of, (ii) constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, (iii) result in the
termination of or accelerate the performance required by, or (iv) result in the
creation of any lien, security interest, charge or encumbrance upon any of its
properties or assets under, any of the terms, conditions or provisions of its
articles of incorporation or association or by-laws or any material note, bond,
mortgage, indenture, deed of trust, lease, license, agreement or other
instrument or obligation to or by which it or any of its assets is bound; or
violate any order, writ, injunction, decree, statute, rule or regulation of any
governmental body applicable to it or any of its assets.
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3.04. Financial Statements, Reports and Proxy Statements. Company has
delivered to Whitney true and complete copies of (a) the consolidated balance
sheets as of December 31, 1994 and December 31, 1995 of Company and its
consolidated subsidiaries, the related consolidated statements of income,
shareholders' equity and cash flows for the respective years then ended, the
related notes thereto, and the report of its independent public accountants with
respect thereto, as presented in Company's audited financial statements for the
fiscal year ended December 31, 1995 (collectively, the "Financial Statements"),
(b) the unaudited consolidated balance sheets as of September 30, 1995 and
September 30, 1996 of Company and its consolidated subsidiaries, and the related
unaudited statements of income, shareholders' equity and cash flows for the
nine-month periods then ended (collectively, the "Interim Financial
Statements"), (c) the annual report to the Board of Governors of the Federal
Reserve System ("Federal Reserve Board") for the year ended December 31, 1995,
of each member of Company's consolidated group required to file such reports,
(d) all call reports, including all amendments thereto, made to the Federal
Deposit Insurance Corporation ("FDIC") and the Department of Banking since
December 31, 1992, of each member of Company's consolidated group required to
file such reports, (e) Company's and Bank's Annual Report to Shareholders for
1995 and all subsequent Quarterly Reports to Shareholders and (f) all proxy or
information statements (or similar materials) disseminated to Company's
shareholders or the shareholders of any of its subsidiaries at any time since
December 31, 1992.
The Financial Statements and, except as indicated in the notes
thereto, the Interim Financial Statements, have been (and all financial
statements delivered to Whitney as required by this Agreement will be) prepared
in conformity with generally accepted accounting principles ("GAAP") applied on
a basis consistent with prior periods, and present fairly, in conformity with
GAAP the consolidated results of operations of Company's consolidated group for
the respective periods covered thereby and the consolidated financial condition
of its consolidated group as of the respective dates thereof. All call and other
regulatory reports referred to above have been filed on the appropriate form and
prepared in all material respects in accordance with such form's instructions
and the applicable rules and regulations of the regulating federal agency. As of
the date of the latest balance sheet forming part of the Interim Financial
Statements (the "Latest Balance Sheet"), no member of Company's consolidated
group had, nor are any of any such member's assets subject to, any material
liability, commitment, indebtedness or obligation (of any kind whatsoever,
whether absolute, accrued, contingent, matured or unmatured) which is not
reflected and adequately reserved against in accordance with GAAP. No report,
including any report filed with the Federal Reserve Board or other banking
regulatory agency, and no report made to shareholders of Company or Bank, as of
the respective dates thereof, contained and no such report, proxy statement,
registration statement or report to shareholders filed or disseminated after the
date of this Agreement will contain, any untrue statement of a material fact or
omitted, or will omit, to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Financial Statements and Interim
Financial Statements are supported by and consistent with a general ledger and
detailed trial balances of investment securities, loans and commitments,
depositors' accounts and cash balances on deposit with other institutions,
copies of which have been made available to Whitney.
3.05. Loan and Investment Portfolios. All loans, discounts and
financing leases (in which a member of Company's consolidated group is lessor)
reflected on the Latest Balance Sheet (a) were, at the time and under the
circumstances in which made, made for good, valuable and adequate consideration
in the ordinary course of business of its consolidated group, (b) are evidenced
by genuine notes, agreements or other evidences of indebtedness and (c) to the
extent secured, to the best knowledge of the Company's consolidated group, have
been secured by valid liens and security interests which have been perfected.
Accurate lists of all loans, discounts and financing leases as of the date of
the Latest Balance Sheet (or a more recent date), and of the investment
portfolios of each member of Company's consolidated group as of such date, have
been delivered to Whitney. Except as specifically noted on the loan schedule
attached to the Schedule of Exceptions and except for one or more loans
individually less than $25,000 in principal and in the aggregate less than
$100,000 in principal for all such loans, no member of Company's consolidated
group is a party to any written or oral loan agreement, note or borrowing
arrangement, that was, as of the most recent month-end (i) delinquent by more
than 30 days in the payment of principal or interest, (ii) known by any member
of Company's consolidated group to be otherwise in material default for more
than 30 days, (iii) classified as "substandard," "doubtful," "loss," "other
assets especially mentioned" or any comparable classification by any member of
Company's consolidated group, the Mississippi state banking authorities or the
FDIC, (iv) an obligation of any director, executive officer or 10% shareholder
of any member of Company's consolidated group who is subject to Regulation O of
the Federal Reserve Board (12 C.F.R. Part 215), or any person, corporation or
enterprise controlling, controlled by or under
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common control with any of the foregoing, or (v) in violation of any law,
regulation or rule of any governmental authority, other than those that are
immaterial in amount.
3.06. Adequacy of Allowances for Losses. Each of the allowances for
losses on loans, financing leases and other real estate shown on the Latest
Balance Sheet is adequate in accordance with applicable regulatory guidelines
and GAAP in all material respects, and there are no facts or circumstances known
to Bank's Board of Directors which are likely to require in accordance with
applicable regulatory guidelines or GAAP a future material increase in any such
provisions for losses or a material decrease in any of the allowances therefor
reflected in the Latest Balance Sheet. Each of the allowances for losses on
loans, financing leases and other real estate reflected on the books of
Company's consolidated group at all times from and after the date of the Latest
Balance Sheet is adequate in accordance with applicable regulatory guidelines
and GAAP in all material respects, and there are no facts or circumstances known
to Bank's Board of Directors which are likely to require in accordance with
applicable regulatory guidelines or GAAP a future material increase in any of
such provisions for losses or a material decrease in the allowances therefor
reflected in the Latest Balance Sheet.
3.07. Absence of Certain Changes or Events. Since the date of the
Latest Balance Sheet, no member of Company's consolidated group has declared,
set aside for payment or paid any dividend to holders of, or declared or made
any distribution on, any shares of Company's or Bank's capital stock except for
Company's and Bank's regular quarterly dividends of $.65 and $1.30 per share,
respectively, payable October 1, 1996. Since the date of the Latest Balance
Sheet, there has been no event or condition of any character (whether actual or
threatened) that has had, or can reasonably be anticipated to have, a material
adverse effect on the financial condition, results of operations or business of
Company's consolidated group, taken as a whole. Except as may result from the
transactions contemplated by this Agreement, no such member has, since the date
of the Latest Balance Sheet:
(a) borrowed any money or entered into any capital lease or,
except in the ordinary course of business consistent with past practices, (i)
lent any money or pledged any of its credit in connection with any aspect of its
business whether as a guarantor, surety, issuer of a letter of credit or
otherwise, (ii) mortgaged or otherwise subjected to any lien, encumbrance or
other liability any of its assets, (iii) sold, assigned or transferred any of
its assets in excess of $100,000 in the aggregate, or (iv) incurred any material
liability, commitment, indebtedness or obligation (of any kind whatsoever,
whether absolute or contingent);
(b) suffered any material damage, destruction or loss to
immovable or movable property, whether or not covered by insurance;
(c) experienced any material change in asset concentrations as
to customers or industries or in the nature and source of its liabilities or in
the mix of interest-bearing versus non-interest bearing deposits;
(d) received notice or had knowledge or reason to believe that
any material labor unrest exists among any of its employees or that any group,
organization or union has attempted to organize any of its employees;
(e) received notice that one or more substantial customers has
terminated or intends to terminate such customers' relationship with it, with
the result being a material adverse effect on Bank;
(f) failed to operate its business in the ordinary course
consistent with past practices, or failed to use reasonable efforts to preserve
its business organization intact or to preserve the goodwill of its customers
and others with whom it has business relations;
(g) incurred any material loss except for losses adequately
reserved against on the date of this Agreement or on the Latest Balance Sheet
and expenses associated with this transaction, or waived any material right in
connection with any aspect of its business, whether or not in the ordinary
course of business;
(h) forgiven any material debt owed to it, or cancelled any of
its claims or paid any of its noncurrent obligations or liabilities;
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(i) made any capital expenditure or capital addition or
betterment in excess of $50,000;
(j) entered into any agreement requiring the payment,
conditionally or otherwise, of any salary, bonus, extra compensation, pension or
severance payment to any of its present or former directors, officers or
employees, except such agreements as are terminable at will without any penalty
or other payment by it or increased (except for increases of not more than 10%
consistent with past practices) the compensation (including salaries, fees,
bonuses, profit sharing, incentive, pension, retirement or other similar
payments) of any such person whose annual compensation would, following such
increase, exceed $50,000;
(k) except as required in accordance with GAAP, changed any
accounting practice followed or employed in preparing the Financial Statements
or Interim Financial Statements;
(l) made any loan, given any discount or entered into any
financing lease which has not been (i) made, at the time and under the
circumstances in which made, for good, valuable and adequate consideration in
the ordinary course of business, (ii) evidenced by genuine notes, agreements or
other evidences of indebtedness and (iii) fully reserved against in an amount
sufficient in accordance with applicable regulatory guidelines to provide for
all charge-offs reasonably anticipated in the ordinary course of business after
taking into account all recoveries reasonably anticipated in the ordinary course
of business; or
(m) entered into any agreement, contract or commitment to do
any of the foregoing.
3.08. Taxes. Each member of Company's consolidated group has timely
filed all federal, state and local income, franchise, excise, real and personal
property, employment and other tax returns, tax information returns and reports
required to be filed, has paid all material taxes, interest payments and
penalties as reflected therein which have become due, has made adequate
provision for the payment of all such taxes accruable for all periods ending on
or before the date of this Agreement (and will make such accruals through the
Closing Date) to any city, county, state, the United States or any other taxing
authority, and is not delinquent in the payment of any material tax or material
governmental charge of any nature. The consolidated federal income tax returns
of Company's consolidated group have not been audited by the Internal Revenue
Service since the date of Company's inception other than a 1993 audit of tax
years 1992 and 1991, which audit has been closed. No audit or examination is
presently being conducted by any taxing authority nor has any member of
Company's consolidated group received written notice from any such taxing
authority of its intention to conduct any investigation or audit or to commence
any such proceeding; no material unpaid tax deficiencies or additional
liabilities of any sort have been proposed to any member of Company's
consolidated group by any governmental representative, and no agreements for
extension of time for the assessment of any tax have been entered into by or on
behalf of any member of Company's consolidated group. Each such member has
withheld from its employees (and timely paid to the appropriate governmental
entity) proper and accurate amounts for all periods in material compliance with
all tax withholding provisions of applicable federal, state and local laws
(including, without limitation, income, social security and employment tax
withholding for all forms of compensation).
3.09. Title to Assets. (a) On the date of the Latest Balance Sheet,
each member of Company's consolidated group had and, except with respect to
assets disposed of for adequate consideration in the ordinary course of business
since such date, now has, good and merchantable title to all real property and
good and merchantable title to all other material properties and assets
reflected on the Latest Balance Sheet, and has good and merchantable title to
all real property and good and merchantable title to all other material
properties and assets acquired since the date of the Latest Balance Sheet, in
each case free and clear of all mortgages, liens, pledges, restrictions,
security interests, charges and encumbrances of any nature except for (i)
mortgages and encumbrances which secure indebtedness which is properly reflected
in the Latest Balance Sheet or which secure deposits of public funds as required
by law; (ii) liens for taxes accrued but not yet payable; (iii) liens arising as
a matter of law in the ordinary course of business with respect to obligations
incurred after the date of the Latest Balance Sheet, provided that the
obligations secured by such liens are not delinquent or are being contested in
good faith; (iv) such imperfections of title and encumbrances, if any, as do not
materially detract from the value or materially interfere with the present use
of any of such properties or assets or the potential sale of any of such owned
properties or assets; and (v) capital leases and leases, if any, to third
parties for fair and adequate consideration. Each member of Company's
consolidated group owns, or has valid leasehold interests in, all material
properties and assets used in the conduct of its business. Any real property and
other material assets held
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under lease by any such member are held under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made or and proposed to be made of such property by such member of such
property.
(b) With respect to each lease of any real property or a
material amount of personal property to which any member of Company's
consolidated group is a party, except for financing leases in which a member of
such consolidated group is lessor, (i) such lease is in full force and effect in
accordance with its terms; (ii) all rents and other monetary amounts that have
become due and payable thereunder have been paid; (iii) there exists no default,
or event, occurrence, condition or act, which with the giving of notice, the
lapse of time or the happening of any further event, occurrence, condition or
act would become a default under such lease; and (iv) the Mergers will not
constitute a default or a cause for termination or modification of such lease.
(c) No member of Company's consolidated group has any legal
obligation, absolute or contingent, to any other person to sell or otherwise
dispose of any substantial part of its assets; or to sell or dispose of any of
its assets except in the ordinary course of business consistent with past
practices.
3.10. Legal Matters. (a) To the knowledge of Company, (i) there is no
material claim, action, suit, proceeding, arbitration or investigation pending
in any court or before or by any governmental agency or instrumentality or
arbitration panel or otherwise, or threatened against any member of Company's
consolidated group nor (ii) do any facts or circumstances exist that would be
likely to form the basis for any material claim against any member of Company's
consolidated group that, if adversely determined, would have a material adverse
effect on Company's consolidated group.
(b) Each member of Company's consolidated group has complied
in all material respects with and is not in default in any material respect
under (and has not been charged or threatened with or come under investigation
with respect to any charge concerning any material violation of any provision
of) any federal, state or local law, regulation, ordinance, rule or order
(whether executive, judicial, legislative or administrative) or any order, writ,
injunction or decree of any court, agency or instrumentality.
(c) There are no material uncured violations, or violations
with respect to which material refunds or restitution may be required, cited in
any compliance report to any member of Company's consolidated group as a result
of examination by any bank or bank holding company regulatory authority.
(d) No member of Company's consolidated group is subject to
any written agreement, memorandum or order with or by any bank or bank holding
company regulatory authority.
(e) To the knowledge of Company, there is no claim, action,
suit, proceeding, arbitration, or investigation, pending or threatened, in which
any material claim or demand is made or threatened to be made against any member
of Company's consolidated group or any officer, director, advisory director or
employee, in each case by reason of any person being or having been an officer,
director, advisory director or employee of any such member.
3.11. Employee Benefit Plans. (a) Except for the plans listed on the
subsection of the Schedule of Exceptions that corresponds to this subsection
(the "ERISA Plans"), no member of Company's consolidated group sponsors,
maintains or contributes to, and no such member has at any time sponsored,
maintained or contributed to, any employee benefit plan that is subject to any
of the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Each of the ERISA Plans has been maintained and administered
in all material respects in compliance with its terms, the provisions of ERISA
and all other applicable laws, and, where applicable, the provisions of the
Code. No ERISA Plan, including any "party in interest" or "disqualified person"
with respect thereto has engaged in a nonexempt prohibited transaction under
Section 4975 of the Code or Section 502(i) of ERISA; there is no matter relating
to any of the ERISA Plans pending or threatened, nor are there any facts or
circumstances existing that could reasonably be expected to lead to (other than
routine filings such as qualification determination filings), proceedings
before, or administrative actions by, any governmental agency; there are no
actions, suits or claims pending or threatened (including, without limitation,
breach of fiduciary duty actions, but excluding routine uncontested claims for
benefits) against any of the ERISA Plans or the assets thereof. Each member of
Company's consolidated group has
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complied in all material respects with the reporting and disclosure requirements
of ERISA and the Code. None of the ERISA Plans is a multi-employer plan within
the meaning of Section 3(37) of ERISA. A favorable determination letter has been
issued by the Internal Revenue Service with respect to each ERISA Plan that is
intended to be qualified under Section 401(a) of the Code and the Internal
Revenue Service has taken no action to revoke any such letter and nothing has
occurred, whether by action or failure to act, which would cause the loss of
such qualification. No member of Company's consolidated group has sponsored,
maintained or made contributions to any plan, fund or arrangement subject to
Title IV of ERISA or the requirements of Section 412 of the Code or providing
for medical benefits, insurance coverage or other similar benefits for any
period extending beyond the termination of employment, except as may be required
under the "COBRA" provisions of ERISA and the Code.
(b) Set forth on the subsection of the Schedule of Exceptions
corresponding to this subsection is a true and complete list of each benefit
plan and benefit arrangement of any member of Company's consolidated group other
than the ERISA Plans. True and complete copies of all plan (including ERISA
Plan) documents and written agreements (including all amendments and
modifications thereof), together with copies of any tax determination letters,
trust agreements, summary plan descriptions, insurance contracts, investment
management agreements and the three most recent annual reports on form series
5500 with respect to such plan or arrangement have been made available to
Whitney.
(c) All group health plans of any member of Company's
consolidated group to which Section 4980B(f) of the Code or Section 601 of ERISA
applies are in compliance in all material respects with continuation coverage
requirements of Section 4980B(f) of the Code and Section 601 of ERISA and any
prior violations of such sections have been cured prior to the date hereof.
(d) Each plan, fund or arrangement previously sponsored or
maintained by any member of Company's consolidated group, or to which any member
of Company's consolidated group previously made contributions which has been
terminated by any member of Company's consolidated group was terminated in
accordance with ERISA, the Code and the terms of such plan, fund or arrangement
and no event has occurred and no condition exists that would subject any member
of Company's consolidated group, Whitney or Acquiring Bank to any tax, penalty,
fine or other liability as a result of, directly or indirectly, the termination
of such plan, fund or arrangement.
(e) The current fair market value of the assets of each ERISA
Plan subject to the provisions of Title IV of ERISA equals or exceeds the
present value of the accrued benefits of each such plan as of the end of the
most recent plan year, calculated on a termination and on-going basis, and there
has been no material change likely to change the funding status of any such
plan. No funding deficiency within the meaning of Section 412 of the Code exists
with respect to any ERISA Plan. All contributions required or accrued under the
terms of any plan (including any ERISA Plan) have been made and all insurance
premiums required or accrued under the terms of any plan (including any ERISA
plan) have been paid as of the date hereof.
3.12. Insurance Policies. Each member of Company's consolidated group
maintains in force insurance policies and bonds in such amounts and against such
liabilities and hazards as are considered by it to be adequate. An accurate list
of all such insurance policies is attached to the Schedule of Exceptions. No
member of Company's consolidated group is now liable, nor has any such member
received any notice of any material retroactive premium adjustment. All policies
are valid and enforceable and in full force and effect, and no member of
Company's consolidated group has received any notice of a material premium
increase or cancellation with respect to any of its insurance policies or bonds.
Within the last three years, no member of Company's consolidated group has been
refused any basic insurance coverage sought or applied for (other than certain
exclusions for coverage of certain events or circumstances as stated in such
polices).
3.13. Agreements. (a) No member of Company's consolidated group is a
party to:
(i) any collective bargaining agreement;
(ii) other than the employee benefits and plans
referred to in the section of the Schedule of Exceptions that corresponds to
subsection 3.11 of this Agreement, any employment or other agreement or contract
with
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or commitment to any employee except the agreements, arrangements, policies and
practices referred to in the exceptions to subparagraph (j) of subsection 3.07
of this Agreement and such agreements as are terminable without penalty upon not
more than 30 days notice by the employer;
(iii) any obligation of guaranty or
indemnification except such indemnification of officers, directors, employees
and agents of Company's consolidated group as on the date of this Agreement may
be provided in their respective articles of incorporation or association and
by-laws (and no indemnification of any such officer, director, employee or
agent has been authorized, granted or awarded), except if entered into in the
ordinary course of business with respect to customers of any member of Company's
consolidated group, letters of credit, guaranties of endorsements and guaranties
of signatures;
(iv) any agreement, contract or commitment
which is or if performed will be materially adverse to the financial condition,
results of operations or business of any member of Company's consolidated group;
or
(v) any agreement, contract or commitment
containing any covenant limiting the freedom of any member of Company's
consolidated group (x) to engage in any line of business permitted by regulatory
authorities, (y) to compete with any person in a line of business permitted by
applicable regulatory guidelines to be engaged in by bank holding companies,
Mississippi state banks or national banks, or (z) to fulfill any of its
requirements or needs for services or products (including, for example,
contracts with vendors to supply customers with credit insurance); or
(vi) any written agreement, memorandum, letter,
order or decree, formal or informal, with any federal or state regulatory
agency.
(b) The subsection of the Schedule of Exceptions that
corresponds to this subsection contains a list of each material agreement,
contract or commitment (except those entered into in the ordinary course of
business with respect to loans, lines of credit, letters of credit, depositor
agreements, certificates of deposit and similar banking activities and equipment
maintenance agreements which are not material) to which any member of Company's
consolidated group is a party or which affects any such member. To Company's
knowledge, no member of Company's consolidated group has in any material respect
breached, nor is there any pending or threatened claim that it has materially
breached, any of the terms or conditions of any of such agreements, contracts or
commitments.
