<PAGE> 1
Filed with the SEC on September 19, 1996 Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
---------------------------------------
DEPOSIT GUARANTY CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MISSISSIPPI 6711 64-072169
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or Classification Code Number) Identification Number)
organization)
210 EAST CAPITOL STREET ARLEN L. MCDONALD
POST OFFICE BOX 730 210 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39205 POST OFFICE BOX 730
TELEPHONE NUMBER: (601) 354-8497 JACKSON, MISSISSIPPI 39205
(Address, including zip code, TELEPHONE NUMBER: (601) 354-8497
and telephone number, including (Name, address, including zip
area code of registrant's code, and telephone number,
principal executive offices) including area code, of agent
for service)
L. Keith Parsons, Esq. Copies to:
Watkins Ludlam & Stennis, P.A. Phillip W. Preis, Esq.
633 North State Street Preis & Laborde, A Professional Corporation
Post Office Box 427 1000 Premier Centre - North Tower, 450 Laurel Street
Jackson, Mississippi 39205-0427 Baton Rouge, LA 70801
Telephone Number: (601) 949-4701 Telephone Number: (504) 387-0707
</TABLE>
Approximate date of commencement of proposed sale of securities to the public:
At the Effective Date of the merger of Tuscaloosa Bancshares, Inc. into Deposit
Guaranty Louisiana Corp. as described in the attached Proxy
Statement/Prospectus.
If the securities being registered on this form are being offered in
conjunction with the formation of a holding company and there is compliance
with General Instruction G, check the following box. /__/
<TABLE>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
<S> <C> <C> <C> <C>
Proposed Maximum
Title of Each Class of Amount to be Offering Price Proposed Maximum Aggregate Amount of
Securities to be Registered Registered(1) Per Unit Offering Price(2) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value 210,989 NA $4,106,918 $1,416.18
====================================================================================================================================
</TABLE>
(1) Plus such additional shares as may be issued as a result of the
adjustment provisions contained in the Agreement and Plan of Merger. Based
upon the anticipated maximum number of shares to be issued in connection with
the transaction described herein.
(2) Estimated in accordance with Rule 457(f)(2) solely for the purpose of
calculating the registration fee on the basis of the book value of the
outstanding shares of Tuscaloosa Bancshares, Inc. common stock as of June 30,
1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
<PAGE> 2
DEPOSIT GUARANTY CORP.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
Caption or Location
in Proxy
Items in Form S-4 Statement/Prospectus
- ----------------- --------------------
<S> <C> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus....................... Cover Page of
Registration Statement;
Cross Reference Sheet;
Cover Page of the Proxy
Statement/Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus........ Available Information;
Incorporation of
Certain Documents by
Reference
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information...................... Summary
4. Terms of the Transaction......... Summary; The Merger;
Comparative Rights of
Shareholders
5. Pro Forma Financial Information.. Not Applicable
6. Material Contracts with the
Company Being Acquired........... Not Applicable
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Under-
writers.......................... Not Applicable
8. Interest of Named Experts and
Counsel.......................... Not applicable
9. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities... Not Applicable
10. Information with Respect to
S-3 Registrants.................. Available Information;
Incorporation of
Certain Documents by
Reference
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
11. Incorporation of Certain Infor-
mation by Reference.............. Available Information;
Incorporation of
Certain Documents by
Reference
12. Information with Respect to S-2
or S-3 Registrants............... Not Applicable
13. Incorporation of Certain Infor-
mation by Reference.............. Not Applicable
14. Information with Respect to
Registrants Other Than S-2 or
S-3 Registrants.................. Not Applicable
15. Information with Respect to S-3
Companies........................ Not Applicable
16. Information with Respect to S-2
or S-3 Companies................. Not Applicable
17. Information with Respect to
Companies Other Than S-2 or
S-3 Companies.................... Information Concerning
Tuscaloosa Bancshares;
Market Prices of and
Dividends on Tuscaloosa
Bancshares Common Stock;
Management's Discussion
and Analysis of Financial
Condition and Results of
Operations for the Years
Ended December 31, 1995 and
1994; Index to Tuscaloosa
Bancshares Financial
Statements
18. Information if Proxies, Consents
or Authorizations Are to be
Solicited........................ Incorporation of
Certain Documents by
Reference; Summary;
Introduction; The
Merger--Interests of
Certain Persons in the
Merger; Stock Ownership
of Management of
Tuscaloosa Bancshares;
Principal Shareholders
of Tuscaloosa Bancshares;
Experts
19. Information if Proxies, Consents
or Authorizations Are Not to be
Solicited or in an Exchange
Offer............................ Not Applicable
</TABLE>
<PAGE> 4
TUSCALOOSA BANCSHARES, INC.