3.14. Licenses, Franchises and Governmental Authorizations. Each member
of Company's consolidated group possesses all licenses, franchises, permits and
other governmental authorizations necessary for the continued conduct of its
business. The deposits of Bank are insured by the FDIC to the extent provided by
applicable law, and there are no pending or threatened proceedings to revoke or
modify that insurance or for relief under 12 U.S.C. Section 1818.
3.15. Corporate Documents. Company has delivered to Whitney, with
respect to each member of Company's consolidated group, true and correct copies
of its articles of incorporation or articles of association, and its by-laws,
all as amended. All of the foregoing and all of the corporate minutes and stock
transfer records of each member of Company's consolidated group are current,
complete and correct in all material respects.
3.16. Certain Transactions. No past or present director, executive
officer or five percent shareholder of any member of Company's consolidated
group has, since January 1, 1993, engaged in any transaction or series of
transactions which, if such member had been subject to Section 14(a) of the
Exchange Act, would have been would be required to be disclosed pursuant to Item
404 of Regulation S-K of the Rules and Regulations of the Securities and
Exchange Commission (the "SEC"), other than transactions which were so
disclosed.
3.17. Broker's or Finder's Fees. No agent, broker, investment banker,
investment or financial advisor or other person acting on behalf of any member
of Company's consolidated group is entitled to any commission, broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated by this Agreement.
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3.18. Environmental Matters. (a) (i) Each member of Company's
consolidated group has obtained all material permits, licenses and other
authorizations that are required to be obtained by it under any applicable
Environmental Law Requirements (as hereinafter defined) in connection with the
operation of its businesses and ownership of its properties (collectively, the
"Subject Properties"), including without limitation, to the knowledge of
Company, properties acquired by foreclosure or in settlement of loans;
(ii) Each member of Company's consolidated group is
in compliance with all terms and conditions of such permits, licenses and
authorizations and with all applicable Environmental Law Requirements, except
for such noncompliance as would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the financial
condition, results of operations or business of Company and its consolidated
group, taken as a whole;
(iii) There are no past or present events, conditions,
circumstances, activities or plans by any member of Company's consolidated group
related in any manner to any member of Company's consolidated group or the
Subject Properties that did or would violate or prevent compliance or continued
compliance with any of the Environmental Law Requirements, or give rise to any
Environmental Liability, as hereinafter defined, except for such as would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the financial condition, results of operations or business of
Company and its consolidated group, taken as a whole;
(iv) To Company's knowledge, there is no civil,
criminal or administrative action, suit, demand, claim, order, judgment,
hearing, notice or demand letter, notice of violation, investigation or
proceeding pending or threatened by any person against any member of Company's
consolidated group, or any prior owner of any of the Subject Properties which
relates to the Subject Properties and relates in any way to any Environmental
Law Requirement or seeks to impose any Environmental Liability; and
(v) To Company's knowledge, no member of Company's
consolidated group is subject to or responsible for any material Environmental
Liability which is not set forth and adequately reserved against on the Latest
Balance Sheet.
(b) "Environmental Law Requirement" means all applicable
present and future statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises and
similar items, of all governmental agencies, departments, commissions, boards,
bureaus, or instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative, and regulatory
decrees, judgments and orders relating to the protection of human health or the
environment, including without limitation: (A) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of Hazardous Materials (as such term is defined below), chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials or wastes whether solid, liquid, or gaseous in nature, into the air,
surface water, groundwater, or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Materials, chemical substances, pollutants, contaminants, or hazardous
or toxic substances, materials or wastes, whether solid, liquid, or gaseous in
nature; (B) all requirements pertaining to protection of the health and safety
of employees or the public; and (C) all requirements pertaining to the (i)
drilling, production, and abandonment of oil and gas wells, (ii) the
transportation of produced oil and gas, and (iii) the remediation of sites
related to that drilling, production or transportation.
(c) "Hazardous Materials" shall mean: (A) Any "hazardous
substance" as defined by either the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Section 9601, et seq.)
("CERCLA") as amended from time to time, or regulations promulgated thereunder;
(B) asbestos; (C) polychlorinated biphenyls; (D) any "regulated substance" as
defined by 40 C.F.R. Section 280.12, or the Mississippi Administrative Code; (E)
any naturally occurring radioactive material ("NORM"), as defined by applicable
federal or state laws or regulations as amended from time to time, irrespective
of whether the NORM is located in Mississippi or another jurisdiction; (F) any
non-hazardous oilfield wastes ("NOW") defined under applicable federal or state
laws or regulations, irrespective of whether those wastes are located in
Mississippi or another jurisdiction; (G) any substance the presence of which on
the Subject Properties is prohibited by any lawful rules and regulations of
legally constituted
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authorities from time to time in force and effect relating to the Subject
Properties; and (H) any other substance which by any such rule or regulation
requires special handling in its collection, storage, treatment or disposal.
(d) "Environmental Liability" shall mean (i) any liability or
obligation arising under any Environmental Law Requirement, or (ii) any
liability or obligation under any other theory of law or equity (including
without limitation any liability for personal injury, property damage or
remediation) that results from, or is based upon or related to, the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any Hazardous Material, pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
3.19. Compliance with Laws. Each member of Company's consolidated group
is in compliance with all applicable laws, rules, regulations, orders, writs,
judgments and decrees the noncompliance with which reasonably could be expected
to have a material adverse effect on the financial condition, results of
operations or business of Company's consolidated group taken as a whole. There
are no material uncured violations, or violations with respect to which material
refunds or restitution may be required, cited in any compliance report to any
member of Company's consolidated group as a result of examination by any bank or
bank holding company regulatory authority, except those cited in examination
reports previously submitted to, and reviewed by, Whitney.
3.20. Intellectual Property. Each member of Company's consolidated
group owns all trademarks, tradenames, service marks and other intellectual
property that is material to the conduct of its business.
3.21. Community Reinvestment Act. Bank has complied in all material
respects with the provisions of the Community Reinvestment Act ("CRA") and the
rules and regulations thereunder, has CRA ratings of not less than
"satisfactory," and has received no material criticism from regulators with
respect to discriminatory lending practices, and has no knowledge of any
conditions or circumstances that are likely to result in CRA ratings of less
than "satisfactory" or material criticism from regulators with respect to
discriminatory lending practices.
3.22. Accuracy of Statements. No warranty or representation made or to
be made by any member of Company's consolidated group in this Agreement or in
any document furnished or to be furnished by any member of Company's
consolidated group pursuant to this Agreement contains or will contain, as of
the date of this Agreement, the effective date of the Registration Statement (as
defined in subsection 5.14 hereof) and the Closing Date, an untrue statement of
a material fact or an omission of a material fact necessary to make the
statements contained herein and therein, in light of the circumstances in which
they are made, not misleading.
Section 4. Representations and Warranties of Whitney and Acquiring Bank
Whitney and Acquiring Bank represent and warrant to Company
and Bank that as of the date hereof and as of the Closing Date:
4.01. Consolidated Group; Organization; Qualification. "Whitney's
consolidated group," as such term is used in this Agreement, consists of Whitney
and Whitney National Bank ("WNB") and will include Acquiring Bank upon its
formation and, in addition includes Whitney Bank of Alabama ("WBA") and several
other subsidiaries. Whitney is a corporation duly organized and validly existing
under the laws of the State of Louisiana and is a bank holding company within
the meaning of the Bank Holding Company Act. WNB is a national banking
association duly organized and validly existing and in good standing under the
laws of the United States of America. Whitney has all requisite corporate power
and authority to own and lease its property and to carry on its business as it
is currently being conducted and to execute and deliver this Agreement and the
Company Merger Agreement to which it is a party and to consummate the
transactions contemplated hereby, and is qualified and in good standing as a
foreign corporation in all jurisdictions in which the failure to so qualify
would have a material adverse effect on its financial condition, results of
operations or business.
Pursuant to Section 1.01(a) of this Agreement, Whitney intends
to charter Acquiring Bank and cause it to merge with Bank. At Closing, Acquiring
Bank will be a national banking association duly organized, validly existing and
in good standing under the laws of the United States of America. Acquiring Bank
will have all requisite
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corporate power and authority to own and lease its property and to carry on its
business as it is intended to be conducted and to execute and deliver this
Agreement and the Bank Merger Agreement and to consummate the transactions
contemplated hereby and thereby, and will be qualified and in good standing as a
foreign corporation in all jurisdictions in which the failure to so qualify
would have a material adverse effect on its financial condition, results of
operations or business.
4.02. Capital Stock. As of the date of this Agreement, the authorized
capital stock of Whitney consists of 40,000,000 shares of Whitney Common Stock.
As of September 30, 1996, 19,252,056 shares of Whitney Common Stock were issued
and outstanding and 494,280 shares were held in its treasury. All issued and
outstanding shares of capital stock of Whitney have been duly authorized and are
validly issued, fully paid and non-assessable and have been issued in compliance
with all legal requirements and any preemptive or similar rights. All issued and
outstanding shares of capital stock of Acquiring Bank will be duly authorized
and validly issued, fully paid and (except as provided in 12 U.S.C. Section 55)
non-assessable and will be issued in compliance with all legal requirements and
any preemptive or similar rights. Upon the formation of Acquiring Bank, Whitney
will own all of the issued and outstanding shares of capital stock of Acquiring
Bank free and clear of all liens, charges, security interests, mortgages,
pledges and other encumbrances.
4.03. Corporate Authorization; No Conflicts. All corporate acts and
other proceedings required of Whitney for the due and valid authorization,
execution, delivery and performance of this Agreement and the Company Merger
Agreement and consummation of the Mergers have been, or will be prior to
Closing, validly and appropriately taken. All corporate acts and other
proceedings required of Acquiring Bank for the due and valid authorization,
execution, delivery and performance of this Agreement and the Bank Merger
Agreement and consummation of the Bank Merger will be validly and appropriately
taken prior to Closing. Subject to such regulatory approvals as are required by
law, this Agreement and the Merger Agreements are, and in the case of Acquiring
Bank will be, legal, valid and binding obligations of Whitney and Acquiring
Bank, as the case may be, and are, and in the case of Acquiring Bank will be,
enforceable against them in accordance with the respective terms of such
agreements, except that enforcement may be limited by bankruptcy,
reorganization, insolvency and other similar laws and court decisions relating
to or affecting the enforcement of creditors' rights generally and by general
equitable principles. With respect to each of Whitney and Acquiring Bank,
neither the execution, delivery or performance of this Agreement or the Merger
Agreements, nor the consummation of the transactions contemplated hereby or
thereby will (i) violate, conflict with, or result in a breach of any provision
of, (ii) constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, (iii) result in the termination of
or accelerate the performance required by, or (iv) result in the creation of any
lien, security interest, charge or encumbrance upon any of its properties or
assets under, any of the terms, conditions or provisions of its articles of
incorporation or association or by-laws (or comparable documents) or any
material note, bond, mortgage, indenture, deed of trust, lease, license,
agreement or other instrument or obligation to or by which it or any of its
assets is bound; or violate any order, writ, injunction, decree, statute, rule
or regulation of any governmental body applicable to it or any of its assets.
4.04. Financial Statements; Reports and Proxy Statements. (a) Whitney
has delivered to Company true and complete copies of (i) the consolidated
balance sheets as of December 31, 1994 and December 31, 1995 of Whitney and its
consolidated subsidiaries, the related consolidated statements of operations,
changes in shareholders' equity and cash flows for the respective years then
ended, the related notes thereto, and the report of its independent public
accountants with respect thereto, as presented in Whitney's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 filed with the SEC
(collectively, the "Whitney Financial Statements") and (ii) the unaudited
consolidated balance sheet as of September 30, 1996 of Whitney and its
consolidated subsidiaries and the related unaudited statements of operations and
cash flows for the nine month period then ended, as previously delivered by
Whitney to the Company and the Bank (collectively, the "Whitney Interim
Financial Statements").
(b) The Whitney Financial Statements and the Whitney Interim
Financial Statements have been prepared in conformity with GAAP applied on a
basis consistent with prior periods, and present fairly, in conformity with
GAAP, the consolidated results of operations of Whitney's consolidated group for
the respective periods covered thereby and the consolidated financial condition
of its consolidated group as of the respective dates thereof. All call and other
regulatory reports have been filed on the appropriate form and prepared in all
material respects in accordance with such form's instructions and the applicable
rules and regulations of the regulating federal agency. As of the date
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of the latest balance sheet forming part of the Whitney Interim Financial
Statements (the "Whitney Latest Balance Sheet"), no member of Whitney's
consolidated group had, nor were any of any of such member's assets subject to,
any material liability, commitment, indebtedness or obligation (whether
absolute, contingent, matured or unmatured), which is not reflected and
adequately reserved against in the Whitney Latest Balance Sheet in accordance
with GAAP. No report filed with Federal Reserve Board or other bank regulatory
body, as of the respective dates thereof, contained and no such report filed
after the date of this Agreement will contain, any untrue statement of a
material fact or omitted, or will omit, to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
4.05. Legality of Whitney Securities. All shares of Whitney Common
Stock to be issued pursuant to the Mergers have been duly authorized and, when
issued pursuant to the Merger Agreements, will be validly and legally issued,
fully paid and non-assessable, and will be, at the time of their delivery, free
and clear of all liens, charges, security interests, mortgages, pledges and
other encumbrances and any preemptive or similar rights.
4.06. SEC Reports. Whitney has previously delivered to Company an
accurate and complete copy of the following Whitney reports filed with the SEC
pursuant to the Exchange Act: (a) annual reports on Form 10-K for the years
ended December 31, 1993, 1994 and 1995; (b) quarterly reports on Form 10-Q for
the three months ended March 31 and June 30, 1996; and (c) proxy statements for
the years 1994, 1995 and 1996; as of their respective dates, no such Report 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 under which they were
made, not misleading. Whitney has timely filed all reports and other documents
required to be filed by it under the Securities Act and the Exchange Act.
4.07. Absence of Certain Changes or Events. Since the date of the
Whitney Latest Balance Sheet, there has been no event or condition of any
character (whether actual or threatened) that has had, or can reasonably be
anticipated to have, a material adverse effect on the financial condition,
results of operations or business of Whitney's consolidated group taken as a
whole.
4.08. Legal Matters. (a) There are no material actions, suits,
proceedings, arbitrations or investigations pending or, to Whitney's knowledge
threatened, against any member of Whitney's consolidated group which would be
required to be disclosed in a Form 10-K or Form 10-Q pursuant to Item 103 of
Regulation S-K of the SEC's Rules and Regulations that are not so disclosed.
(b) There are no material uncured violations, or violations
with respect to which material refunds or restitution may be required, cited in
any compliance report to any member of Whitney's consolidated group as a result
of examination by any bank or bank holding company regulatory authority.
(c) No member of Whitney's consolidated group is subject to
any written agreement, memorandum or order or decree with or by any bank or bank
holding company regulatory authority.
4.09. Accuracy of Statements. No warranty or representation made or to
be made by any member of Whitney's consolidated group in this Agreement or in
any document furnished or to be furnished by any member of Whitney's
consolidated group pursuant to this Agreement contains or will contain, as of
the date of this Agreement, the effective date of the Registration Statement (as
defined in Subsection 5.14 hereof) and the Closing Date, an untrue statement of
a material fact or an omission of a material fact necessary to make the
statements contained herein and therein, in light of the circumstances in which
they are made, not misleading.
Section 5. Covenants and Conduct of Parties Prior to the Effective
Date. The parties further covenant and agree as follows:
5.01. (a) Investigations; Planning. Each member of Company's
consolidated group shall continue to provide to Whitney and Acquiring Bank and
to their authorized representatives full access during all reasonable times to
its premises, properties, books and records (including, without limitation, all
corporate minutes and stock transfer records), and to furnish Whitney and
Acquiring Bank and such representatives with such financial and operating data
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and other information of any kind respecting its business and properties as
Whitney and Acquiring Bank shall from time to time reasonably request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with the operation of the business of Company's consolidated group.
Each member of Company's consolidated group agrees to cooperate with Whitney and
Acquiring Bank in connection with planning for the efficient and orderly
combination of the parties and the operation of Whitney and Acquiring Bank after
consummation of the Mergers. In the event of termination of this Agreement prior
to the Effective Date, Whitney shall, except to any extent necessary to assert
any rights under this Agreement or the Merger Agreements, return, without
retaining copies thereof, or destroy (and certify to same under penalty of
perjury) all confidential or non-public documents, work papers and other
materials obtained from Company's consolidated group in connection with the
transactions contemplated hereby and shall keep such information confidential,
not disclose such information to any other person or entity except as may be
required by legal process, and not use such information in connection with its
business, and shall cause all of its employees, agents and representatives to
keep such information confidential and not to disclose such information or to
use it in connection with its business, in each case unless and until such
information shall come into the public domain through no fault of Whitney and
Acquiring Bank. Whitney and Acquiring Bank shall continue to provide Company's
executive officers with access to their respective executive officers, during
normal business hours and upon reasonable notice, to discuss the business and
affairs of Whitney and Acquiring Bank to the extent customary in transactions of
the nature contemplated by this Agreement.
(b) Delivery of Schedules of Exceptions; Due Diligence.
Whitney and Company's consolidated group stipulate that they have entered into
this Agreement prior to Company's delivery of its consolidated group's Schedule
of Exceptions and prior to Whitney's completion of Whitney's customary due
diligence investigation of Company's consolidated group. Company shall deliver
to Whitney, on or before the 14th day following the date hereof, its
consolidated group's Schedule of Exceptions. Upon such delivery, such Schedules
shall be initialed on behalf of Whitney and Company, shall be appended hereto
and shall form a part hereof for all purposes. If Company fails to deliver its
consolidated group's Schedule of Exceptions on or before the 14th day following
the date hereof, Whitney may terminate this Agreement without liability by
giving written notice of termination to Company. Whitney's due diligence review
shall be concluded during a 21 calendar day period commencing on the first
business day following Company's delivery to Whitney of its Schedule of
Exceptions as provided herein (the "Review Period"). At or prior to expiration
of the Review Period, Whitney shall elect, by written notice to Company, to
either (a) proceed to the Closing (subject to the satisfaction or waiver of all
other conditions to Closing) or (b) terminate the Agreement (without liability
to Company or Bank except as set forth in the last sentence of this Section
5.01(b)) if, in its sole and absolute discretion, it is not satisfied with the
results of such due diligence review or for any other reason. Absent timely
delivery of written notice electing to terminate this Agreement, Whitney shall
be deemed to have elected to proceed to the Closing, subject to all other terms
and conditions of this Agreement. If, after receiving Company's Schedule of
Exceptions, Whitney elects to terminate this Agreement pursuant to the sixth
sentence of this Section 5.01(b), then notwithstanding any other provision
hereof, Whitney shall reimburse Company for the reasonable out-of-pocket
expenses actually incurred by it in connection with the transactions
contemplated by this Agreement through the date of termination.
5.02. Cooperation and Best Efforts. Each of the parties hereto will
cooperate with the other parties and use its best efforts to (a) procure all
necessary consents and approvals of third parties, (b) complete all necessary
filings, registrations, applications, schedules and certificates, (c) satisfy
all requirements prescribed by law for, and all conditions set forth in this
Agreement to, the consummation of the Mergers and the transactions contemplated
hereby and by the Merger Agreements, and (d) effect the transactions
contemplated by this Agreement and the Merger Agreements at the earliest
practicable date.
5.03. Information for, and Preparation of, Registration Statement and
Proxy Statement. Each of the parties hereto will cooperate in the preparation of
the Registration Statement referred to in Section 5.14 and a proxy statement of
Company and Bank (the "Proxy Statement") which complies with the requirements of
the Securities Act of 1933 (the "Securities Act"), the Exchange Act, the rules
and regulations promulgated thereunder and other applicable federal and state
laws, for the purpose of submitting this Agreement, the Merger Agreements and
the transactions contemplated hereby and thereby to Company's and Bank's
shareholders for approval, as applicable. Each of the parties will as promptly
as practicable after the date hereof furnish all such data and information
relating to it and its
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subsidiaries as any of the other parties may reasonably request for the purpose
of including such data and information in the Registration Statement and the
Proxy Statement.
5.04. Approval of Merger Agreements. No approval by Whitney's
shareholders is necessary as respects the Company Merger Agreement. Whitney, as
the sole shareholder of Acquiring Bank, shall take all action necessary to
effect shareholder approval of the Bank Merger Agreement.
5.05. Press Releases. Whitney and Company will cooperate with each
other in the preparation of any press releases announcing the execution of this
Agreement or the consummation of the transactions contemplated hereby. Without
the prior written consent of the chief executive officer of the other party, no
member of Company's consolidated group or Whitney's consolidated group will
issue any press release or other written statement for general circulation
relating to the transactions contemplated hereby, except as may otherwise be
required by law and, if practical, prior notice of such release is provided to
the other parties. Whitney agrees that it will make a press release with respect
to the results of operations of Whitney and its consolidated group as promptly
as practicable following receipt of financial results covering at least thirty
(30) days of post-mergers combined operations of Whitney to permit the
termination of the limitations set forth in the Shareholder's Commitments on the
ability of each person referred to in Section 5.10 to resell shares of Whitney
Common Stock in a manner inconsistent with Whitney's ability to account for the
Mergers as a pooling of interests.
5.06. Preservation of Business. To the extent consistent with sound
business practices, each member of Company's consolidated group will use its
best efforts to preserve the possession and control of all of its assets other
than those consumed or disposed of for value in the ordinary course of business
to preserve the goodwill of customers and others having business relations with
it and to do nothing knowingly to impair its ability to keep and preserve its
business as it exists on the date of this Agreement.
5.07. Conduct of Business in the Ordinary Course. Each member of
Company's consolidated group shall conduct its business only in the ordinary
course consistent with past practices, and shall not, without the prior written
consent of the chief executive officer of Whitney or his duly authorized
designee:
(a) except for the declaration and payment of Company's
regular quarterly dividends for the first three quarters of 1996 and 1997 in the
amount of $0.65 per share and the normal and customary fourth quarter 1996
dividend of $1.30 per share and Bank's regular quarterly dividends for the first
three quarters of 1996 and 1997 in the amount of $1.30 per share and the normal
and customary fourth quarter 1996 dividend of $2.60 per share (at the customary
time each quarter) until the Effective Time, declare, set aside, increase or pay
any dividend, or declare or make any distribution on, or directly or indirectly
combine, redeem, reclassify, purchase, or otherwise acquire, any shares of its
capital stock or authorize the creation or issuance of or issue any additional
shares of its capital stock or any securities or obligations convertible into or
exchangeable for its capital stock, provided that this subparagraph shall not
prevent dividends or distributions from any member of Company's consolidated
group to any other member of such consolidated group;
(b) amend its articles of incorporation or association or
by-laws or adopt or amend any resolution or agreement concerning indemnification
of its directors or officers;
(c) enter into or modify any agreement so as to require the
payment, conditionally or otherwise, of any salary, bonus, extra compensation,
pension or severance payment to any of its present or former directors, officers
or employees except (i) such agreements as are terminable at will without any
penalty or other payment by it, or increase the compensation (including
salaries, fees, bonuses, profit sharing, incentive, pension, retirement or other
similar benefits and payments) of any such person in any manner inconsistent
with its past practices, (ii) such written agreements between the Bank and
certain officers as may be approved in writing by the Chief Executive Officer of
Whitney at or prior to the Company's delivery of the Schedules of Exceptions and
(iii) after consultation with Whitney's chief executive officer, bonuses to
employees in amounts in an aggregate amount not exceeding $100,000;
(d) except as described in the Schedule of Exceptions or
except in the ordinary course of business consistent with past practices, place
or suffer to exist on any of its assets or properties any mortgage, pledge,
lien, charge
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or other encumbrance, except those of the character described in subsection 3.09
hereof, or cancel any material indebtedness owing to it or any claims which it
may have possessed, or waive any right of substantial value or discharge or
satisfy any material noncurrent liability;
(e) acquire another business or merge or consolidate with
another entity, or sell or otherwise dispose of a material part of its assets
or, except in the ordinary course of business consistent with past practices or
as described in the Schedule of Exceptions;
(f) commit any act that is intended or reasonably may 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 Mergers set forth in Section 6 not being satisfied, or in
a violation of any provision of this Agreement, except, in every case, as may be
required by applicable law;
(g) commit or fail to take any act which act or omission is
intended or reasonably may be expected to result in a material breach or
violation of any applicable law, statute, rule, governmental regulation or
order;
(h) fail to maintain its books, accounts and records in the
usual manner on a basis consistent with that heretofore employed;
(i) fail to pay, or to make adequate provision in all material
respects for the payment of, all taxes, interest payments and penalties due and
payable (for all periods up to the Effective Date, including that portion of its
fiscal year to and including the Effective Date) to any city, county, state, the
United States or any other taxing authority, except those being contested in
good faith by appropriate proceedings and for which sufficient reserves have
been established;
(j) dispose of investment securities in amounts or in a manner
inconsistent with past practices; or make investments in non-investment grade
securities or which are inconsistent with past investment practices;
(k) enter into any new line of non-banking business;
(l) (i) except as described in the Schedule of Exceptions,
charge off (except as may otherwise be required by law or by regulatory
authorities or by GAAP consistently applied) or sell (except for a price not
materially less than the value thereof) any of its portfolio of loans, discounts
or financing leases, or (ii) except as set forth on Schedule of Exceptions, sell
any asset held as other real estate or other foreclosed assets for an amount
materially less than 100% of its book value at the date of the Latest Balance
Sheet;
(m) make any extension of credit which, when added to all
other extensions of credit to a borrower and its affiliates, would exceed
Company's or Bank's applicable regulatory lending limits;
(n) take or cause to be taken any action which would
disqualify the Mergers as a "pooling of interests" for accounting purposes or as
a "reorganization" within the meaning of Section 368(a) of the Code; or
(o) agree or commit to do any of the foregoing.
5.08. Additional Information. Company and Bank will provide Whitney and
Whitney will provide Company and Bank (a) with prompt written notice of any
material adverse change in the financial condition, results of operations,
business or prospects of any member of its consolidated group, any material
breach by any such member of any of its warranties, representations or covenants
in this Agreement, or any material action taken or proposed to be taken with
respect to any member of its consolidated group by any regulatory agency, (b) as
soon as they become available, copies of any financial statements, reports and
other documents of the type referred to in subsection 3.04 with respect to each
member of its consolidated group, and (c) promptly upon its dissemination, any
report disseminated to its shareholders.
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5.09. Shareholder Approval. Company's Board of Directors shall submit
this Agreement and the Company Merger Agreement to its shareholders for approval
in accordance with the applicable law, together with its recommendation that
such approval be given, at a special meeting of the shareholders of Company duly
called and convened for that purpose as soon as practicable after the effective
date of the Registration Statement. Bank will submit this Agreement and the Bank
Merger Agreement to Bank's shareholders for approval in accordance with the
applicable law at a meeting duly called and convened for that purpose as soon as
practicable. At such meeting, Company will, if the shareholders of Company shall
have so approved this Agreement and the Company Merger Agreement, vote all
shares of Bank Common Stock held by it "for" approval of the Bank Merger. The
foregoing meetings will, if practicable, be held on the same date but, in any
event, the Bank meeting will not be convened until the Company meeting has been
finally adjourned.
5.10. Restricted Whitney Common Stock. Company and Bank will use their
best efforts to obtain no later than twenty (20) days after execution of this
Agreement an agreement from each person who is a director or executive officer
of Company or Bank or 5% beneficial owner of securities of Company who will
receive shares of Whitney Common Stock by virtue of the Mergers to the effect
that such person (i) will not dispose of any Company Common Stock or Bank Common
Stock or any Whitney Common Stock received pursuant to the Mergers (a) in a
manner that would disqualify the transactions contemplated hereby from pooling
of interests accounting treatment or (b) in the case of Whitney Common Stock
received pursuant to the Mergers, in violation of Rule 145 of the Securities Act
or the rules and regulations of the SEC thereunder, (ii) will agree to escrow
all such shares until Whitney has made a public announcement of the financial
results of at least 30 days of combined operations following the Effective Date
and (iii) in the case of directors and executive officers will agree to vote all
shares beneficially owned in favor of this Agreement and the Mergers
("Shareholder's Commitment").
5.11. Loan Policy. No member of Company's consolidated group will make
any loans, or enter into any commitments to make loans, which vary other than in
immaterial respects from its written loan policies, a true and correct copy of
which loan policies will be provided to Whitney concurrently with Company's
Schedule of Exceptions, provided that this covenant shall not prohibit Bank from
extending or renewing credit or loans in the ordinary course of business
consistent with past lending practices or in connection with the workout or
renegotiation of loans currently in its loan portfolio.
5.12. No Solicitations. Prior to the Effective Time or until the
termination of this Agreement, no member of Company's consolidated group shall,
without the prior approval of Whitney, directly or indirectly, solicit or
initiate inquiries or proposals with respect to, or, except to the extent
determined by the Board of Directors of Company in good faith, after
consultation with its financial advisors and its legal counsel, to be required
to discharge properly the directors' fiduciary duties to Company's consolidated
group and its shareholders, furnish any information relating to, or participate
in any negotiations or discussions concerning, any Acquisition Transaction (as
defined in Section 7.01) or any other acquisition or purchase of all or a
substantial portion of its assets, or of a substantial equity interest in it or
withdraw its recommendation to the shareholders of Company of the Mergers or
make a recommendation of any other Acquisition Transaction, or any business
combination with it, other than as contemplated by this Agreement (and in no
event will any such information be supplied except pursuant to a confidentiality
agreement in form and substance as to confidentiality substantially the same as
the confidentiality agreement between Company and Whitney); and each such member
shall instruct its officers, directors, agents and affiliates to refrain from
doing any of the above, and will notify Whitney immediately if any such
inquiries or proposals are received by it, any such information is requested
from it, or any such negotiations or discussions are sought to be initiated with
it or any of its officers, directors, agents and affiliates; provided, however,
that nothing contained herein shall be deemed to prohibit any officer or
director of Company or Bank from taking any action that the Board of Directors
of Company or Bank, as the case may be, determines, in good faith after
consultation with and receipt of an opinion of counsel, is required by law or is
required to discharge his fiduciary duties to Company's consolidated group and
its shareholders.
5.13. Operating Functions. Each member of Company's consolidated group
agrees to cooperate in the consolidation of appropriate operating functions with
Whitney to be effective on the Effective Date, provided that the foregoing shall
not be deemed to require any action that, in the opinion of such member's Board
of Directors, would adversely affect its operations if the Mergers were not
consummated.
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5.14. Whitney Registration Statement. (a) Whitney will prepare and file
on Form S-4 a registration statement (the "Registration Statement") under the
Securities Act (which will include the Proxy Statement) complying with all the
requirements of the Securities Act applicable thereto, for the purpose, among
other things, of registering the Whitney Common Stock which will be issued to
the holders of Company Common Stock and Bank Common Stock pursuant to the
Mergers. Whitney shall use its best efforts to cause the Registration Statement
to become effective as soon as practicable, to qualify the Whitney Common Stock
under the securities or blue sky laws of such jurisdictions as may be required
and to keep the Registration Statement and such qualifications current and in
effect for so long as is necessary to consummate the transactions contemplated
hereby. As a result of the registration of the Whitney Common Stock pursuant to
the Registration Statement, such stock shall be freely tradeable by the
shareholders of Company or Bank except to the extent that the transfer of any
shares of Whitney Common Stock received by shareholders of Company or Bank is
subject to the provisions of Rule 145 under the Securities Act or restricted
under applicable tax or pooling of interests rules.
(b) Whitney will indemnify and hold harmless each member of
Company's consolidated group and each of their respective directors, officers
and other persons, if any, who control Company within the meaning of the
Securities Act from and against any losses, claims, damages, liabilities or
judgments, joint or several, to which they or any of them may become subject,
insofar as such losses, claims, damages, liabilities, or judgments (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, or in any amendment or supplement thereto, or in any state
application for qualification, permit, exemption or registration as a
broker/dealer, or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such person for any legal or other expenses
reasonably incurred by such person in connection with investigating or defending
any such action or claim; provided, however, that Whitney shall not be liable,
in any such case, to the extent that any such loss, claim, damage, liability, or
judgment (or action in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, or any such amendment or supplement thereto,
or in any such state application, or in any amendment or supplement thereto, in
reliance upon and in conformity with information furnished to Whitney by or on
behalf of any member of Company's consolidated group or any officer, director or
affiliate of any such member for use therein.
5.15. Application to Regulatory Authorities. Whitney shall prepare, as
promptly as practicable, all regulatory applications and filings which are
required to be made with respect to the Mergers.
5.16. Revenue Ruling. Whitney may elect to prepare (and in that event
Company shall cooperate in the preparation of) a request for a ruling from the
Internal Revenue Service with respect to certain tax matters in connection with
the transactions contemplated by this Agreement and the Merger Agreements.
5.17. Bond for Lost Certificates. Upon receipt of notice from any of
its shareholders that a certificate representing Company Common Stock or Bank
Common Stock has been lost or destroyed and prior to issuing a new certificate,
Company or Bank, as the case may be, shall require such shareholder to post a
bond in such amount as is sufficient to support the shareholder's agreement to
indemnify Company or Bank against any claim made by the owner of such
certificate, unless Whitney agrees to the waiver of such bond requirement.
5.18. Dissenters. Company and Bank shall give Whitney (i) prompt
written notice of, and a copy of, any instrument received by Company or Bank
with respect to the assertion or perfection of dissenters rights, and (ii) the
opportunity to participate in any and all negotiations and proceedings with
respect to dissenters rights, should Whitney desire to do so.
5.19. Withholding. Whitney shall be entitled to deduct and withhold
from the consideration otherwise payable to any holder of Company Common Stock
or Bank Common Stock after the Effective Time such amounts as Whitney may be
required by law to deduct and withhold therefrom. All such deductions and
withholdings shall be deemed for all purposes of this Agreement and the Merger
Agreements to have been paid to the person with respect to whom such deduction
and withholding was made.
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5.20. NASDAQ/NMS. Whitney shall cause the shares of Whitney Common
Stock to be issued in the Mergers to be duly authorized, validly issued, fully
paid and nonassessable, free of any preemptive or similar right and to be
approved for quotation in the NASDAQ Stock Market prior to the Effective Time.
5.21. Continuing Indemnity; Insurance. Whitney covenants and agrees
that:
(a) All rights to indemnification and all limitations of
liability existing in favor of indemnified parties under Company's Articles of
Incorporation and By-Laws and in the Articles of Association and By-Laws of Bank
(as the case may be) as in effect as of the date of this Agreement with respect
to matters occurring prior to or at the later to occur of the Effective Time or
the effective time of the Bank Merger shall survive the Mergers and shall
continue in full force and effect, without any amendment thereto, for a period
of three (3) years from such applicable effective time; provided, however, that
all rights to indemnification in respect of any claim asserted or made as to
which Whitney is notified in writing within such period shall continue until the
final disposition of such claim.
(b) Whitney shall use best efforts to cause the persons
serving as officers and directors of Company and Bank immediately prior to the
Effective Time (in the case of Company) and the effective time of the Bank
Merger (in the case of Bank) to be covered for a period of three (3) years from
such applicable effective time by the directors' and officers' liability
insurance policy maintained by Company and Bank with respect to acts or
omissions occurring prior to or at the respective effective times which were
committed by such officers and directors in their capacity as such; provided
that Whitney may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous to such
directors and officers, and, provided further that Whitney shall not be
obligated to make premium payments for the insurance policies provided by this
Section 5.21 to the extent such premiums exceed 150% of the most recent annual
premiums paid as of the date hereof by Company for such insurance.
(c) If Whitney or any of its successors or assigns (i) shall
consolidate with or merge into any corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns of Whitney shall
assume the obligations set forth in this Section 5.21.
(d) The provisions of this Section 5.21 are intended to be for
the benefit of, and shall be enforceable by, each indemnified party and his or
her heirs and representatives.
5.22. Employees and Certain Other Matters. All employees of Company and
Bank at the Effective Time shall become employees of Acquiring Bank. Although
Whitney's and Acquiring Bank's present intentions are to retain Company's and
Bank's employees, Whitney and Acquiring Bank reserve the right, subject to
Acquiring Bank's obligations under Section 5.07(c)(ii), to terminate any such
employee, and to modify the job duties, compensation and authority of such
employee. At the Effective Time, all persons then employed by Company and Bank
shall be eligible for such employee benefits as are generally available to
employees of WNB and WBA having like tenure, officer status and compensation
levels except (i) all executive and senior level management bonuses, stock
options, restricted stock and similar benefits shall be at the discretion of
Acquiring Bank's Compensation Committee and (ii) all Company and Bank employees
who are employed at the Effective Time shall be given full credit for all prior
service as employees of Company or Bank provided, however, that all such
employees shall be treated as newly hired Acquiring Bank employees (i.e., prior
service credit with Company and Bank shall not be considered in determining
future benefits under Whitney's, WNB's or Acquiring Bank's defined benefit
pension plan) for all purposes of Whitney's, WNB's or Acquiring Bank's defined
benefit pension plan.
5.23. Retention of Insurance Policies. Whitney agrees to cause
Acquiring Bank to assume the premium payment obligations under those certain
life insurance policies numbered 200-7023535-0 and 200-7015796-0 issued by
Connecticut Mutual Life Insurance Company insuring the lives of Mr. Guy C.
Billups, Jr. and Mr. William R. Allison, respectively; life insurance policies
numbered 4182389 and 4164782 issued by Connecticut Mutual Life Insurance Company
insuring the lives of Mr. Guy C. Billups, Jr. and Mr. William R. Allison,
respectively; and life
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insurance policy number 3267813 issued by the Guardian Life Insurance Company of
America insuring the life of Mr. Guy C. Billups, Jr..
5.24. Governance. Whitney's Board of Directors shall take all action
necessary to appoint Mr. Guy C. Billups, Jr. to the Boards of Directors of
Whitney and Acquiring Bank upon the Effective Date; provided, however, that
Whitney may delay its appointment of Mr. Guy C. Billups, Jr. to the Whitney
board until after its April 1997 Annual Meeting of Shareholders if the Effective
Date occurs too late in 1997 for Whitney to include Mr. Guy C. Billups, Jr. in
its proxy statement. Whitney's and Acquiring Bank's Boards of Directors shall
nominate Mr. Guy C. Billups, Jr. for election and/or re-election to the Boards
of Directors of Whitney and Acquiring Bank (or to the board of Whitney National
Bank, in the event Acquiring Bank merges with Whitney National Bank subsequent
to the Effective Date) to serve an aggregate term of not less than each of the
next five years succeeding the Effective Date.
5.25. Assumption of Change in Control Contract. Whitney agrees to
assume all of the obligations of Mr. Guy Billups, Jr. under that certain change
in control contract between Mr. Guy C. Billups, Jr. and Mr. P. E. Moran, Jr.
providing for the payment of $50,000 to Mr. P. E. Moran, Jr. in the event Bank
undergoes a change in control within a ten year period beginning October 21,
1993.
Section 6. Conditions of Closing
6.01. Conditions of All Parties. The obligations of each of the
parties hereto to consummate the Mergers are subject to the satisfaction of the
following conditions at or prior to the Closing:
(a) Shareholder Approval. This Agreement and the Company
Merger Agreement shall have been duly approved by the shareholders of Company,
and this Agreement and the Bank Merger Agreement shall have been duly approved
by the shareholders of the Bank.
(b) Effective Registration Statement. The Registration
Statement shall have become effective prior to the mailing of the Proxy
Statement, no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been instituted or, to the knowledge of any party, shall be contemplated, and
Whitney shall have received all state securities laws permits and authorizations
necessary to consummate the transactions contemplated hereby.
(c) No Restraining Action. No action or proceeding shall have
been threatened or instituted before a court or other governmental body to
restrain or prohibit the transactions contemplated by this Agreement or the
Merger Agreements or to obtain damages or other relief in connection with the
execution of such agreements or the consummation of the transactions
contemplated hereby or thereby; and no governmental agency shall have given
notice to any party hereto to the effect that consummation of the transactions
contemplated by this Agreement or the Merger Agreements would constitute a
violation of any law or that it intends to commence proceedings to restrain
consummation of the Mergers.
(d) Statutory Requirements and Regulatory Approval. All
statutory requirements for the valid consummation of the transactions
contemplated by this Agreement and the Merger Agreements shall have been
fulfilled; all appropriate orders, consents and approvals from all regulatory
agencies and other governmental authorities whose order, consent or approval is
required by law for the consummation of the transactions contemplated by this
Agreement and the Merger Agreements shall have been received; and the terms of
all requisite orders, consents and approvals shall then permit the effectuation
of the Mergers without imposing any material conditions with respect thereto
except for any such conditions that are acceptable to Whitney.
(e) Tax Opinion. Whitney and Company shall have received the
opinion of Arthur Andersen LLP, in form and substance reasonably satisfactory to
both of them, as to certain tax aspects of the Mergers, including an opinion
that the receipt of Whitney Common Stock by Company's and Bank's shareholders
will not be a taxable event to such shareholders.
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6.02. Additional Conditions of Whitney. The obligations of Whitney
and Acquiring Bank to consummate the Mergers are also subject to the
satisfaction of the following additional conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The
representations and warranties of Company and Bank contained in this Agreement
shall be true and correct in all material respects, individually and in the
aggregate, on and as of the Closing Date, with the same effect as though made on
and as of such date, except to the extent of changes permitted by the terms of
this Agreement, and each of Company and Bank shall have in all material respects
performed all obligations and complied with all covenants required by this
Agreement and the Merger Agreements to be performed or complied with by it at or
prior to the Closing. In addition, each of Company and Bank shall have delivered
to Whitney and Acquiring Bank its certificate dated as of the Closing Date and
signed by its chief executive officer and chief financial officer to the effect
that, except as specified in such certificate, such persons do not know, and
have no reasonable grounds to know, of any material failure or breach of any
representation, warranty or covenant made by it in this Agreement.