1509 S. RANGE AVENUE
POST OFFICE BOX 1749
DENHAM SPRINGS, LOUISIANA 70726-4896
September __, 1996
To Our Shareholders:
You are cordially invited to attend a Special Meeting (the "Meeting")
of Shareholders of Tuscaloosa Bancshares, Inc. ("Tuscaloosa Bancshares") to be
held at 12:00 noon, local time, on October __, 1996 at the main office of
Tuscaloosa Commerce Bank.
At the Meeting you will be asked to consider and vote upon the proposal
to approve an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of July 22, 1996, by and among Deposit Guaranty Corp., a Mississippi
corporation ("Deposit Guaranty"), Deposit Guaranty Louisiana Corp. ("Deposit
Guaranty Louisiana"), a Louisiana corporation and a wholly-owned subsidiary of
Deposit Guaranty, and Deposit Guaranty National Bank of Louisiana ("DGNB
Louisiana"), a national bank and a wholly-owned subsidiary of Deposit Guaranty
Louisiana, on the one hand, and Tuscaloosa Bancshares and its wholly-owned
subsidiary, Tuscaloosa Commerce Bank ("Tuscaloosa Bank"), on the other hand,
pursuant to which (a) Tuscaloosa Bancshares will merge into Deposit Guaranty
Louisiana (the "Holding Company Merger") and Tuscaloosa Bank will merge into
DGNB Louisiana (the "Bank Merger" and together with the Holding Company Merger,
the "Mergers"), and (b) each outstanding share of Tuscaloosa Bancshares common
stock will be converted into shares of Deposit Guaranty common stock as more
fully described in the accompanying Proxy Statement/Prospectus.
The affirmative vote of the holders of at least a majority of the
outstanding shares of common stock of Tuscaloosa Bancshares must approve the
Merger Agreement. Consummation of the Mergers also requires certain regulatory
approvals.
The Board of Directors of Tuscaloosa Bancshares believes the Mergers
are in the best interests of Tuscaloosa Bancshares and its shareholders and
unanimously recommends that you vote for approval of the Merger Agreement. The
reasons for such recommendation are set forth in the accompanying Proxy
Statement/Prospectus. Furthermore, Tuscaloosa Bancshares' financial advisor,
Chaffe & Associates, Inc. ("Chaffe"), has issued its opinion to the effect
that, as of the date of such opinion and based upon the considerations
described therein, the terms of the Mergers are fair, from a financial point of
view, to the shareholders of Tuscaloosa Bancshares.
We believe that the Mergers represent an exceptional opportunity for
Tuscaloosa Bancshares' shareholders to join on favorable terms in a combined
enterprise with greater financial resources and a more geographically
diversified business. As a result of the proposed Mergers, you, as a
shareholder of Deposit Guaranty, will own common stock in a bank holding
company whose shares are actively traded. Combining Tuscaloosa Bancshares with
Deposit Guaranty through the Mergers should thus provide Tuscaloosa Bancshares'
shareholders with a continued equity interest in a larger, more diversified
banking company.
We urge you to read the enclosed materials carefully so that you can
evaluate the Mergers for yourself.
All shareholders are invited to attend the Meeting in person. However,
in order to ensure that your shares will be represented at the Meeting, please
date, sign and promptly return the enclosed proxy card in the enclosed
postage-paid envelope whether or not you plan to attend the Meeting. If you
attend the Meeting in person, you may, if you wish, vote personally on all
matters brought before the Meeting.