(b) No Material Adverse Change. There shall not have occurred
any material adverse change from the date of the Latest Balance Sheet to the
Closing Date in the financial condition, results of operations or business of
Company's consolidated group; provided, however, that (i) the incurrence by
Company or Bank of fees and expenses payable to Watkins Ludlam & Stennis, P.A.
and Taylor, Powell, Wilson and Hartford, P.A., expenses and payments to
executive officers or other employees of Company or Bank pursuant to agreements
set forth on the Schedule of Exceptions and (ii) the occurrence of an event
specifically permitted under Section 5.07 or otherwise expressly consented in
writing by Whitney, are expressly deemed not to constitute such a material
adverse change.
(c) Accountants' Letters. Whitney shall have received
"comfort" letters from Taylor, Powell, Wilson and Hartford, P.A., independent
public accountants for Company and Bank, dated, respectively, within three (3)
days prior to the date of the Proxy Statement and within three (3) days prior to
the Closing Date, in customary form for transactions of this sort and in
substance satisfactory to Whitney.
(d) Opinion of Counsel. Whitney and Acquiring Bank shall have
received from Watkins Ludlam and Stennis, P.A., special counsel to Company and
Bank, an opinion, dated as of the Closing Date, in form and substance
satisfactory to Whitney and Acquiring Bank. In giving such opinions, such
counsel may rely as to questions of fact upon certificates of one or more
officers of the members of Company's consolidated group and governmental
officials.
(e) Tax Consequences of Mergers. Whitney shall have received
satisfactory assurances from their independent accountants that the consummation
of the Mergers will not be a taxable event to Whitney and Acquiring Bank.
(f) Pooling of Interest. Prior to the expiration of the Review
Period and within three (3) days prior to the Closing Date, Taylor, Powell,
Wilson and Hartford, P.A. shall have rendered an opinion to Whitney, in form and
substance satisfactory to Whitney, to the effect that, based upon the facts and
circumstances then known to Taylor, Powell, Wilson and Hartford, P.A., Whitney
will be permitted to account for the Mergers as a pooling of interests. Neither
Whitney's independent accountants nor the SEC shall have taken the position that
the transactions contemplated by this Agreement and the Merger Agreements do not
qualify for pooling of interests accounting treatment.
(g) Shareholder's Commitment. A Shareholder's Commitment
substantially in the form specified on Exhibit 6.02(g) hereto (as contemplated
by Section 5.10) shall have been executed by each person who serves as an
executive officer or director of Company or Bank or who beneficially owns 5% or
more of the Company Common Stock outstanding; and Whitney shall have received
from each such person a written confirmation dated not earlier than five days
prior to the Closing Date to the effect that each representation made in such
person's Shareholder's Commitment is true and correct as of the date of such
confirmation and that such person has complied with all of his or her covenants
therein through the date of such confirmation.
(h) Regulatory Action. No adverse regulatory action shall be
pending or threatened against any member of Company's consolidated group,
including (without limitation) any proposed amendment to any existing
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agreement, memorandum, letter, order or decree, formal or informal, between any
regulator and any member of Company's consolidated group, if such action would
or could impose any material liability on Whitney or interfere in any material
respect with the conduct of the businesses of Whitney's consolidated group
following the Mergers.
6.03. Additional Conditions of Company and Bank. The obligations of
Company and Bank to consummate the Mergers are also subject to the satisfaction
of the following additional conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. The
representations and warranties of Whitney and Acquiring Bank contained in this
Agreement shall be true and correct in all material respects, individually and
in the aggregate, on the Closing Date, with the same effect as though made on
and as of such date, except to the extent of changes permitted by the terms of
this Agreement, and each of Whitney and Acquiring Bank shall have in all
material respects performed all obligations and complied with all covenants
required by this Agreement and the Merger Agreements to be performed or complied
with by it at or prior to the Closing. In addition, each of Whitney and
Acquiring Bank shall have delivered to Company and Bank its certificate dated as
of the Closing Date and signed by its chief executive officer and chief
financial officer to the effect that, except as specified in such certificate,
such persons do not know, and have no reasonable grounds to know, of any
material failure or breach of any representation, warranty or covenant made by
it in this Agreement.
(b) Opinion of Counsel. Company and Bank shall have received
from Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P., counsel for
Whitney and Acquiring Bank, an opinion, dated as of the Closing Date, customary
in scope and in form and substance satisfactory to Company and Bank. In giving
such opinion, such counsel may rely as to questions of fact upon certificates of
one or more officers of Whitney or members of Whitney's consolidated group, and
governmental officials and as to matters of law other than Louisiana or federal
law on the opinions of foreign counsel retained by them or Whitney.
(c) No Material Adverse Change. There shall not have occurred
any material adverse change from Whitney's Latest Balance Sheet to the Effective
Date in the financial condition, results of operations or business of Whitney's
consolidated group taken as a whole.
6.04. Waiver of Conditions. Any condition to a party's obligations
hereunder may be waived by that party, other than the conditions specified in
subparagraphs (a), (b) and (d) of subsection 6.01 hereof. The failure to waive
any condition hereunder shall not be deemed a breach of subsection 5.02 hereof.
Section 7. Termination
7.01. Termination. This Agreement and the Merger Agreements may be
terminated and the Mergers contemplated herein abandoned at any time before the
Effective Time, whether before or after approval by the shareholders of Company
and Bank:
(a) Mutual Consent. By the mutual consent of the Boards of
Directors of Whitney and Company.
(b) Breach. By the Board of Directors of either Whitney or
Company in the event of a breach by any member of the consolidated group of the
other of them of any representation or warranty contained in this Agreement or
of any covenant contained in this Agreement, which in either case cannot be, or
has not been, cured within 15 days after written notice of such breach is given
to the entity committing such breach, provided that the right to effect such
cure shall not extend beyond the date set forth in subparagraph (c) below.
(c) Abandonment. By the Board of Directors of either Whitney
or Company if (i) all conditions to Closing required by Section 6 hereof have
not been met by or waived by Whitney or Company by June 30, 1997, or (ii) any
such condition cannot be met by June 30, 1997 and has not been waived by each
party in whose favor such condition inures, or (iii) if the Mergers have not
been consummated by June 30, 1997, provided that the failure to
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consummate the transactions contemplated hereby is not caused by the party
electing to terminate pursuant to this clause (iii).
(d) Dissenting Shareholders. By Whitney, if the number of
shares of Company Common Stock and Bank Common Stock as to which the holders
thereof are, at the time of the Closing, legally entitled to assert dissenting
shareholders rights plus the number of such shares as to which the holders
thereof are entitled to receive cash payments in lieu of fractional shares
exceeds that number of shares of Company Common Stock and Bank Common Stock that
would preclude pooling of interests accounting for the Mergers.
(e) Shareholder Vote. By Whitney if this Agreement or the
Company Merger fails to receive the requisite vote at any meeting of Company
shareholders called for the purpose of voting thereon, or if this Agreement or
the Bank Merger Agreement fails to receive the requisite vote at any meeting of
Bank shareholders called for the purpose of voting thereon.
(f) Company Recommendation. By Whitney if the Board of
Directors of Company or Bank (A) shall withdraw, modify or change its
recommendation to its shareholders of this Agreement or the Mergers or shall
have resolved to do any of the foregoing; (B) shall have recommended to the
shareholders of Company or Bank (or in the case of (iii) approved) any of the
following (being referred to herein as an "Acquisition Transaction") (i) any
merger, consolidation, share exchange, business combination or other similar
transaction (other than the transactions contemplated by this Agreement); (ii)
any sale, lease, transfer or other disposition of all or substantially all of
the assets of any member of Company's consolidated group; or (iii) any
acquisition, by any person or group, of the beneficial ownership of 15% or more
of any class of Company capital stock; or (C) shall have made any announcement
of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(g) Prior to Notification Date. By Whitney by delivery of a
notice to terminate this Agreement pursuant to Section 5.01(b).
(h) Acquisition Transaction. By Company in the event Company
receives a written offer with respect to an Acquisition Transaction and the
Board of Directors of Company determines in good faith, after consultation with
its financial advisors and counsel, that such Acquisition Transaction is more
favorable to Company's shareholders than the transactions contemplated by this
Agreement.
7.02. Effect of Termination; Survival. Upon termination of this
Agreement pursuant to this Section 7, the Merger Agreements shall also
terminate, and this Agreement and the Merger Agreements shall be void and of no
effect, and there shall be no liability by reason of this Agreement or the
Merger Agreements, or the termination thereof, on the part of any party or their
respective directors, officers, employees, agents or shareholders except for any
liability of a party hereto arising out of (i) an intentional breach of any
representation, warranty or covenant in this Agreement prior to the date of
termination, except if such breach was required by law or by any bank or bank
holding company regulatory authority or (ii) a breach of any covenant that
survives pursuant to the following sentence. The following provisions shall
survive any termination of this Agreement: the second to last sentence of
subsection 5.01(a) and the last sentence of subsection 5.01(b); subsection 7.02;
subsection 7.03 and Section 8.
7.03. Termination Fee. If this Agreement is terminated pursuant to
7.01(h), then Company shall pay or cause to be paid to Whitney upon demand a fee
of $2,500,000 (the "Termination Fee"), payable in same day funds.
Section 8. Miscellaneous
8.01. Notices. Any notice, communication, request, reply, advice or
disclosure (hereinafter severally and collectively "notice") required or
permitted to be given or made by any party to another in connection with this
Agreement or the Merger Agreements or the transactions herein or therein
contemplated must be in writing and may be given or served by depositing the
same in the United States mail, postage prepaid and registered or certified with
return receipt requested, or by delivering the same to the address of the person
or entity to be notified, or by sending the same by a national commercial
courier service (such as Airborne Express, Federal Express, Emery Air Freight,
Network Courier, Purolator or the like) for next-day delivery provided such
delivery is confirmed in writing by such
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courier. Notice deposited in the mail in the manner hereinabove described shall
be effective 48 hours after such deposit, and notice delivered in person or by
commercial courier shall be effective at the time of delivery. A party
delivering notice shall endeavor to obtain a receipt therefor. For purposes of
notice, the addresses of the parties shall, until changed as hereinafter
provided, be as follows:
If to Whitney or Acquiring Bank:
Whitney Holding Corporation
Attn: Mr. William L. Marks
Chairman of the Board & CEO
228 St. Charles Avenue
New Orleans, Louisiana 70130
With copies to:
Joseph S. Schwertz, Jr., Esq.
Whitney National Bank
Legal Department
228 St. Charles Avenue
New Orleans, Louisiana 70130
If to Company or Bank:
Merchants Bank & Trust Co.
Attn: Mr. William R. Allison
President
1300 25th Avenue
Gulfport, Mississippi 39501
With copies to:
Carl J. Chaney, Esq.
Watkins Ludlam & Stennis, P.A.
633 North State Street
Jackson, Mississippi 39202
8.02. Waiver. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such waiver
is an express written waiver which has been signed by the waiving party. Waiver
of any one breach shall not be deemed to be a waiver of any other breach of the
same or any other provision hereof.
8.03. Expenses. Except as otherwise provided herein, regardless of
whether the Mergers are consummated, all expenses incurred in connection with
this Agreement and the Merger Agreements and the transactions contemplated
hereby and thereby shall be borne by the party incurring them.
8.04. Headings. The headings in this Agreement have been included
solely for reference and shall not be considered in the interpretation or
construction of this Agreement.
8.05. Annexes, Exhibits and Schedules. The annexes, exhibits and
schedules to this Agreement are incorporated herein by this reference and
expressly made a part hereof.
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8.06. Integrated Agreement. This Agreement, the Merger Agreements,
the exhibits and schedules hereto and all other documents and instruments
delivered in accordance with the terms hereof constitute the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof, and there are no agreements, understanding, restrictions,
representations or warranties among the parties other than those set forth
herein or therein, all prior agreements and understandings being superseded
hereby.
8.07. Choice of Law. The validity of this Agreement and the Merger
Agreements, the construction of their terms and the determination of the rights
and duties of the parties hereto in accordance therewith shall be governed by
and construed in accordance with the laws of the United States and those of the
State of Louisiana applicable to contracts made and to be performed wholly
within such State, except to the extent that the laws of the State of
Mississippi require this Agreement and the Merger Agreements to be governed by
the laws of that state.
8.08. Parties in Interest. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that this Agreement may not be transferred or assigned by any member of
either consolidated group without the prior written consent of the other parties
hereto, including any transfer or assignment by operation of law. Nothing in
this Agreement or the Merger Agreements is intended or shall be construed to
confer upon or to give any person other than the parties hereto any rights or
remedies under or by reason of this Agreement or the Merger Agreements, except
as expressly provided for herein and therein.
8.09. Amendment. The parties may, by mutual agreement of their
respective Boards of Directors, amend, modify or supplement this Agreement, the
Merger Agreements, or any exhibit or schedule of any of them, in such manner as
may be agreed upon by the parties in writing, at any time before or after
approval of this Agreement and the Merger Agreements and the transactions
contemplated hereby and thereby by the shareholders of the parties hereto. This
Agreement and any exhibit or schedule to this Agreement may be amended at any
time and, as amended, restated by the chief executive officers of the respective
parties (or their respective designees) without the necessity for approval by
their respective Boards of Directors or shareholders, to correct typographical
errors or to change erroneous references or cross references, or in any other
manner which is not material to the substance of the transactions contemplated
hereby.
8.10 Share Exchange. At the time of execution of this Agreement, the
Constituent Corporations have not determined whether Whitney will acquire 100%
of the outstanding Bank Common Stock pursuant to the Bank Merger described
herein or through a share exchange as permitted under Section 116 of the LBCL
and applicable Mississippi law (a "Share Exchange"), which would provide Bank's
shareholders (other than Company) with the same consideration and rights to
which they would be entitled under the Bank Merger. If the parties shall
determine to effect such acquisition through a Share Exchange, the chief
executive officers of each of the parties hereto are hereby authorized to amend
and restate this Agreement, without further action by their respective Boards of
Directors, to eliminate all references to the Bank Merger and to insert in lieu
thereof provisions pursuant to which the Share Exchange would be effected.
8.11. Counterparts. This Agreement may be executed by the parties
in any number of counterparts, each of which shall be deemed an original, but
all of which taken together shall constitute one and the same document.
8.12. Non-Survival of Representations and Warranties; Covenants. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant hereto shall survive the Effective Time. Each party hereby
agrees that its sole right and remedy with respect to any breach of a
representation or warranty or covenant by the other party shall be not to close
the transactions described herein if such breach results in the nonsatisfaction
of a condition set forth in Section 6 hereof; provided, however, that the
foregoing shall not be deemed to be a waiver of any claim for an intentional
breach of a representation, warranty or covenant or for fraud except if such
breach is required by law or by any bank or bank holding company regulatory
authority; it being understood that a disclosure in any closing certificate
provided in accordance with subparagraph (a) of subsection 6.02 or subparagraph
(a) of subsection 6.03 hereof concerning an inaccuracy of a representation or
warranty shall not of itself be deemed to be an intentional breach of such
representation or warranty. The covenants of the parties set forth herein shall
survive the Effective Time in accordance with their terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
WHITNEY HOLDING CORPORATION
BY: /s/ William L. Marks
-----------------------
William L. Marks
ITS: Chairman and CEO
MERCHANTS BANCSHARES, INC.
BY: /s/ Guy C. Billups, Jr.
------------------------
Guy C. Billups, Jr.
ITS: Chairman
MERCHANTS BANK & TRUST CO.
BY: /s/ Guy C. Billups, Jr.
-------------------------
Guy C. Billups, Jr.
ITS: Chairman
IN WITNESS WHEREOF, in accordance with Section 1.01(a) of the Agreement
and Plan of Merger by and between Whitney Holding Corporation, Merchants
Bancshares, Inc. and Merchants Bank & Trust Co. dated November _____, 1996, (the
"Agreement"), Acquiring Bank hereby executes the Agreement as a party.
ACQUIRING BANK
BY: ____________________________
ITS:
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Exhibit 1.01(b) to
Agreement and Plan of Merger
JOINT AGREEMENT OF MERGER
OF
MERCHANTS BANCSHARES, INC.
AND
WHITNEY HOLDING CORPORATION
THIS JOINT AGREEMENT OF MERGER (this "Joint Agreement") is dated as of
the ______ day of November 1996, between Merchants Bancshares, Inc., a
Mississippi corporation ("Company"), and Whitney Holding Corporation, a
Louisiana corporation ("Whitney"); and is entered into pursuant to the
provisions of Sections 111, et seq. of the Louisiana Business Corporation Law
("LBCL") and Sections 79-4-11.01, et seq. of the Mississippi Business
Corporation Act ("MBCA").
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of Company and Whitney (collectively, the
"Merging Corporations") deem it advisable that Company be merged with and into
Whitney (the "Company Merger"), as provided in this Joint Agreement and in the
Agreement and Plan of Merger dated November 14, 1996 (the "Plan") among Whitney,
Company, Acquiring Bank, which is a wholly owned subsidiary of Whitney, and
Merchants Bank & Trust Company ("Bank"), which is a 98.91% owned subsidiary of
Company, which sets forth, among other things, certain representations,
warranties, covenants and conditions relating to the Company Merger; and
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of the Merging Corporations wish to enter into
this Joint Agreement and submit it to the shareholders of Company for approval
in the manner required by law and, subject to such approval and to such other
approvals as may be required, to effect the Company Merger, all in accordance
with the provisions of this Joint Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be derived
from this Joint Agreement and the Company Merger, the parties hereto agree as
follows:
1. THE COMPANY MERGER
In accordance with the applicable provisions of the LBCL and MBCA,
Company shall be merged with and into Whitney; the separate existence of Company
shall cease; and Whitney shall be the corporation surviving the Company Merger.
2. EFFECTIVENESS OF THE COMPANY MERGER
2.1. Effective Time of the Company Merger. The Company Merger shall
become effective at ________ on the date on which this Joint Agreement (and, as
applicable, Articles of Merger), having been executed and acknowledged in the
manner required by law, are filed in the office of the Secretary of State of
Louisiana and the Secretary of State of Mississippi (the "Effective Time").
2.2. Effect of the Company Merger. At the Effective Time, (i) the
separate existence of Company shall cease and Company shall be merged with and
into Whitney; (ii) Whitney shall continue to possess all of the rights,
privileges
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and franchises possessed by it and shall, at the Effective Time, become vested
with and possess all rights, privileges and franchises possessed by Company;
(iii) Whitney shall be responsible for all of the liabilities and obligations of
Company in the same manner as if Whitney had itself incurred such liabilities or
obligations, and the Company Merger shall not affect or impair the rights of the
creditors or of any persons dealing with the Merging Corporations; and (iv) the
Company Merger shall, from and after the Effective Time, have all the effects
provided by applicable Louisiana and Mississippi law.
2.3. Articles of Incorporation.
(a) The Articles of Incorporation of Whitney, as in effect
immediately prior to the Effective Time, shall not be amended by reason of the
Company Merger and shall be the Articles of Incorporation of Whitney as the
surviving corporation in the Company Merger until thereafter changed or amended
as provided therein or by applicable law.
(b) The Bylaws of Whitney, as in effect immediately prior to
the Effective Time, shall not be amended by reason of the Company Merger and
shall be the Bylaws of Whitney as the surviving corporation in the Company
Merger until thereafter changed or amended as provided therein or by applicable
law.
2.4. Directors and Officers. The directors and officers of Whitney at
the Effective Time shall be the directors and officers of Whitney as the
surviving corporation in the Company Merger until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
2.5. Additional Actions. If, at any time after the Effective Time,
Whitney shall consider or be advised that any further assignments or assurances
in law or any other acts are necessary or desirable (a) to vest, perfect or
confirm, of record or otherwise, in Whitney, title to or the possession of any
property or right of Company acquired or to be acquired by reason of, or as a
result of, the Company Merger, or (b) otherwise to carry out the purposes of
this Joint Agreement, Company and its proper officers and directors shall be
deemed to have granted to Whitney an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments and assurances in law and to do
all acts necessary or proper to vest, perfect or confirm title to and possession
of such property or rights in Whitney and otherwise to carry out the purposes of
this Joint Agreement; and the proper officers and directors of Whitney are fully
authorized in the name of Company to take any and all such action.
3. METHOD OF CARRYING COMPANY MERGER INTO EFFECT
The shareholders of Whitney are not required to approve this Joint
Agreement under applicable provisions of the LBCL; however, this Joint Agreement
shall be submitted to the shareholders of Company for their approval. If such
approval is given, then the fact of such approval shall be certified hereon by
the Secretary of Company. This Joint Agreement, so approved and certified,
shall, as soon as is practicable, be signed and acknowledged by the President or
Vice President of each of the Merging Corporations. As soon as may be
practicable thereafter and after the approval of all applicable regulatory
authorities and the expiration of all applicable waiting periods, this Joint
Agreement, so certified, signed and acknowledged, (and, as applicable, Articles
of Merger) shall be delivered to the Secretary of State of Louisiana and the
Secretary of State of Mississippi for filing in the manner required by law and
shall be effective at the Effective Time; and thereafter, as soon as
practicable, a copy of the Certificate of Merger issued by the Secretary of
State of Louisiana, and certified by him to be a true copy, shall be filed in
the mortgage records of the parish and county in which the Merging Corporations
have their respective registered offices and in the conveyance records of each
county in which Company has immovable property.