Very truly yours,
Calvin C. Fayard, Jr.
Chairman of the Board
<PAGE> 5
TUSCALOOSA BANCSHARES, INC.
1509 S. RANGE AVENUE
POST OFFICE BOX 1749
DENHAM SPRINGS, LOUISIANA 70726-4896
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Tuscaloosa Bancshares, Inc.:
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Tuscaloosa Bancshares, Inc. ("Tuscaloosa Bancshares") will be
held at the main office of Tuscaloosa Commerce Bank on October __, 1996 at
12:00 noon, local time, for the purpose of considering and voting upon the
following matters:
1. To consider and vote upon the proposal to approve an Agreement
and Plan of Merger (the "Merger Agreement"), dated as of July
22, 1996, by and among Deposit Guaranty Corp., a Mississippi
corporation ("Deposit Guaranty"), Deposit Guaranty Louisiana
Corp. ("Deposit Guaranty Louisiana"), a Louisiana corporation
and a wholly-owned subsidiary of Deposit Guaranty, and Deposit
Guaranty National Bank of Louisiana ("DGNB Louisiana"), a
national bank and a wholly-owned subsidiary of Deposit
Guaranty Louisiana, on the one hand, and Tuscaloosa
Bancshares, a Louisiana corporation, and its wholly-owned
subsidiary, Tuscaloosa Commerce Bank ("Tuscaloosa Bank"), a
Louisiana state bank, on the other hand, pursuant to which (a)
Tuscaloosa Bancshares will merge into Deposit Guaranty
Louisiana (the "Holding Company Merger") and Tuscaloosa Bank
will merge into DGNB Louisiana (the "Bank Merger"), and (b)
each outstanding share of Tuscaloosa Bancshares common stock
will be converted into shares of Deposit Guaranty common stock
in accordance with the terms of the Merger Agreement; and
2. To transact such other business as may lawfully come before
the meeting or any adjournment or postponement thereof.
DISSENTING SHAREHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF
THE BUSINESS CORPORATION LAW OF LOUISIANA WILL BE ENTITLED TO RECEIVE PAYMENT
OF THE FAIR CASH VALUE OF THEIR SHARES IF THE HOLDING COMPANY MERGER IS
EFFECTED UPON APPROVAL BY LESS THAN EIGHTY PERCENT (80%) OF THE TOTAL VOTING
POWER OF TUSCALOOSA BANCSHARES.
The affirmative vote of the holders of a majority of the outstanding
shares of Tuscaloosa Bancshares Common Stock is required for approval of the
Merger Agreement. Only shareholders of record as of the close of business on
September 12, 1996, are entitled to vote at the Meeting. All shareholders are
invited to attend the Meeting in person. However, in order to ensure that your
shares will be represented at the Meeting, please date, sign and promptly
return the enclosed proxy card in the enclosed postage-paid envelope, whether
or not you plan to attend the Meeting. Your proxy may be revoked by
appropriate notice to the Secretary of Tuscaloosa Bancshares at any time prior
to the voting thereof. If you attend the Meeting in person, you may, if you
wish, vote personally on all matters brought before the Meeting.
By Order of the Board of Directors
Maurice J. Melancon, Secretary
September __, 1996
Denham Springs, Louisiana
<PAGE> 6
PROSPECTUS PROXY STATEMENT
- ---------- ---------------
DEPOSIT GUARANTY CORP. TUSCALOOSA BANCSHARES, INC.
- ------------------------- -------------------------------
210,989 SHARES OF SPECIAL MEETING OF
COMMON STOCK, NO PAR VALUE SHAREHOLDERS TO BE HELD
OCTOBER__, 1996
This Proxy Statement/Prospectus is being furnished to the shareholders
of Tuscaloosa Bancshares, Inc. ("Tuscaloosa Bancshares") in connection with
the solicitation of proxies by the Board of Directors of Tuscaloosa Bancshares
for use at its Special Meeting (the "Meeting") of Shareholders to be held on
October __, 1996. This Proxy Statement/Prospectus was first mailed to
shareholders of Tuscaloosa Bancshares on or about September _____, 1996.