4. CONVERSION OF SHARES
4.1. Conversion. (a) Company Merger. Subject to the provisions of this
Section 4, at the Effective Time, by virtue of the Company Merger and without
any action on the part of the holders thereof, the shares of Company common
stock, par value $2.50 per share ("Company Common Stock"), shall be converted as
follows: Except for (i) shares issued and outstanding immediately prior to the
Effective Time as to which dissenters' rights have been perfected
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and not withdrawn or otherwise forfeited under Article 13 of the MBCA
("Dissenters' Shares") and (ii) shares of Company Common Stock held by Company
as treasury shares (which shall by reason of the Company Merger be canceled),
and subject to the provisions of Section 4.1(e) relating to fractional shares,
each issued and outstanding share of Company Common Stock shall be converted
into and become that number of shares of Whitney common stock, no par value
("Whitney Common Stock") that is equal to the quotient obtained by dividing the
Company Percentage (as hereinafter defined) of the Maximum Deliverable Amount
(as hereinafter defined), rounded up to the nearest whole number of shares, by
the total number of issued and outstanding shares (not treasury shares) of
Company Common Stock at the Effective Time.
(b) For purposes of this Section 4, shares of Company Common
Stock that are held by Company or Bank (other than shares held by Bank in a
fiduciary capacity other than for Company), shall not be considered outstanding
and shall be cancelled (and not converted) by virtue of the Company Merger.
(c) Certain Defined Terms. As used in this Section 4.1, the
following terms shall have the meanings set forth below:
(i) Purchase Price. The term "Purchase Price" means
$51,814,000 plus Retained Net Income After Tax (as hereinafter defined).
(ii) Maximum Deliverable Amount. The term "Maximum
Deliverable Amount" means the quotient obtained by dividing the Purchase Price
by the Average Market Price (as hereinafter defined).
(iii) Bank Common Stock. The term "Bank Common Stock"
means the common stock, $5.00 par value, of Bank.
(iv) Bank Percentage. The term "Bank Percentage" means
the percentage obtained by dividing (A) the dollar amount obtained by
multiplying (x) the Purchase Price, minus the book value of all assets of
Company other than Bank Common Stock, by (y) the percentage of the outstanding
shares of Bank Common Stock owned by persons other than Company, by (B) the
total Purchase Price.
(v) Company Percentage. The term "Company Percentage"
means the result obtained by subtracting the Bank Percentage from 100%.
(vi) Retained Net Income After Tax. The term "Retained
Net Income After Tax" means the consolidated retained net income for the period
October 1, 1996 through the end of the calendar month immediately preceding
the effective date of the Company Merger, as agreed to by the Merging
Corporations, based on normal banking net income less appropriate income taxes
and dividends declared and/or paid and excluding any unusual or nonrecurring
additions to net income such as reversals of loan loss or other valuation
reserves and gains on the sales of investments or other assets.
(d) Average Market Price. The "Average Market Price" shall be
the average of the closing per share trading prices of Whitney Common Stock
(adjusted appropriately for any stock split, stock dividend, recapitalization,
reclassification or similar transaction which is effected, or for which a record
date occurs) on the forty (40) trading days preceding the fifth trading day
immediately prior to the effective date of the Company Merger, as reported in
the Wall Street Journal (corrected for typographical errors); provided, however,
that if the Average Market Price as calculated above is less than $30.00, the
Average Market Price for purposes of this Section 4.1(d) shall be $30.00, and if
the Average Market Price as calculated above is greater than $36.00, the Average
Market Price for purposes of this Section 4.1(d) shall be $36.00.
(e) Fractional Shares. In lieu of the issuance of fractional
shares of Whitney Common Stock, each shareholder of Company who would otherwise
be entitled thereto, upon surrender of his or her certificates that immediately
prior to the Effective Time represented Company Common Stock, other than
Dissenters' Shares and shares of Company Common Stock held by Company as
treasury shares (which shall by reason of the Merger be canceled), shall receive
a cash payment (without interest) equal to the fair market value at the
Effective Time of any fraction of
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a share of Whitney Common Stock to which such holder would be entitled but for
this provision. For purposes of calculating such payment, the fair market value
of a fraction of a share of Whitney Common Stock at the Effective Time shall be
such fraction multiplied by the Average Market Price.
(f) Exchange of Certificates. After the Effective Time, each
holder of an outstanding certificate or certificates theretofore representing a
share or shares of Company Common Stock (other than Dissenters' Shares), upon
surrender thereof to the exchange agent selected by Whitney (the "Exchange
Agent"), together with duly executed transmittal materials provided pursuant to
Section 4.1(h) or upon compliance by the holder or holders thereof with the
procedures of the Exchange Agent with respect to lost, stolen or destroyed
certificates, shall be entitled to receive in exchange therefor any payment due
in lieu of fractional shares and a certificate or certificates representing the
number of whole shares of Whitney Common Stock into which such holder's shares
of Company Common Stock were converted. Until so surrendered, each outstanding
Company stock certificate shall be deemed for all purposes, other than as
provided below with respect to the payment of dividends or other distributions
(if any) in respect of Whitney Common Stock, to represent the number of whole
shares of Whitney Common Stock into which such holder's Company Common Stock
shall have been converted. Whitney may, at its option, refuse to pay any
dividend or other distribution to holders of unsurrendered Company stock
certificates until surrendered; provided, however, that upon the surrender and
exchange of any Company stock certificates there shall be paid, to the extent
not previously paid, to the record holders of the Whitney stock certificates
issued in exchange therefor the amount, without interest, of accumulated
dividends and distributions, if any, which have become payable with respect to
the number of whole shares of Whitney Common Stock into which the shares of
Company Common Stock theretofore represented by such certificates shall have
been exchanged.
(g) Deposit. Promptly following the Effective Time, Whitney
shall deposit or cause to be deposited with the Exchange Agent (i) certificates
representing the shares of Whitney Common Stock and (ii) the cash in lieu of
fractional shares to be issued and paid, as the case may be, in exchange for
outstanding shares of Company Common Stock pursuant to this Section 4.
(h) Transmittal Materials. Promptly after the Effective Time,
Whitney shall send or cause to be sent to each former shareholder of record of
Company at the Effective Time, excluding the holders, if any, of Dissenters'
Shares, transmittal materials for use in exchanging certificates of Company
Common Stock for certificates of Whitney Common Stock.
(i) Dissenters' Shares. Holders of Dissenters' Shares shall
not be entitled to receive the shares of Whitney Common Stock and any unpaid
dividends and distributions payable thereon pursuant to this Section 4.1 and
shall only be entitled to receive payment of the fair cash value of such shares
in accordance with the provisions of Article 13 of the MBCA, unless and until
such holders fail to perfect or effectively withdraw or lose their rights to
such appraisal and payment. If, after the Effective Time, any such holder fails
to perfect or effectively withdraws or loses such right, such shares of Company
Common Stock will be treated as if they had been converted into, at the
Effective Time, the shares of Whitney Common Stock (and cash in lieu of
fractional share), and any unpaid dividends and distributions payable thereon,
pursuant to this Section 4.1, without interest thereon.
4.2. Closing Transfer Books. At the Effective Time, the stock transfer
books of Company shall be closed and no transfer of shares of Company Common
Stock shall be made thereafter. All shares of Whitney Common Stock issued, and
any fractional share payments paid upon surrender for exchange of certificates
representing shares of Company Common Stock in accordance with this Joint
Agreement shall be deemed to have been issued in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented by such
certificates.
5. MISCELLANEOUS
5.1. Termination. Prior to the Effective Time, this Joint Agreement
may be terminated, and the Company Merger abandoned, as set forth in the Plan.
5.2. Headings. The descriptive headings of the sections of this Joint
Agreement are inserted for convenience only and do not constitute a part hereof
for any other purpose.
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5.3. Modifications, Amendments and Waivers. At any time prior to the
Effective Time (notwithstanding any shareholder approval that may have already
been given), the parties hereto may, to the extent permitted by and as provided
in the Plan, modify, amend or supplement any term or provision of this Joint
Agreement.
5.4. Governing Law. This Joint Agreement shall be governed by the laws
of the State of Louisiana (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters, including, but not limited
to, matters of validity, construction, effect and performance, except to the
extent that the laws of the State of Mississippi require this Joint Agreement to
be governed by the laws of that state.
IN WITNESS WHEREOF, this Joint Agreement has been executed by a
majority of the respective Directors of each of the Merging Corporations, as of
the day and year first above written.
[Signature lines omitted]
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Exhibit 1.01(c) to
Agreement and Plan of Merger
AGREEMENT OF MERGER
OF
MERCHANTS BANK & TRUST CO.
INTO
ACQUIRING BANK
THIS AGREEMENT OF MERGER (this "Agreement") is made and entered into as
of this ______ day of ______________________, 199___, between Merchants Bank &
Trust Co., a Mississippi chartered state bank, domiciled at Gulfport,
Mississippi ("Bank") and Acquiring Bank, a national banking association,
organized under the laws of the United States ("Acquiring Bank" or the
"Receiving Association").
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of Acquiring Bank and Bank (collectively called
the "Merging Associations") deem it advisable that Bank be merged with and into
Acquiring Bank (the "Bank Merger"), as provided in this Agreement and in the
Agreement and Plan of Merger dated November ___, 1996 (the "Plan"), among the
Merging Associations, Whitney Holding Corporation, a Louisiana corporation
("Whitney") of which Acquiring Bank is a wholly-owned subsidiary, and Merchants
Bancshares, Inc., a Mississippi corporation ("Company"), which is the record and
beneficial owner of 98.91% of Bank's outstanding capital stock, which sets
forth, among other things, certain representations, warranties, covenants and
conditions relating to the Bank Merger; and
WHEREAS, as required by law, at least a majority of the members of the
respective Boards of Directors of the Merging Associations wish to enter into
this Agreement and submit it to the respective shareholders of the Merging
Associations for approval in the manner required by law and, subject to said
approval and to approval by the Office of the Comptroller of the Currency (the
"OCC") and the Mississippi Department of Banking and Consumer Finance being duly
given and to such other approvals as may be required by law, to effect the Bank
Merger, all in accordance with the provisions of this Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be derived
from this Agreement and the Bank Merger, the parties hereto agree as follows:
1. The Bank Merger. At the Effective Time (as defined in Section 2
hereof), Bank shall be merged with and into Acquiring Bank under the Articles of
Association of Acquiring Bank, existing Charter No. ___________, pursuant to the
provisions of, and with the effect provided in, 12 U.S.C. ss.215a, et seq. and
Mississippi Business Corporation Act ("MBCA"). At the Effective Time, Acquiring
Bank, the Receiving Association, shall continue to be a national banking
association, and its business shall continue to be conducted at its main office
in Bay St. Louis, Mississippi, and at its legally established branches
(including, without limitation, the legally established offices from which Bank
conducted business immediately prior to the Effective Time). The Articles of
Association of Acquiring Bank shall not be altered or amended by virtue of the
Bank Merger. The directors and officers of Bank in office immediately prior to
the Effective Time shall be the directors and officers of the Acquiring Bank, as
the Receiving Association.
2. Effective Time. The Bank Merger shall become effective at the time
specified or permitted by the Comptroller in a certificate or other written
record submitted by the Merging Associations to, or issued by the Office of the
Comptroller of the Currency (the "Effective Time").
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3.1. Conversion of Capital Stock of Bank. (a) Subject to the provisions
of this Section 3.1, at the Effective Time, by virtue of the Bank Merger and
without any action on the part of the holders thereof, the shares of Bank common
stock, par value $5.00 per share ("Bank Common Stock"), shall be converted as
follows: Except for shares as to which dissenters' rights have been perfected
and not withdrawn or otherwise forfeited under 12 U.S.C. ss.215a (the
"Dissenters' Shares") and/or Article 13 of the Mississippi Business Corporation
Act subject to the provisions of Section 3.1(e) relating to fractional shares,
each outstanding share of Bank Common Stock will be converted into and become
that number of shares of Whitney common stock, no par value ("Whitney Common
Stock"), that is equal to the quotient obtained by dividing the Bank Percentage
(as hereinafter defined) of the Maximum Deliverable Amount, rounded up to the
nearest whole number of shares, by the total number of shares of Bank Common
Stock issued and outstanding on the effective date of the Bank Merger.
(b) For purposes of this Section 3, shares of Bank Common
Stock that are held by Company or Bank (other than shares held by Bank in a
fiduciary capacity other than for Company), shall not be considered outstanding
and shall be cancelled (and not converted) by virtue of the Bank Merger.
(c) Certain Defined Terms. As used in this Section 3.1, the
following terms shall have the meanings set forth below:
(i) Purchase Price. The term "Purchase Price" means
$51,814,000 plus Retained Net Income After Tax (as hereinafter defined).
(ii) Maximum Deliverable Amount. The term "Maximum
Deliverable Amount" means the quotient obtained by dividing the Purchase Price
by the Average Market Price (as hereinafter defined).
(iii) Bank Percentage. The term "Bank Percentage" means
the percentage obtained by dividing (A) the dollar amount obtained by
multiplying (x) the Purchase Price, minus the book value of all assets of
Company other than Bank Common Stock, by (y) the percentage of the outstanding
shares of Bank Common Stock owned by persons other than Company, by (B) the
total Purchase Price.
(iv) Retained Net Income After Tax. The term "Retained Net
Income After Tax" means the consolidated retained net income for the period
October 1, 1996 through the end of the calendar month immediately preceding the
Effective Date, as agreed to by the Whitney and Company, based on normal banking
net income less appropriate income taxes and dividends declared and/or paid and
excluding any unusual or nonrecurring additions to net income such as reversals
of loan loss or other valuation reserves and gains on the sales of investments
or other assets.
(d) Average Market Price. The "Average Market Price" shall be
the average of the closing per share trading prices of Whitney Common Stock
(adjusted appropriately for any stock split, stock dividend, recapitalization,
reclassification or similar transaction which is effected, or for which a record
date occurs) on the forty (40) trading days preceding the fifth trading day
immediately prior to the Effective Date, as reported in the Wall Street Journal
(corrected for typographical errors); provided, however, that if the Average
Market Price as calculated above is less than $_________, the Average Market
Price for purposes of this Section 3.1(d) shall be $_________ and if the Average
Market Price as calculated above is greater than $_________ the Average Market
Price for purposes of this Section 3.1(d) shall be $_________.
(e) Fractional Shares. In lieu of the issuance of fractional
shares of Whitney Common Stock, each shareholder of Bank who would otherwise be
entitled thereto, upon surrender of his or her certificates that immediately
prior to the Effective Time represented Bank Common Stock, other than
Dissenters' Shares, shall receive a cash payment (without interest) equal to the
fair market value at the Effective Time of any fraction of a share of Whitney
Common Stock to which such holder would be entitled but for this provision. For
purposes of calculating such payment, the fair market value of a fraction of a
share of Whitney Common Stock at the Effective Time shall be such fraction
multiplied by the Average Market Price.
(f) Exchange of Certificates. After the Effective Time, each
holder of an outstanding certificate or certificates theretofore representing a
share or shares of Bank Common Stock (other than Dissenters' Shares), upon
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surrender thereof to the exchange agent selected by Whitney (the "Exchange
Agent"), together with duly executed transmittal materials provided pursuant to
Section 3.1(h) or upon compliance by the holder or holders thereof with the
procedures of the Exchange Agent with respect to lost, stolen or destroyed
certificates, shall be entitled to receive in exchange therefor any payment due
in lieu of fractional shares and a certificate or certificates representing the
number of whole shares of Whitney Common Stock into which such holder's shares
of Bank Common Stock were converted. Until so surrendered, each outstanding Bank
stock certificate shall be deemed for all purposes, other than as provided below
with respect to the payment of dividends or other distributions (if any) in
respect of Whitney Common Stock, to represent the number of whole shares of
Whitney Common Stock into which such holder's Bank Common Stock shall have been
converted. Whitney may, at its option, refuse to pay any dividend or other
distribution to holders of unsurrendered Bank stock certificates until
surrendered; provided, however, that upon the surrender and exchange of any Bank
stock certificates there shall be paid, to the extent not previously paid, to
the record holders of the Whitney stock certificates issued in exchange therefor
the amount, without interest, of accumulated dividends and distributions, if
any, which have become payable with respect to the number of whole shares of
Whitney Common Stock into which the shares of Bank Common Stock theretofore
represented by such certificates shall have been exchanged.
(g) Deposit. Promptly following the Effective Time, Whitney
shall deposit or cause to be deposited with the Exchange Agent (i) certificates
representing the shares of Whitney Common Stock and (ii) the cash in lieu of
fractional shares to be issued and paid, as the case may be, in exchange for
outstanding shares of Bank Common Stock pursuant to this Section 3.1.
(h) Transmittal Materials. Promptly after the Effective Time,
Whitney shall send or cause to be sent to each former shareholder of record of
Bank at the Effective Time, excluding the holders, if any, of Dissenters'
Shares, transmittal materials for use in exchanging certificates of Bank Common
Stock for certificates of Whitney Common Stock.
(i) Dissenters' Shares. Holders of Dissenters' Shares shall
not be entitled to receive the shares of Whitney Common Stock and any unpaid
dividends and distributions payable thereon pursuant to this Section 3.1 and
shall only be entitled to receive payment of the fair cash value of such shares
in accordance with the provisions of Article 13 of the MBCA and 12 U.S.C.
ss.215a, as applicable, unless and until such holders fail to perfect or
effectively withdraw or lose their rights to such appraisal and payment. If,
after the Effective Time, any such holder fails to perfect or effectively
withdraws or loses such right, such shares of Bank Common Stock will be treated
as if they had been converted into, at the Effective Time, the shares of Whitney
Common Stock (and cash in lieu of fractional shares), and any unpaid dividends
and distributions payable thereon, pursuant to this Section 3.1, without
interest thereon.
3.2. Closing Transfer Books. At the Effective Time, the stock transfer
books of Bank shall be closed and no transfer of shares of Bank Common Stock
shall be made thereafter. All shares of Whitney Common Stock issued, and any
fractional share payments paid upon surrender for exchange of certificates
representing shares of Bank Common Stock in accordance with this Section 3 shall
be deemed to have been issued in full satisfaction of all rights pertaining to
the shares of Bank Common Stock theretofore represented by such certificates.
4. Capital Stock of the Receiving Association. The shares of the
capital stock of Acquiring Bank, the Receiving Association, issued and
outstanding immediately prior to the Effective Time shall, at the Effective
Time, continue to be issued and outstanding, and no additional shares of
Acquiring Bank shall be issued as a result of the Bank Merger. Therefore, at the
Effective Time, the amount of capital stock of Acquiring Bank, the Receiving
Association, shall be $__________, divided into ___________ shares of common
stock, par value $______ per share.
5. Assets and Liabilities of the Merging Associations. At the Effective
Time, the corporate existence of each of the Merging Associations shall be
merged into and continued in Acquiring Bank, the Receiving Association, and such
Receiving Association shall be deemed to be the same corporation as each bank or
banking association participating in the Bank Merger. All rights, franchises,
and interests of the individual Merging Associations in and to every type of
property (real, personal and mixed) and choses in action shall be transferred to
and vested in the Receiving Association by virtue of the Bank Merger without any
deed or other transfer. The Receiving Association, upon the Bank Merger and
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights of property, franchises, and interests, including
appointments, designations, and nominations, and all other rights and
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interests as trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, and in every other fiduciary capacity, in the same manner
and to the same extent as such rights, franchises, and interests were held or
enjoyed by any one of the Merging Associations at the time of the Bank Merger,
subject to the conditions specified in 12 U.S.C. ss.215a(f). The Receiving
Association shall, from and after the Effective Time, be liable for all
liabilities of the Merging Associations.
6. Shareholder Approval; Conditions; Filing. This Agreement shall be
submitted to the shareholders of the Merging Associations for ratification and
confirmation in accordance with applicable provisions of law. The obligations of
the Merging Associations to effect the Bank Merger shall be subject to all the
terms and conditions of the Plan. If the shareholders of the Merging
Associations ratify and confirm this Agreement, then the fact of such approval
shall be certified hereon by the Secretary of each of the Merging Associations
and this Agreement, so approved and certified, shall, as soon as is practicable,
be signed and acknowledged by the President or Chairman of the Board of each of
them. As soon as may be practicable thereafter, this Agreement, so certified,
signed and acknowledged, shall be delivered to the OCC for filing in the manner
required by law.
7. Miscellaneous. This Agreement may, at any time prior to the
Effective Time, be amended or terminated as provided in the Plan. This Agreement
may be executed in counterparts, each of which shall be deemed to constitute an
original. This Agreement shall be governed and interpreted in accordance with
federal law and the applicable laws of the State of Louisiana applicable to
contracts made and to be performed wholly with such state, except to the extent
that the laws of the State of Mississippi require this Agreement to be governed
by the laws of that state. This Agreement may be assigned only to the extent
that the party seeking to assign it is permitted to assign its interests in the
Plan, and subject to the same effect as any such assignment. The headings in
this Agreement are inserted for convenience only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
Capitalized terms used herein and not otherwise defined have the meanings given
to them in the Plan.
IN WITNESS WHEREOF, this Agreement has been executed by a majority of
the directors of each of the Merging Associations, as of the day and year first
above written.
[Signature lines omitted]
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Exhibit 6.02(g) to
Agreement and Plan of Merger
[Letter from directors and executive officers of Bank or
Company and 5% beneficial shareholders of Company]
[date]
Mr. William L. Marks
Chairman and CEO
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, La. 70130
Dear Mr. Marks:
In consideration of the benefits I will receive as a shareholder of
Other Company ("Company") or Other Bank ("Bank") from the Agreement and Plan of
Merger dated November___, 1996 (the "Agreement") between Company, Bank and
Whitney Holding Corporation ("Whitney"), I agree as follows:
[If a director or executive officer of Company or Bank: I agree to vote
all shares of Company or Bank common stock that I own beneficially or of record
in favor of approving the Agreement and the mergers to be effected thereby,
unless Whitney is then in breach or default in any material respect as regards
any covenant, agreement, representation or warranty as to it contained in the
Agreement; provided, however, that nothing in this sentence shall be deemed to
require me to vote any shares of Company stock over which I have or share voting
power solely in a fiduciary capacity on behalf of any person other than Company
or Bank, if I determine, in good faith after consultation with and receipt of an
opinion of counsel, that such a vote would cause a breach of my fiduciary duties
to such other person.]
I [further] agree that I will not, without the prior consent of
Whitney, transfer any of my shares of Company or Bank stock prior to the
Effective Date, as that term is set forth in the Agreement, except by operation
of law, by will, or under the laws of descent and distribution or, in the case
of any transfer more than 30 days before the Effective Date, where the
transferee agrees in writing to be bound by the terms of this letter.
I also acknowledge that Whitney intends to account for the acquisition
of Company and Bank as a pooling of interests. I understand that my transfer of
any shares of Company or Bank common stock and any Whitney common stock that I
receive in exchange for Company or Bank stock, prior to Whitney's publication of
financial results covering at least 30 days of its operations following the
Effective Date, may impair this accounting treatment. Therefore, I agree that,
without the prior consent of Whitney, I will not, except by operation of law, by
will, or under the laws of descent and distribution, sell or otherwise transfer
any shares of Company or Bank stock, (or the Whitney stock which I receive in
exchange for my Company or Bank stock) over which I hold the power to sell,
transfer, pledge or otherwise alienate or encumber until:
a. the mergers have become effective and Whitney has published
financial results covering at least 30 days of its combined
operations following the Effective Date, or
b. the Agreement terminates.
I authorize Whitney or its authorized agent to hold the certificates
representing the shares of Whitney common stock into which my shares of Company
or Bank common stock will be converted until the date that I am free to trade
those shares in accordance with the foregoing paragraph. I understand that upon
my delivery of certificates to the Exchange Agent in compliance with Section
2.01(g) of the Agreement, I will have the right to vote the Whitney shares
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received in exchange therefore and receive dividends in respect thereof during
the time that Whitney or its agent holds the shares under this letter agreement.
I certify that all of the shares of Company or Bank stock of which I
hold the power to sell, transfer, pledge or otherwise alienate or encumber are
represented by the following certificates:
Certificate No. No. of shares
I have no present plan or intention to dispose of any Whitney common
stock that I will receive in the mergers to be effected pursuant to the
Agreement.
I also understand the resale or other disposition of Whitney common
stock that I receive may be governed by Rule 145 of the SEC under the Securities
Act of 1933, as amended, which Rule has been explained to me. I agree not to
sell any of the Whitney common stock to be held by me in violation of the
Securities Act of 1933, as amended, or the rules and regulations thereunder.
This letter shall constitute an irrevocable agreement of the
undersigned, and may be revoked only upon the mutual agreement of the parties.
The agreements contained in this letter will terminate upon any termination of
the Agreement under Section 7 of the Agreement or upon any material amendment of
the Agreement. It is understood that any amendment to the Agreement made
pursuant to Section 8.10 thereof shall not be deemed to be material for purposes
of this letter agreement.
Sincerely,
[Director, Executive Officer or
5% beneficial shareholder]
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APPENDIX B
Article 13 of the Mississippi Business Corporation Act
and Selected Provisions of 12 U.S.C. ss.215a
<PAGE>
Article 13 of the Mississippi Business Corporation Act
ARTICLE 13
DISSENTERS' RIGHTS
Subarticle A. Right to Dissent and Obtain Payment for Shares
79-4-13.01 DEFINITIONS--ln this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 79- 4-13.02 and who exercises that right when and
in the manner required by Sections 79-4-13.20 through 79-4-13.28.
( 3) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
79-4-13.02 RIGHT TO DISSENT.--(a) A shareholder is entitled to dissent
from, and obtain payment of the fair value of his shares in the event of any of
the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by Section
79-4-11.03 or the articles of incorporation and the shareholder is entitled to
vote on the merger, or (ii) if the corporation is a subsidiary that is merged
with its parent under Section 79-4-11.04;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
(1) year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
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(ii) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fraction share so created is to be acquired for cash
under Section 79-4-6.04; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of either
(i) making such corporation subject to application of the Mississippi Control
Share Act, or (ii) making such act inapplicable to a control share acquisition
of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
79-4-13.03 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered
in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
Subarticle B. Procedure for Exercise of Dissenters' Rights
79-4-13.20 NOTICE OF DISSENTERS' RIGHTS. --(a) If proposed corporate
action creating dissenters' rights under Section 79-4-13.02 is submitted to a
vote at a shareholders' meeting, the meeting notice must state that shareholders
are or may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Section
79-4-13.02 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Section
79-4-13.22.
79-4-13.21 NOTICE OF INTENT TO DEMAND PAYMENT.-- (a) If proposed
corporate action creating dissenters' rights under Section 79-4-13.02 is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights (1) must deliver to the corporation before the vote is
taken written notice of his intent to demand payment for his shares if the
proposed action is effectuated, and (2) must not vote his shares in favor of the
proposed action.
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(b) A shareholder who does not satisfy the requirement of subsection
(a) is not entitled to payment for his shares under this article.
79-4-13.22 DISSENTERS' NOTICE.--(a) If proposed corporate action
creating dissenters' rights under Section 79-4-13.02 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10) days
after the corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30) nor more that sixty (60)
days after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this article.
79-4-13.23 DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a
dissenters' notice described in Section 79-4-13.22 must demand payment, certify
whether he acquired beneficial ownership of the shares before the date required
to be set forth in the dissenter's notice pursuant to Section 79-4-13.22(b)(3),
and deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice,
is not entitled to payment for his shares under this article.
79-4-13.24 SHARE RESTRICTIONS.--(a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is taken or the restrictions
released under Section 79-4-13.26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
79-4-13.25 PAYMENT.--(a) Except as provided in Section 79-4-13.27, as
soon as the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with Section
79-4-13.23 the amount the corporation estimates to be the fair value of his
shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if any;
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(2) A statement of the corporation's estimate of the fair value of
the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' right to demand payment under
Section 79-4-13.28; and
(5) A copy of this article.
79-4-13.26 FAILURE TO TAKE ACTION.--(a) If the corporation does not
take the proposed action within sixty (60) days after the date set for demanding
payment and depositing share certificates, the corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 79-4-13.22 and repeat the payment demand
procedure.
79-4-13.27 AFTER-ACQUIRED SHARES.--(a) A corporation may elect to
withhold payment required by Section 79-4-13.25 from a dissenter unless he was
the beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated and
a statement of the dissenter's right to demand payment under Section 79-4-13.28.
79-4-13.28 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
- --(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate (less any payment under Section 79-4-13.25), or reject the
corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under Section
79-4-13.25 or offered under Section 79- 4-13.27 is less than the fair value of
his shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section 79-4-13.25
within sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
within thirty (30) days after the corporation made or offered payment for his
shares.
Subarticle C. Judicial Appraisal of Shares
79-4-13.30 COURT ACTION.--(a) If a demand for payment under Section
79-4-13.28 remains unsettled, the corporation shall commence a proceeding within
sixty (60) days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
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(b) The corporation shall commence the proceeding in the chancery court
of the county where a corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters (whether or not residents
of this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the corporation, or (2)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under Section 79-4-13.27.
79-4-13.31 COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under Section 79-4-13.30 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 79-4-13.20 through 79-4-13.28; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by this article.
(c) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
B-5
<PAGE>
12 U.S.C. Section 215a
Dissenting shareholders
(b) If a merger shall be voted for at the called meetings by the
necessary majorities of the shareholders of each association or State bank
participating in the plan of merger, and thereafter the merger shall be approved
by the Comptroller, any shareholder of any association or State bank to be
merged into the receiving association who has voted against such merger at the
meeting of the association or bank of which he is a stockholder, or has given
notice in writing at or prior to such meeting to the presiding officer that he
dissents from the plan of merger, shall be entitled to receive the value of the
shares so held by him when such merger shall be approved by the Comptroller upon
written request made to the receiving association at any time before thirty days
after the date of consummation of the merger, accompanied by the surrender of
his stock certificates.
Valuation of shares
(c) The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the merger, by an appraisal made by a
committee of three persons, composed of (1) one selected by the vote of the
holders of the majority of the stock, the owners of which are entitled to
payment in cash; (2) one selected by the directors of the receiving association;
and (3) one selected by the two so selected. The valuation agreed upon by any
two of the three appraisers shall govern. If the value so fixed shall not be
satisfactory to any dissenting shareholder who has requested payment, that
shareholder may, within five days after being notified of the appraised value of
his shares, appeal to the Comptroller, who shall cause a reappraisal to be made
which shall be final and binding as to the value of the shares of the appellant.
Application to shareholders of merging associations: appraisal by Comptroller;
expenses of receiving association; sale and resale of shares; State appraisal
and merger law
(d) If, within ninety days from the date of consummation 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 shares, the Comptroller
shall upon written request of any interested party cause an appraisal to be made
which shall be final and binding on all parties. The expenses of the Comptroller
in making the reappraisal or the appraisal, as the case may be, shall be paid by
the receiving association. The value of the shares ascertained shall be promptly
paid to the dissenting shareholders by the receiving association. The shares of
stock of the receiving association which would have been delivered to such
dissenting shareholders had they not requested payment shall be sold by the
receiving association at an advertised public auction, and the receiving
association shall have the right to purchase any of such shares at such public
auction, if it is the highest bidder therefor, for the purpose of reselling such
shares within thirty days thereafter to such person or persons and at such price
not less than par as its board of directors by resolution may determine. If the
shares are sold at public auction at a price greater than the amount paid to the
dissenting shareholders, the excess in such sale price shall be paid to such
dissenting shareholders. The appraisal of such shares of stock in any State bank
shall be determined in the manner prescribed by the law of the State in such
cases, rather than as provided in this section, if such provision is made in the
State law; and no such merger shall be in contravention of the law of the State
under which such bank is incorporated. The provisions of this subsection shall
apply only to shareholders of (and stock owned by them in) a bank or association
being merged into the receiving association.
B-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 83 of the Louisiana Business Corporation Law ("LBCL") provides
in part that a corporation may indemnify any director, officer, employee or
agent of the corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any action, suit or proceeding to which he is or was a
party or is threatened to be made a party (including any action by or in the
right of the corporation), if such action arises out of his acts on behalf of
the corporation and he acted in good faith 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.
The indemnification provisions of the LBCL are not exclusive; however,
no corporation may indemnify any person for willful or intentional misconduct. A
corporation has the power to obtain and maintain insurance, or to create a form
of self-insurance on behalf of any person who is or was acting for the
corporation, regardless of whether the corporation has the legal authority to
indemnify the insured person against such liability.
Whitney's Articles of Incorporation and By-laws provide for
indemnification for directors, officers, employees and agents or former
directors, officers, employees and agents of Whitney to the full extent
permitted by Louisiana law.
Whitney maintains an insurance policy covering the liability of its
directors and officers for actions taken in their official capacity.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Whitney
pursuant to the foregoing provision or otherwise, Whitney 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 and is, therefore,
unenforceable.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
The following Exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2 The Plan of Merger (included in the Registration Statement as Appendix A and
incorporated herein by reference).
5 Opinion of Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain tax matters.
23.1 Consent of Arthur Andersen LLP dated January 27, 1997.
23.2 Consent of Taylor, Powell, Wilson and Hartford, P.A. dated January 27, 1997.
23.3 Consent of Milling, Benson, Woodward, Hillyer, Pierson & Miller, L.L.P.,
included in Exhibit 5.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
24 Powers of Attorney of directors of Whitney Holding Corporation (contained on
page S-1 of the Registration Statement).
99.1 Forms of Proxy of Merchants Bancshares, Inc. and Merchants Bank & Trust
Company.
</TABLE>
(b) Financial Statement Schedules
None
Item 22. Undertakings
The undersigned Registrant hereby undertakes as follows:
(1) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(2) 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.
(3) That for purposes of determining any liability under the Securities
Act of 1933 (the "Securities Act"), each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement related 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.
(4) 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 Registrant 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.
(5) That every prospectus (i) that is filed pursuant to paragraph (4)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant, 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 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 and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New
Orleans, State of Louisiana, on this 27th day of January, 1997.
WHITNEY HOLDING CORPORATION
By: /s/ William L. Marks
-------------------------------
William L. Marks
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints R. King Milling and Edward B.
Grimball, and each or any one of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and all 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 be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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.
/s/ William L. Marks
- --------------------------- Chairman of the Board January 27, 1997
William L. Marks and Chief Executive Officer
/s/ R. King Milling
- --------------------------- Director and President January 27, 1997
R. King Milling
/s/ Edward B. Grimball
- --------------------------- Executive Vice President and January 27, 1997
Edward B. Grimball Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
/s/ Harry J. Blumenthal, Jr.
- --------------------------- Director January 27, 1997
Harry J. Blumenthal, Jr.
/s/ Joel B. Bullard, Jr.
- --------------------------- Director January 27, 1997
Joel B. Bullard, Jr.
/s/ James M. Cain
- --------------------------- Director January 27, 1997
James M. Cain
S-1
<PAGE>
/s/ Angus R. Cooper, II
- --------------------------- Director January 27, 1997
Angus R. Cooper, II
/s/ Robert H. Crosby, Jr.
- --------------------------- Director January 27, 1997
Robert H. Crosby, Jr.
/s/ Richard B. Crowell
- --------------------------- Director January 27, 1997
Richard B. Crowell
/s/ Camille A. Cutrone Director January 27, 1997
- ---------------------------
Camille A. Cutrone
/s/ William A. Hines Director January 27, 1997
- ---------------------------
William A. Hines
/s/ Robert E. Howson Director January 27, 1997
- ---------------------------
Robert E. Howson
/s/ John J. Kelly Director January 27, 1997
- ---------------------------
John J. Kelly
/s/ E. James Kock, Jr. Director January 27, 1997
- ---------------------------
E. James Kock, Jr.
/s/ Alfred S. Lippman Director January 27, 1997
- ---------------------------
Alfred S. Lippman
/s/ John G. Phillips Director January 27, 1997
- ---------------------------
John G. Phillips
/s/ John K. Roberts, Jr. Director January 27, 1997
- ---------------------------
John K. Roberts, Jr.
/s/ W. P. Snyder III Director January 27, 1997
- ---------------------------
W. P. Snyder III
/s/ Carroll W. Suggs Director January 27, 1997
- ---------------------------
Carroll W. Suggs
/s/ Warren K. Watters Director January 27, 1997
- ---------------------------
Warren K. Watters
S-2
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
Number Description Page
2 The Plan of Merger (included in the Registration Statement
as Appendix A and incorporated herein by reference).
5 Opinion of Milling, Benson, Woodward, Hillyer, Pierson &
Miller, L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain tax
matters.
23.1 Consent of Arthur Andersen LLP dated January 27, 1997.
23.2 Consent of Taylor, Powell, Wilson and Hartford, P.A. dated
January 27, 1997.
23.3 Consent of Milling, Benson, Woodward, Hillyer, Pierson &
Miller, L.L.P., included in Exhibit 5.
24 Powers of Attorney of directors of Whitney Holding
Corporation (contained on page S-1 of the Registration
Statement).
99.1 Forms of Proxy of Merchants Bancshares, Inc. and Merchants
Bank & Trust Company
<PAGE>
EXHIBIT 5
[MILLING, BENSON, WOODWARD, HILLYER,
PIERSON & MILLER, L.L.P. LETTERHEAD]
January 27, 1997
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, LA 70130
Re: Merchants Bancshares, Inc. and
Merchants Bank & Trust Company/
Registration Statement on Form S-4
Gentlemen:
We have acted as special counsel to Whitney Holding Corporation (the
"Company") in connection with the preparation of that certain Registration
Statement on Form S-4 (the "Registration Statement") filed by the Company on the
date hereof with the Securities and Exchange Commission for registration under
the Securities Act of 1933, as amended (the "Securities Act"), of up to
1,727,133 shares of the Company's common stock, no par value (the "Shares"), to
be exchanged for all of the outstanding shares of common stock of Merchants
Bancshares, Inc. and Merchants Bank & Trust Company ("Merchants Bank") pursuant
to that certain Agreement and Plan of Merger dated November 14, 1996 between the
Company and, upon its formation, Whitney National Bank of Mississippi
("WNB-Mississippi"), on the one hand, and Merchants Bancshares, Inc. and
Merchants Bank, on the other hand, the related Joint Agreement of Merger to be
entered into between the Company and Merchants Bancshares, Inc. and the related
Agreement of Merger between Merchants Bank and WNB-Mississippi (collectively,
the "Plan of Merger").
In so acting, we have examined originals, or photostatic or certified
copies, of the Plan of Merger, such records of the Company, certificates of
officers of the Company and of public officials, and such other documents as we
have deemed relevant. In such examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
documents.
Based upon the foregoing, we are of the opinion that:
(1) The Company is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Louisiana.
<PAGE>
January 27, 1997
Page 2
(2) The Shares are duly authorized and, when issued by the Company in
accordance with the terms of the Plan of Merger, will be validly issued, fully
paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus forming a
part thereof under the caption "Legal Matters." In giving this consent, we do
not admit that we are within the category of persons whose consent is required
under Section 7 of the Securities Act or the general rules and regulations of
the Commission.
Very truly yours,
/s/
MILLING, BENSON, WOODWARD,
HILLYER, PIERSON & MILLER, L.L.P.
<PAGE>
EXHIBIT 8
_______________, 1997
DRAFT
PERSONAL AND CONFIDENTIAL
BY HAND
Mr. William L. Marks
Chairman of the Board & CEO
Whitney Holding Corporation
228 St. Charles Avenue
New Orleans, Louisiana 70130
Mr. William R. Allison
President
Merchants Bancshares, Inc.
Merchants Bank & Trust Company
1300 25th Avenue
Gulfport, Mississippi 39501
Dear Messrs. Marks and Allison:
This opinion is being furnished to you in connection with the proposed
acquisition of Merchants Bancshares, Inc. ("Company") and its banking
subsidiary, Merchants Bank & Trust Company ("Bank") by Whitney Holding
Corporation ("Whitney"), which is expected to be completed on ______________,
1997 ("the Effective Date"). You have requested our opinion concerning the
following:
o Whether the merger of Company into Whitney will qualify as a
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended ("the Code").
o That the exchange of Company common stock to the extent exchanged
solely for Whitney common stock will not give rise to gain or loss for
federal income tax purposes to the holders of Company common stock with
respect to such exchange.
o Whether the merger of Bank into Whitney National Bank of Mississippi
("WNB-Mississippi"), a wholly-owned subsidiary of Whitney, will qualify
as a reorganization under Section 368 of the Code.
o That the exchange of Bank common stock to the extent exchanged solely
for Whitney common stock will not give rise to gain or loss for federal
income tax purposes to the holders of Bank common stock with respect to
such exchange.
You have asked for our opinion on the federal income tax consequences to
Whitney, Company, Bank, WNB-Mississippi and the stockholders of Company and
Bank. We have not considered any nonincome tax, state, local or foreign income
tax consequences, and, therefore, do not express any opinion regarding the
treatment that would be given the mergers by the applicable authorities on any
nonincome tax or any state, local or foreign tax issues. We also express no
opinion on nontax issues, such as corporate law or securities law matters,
including, but not limited to, all securities law disclosure requirements.
In rendering our opinion, we have relied upon the accuracy and completeness of
the facts and information as contained in the Agreement and Plan of Merger dated
November 14, 1996 ("Plan of Merger"), including all exhibits attached
<PAGE>
Mr. William L. Marks
Mr. William R. Allison
Page 2
_________________, 1997
thereto, the Registration Statement on Form S-4, and the representations
included below. To the extent there are any changes to the Plan of Merger, the
Registration Statement on Form S-4, or representations, our opinion may be
affected accordingly.
The discussion and conclusions set forth below are based upon the Code, the
Treasury Regulations, and existing administrative and judicial interpretations
thereof, as of the Effective Date, all of which are subject to change. All
section references are to the Internal Revenue Code of 1986, as amended, unless
otherwise stated. If there is a change in the Code, the Treasury Regulations or
public rulings thereunder, the current Internal Revenue Service rulings or
releases, or in the prevailing judicial interpretation of the foregoing, the
opinion expressed herein would necessarily have to be re-evaluated in light of
any such changes. We have no responsibility to update this opinion for events,
transactions, changes in the above-listed law and authority or circumstances
occurring after the Effective Date.