At the Meeting, the holders of Tuscaloosa Bancshares common stock, no
par value, ("Tuscaloosa Bancshares Common Stock"), will be asked to approve the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 22,
1996, by and among Deposit Guaranty Corp. ("Deposit Guaranty"), a Mississippi
corporation, Deposit Guaranty Louisiana Corp. ("Deposit Guaranty Louisiana"), a
Louisiana corporation and a wholly-owned subsidiary of Deposit Guaranty and
Deposit Guaranty National Bank of Louisiana ("DGNB Louisiana") a wholly-owned
subsidiary of Deposit Guaranty Louisiana, on the one hand, and Tuscaloosa
Bancshares, a Louisiana corporation, and its wholly-owned subsidiary,
Tuscaloosa Commerce Bank ("Tuscaloosa Bank"), a Louisiana state bank, on the
other hand, pursuant to which Tuscaloosa Bancshares will merge into Deposit
Guaranty Louisiana (the "Holding Company Merger") and Tuscaloosa Bank will
merge into DGNB Louisiana (the "Bank Merger," and together with the Holding
Company Merger, the "Mergers"). Upon consummation of the Mergers, each
outstanding share of Tuscaloosa Bancshares Common Stock, other than shares held
by Tuscaloosa Bancshares' shareholders who perfect dissenters' rights, will be
converted into shares of Deposit Guaranty common stock, no par value per share
("Deposit Guaranty Common Stock"), and cash in lieu of any fractional shares,
all in accordance with the terms of the Merger Agreement. For a more complete
description of the Merger Agreement and the terms of the Mergers, see "The
Mergers." A conformed copy of the Merger Agreement is attached to this Proxy
Statement/Prospectus as Exhibit A. For a more complete description of
dissenters' rights see "Dissenters' Rights."
Deposit Guaranty has filed a Registration Statement on Form S-4 with
the Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering up to
210,989 shares of Deposit Guaranty Common Stock to be issued in connection
with the Mergers. This document constitutes a Proxy Statement of Tuscaloosa
Bancshares in connection with the Meeting and a Prospectus of Deposit Guaranty
with respect to the shares of Deposit Guaranty Common Stock to be issued upon
consummation of the Mergers. Each of Deposit Guaranty and Tuscaloosa
Bancshares has furnished all information included herein with respect to it and
its consolidated subsidiaries.
No person is authorized to give any information or to make any
representation concerning the Mergers not contained in this Proxy
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this Proxy
Statement/Prospectus, or the solicitation of a proxy, in any jurisdiction, to
or from any person to whom it is unlawful to make such offer or solicitation of
an offer or proxy solicitation in such jurisdiction. Neither the delivery of
this Proxy Statement/Prospectus nor any distribution of the securities made
under this Proxy Statement/Prospectus shall, under any circumstances, create
any implication that there has been no change in the information set forth
herein since the date of this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus does not cover any resales of Deposit
Guaranty Common Stock to be received by Tuscaloosa Bancshares' shareholders
upon consummation of the Holding Company Merger, and no person is authorized to
make use of this Proxy Statement/Prospectus in connection with any such resale.
-----------------------------
THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR
HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------------------------
The date of this Proxy Statement/Prospectus is September ___, 1996.
<PAGE> 7
AVAILABLE INFORMATION
Deposit Guaranty is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by Deposit Guaranty can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549 and at its Regional
Offices located in the Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can also be obtained from the Commission's
Public Reference Section, Judiciary Plaza, 450 Fifth Street N.W., Washington,
D.C. 20549, at prescribed rates. Electronic filings made through the
Electronic Data Gathering, Analysis, and Retrieval System are publicly
available through the Commission's Web site (http://www.sec.gov).
Deposit Guaranty has filed with the Commission a Registration Statement
on Form S-4 (the "Registration Statement") under the Securities Act with
respect to the common stock offered by this Proxy Statement/Prospectus. This
Proxy Statement/Prospectus does not contain all the information set forth in
the Registration Statement, certain portions of which have been omitted
pursuant to the Rules and Regulations of the Commission, and to which portions
reference is hereby made for further information with respect to Deposit
Guaranty and the securities offered hereby. The Registration Statement and any
amendments thereto, including exhibits filed as a part thereof, are available
for inspection and copying as set forth above.