This opinion is solely for the benefit of Company and Whitney and is not
intended to be relied upon by anyone other than Company and Whitney. Although
you do hereby have our express consent to inform WNB-Mississippi, Bank, and
Company and Bank common stockholders of our opinion by including copies of this
letter as an exhibit to the Plan of Merger and as an exhibit in the Registration
Statement on Form S-4 for the proposed transactions, and by making reference to
us and our opinion in the Proxy Statement-Prospectus forming a part of the
registration statement, we assume no responsibility for tax consequences to
them. Instead, each of these parties must consult and rely upon the advice of
his/her/its counsel, accountant or other advisor. Except to the extent expressly
permitted hereby, and without the prior written consent of this firm, this
letter may not be quoted in whole or in part or otherwise referred to in any
documents or delivered to any other person or entity.
Proposed Transactions
Our understanding of the proposed transactions, as described in the Plan of
Merger, is as follows:
A. Company will be merged with and into Whitney ("Company Merger") on the
Effective Date under the Articles of Incorporation of Whitney, pursuant
to Section 111, et seq. of the Louisiana Business Corporation Law and
Section 79-4-11.01, et seq. of the Mississippi Business Corporation Act
("MBCA").
B. On the Effective Date and pursuant to the Company Merger, each issued
and outstanding share of Company common stock, other than shares as to
which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited, shall be converted into shares of Whitney common
stock based on the terms contained in Section 2 of the Plan of Merger.
In lieu of issuing fractional shares of Whitney common stock as a
result of the Company Merger, common stockholders of Company will be
entitled to receive a cash payment equal to such fractional share
multiplied by the designated value of a share of Whitney common stock.
C. Bank will be merged with and into WNB-Mississippi ("Bank Merger") on
the Effective Date or promptly following the Effective Date under the
Articles of Association of WNB-Mississippi, pursuant to the provisions
of, and with the effect provided in, 12 U.S.C. Section 215a, et seq.
The Bank Merger shall become effective at the time specified or
permitted by the Office of the Comptroller of the Currency ("Effective
Time").
D. At the Effective Time and pursuant to the Bank Merger, each issued and
outstanding share of Bank common stock, other than shares as to which
dissenters' rights have been perfected and not withdrawn or otherwise
forfeited, shall be converted into shares of Whitney common stock based
on the terms contained in Section 2 of the Plan of Merger. In lieu of
issuing fractional shares of Whitney common stock as a result of the
Bank Merger, common stockholders of Bank will be entitled to receive a
cash payment equal to such fractional share multiplied by the
designated value of a share of Whitney common stock.
<PAGE>
Mr. William L. Marks
Mr. William R. Allison
Page 3
_________________, 1997
E. Shares of Company common stock that are held by Company or Bank (other
than shares held by Bank in a fiduciary capacity other than for
Company), and shares of Bank common stock that are held by Company or
Bank (other than shares held by Bank in a fiduciary capacity other than
for Company), shall not be considered outstanding and shall be canceled
(and not converted ) by virtue of the Company Merger and Bank Merger.
F. WNB-Mississippi was organized under the National Banking Act to
facilitate the Bank Merger and WNB-Mississippi will continue the
historic business (i.e., banking operations) of Bank. Management of
Whitney has indicated that it is likely that Whitney will merge
WNB-Mississippi into Whitney National Bank ("WNB"), a national banking
association and wholly-owned subsidiary of Whitney, provided that
applicable state law would permit such a merger, at some time after
June 1, 1997, the date on which the Riegle-Neal Interstate Banking and
Branching Act of 1994 removes restrictions on interstate banking.
Additional Representations
In addition to the representations included in the Plan of Merger , the
following representations have been made to us by representatives of Whitney and
Company regarding the Company Merger:
a) Whitney, Company and the stockholders of Company will pay their
respective expenses, if any, incurred in connection with the successful
consummation of the transaction.
b) There is no intercorporate indebtedness existing between Company and
Whitney that was issued, acquired, or will be settled at a discount.
c) The fair market value of the assets of Company transferred to Whitney
will equal or exceed the sum of the liabilities assumed by Whitney plus
the amount of liabilities, if any, to which the transferred assets are
subject.
d) None of the compensation received by any stockholders that are
employees of either Company or Bank ("stockholder-employees") will be
separate consideration for, or allocable to, any of their shares of
Company common stock; none of the shares of Whitney common stock
received by any stockholder-employees will be separate consideration
for, or allocable to, any employment agreement; and the compensation
paid to any stockholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
e) Company will be merged with and into Whitney under the Articles of
Incorporation of Whitney, pursuant to Section 111, et seq. of the
Louisiana Business Corporation Law and Section 79-4-11.01, et seq. of
the MBCA.
f) Except for restrictions placed upon the disposition of Whitney common
stock pursuant to agreements made by certain officers, directors and
shareholders of Company in the shareholder commitments referred to in
Section 6.02(g) of the Plan of Merger, the Company common stockholders
will have unrestricted rights of ownership of Whitney common stock
received in the transaction, and their ability to retain the Whitney
common stock received in the transaction will not be limited in any
way.
g) The ratio for the exchange of shares of Company common stock for
Whitney common stock in the transaction was negotiated through arm's
length bargaining. Accordingly, the fair market value of the Whitney
common stock to be received by Company common stockholders in the
transaction will be approximately equal to the fair market value of the
Company common stock surrendered by such stockholders in exchange
therefor.
<PAGE>
Mr. William L. Marks
Mr. William R. Allison
Page 4
_________________, 1997
The following representations have been made to us by representatives of Whitney
regarding the Company Merger:
h) Whitney has no plan or intention to re-acquire any of its stock issued
in the transaction.
i) Whitney has no plan or intention to sell or otherwise dispose of any of
the assets of Company acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code and except for Bank
common stock to be canceled in the Bank Merger.
j) Following the transaction, Whitney will continue the historic
businesses of Company or use a significant portion of these historic
business assets in the operation of a trade or business.
k) The payment of cash in lieu of fractional shares of Whitney common
stock is solely for the purpose of avoiding the expense and
inconvenience to Whitney of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the transaction to the Company
stockholders instead of issuing fractional shares of Whitney common
stock will not exceed (1) one percent of the total consideration that
will be issued in the transaction to the Company stockholders in
exchange for their shares of Company common stock. The fractional share
interests of each Company stockholder will be aggregated, and no
Company stockholder will receive cash for such fractional share
interests in an amount equal to or greater than the value of one full
share of Whitney common stock.
l) The assumption by Whitney of the liabilities of Company pursuant to the
transaction is for bona fide business purposes and the principal
purpose of such assumption is not the avoidance of federal income tax
on the transfer of assets of Company pursuant to the transaction.
m) Whitney is not an investment company as defined in Sections 368(a)(2)
(F)(iii) and 368(a)(2)(F)(iv).
n) The proposed transaction is being undertaken for reasons germane to the
continuance of the business of Whitney.
The following representations have been made to us by representatives of Company
regarding the Company Merger:
o) There is no plan or intention by the Company common stockholders who
own (1) one percent or more of the stock, and to the best of the
knowledge of the management of Company, there is no plan or intention
on the part of the remaining common stockholders to sell, exchange, or
otherwise dispose of a number of shares of Whitney common stock
received in the transaction that would reduce the stockholders'
ownership of Whitney common stock to a number of shares having a value,
as of the Effective Date, of less than (50) fifty percent of the value
of all the formerly outstanding common stock of Company as of the same
date. For purposes of this representation, shares of Company common
stock exchanged for cash in lieu of fractional shares of Whitney stock
will be treated as outstanding Company common stock on the Effective
Date. Moreover, shares of Company common stock and shares of Whitney
common stock held by Company stockholders and otherwise sold, redeemed,
or disposed of prior or subsequent to the transaction, will be
considered in making this representation.
p) The liabilities of Company assumed by Whitney, and the liabilities to
which the transferred assets of Company are subject were incurred by
Company in the ordinary course of business.
q) Company is not an investment company as defined in Sections 368(a)(2)
(F)(iii) and 368(a)(2)(F)(iv).
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r) Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
s) The proposed transaction is being undertaken for reasons germane to the
continuance of the business of Company.
In addition to the representations included in the Plan of Merger , the
following representations have been made to us by representatives of Whitney,
WNB-Mississippi, Company, and Bank regarding the Bank Merger:
a) Whitney, WNB-Mississippi, Bank, Company, and Bank shareholders will pay
their respective expenses, if any, incurred in connection with the
successful consummation of the transaction.
b) Bank will not incur any indebtedness to fund payments to shareholders
who exercise dissenters rights. Bank has the financial resources to
fund any payments to shareholders who exercise dissenters rights, and
such payments will not be reimbursed to Bank by any other party.
c) There is no intercorporate indebtedness existing between Whitney and
Bank or between WNB-Mississippi and Bank that was issued, acquired, or
will be settled at a discount.
d) The fair market value of the assets of Bank transferred to
WNB-Mississippi will equal or exceed the sum of the liabilities assumed
by WNB-Mississippi plus the amount of liabilities, if any, to which the
transferred assets are subject.
e) None of the compensation received by any employees of Bank that are
also stockholders of either Company or Bank ("stockholder-employees")
will be separate consideration for, or allocable to, any of their
shares of Bank or Company common stock; none of the shares of Whitney
common stock received by any stockholder-employees will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employees will be for services
actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services.
f) Bank will be merged with and into WNB-Mississippi pursuant to, and with
the effect provided in, 12 U.S.C. Section 215a, et seq.
g) Except for restrictions placed upon the disposition of Whitney common
stock pursuant to agreements made by certain officers, directors and
shareholders of Bank in the shareholder commitments referred to in
Section 6.02(g) of the Plan of Merger, Bank shareholders will have
unrestricted rights of ownership of Whitney common stock received in
the transaction, and their ability to retain the Whitney common stock
received in the transaction will not be limited in any way.
h) The ratio for the exchange of shares of Bank common stock for Whitney
common stock in the transaction was negotiated through arm's length
bargaining. Accordingly, the fair market value of the Whitney common
stock to be received by Bank shareholders in the transaction will be
approximately equal to the fair market value of the Bank common stock
surrendered by such stockholders in exchange therefor.
i) WNB-Mississippi will acquire at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair market
value of the gross assets held by Bank immediately prior to the
transaction. For purposes of this representation, amounts paid by Bank
to dissenters, amounts used by Bank to pay its reorganization expenses,
amounts paid by Bank to Bank shareholders who received cash or other
property, and
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all redemptions and distributions (except for regular, normal
dividends) made by Bank immediately preceding the transfer will be
included as assets of Bank immediately prior to the transaction.
The following representations have been made to us by representatives of Whitney
and WNB-Mississippi regarding the Bank Merger:
j) Whitney has no plan or intention to re-acquire any of its stock issued
in the transaction.
k) Whitney has no plan or intention to cause WNB-Mississippi to sell or
otherwise dispose of any of the assets of Bank acquired in the
transaction, except for dispositions made in the ordinary course of
business or transfers described in Section 368(a)(2)(C) of the Code.
l) Following the transaction, WNB-Mississippi will continue the historic
business of Bank or use a significant portion of these historic
business assets in the operation of a trade or business.
m) The payment of cash in lieu of fractional shares of Whitney common
stock is solely for the purpose of avoiding the expense and
inconvenience to Whitney of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the transaction to the Bank
shareholders instead of issuing fractional shares of Whitney common
stock will not exceed (1) one percent of the total consideration that
will be issued in the transaction to the Bank shareholders in exchange
for their shares of Bank common stock. The fractional share interests
of each Bank shareholder will be aggregated, and no Bank shareholder
will receive cash for such fractional share interests in an amount
equal to or greater than the value of one full share of Whitney common
stock.
n) The assumption by WNB-Mississippi of the liabilities of Bank pursuant
to the transaction is for bona fide business purposes and the principal
purpose of such assumption is not the avoidance of federal income tax
on the transfer of assets of Bank pursuant to the transaction.
o) Whitney and WNB-Mississippi are not investment companies as defined in
Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
p) The proposed transaction is being undertaken for reasons germane to the
continuance of the business of Whitney and WNB-Mississippi.
q) Whitney has no plan or intention to liquidate WNB-Mississippi or to
merge WNB-Mississippi with and into another corporation, until such
time as applicable restrictions on interstate mergers are eliminated.
In the event that at some future date the applicable Federal and state
banking laws are changed to eliminate restrictions on interstate
mergers, and Whitney decides to merge WNB-Mississippi with and into
WNB, WNB-Mississippi will be completely dissolved by operation of law,
all the assets and liabilities of WNB-Mississippi will be
transferred/assumed by WNB by operation of law, and Whitney will
continue to be the sole shareholder of WNB.
r) Prior to the transaction, Whitney will be in control of WNB-Mississippi
within the meaning of Section 368(c) of the Code.
s) Following the transaction, WNB-Mississippi will not issue additional
shares of its stock that would result in Whitney losing control of
WNB-Mississippi within the meaning of Section 368(c).
t) No stock of WNB-Mississippi will be issued in the transaction.
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u) Whitney and WNB-Mississippi do not own, directly or indirectly, nor
have either owned during the past five years, directly or indirectly,
any stock of Bank.
The following representations have been made to us by representatives of Company
and Bank regarding the Bank Merger:
v) The liabilities of Bank assumed by WNB-Mississippi, and the liabilities
to which the transferred assets of Bank are subject were incurred by
Bank in the ordinary course of business.
w) Bank is not an investment company as defined in Sections 368(a)(2)(F)
(iii) and 368(a)(2)(F)(iv).
x) Bank is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
y) The proposed transaction is being undertaken for reasons germane to the
continuance of the business of Bank.
Analysis of Applicable Federal Tax Provisions
A. Exchange of Whitney Stock for Company Stock and Bank Stock
Section 354(a)(1) addresses the effects of corporate reorganizations on
shareholders, providing in general that no gain or loss shall be recognized if
stock or securities in a corporation a party to a reorganization are, in
pursuance of the plan of reorganization, exchanged solely for stock or
securities in such corporation or in another corporation, a party to the
reorganization.
For purposes of Code Section 354, the terms "reorganization" and "party to a
reorganization" mean only a reorganization or a party to a reorganization as
defined in Sections 368(a) and 368(b). Section 368(a)(1)(A) states that the term
reorganization includes a statutory merger or consolidation. Reg. Section
1.368-2(b)(1) states that in order for a transaction to qualify as a
reorganization under Section 368(a)(1)(A), the transaction must be a merger or
consolidation effected pursuant to the corporation laws of the United States or
State or Territory or the District of Columbia. Under Section 368(b), the term
party to a reorganization includes both corporations in the case of a
reorganization resulting from the acquisition by one corporation of stock or
properties of another. In the case of a reorganization qualifying under Section
368(a)(1)(A) by reason of Section 368(a)(2)(D), the term "party to a
reorganization" includes the corporation which is in control of the acquiring
corporation.
Section 368(a)(2)(D) provides that the acquisition by one corporation in
exchange for stock of a corporation which is in control of the acquiring
corporation, of substantially all of the properties of another corporation shall
not disqualify a transaction under Section 368(a) if no stock of the acquiring
corporation is used in the transaction and such transaction would have qualified
under Section 368(a)(1)(A) had the merger been into the controlling corporation.
Section 368(a)(1)(C) provides that the acquisition by one corporation, in
exchange solely for all or a part of its voting stock ( or in exchange solely
for all or a part of the voting stock of a corporation which is in control of
the acquiring corporation), of substantially all of the properties of another
corporation also constitutes a reorganization under Section 368(a).
The "substantially all" requirement has not been statutorily defined. The
determination of "substantially all" is based upon all the facts and
circumstances of each transaction. The Internal Revenue Service's advance
ruling guidelines (Rev. Proc. 86-42) provide that the "substantially all"
requirement will be met if at least 90% of the fair market value of the
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net assets and at least 70% of the fair market value of the gross assets of the
acquired corporation immediately before the merger are transferred to the
acquiring corporation.
Assuming Whitney's intentions as described in representation "q" above for the
Bank Merger are deemed not to be a plan or intention to liquidate
WNB-Mississippi or to merge WNB-Mississippi with and into another corporation,
the reorganization should qualify under Section 368(a)(1)(A) by reason of
Section 368(a)(2)(D). Any subsequent merger of WNB-Mississippi with, and into
WNB, a wholly owned national banking subsidiary of Whitney, should be accorded
separate treatment under the tax law since such transaction is not able to be
legally consummated under current Federal and state banking laws and the
consummation of the subject merger of Bank into WNB-Mississippi is in no manner
conditioned upon the ability of the parties to effect any subsequent mergers.
Therefore, the transaction should qualify as a reorganization that is governed
by Sections 368(a)(1)(A) and 368(a)(2)(D).
However, even if the merger of Bank into WNB-Mississippi were to be integrated
with a subsequent merger of WNB-Mississippi into WNB, the two transactions when
viewed together should still constitute a reorganization under Section 368(a).
In this alternative, if WNB-Mississippi is subsequently merged into WNB in a
statutory merger, and based on the additional representations made by the
parties, the two transactions may be viewed together as an overall
reorganization under Section 368(a)(1)(C). For federal income tax purposes, the
transfer by WNB-Mississippi of Whitney stock to Bank shareholders solely in
exchange for Bank stock, immediately followed by the liquidation of or merger of
Bank into WNB-Mississippi will be disregarded. (Rev. Rul. 67-274, 1967-2 C.B.
141). The current merger of Bank into WNB-Mississippi could be disregarded and
instead the transaction will be treated as the acquisition of substantially all
of the assets of Bank by WNB in exchange solely for voting common stock of
Whitney, a corporation which is in control of WNB; and the assumption by WNB of
the liabilities of Bank in a transaction constituting a reorganization within
the meaning of Section 368(a)(1)(C).
B. Additional Regulatory Requirements Relating to Tax-Free Reorganizations
The regulations under Section 368 require as a part of a reorganization a
continuity of the business enterprise under the modified corporate form, a bona
fide business purpose for the reorganization, and a continuity of interest
therein on the part of those persons who, directly or indirectly, were owners of
the enterprise prior to the reorganization. Reg. Section 1.368-1(d)(2) states
that the continuity of business enterprise requirement is met if the acquiring
corporation either continues the acquired corporation's historic business or
uses a significant portion of the acquired corporation's business assets in the
operation of a trade or business. Based on the representations included in the
Registration Statement on Form S-4, as well as management's representations set
forth above, the continuity of business enterprise requirement is met with
respect to the assets and business operations of Company and Bank.
Reg. Section 1.368-2(g) indicates that in addition to coming within the scope of
the specific language of Sec. 368(a), a reorganization must also be "undertaken
for reasons germane to the continuance of the business of a corporation a party
to the reorganization." If the transaction or series of transactions has no
business or corporate purpose, then the plan is not a reorganization pursuant to
Section 368(a). [Reg. Section 1.368-1(c).] In the Proxy Statement-Prospectus, a
discussion of the reasons for the Plan of Merger is included. In general, there
is a desire to combine the financial and managerial resources of Whitney and
Bank to pursue consumer and commercial banking business in markets currently
served by Bank. Whitney's business strategy includes expansion eastward along
the Interstate 10 corridor to Panama City, Florida and Whitney's management
identified Bank as an institution that fits well in its eastward expansion
strategy. With respect to Company and Bank, the current and prospective economic
environment and competitive constraints facing small community based banks was a
factor in the decision to adopt the Plan of Merger. Based on the reasons stated
in the Proxy Statement-Prospectus and the representations set forth above, the
transaction meets the business purpose requirement.
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The continuity of interest requirement does not require that all shareholders of
the acquired corporation have a proprietary interest in the surviving
corporation after the acquisition; it is not even necessary for a substantial
percentage of such shareholders to have such an interest. Rather, the IRS
announced in Rev. Proc. 77-37 that it would rule that the continuity of interest
requirement is met so long as one or more of the acquired corporation's
shareholders retain a sufficient proprietary interest in the continuing
corporation. The IRS indicated in Rev. Proc. 77-37 that a sufficient proprietary
interest is an interest with a value that is at least 50% of the total equity
value of the acquired corporation.
In addition to meeting the continuity of interest requirement immediately after
the reorganization, the former shareholders of the acquired corporation must
retain their interest in the acquiring corporation for some time after the
reorganization. The courts have ruled that the tax-free nature of the
reorganization may be retroactively invalidated if the continuity of interest is
not maintained either because, at the time of the reorganization, the
shareholders intended to dispose of the proprietary interest soon after the
reorganization (Christian Est. v. Comr., T.C. Memo 1989-413) or because a
shareholder disposes of stock immediately following the reorganization in
accordance with a pre-existing commitment to sell (American Wire Fabrics Corp.
v. Comr., 16 TC 607). The courts have generally looked to the intent of the
shareholders at the time of the reorganization to dispose of their interests in
determining whether the continuity of interest requirement is subsequently
violated.
The Internal Revenue Service has ruled that the continuity of interest
requirement was met in situations similar to the proposed transactions (PLR
8839036, PLR 8903054, PLR 9319017 and PLR 9325026). It should be noted, however,
that a private letter ruling (PLR) is directed only to the taxpayer who
requested it. Section 6110(j)(3) provides that it may not be used or cited as
precedent. On the other hand, a PLR does represent an indication of how the IRS
may view the tax consequences of a taxpayer with similar facts and
circumstances. In these rulings, a corporation and its wholly-owned subsidiary
were simultaneously merged into the acquiring parent and its wholly-owned
subsidiary, respectively, as part of the same overall transaction. Based on the
representations set forth above, the continuity of interest requirement should
be met with respect to the transactions. However, it should be noted that the
satisfaction of the continuity of interest standard will depend upon the actions
of the shareholders with respect to Company stock before and after the
transaction and their intentions at the time of the reorganization. The
continuity of interest requirement will only be satisfied if the actual historic
shareholders of Company and Bank, in the aggregate, in fact do receive and
retain an amount of Whitney stock that is sufficient to satisfy the requirement.
Neither the undersigned, nor any parties to the transactions has taken, or
intends to take, a survey of the shareholders in connection with this matter.
C. Other Operational Code Provisions
Section 356(a)(1) provides that if Section 354 would apply to an exchange but
for the fact that the property received in the exchange consists not only of
property permitted to be received under Section 354 without the recognition of
gain but also of other property or money then the gain, if any, to the recipient
shall be recognized but not in excess of the sum of money and the fair market
value of such other property. Section 356(c) states that no loss from the
exchange may be recognized by the shareholder.
In other official pronouncements (Rev. Rul. 74-515, 1974-2 C.B. 118; Rev. Rul.
74-516, 1974-2 C.B. 121) , the Internal Revenue Service has treated the
distribution of cash as part of a reorganization and in a transaction subject to
Section 356 by applying the redemption principles under Section 302. Section 302
provides, in part, that a redemption will be treated as a distribution in part
or full payment in exchange for stock if it can meet the tests of that section.
In Rev. Rul. 66-365, the IRS announced that in a transaction qualifying as a
reorganization under Section 368(a)(1)(A) of the Code where a cash payment is
made by the acquiring corporation in lieu of fractional shares and is not
separately bargained for, such cash payment will be treated under Section 302 of
the Code as in redemption of fractional share interests. Therefore, each
shareholder's redemption will be treated as a distribution in full payment in
exchange for his or her fractional share interest under Section 302(a) of the
Code and accorded capital gain or loss treatment provided
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the redemption is not essentially equivalent to a dividend and that the
fractional shares redeemed constitute a capital asset in the hands of the holder
as discussed below. In Rev. Proc. 77-41, the IRS stated that "a ruling will
usually be issued under Section 302(a) of the Code that cash to be distributed
to shareholders in lieu of fractional share interests arising in corporate
reorganizations...will be treated as having been received in part or in full
payment in exchange for the stock redeemed if the cash distribution is
undertaken solely for the purpose of saving the corporation the expense and
inconvenience of issuing and transferring fractional shares, and is not
separately bargained-for consideration."
Under Section 358(a)(1), in the case of an exchange to which Section 354 or
Section 356 applies, the basis of property which is permitted to be received
under such section without the recognition of gain or loss shall be the same as
that of the property exchanged, decreased by the amount of any money received by
the recipient and the amount of loss recognized by the recipient as a result of
the exchange and increased by the amount which was treated as a dividend and the
amount of other gain recognized by the recipient as a result of the transaction.
It should be noted that where cash is received in lieu of fractional shares, the
substance of the transaction is that of a hypothetical receipt of the fractional
shares and then a redemption of such shares. Therefore, the basis that is to be
allocated to the stock of the acquiring corporation received must be allocated
to the shares retained and the fractional shares hypothetically received. The
gain or loss attributable to the receipt of cash in lieu of fractional shares is
measured by comparing the cash received with the basis allocated to the
fractional shares that are hypothetically received, and such gain or loss is
recognized as discussed earlier pursuant to Rev. Rul. 66-365.
In other instances where other property or money is also received under Section
356, the redemption principles of Section 302 are applied to determine if the
payments should be treated as dividend distributions or payments in exchange for
stock. Thus, cash payments made by the acquiring corporation to a dissenting
shareholder of the acquired corporation in a reorganization under Section 368
are treated as made in exchange for the shareholder's stock if the payment meets
the requirements of Section 302. The Supreme Court in Clarke vs. Comr., 489 U.S.
726, applied the tests of Section 302 by viewing the exchange involving cash or
other property as a "hypothetical post-reorganization redemption." The Court
viewed the exchange as first an exchange of solely stock of the acquiring
corporation for the acquired company stock, followed by an exchange by the
shareholder of the newly acquired stock for cash from the acquiring corporation.
The Section 302 tests were applied to the second hypothetical exchange.
One of the tests of Section 302 provides that where there is a complete
redemption of all of a shareholder's stock in a corporation (after consideration
of the constructive ownership rules of Section 302(c)), the redemption payment
is treated as made entirely in exchange for the shareholder's stock in the
corporation (Section 302(b)(3)). The constructive ownership rules of Section
302(c) are generally contained in Section 318 and provide that an individual or
entity is treated as owning the stock owned by certain other related individuals
and entities. Where there is a complete termination of the shareholder's
interest, the constructive ownership rules may be waived if certain conditions
are met.
Code Section 361(a) states that, as a general rule, no gain or loss is to be
recognized by a corporation if such corporation is a party to a reorganization
and exchanges property, in pursuance of the plan of reorganization, solely for
stock or securities in another corporation a party to the reorganization.
Section 361(b) states that if Section 361(a) would apply to an exchange but for
the fact that the property received in exchange consists not only of stock or
securities afforded nonrecognition treatment under Section 361(a), but also of
other property or money, then provided the corporation receiving such other
property or money distributes it in pursuance to the plan of reorganization, no
gain to the corporation shall be recognized from the exchange. Section 361(c)
states that as a general rule no gain or loss shall be recognized to a
corporation a party to a reorganization on the distribution to its shareholders
of any stock in another corporation which is a party to the reorganization if
such stock was received by the distributing corporation in the exchange.
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Section 1032(a) states that no gain or loss shall be recognized to a corporation
on the receipt of money or other property in exchange for such corporation's
stock, including treasury stock.
Code Section 362(b) states that the basis of property received by the acquiring
corporation in a reorganization is the same as it would be in the hands of the
transferor of the assets, increased by any gain recognized by the transferor.
The transferors for purposes of the preceding sentence in the instant case are
Company and Bank.
Section 1221 defines a capital asset as property held by the taxpayer which is
not inventory or other property held by the taxpayer primarily for sale to
customers in the ordinary course of a trade or business, property used in the
taxpayer's trade or business subject to the allowance for depreciation under
Section 167, a copyright, literary, musical or artistic composition, a letter or
memorandum, or similar property created by the personal efforts of the taxpayer,
accounts or notes receivable acquired in the ordinary course of a trade or
business for services rendered or from the sale of inventory or other property
held by the taxpayer primarily for sale to customers in the ordinary course of
business, or a publication of the United States Government which is received
from the United States Government or any agency thereof other than by purchase
at the price at which it is offered for sale to the public.
Section 1223(1) states that in determining the period for which a taxpayer has
held property received in an exchange, there shall be included the period for
which he, she, or it held the property exchanged if the property has, for the
purpose of determining gain or loss from a sale or exchange, the same basis as
the property exchanged and the property exchanged was a capital asset as defined
in Section 1221 as of the date of the exchange.
Section 1223(2) states that for determining the period for which the taxpayer
has held property however acquired there shall be included the period for which
such property was held by another person if the property has the same basis in
whole or in part in his hands as it would have had in the hands of such other
person.
Subchapter P of Chapter 1 of the Code provides limitations on the recognition of
capital gains and losses including, but not limited to, the allowance of capital
losses to the extent of capital gains with respect to corporate taxpayers and
the allowance of between $1,500 and $3,000 of net capital losses with respect to
taxpayers other than corporate taxpayers.
Opinion
Based upon all of the foregoing, including representations of the management of
Whitney and Company, it is our opinion with respect to the Company Merger that:
a) Provided that the shareholders of Company receive and retain a
sufficient amount of stock in Whitney to satisfy the continuity of
shareholder interest requirement discussed on pages 12 and 13, the
merger of Company with and into Whitney, as described above, will
constitute a reorganization under Section 368 of the Code (Section
368(a)(1)(A)). As a consequence the following will apply:
b) Company and Whitney will each be "a party to a reorganization" (Section
368(b)).
c) No gain or loss will be recognized by the common stockholders of
Company on the receipt of solely Whitney common stock in exchange for
surrendered Company common stock pursuant to the plan of reorganization
(Section 354(a)(1)).
d) The tax basis of the Whitney common stock received by Company common
stockholders will be the same as the basis of the Company common stock
surrendered in exchange therefor, decreased by the amount of basis
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allocated to the fractional shares that are hypothetically received by
the stockholder and redeemed for cash (Section 358(a)(1)).
e) The holding period of the Whitney common stock received by the Company
common stockholders will include the period during which the Company
common stock surrendered in exchange therefor was held, provided that
the Company common stock is held as a capital asset in the hands of the
Company stockholders on the Effective Date (Section 1223(1)).
f) The payment of cash in lieu of fractional share interests of Whitney
common stock will be treated as if each fractional share was
distributed as part of the exchange and then redeemed by Whitney.
Pursuant to Section 302(a) of the Code, these cash payments will be
treated as having been received as distributions in full payment in
exchange for the Whitney common stock. Any gain or loss recognized upon
such exchange (as determined under Section 1001 and subject to the
limitations of Section 267) will be capital gain or loss provided the
fractional share would constitute a capital asset in the hands of the
exchanging stockholder (Rev. Rul. 66-365 and Rev. Proc. 77-41).
g) Each shareholder of Company who elects to dissent from the merger
transaction involving Company and Whitney, and receives cash in
exchange for his shares of Company common stock, will be treated as
receiving such payment in complete redemption of his shares of Company,
provided such shareholder does not actually or constructively own any
Company common stock after the exchange under the provisions and
limitations of Section 302.
h) No gain or loss will be recognized by Company on the transfer of all of
its assets to Whitney solely in exchange for Whitney common stock and
cash in lieu of fractional shares which is subsequently distributed to
Company common stockholders pursuant to the plan of reorganization
(Section 361).
i) No gain or loss will be recognized by Whitney on the receipt by Whitney
of substantially all of the assets of Company in exchange for Whitney
stock (Section 1032(a).)
j) The tax basis of Company's assets in the hands of Whitney will be the
same as the basis of those assets in the hands of Company immediately
prior to the merger (Section 362(b)). The tax basis of Company's assets
in the hands of Whitney will not be increased by any cash paid to
dissenters or cash paid in lieu of fractional shares.
k) The holding period of the assets of Company in the hands of Whitney
will include the period during which such assets were held by Company
(Section 1223(2).)
Based upon all of the foregoing, including representations of the management of
Whitney and WNB-Mississippi and the management and Board of Directors of Company
and Bank, it is our opinion with respect to the Bank Merger that:
a) The acquisition by WNB-Mississippi of substantially all of the assets
of Bank solely in exchange for Whitney common stock and the assumption
by WNB-Mississippi of the liabilities of Bank will qualify as a
reorganization under the provisions of Section 368, provided that the
shareholders of Bank receive and retain a sufficient amount of stock in
Whitney to satisfy the continuity of shareholder interest requirement
discussed on pages 12 and 13 above . For purposes of this opinion,
"substantially all" means at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of
the gross assets of Bank held immediately prior to the proposed
transaction.
b) Whitney, WNB-Mississippi, and Bank will each be a "party to a
reorganization" (Section 368 (b)).
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c) No gain or loss will be recognized by Whitney or WNB-Mississippi on the
merger of Bank into WNB-Mississippi (Section 354(a)(1)).
d) No gain or loss will be recognized by Bank on the transfer of all of
its assets to WNB-Mississippi pursuant to the plan of reorganization
(Section 361).
e) The tax basis of Bank's assets in the hands of WNB-Mississippi will be
the same as the basis of those assets in the hands of Bank immediately
prior to the transaction (Section 362(b)). The tax basis of Bank's
assets in the hands of WNB-Mississippi will not be increased by any
cash paid to dissenters or cash paid in lieu of fractional shares.
f) The holding period of the assets of Bank in the hands of
WNB-Mississippi will include the period during which such assets were
held by Bank (Section 1223(2)).
g) No gain or loss will be recognized by Bank shareholders as a result of
the exchange of Bank common stock solely for Whitney common stock
pursuant to the Bank Merger, except that gain or loss will be
recognized on the receipt of cash, if any, received in lieu of
fractional shares. (Section 354(a)(1)). The payment of cash in lieu of
fractional share interests of Whitney common stock will be treated as
if each fractional share was distributed as part of the exchange and
then redeemed by Whitney. Pursuant to Section 302(a) of the Code, these
cash payments will be treated as having been received as distributions
in full payment in exchange for the Whitney common stock. Any gain or
loss recognized upon such exchange (as determined under Section 1001
and subject to the limitations of Section 267) will be capital gain or
loss provided the fractional share would constitute a capital asset in
the hands of the exchanging stockholder (Rev. Rul. 66-365 and Rev.Proc.
77-41).
h) Each shareholder of Bank who elects to dissent from the merger
transaction involving Bank and WNB- Mississippi, and receives cash in
exchange for his shares of Bank common stock, will be treated as
receiving such payment in complete redemption of his shares of Bank,
provided such shareholder does not actually or constructively own any
Bank common stock after the exchange under the provisions and
limitations of Section 302.
i) The tax basis of the Whitney common stock received by Bank shareholders
will be the same as the basis of the Bank common stock surrendered in
exchange therefor, decreased by the amount of basis allocated to the
fractional shares that are hypothetically received by the stockholder
and redeemed for cash (Section 358(a)(1)).
j) The holding period of the Whitney common stock received by Bank
shareholders will include the period during which the Bank common stock
surrendered in exchange therefor was held, provided that the Bank
common stock is held as a capital asset in the hands of the Bank
shareholders on the Effective Date (Section 1223(1)).
We express no opinion on the impact, if any, on any other sections of the Code,
including but not limited to Section 382, other than that as stated immediately
above, and neither this opinion nor any prior statements are intended to imply
or to be an opinion on any other matters.
In analyzing the authorities relevant to the potential tax issues outlined in
the opinion we have applied the standards of "substantial authority" and "more
likely than not the proper treatment," as used in Section 6662 under current
law. Based upon our analysis, we have concluded that there is substantial
authority for the indicated tax treatment of the transaction, and we also
believe the indicated tax treatment of the transaction is more likely than not
the proper treatment.
<PAGE>
Mr. William L. Marks
Mr. William R. Allison
Page 14
_________________, 1997
The opinion expressed herein is based solely upon our interpretation of the Code
and income tax regulations as further interpreted by court decisions, rulings,
and procedures issued by the Internal Revenue Service, as of the effective date
of this letter. Our opinion may be subject to change in the event of changes in
any of the foregoing authorities, some of which could be retroactive. The
opinion expressed herein is not binding on the Internal Revenue Service, and
there can be no assurance that the Internal Revenue Service will not take a
position contrary to the opinion expressed herein, or if the Internal Revenue
Service took such a position, whether it would be sustained by the courts.
Further, WNB- Mississippi, Bank, and Company and Bank common stockholders are
urged to discuss the consequences of the proposed transactions with their own
tax advisors.
Very truly yours,
ARTHUR ANDERSEN LLP
By:
---------------------------
Kay Gravolet Priestly
Copies to: Joseph S. Schwertz, Jr., Esq.
Carl J. Chaney, Esq.
Ms. Elizabeth B. Martin
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 16, 1996
(except with respect to the matter discussed in the first paragraph of Note 16,
as to which the date is March 8, 1996) included in Whitney Holding Corporation's
Form 10-K for the year ended December 31, 1995, and of our report dated March 8,
1996 included in Whitney Holding Corporation's Form 10-K/A for the year ended
December 31, 1995 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
New Orleans, Louisiana
January 27, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 2, 1996 with respect to the consolidated
financial statements of Merchants Bancshares, Inc., included in this
Registration Statement (Form S-4) and related Prospectus of Whitney Holding
Corporation for the registration of its common stock.
/s/ Taylor, Powell, Wilson & Hartford, P.A.
January 27, 1997
<PAGE>
EXHIBIT 99
MERCHANTS BANCSHARES, INC.
Bay St. Louis - Gulfport - Long Beach - Waveland - Biloxi
Mississippi
This Proxy is Solicited on Behalf of the
Board of Directors of the Merchants Bancshares, Inc.
The undersigned shareholder of Merchants Bancshares, Inc. (the "Company"),
a Mississippi corporation, hereby constitutes and appoints Guy C. Billups, Jr.
and W. R. Allison, or either of them, proxies of the undersigned, with power of
substitution, to represent the undersigned, and to vote all of the shares of
Company common stock that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Company which will be held at the Merchants Bank
Building (second floor) in Gulfport, Mississippi, at _____ p.m. on the __th day
of _____, 1997 (the "Special Meeting"), and at any adjournments or postponements
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY
THE SHAREHOLDER. IF NO DIRECTION IS SPECIFIED WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED "FOR" PROPOSAL 1 SET FORTH HEREIN.
The Board of Directors of the Company recommends that you vote "FOR"
approval of the Plan of Merger described in Item 1 on reverse.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
PLEASE MARK YOUR CHOICE LIKE
THIS |X| IN BLUE OR BLACK INK
Item 1. A proposal to approve an Agreement and Plan of Merger, dated as of
November 14, 1996 between Whitney Holding Corporation ("Whitney"),
the Company and Merchants Bank & Trust Company (the "Bank") and the
related Joint Agreement of Merger between the Company and Whitney
(collectively, the "Plan of Merger") pusuant to which, among other
things: (a) the Company would merge into Whitney, (b) the Bank would
merge into Whitney National Bank of Mississippi, a newly formed,
wholly-owned bank subsidiary of Whitney, and (c) each outstanding
share of common stock of the Company would be converted into shares
of Whitney common stock as determined in accordance with the terms of
the Plan of Merger.
For Against Abstain
_ _ _
|_| |_| |_|
Item 2. In their discretion, to vote upon such other business as may properly
come before the Special Meeting or any adjournment thereof.
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Special Meeting of Shareholders and Proxy Statement-
Prospectus and hereby revokes any proxy or proxies heretofore given.
Date________________________________ Signature______________________________
Number of Shares:______________________
Please mark, date and sign as your name appears and return in the enclosed
envelope. If acting as executor, administrator, trustee, guardian or in a
similar capacity, you should so indicate when signing. If the person signing is
a corporation, partnership or other entity, please sign the full name of the
corporation, partnership or other entity by a duly authorized officer, partner
or other person. If the shares are held jointly, each shareholder named should
sign.
<PAGE>
MERCHANTS BANK & TRUST COMPANY
Bay St. Louis - Gulfport - Long Beach - Waveland - Biloxi
Mississippi
This Proxy is Solicited on Behalf of the
Board of Directors of the Merchants Bank & Trust Company
The undersigned shareholder of Merchants Bank & Trust Company (the
"Bank"), a Mississippi state chartered bank, hereby constitutes and appoints Guy
C. Billups, Jr. and W. R. Allison, or either of them, proxies of the
undersigned, with power of substitution, to represent the undersigned, and to
vote all of the shares of Bank common stock that the undersigned is entitled to
vote at the Special Meeting of Shareholders of the Bank which will be held at
the Merchants Bank Building (second floor) in Gulfport, Mississippi, at _____
p.m. on the __th day of _______, 1997 (the "Special Meeting"), and at any
adjournments or postponements thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN
BY THE SHAREHOLDER. IF NO DIRECTION IS SPECIFIED WHEN THE DULY EXECUTED PROXY
IS RETURNED, SUCH SHARES WILL BE VOTED "FOR" PROPOSAL 1 SET FORTH HEREIN .
The Board of Directors of the Bank recommends that you vote "FOR"
approval of the Plan of Merger described in Item 1 on reverse.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
PLEASE MARK YOUR CHOICE LIKE
THIS |X| IN BLUE OR BLACK INK
Item 1. A proposal to approve an Agreement and Plan of Merger, dated as of
November 14, 1996 between Whitney Holding Corporation ("Whitney"),
Merchants Bancshares, Inc. (the "Company") and the Bank and the
related Agreement of Merger between the Bank and Whitney National
Bank of Mississippi (collectively, the "Plan of Merger") pusuant to
which, among other things: (a) the Company would merge into Whitney,
(b) the Bank would merge into Whitney National Bank of Mississippi, a
newly formed, wholly-owned bank subsidiary of Whitney, and (c) each
outstanding share of common stock of the Bank not owned by the
Company would be converted into shares of Whitney common stock as
determined in accordance with the terms of the Plan of Merger.
For Against Abstain
_ _ _
|_| |_| |_|
Item 2. In their discretion, to vote upon such other business as may properly
come before the Special Meeting or any adjournment thereof.
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Special Meeting of Shareholders and Proxy
Statement-Prospectus and hereby revokes any proxy or proxies heretofore given.
Date________________________________ Signature______________________________
Number of Shares:______________________
Please mark, date and sign as your name appears and return in the enclosed
envelope. If acting as executor, administrator, trustee, guardian or in a
similar capacity, you should so indicate when signing. If the person signing is
a corporation, partnership or other entity, please sign the full name of the
corporation, partnership or other entity by a duly authorized officer, partner
or other person. If the shares are held jointly, each shareholder named should
sign.
<PAGE>