AS INDICATED BELOW, THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY
REFERENCE CERTAIN INFORMATION WITH RESPECT TO DEPOSIT GUARANTY, WHICH IS NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH INFORMATION OR
DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE WITHOUT CHARGE, UPON THE
WRITTEN OR ORAL REQUEST OF ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED. IN ORDER TO ENSURE TIMELY
DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY OCTOBER ___, 1996,
AND SUCH REQUESTS SHOULD BE DIRECTED TO DEPOSIT GUARANTY'S PRINCIPAL EXECUTIVE
OFFICES AT 210 EAST CAPITOL STREET, JACKSON, MISSISSIPPI 39201, ATTENTION:
ARLEN L. MCDONALD, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
TELEPHONE NUMBER (601) 354-8497.
<PAGE> 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Deposit Guaranty with the Commission
are hereby incorporated by reference:
(1) Deposit Guaranty's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995;
(2) Deposit Guaranty's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996;
(3) The description of capital stock contained in Item 14 of
Deposit Guaranty's Registration Statement on Form 10 filed
April 21, 1970, Item 4 of Deposit Guaranty's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1982, Item 4 of
Deposit Guaranty's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1986, Item 4 of Deposit Guaranty's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1987, relating to the description of Deposit Guaranty's Common
Stock.
All documents filed by Deposit Guaranty pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the date of the Meeting of shareholders of Tuscaloosa Bancshares are hereby
incorporated by reference into this Proxy Statement/Prospectus and shall be
deemed a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference shall
be deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of the Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of the Meeting; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Reasons for the Mergers; Recommendation of the Board of Directors . . . . . . . . . . . . . . . . . . . 2
Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Other Conditions to Consummation of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange of Tuscaloosa Bancshares Certificates; No Fractional Shares . . . . . . . . . . . . . . . . . 3
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Deposit Guaranty - Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Tuscaloosa Bancshares, Inc. and Subsidiary - Selected Financial Data . . . . . . . . . . . . . . . . . . 5
Deposit Guaranty Corp. and Subsidiaries - Selected Financial Data . . . . . . . . . . . . . . . . . . . 6
Comparative Per Share Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Record Date; Voting Rights; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Structure and Terms of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Background of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Reasons for the Mergers; Recommendation of Board of Directors . . . . . . . . . . . . . . . . . . . . . 10
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Conditions to the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Interests of Certain Persons in the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange of Tuscaloosa Bancshares Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Amendment; Waiver; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Conduct of Business Pending the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Resales of Deposit Guaranty Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DISSENTERS' RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Filing Written Objection and Vote Against the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . 16
Notice of the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Written Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Payment and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Cumulative Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Limitations on Directors' and Officers' Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Supermajority Voting Requirements; Business Combinations; Control Shares . . . . . . . . . . . . . . . . 19
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Vacancies in the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Amendment of the Articles of Incorporation or Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Shareholder Proposals and Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Redemption and Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Stockholders' Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MARKET PRICES OF AND DIVIDENDS ON TUSCALOOSA BANCSHARES COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . 22
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF TUSCALOOSA BANCSHARES . . . . . . . . . . . . . . 23
INFORMATION CONCERNING TUSCALOOSA BANCSHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Supervision and Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Supplemental Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Loan Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Summary of Loan Loss Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Risk Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Return on Equity and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF TUSCALOOSA BANCSHARES, INC. . . . . . . . . . . . . . . . . . . . 29
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
INDEX TO TUSCALOOSA BANCSHARES FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit A - Agreement and Plan of Merger
Exhibit B - Fairness Opinion of Chaffe & Associates, Inc.
Exhibit C - Section 131 of the Louisiana Business Corporation Law
</TABLE>
<PAGE> 11
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Proxy Statement/ Prospectus and the documents incorporated
herein by reference. This summary is necessarily incomplete and is subject to
and qualified in its entirety by reference to the more detailed information and
financial statements contained elsewhere in this Proxy Statement/Prospectus,
including the Exhibits and the documents incorporated in this Proxy
Statement/Prospectus by reference. Certain capitalized terms used in this
summary are defined elsewhere in this Proxy Statement/Prospectus. Stockholders
are urged to read carefully the entire Proxy Statement/Prospectus, including
the Exhibits.
PURPOSE OF THE MEETING
The purpose of the Meeting is to consider and vote upon a proposal to
approve an Agreement and Plan of Merger, dated July 22, 1996 (the "Merger
Agreement"), by and among Deposit Guaranty Corp., a Mississippi corporation
("Deposit Guaranty"), its wholly-owned subsidiary, Deposit Guaranty Louisiana
Corp., a Louisiana corporation ("Deposit Guaranty Louisiana"), and Deposit
Guaranty Louisiana's wholly-owned subsidiary, Deposit Guaranty National Bank of
Louisiana, a national banking association ("DGNB Louisiana"), on the one hand,
and Tuscaloosa Bancshares, Inc., a Louisiana corporation ("Tuscaloosa
Bancshares") and its wholly-owned subsidiary, Tuscaloosa Commerce Bank, a
Louisiana state bank ("Tuscaloosa Bank"), on the other hand, pursuant to which,
among other things, (a) Tuscaloosa Bancshares will be merged into Deposit
Guaranty Louisiana (the "Holding Company Merger"), (b) Tuscaloosa Bank will be
merged into DGNB Louisiana (the "Bank Merger" and together with the Holding
Company Merger, the "Mergers"), and (c) on the effective date of the Mergers
(the "Effective Date"), each outstanding share of Tuscaloosa Bancshares common
stock, no par value per share ("Tuscaloosa Bancshares Common Stock"), will be
converted into a number of shares of common stock, no par value per share, of
Deposit Guaranty ("Deposit Guaranty Common Stock") determined by dividing
210,989 by the number of shares of Tuscaloosa Bancshares Common Stock
outstanding on the date immediately preceding the Effective Date. Based on the
number of shares of Tuscaloosa Bancshares Common Stock outstanding on June 30,
1996, Tuscaloosa Bancshares shareholders will receive .059034 shares of
Deposit Guaranty Common Stock for each share of Tuscaloosa Bancshares Common
Stock. As a result of the Mergers, the business and properties of Tuscaloosa
Bancshares will become the business and properties of Deposit Guaranty
Louisiana, the business and properties of Tuscaloosa Bank will become the
business and properties of DGNB Louisiana, and shareholders of Tuscaloosa
Bancshares will become shareholders of Deposit Guaranty.
DATE, TIME AND PLACE OF THE MEETING; RECORD DATE
A Special Meeting (the "Meeting") of the Shareholders of Tuscaloosa
Bancshares will be held on October ____ , 1996, at 12:00 noon, at the main
office of Tuscaloosa Commerce Bank. The Board of Directors of Tuscaloosa
Bancshares has fixed the close of business on September 12, 1996, as the
record date (the "Record Date") for determining holders of outstanding shares
of Tuscaloosa Bancshares Common Stock entitled to notice of and to vote at the
Meeting. Only holders of Tuscaloosa Bancshares Common Stock of record on the
books of Tuscaloosa Bancshares at the close of business on the Record Date are
entitled to vote at the Meeting or at any adjournment or postponement thereof.
As of the Record Date, there were 3,574,000 shares of Tuscaloosa Bancshares
Common Stock issued and outstanding, each of which is entitled to one vote.
See "Introduction -- General" and "Introduction -- Record Date; Voting Rights;
Proxies."
VOTE REQUIRED
Approval of the Merger Agreement requires the affirmative vote at the
Meeting of the holders of not less than a majority of the outstanding shares of
Tuscaloosa Bancshares Common Stock. As of the Record Date, the executive
officers and directors of Tuscaloosa Bancshares as a group had the power to
vote approximately 1,832,230 shares of Tuscaloosa Bancshares Common Stock,
representing approximately fifty-one percent (51%) of the outstanding shares,
all of which are expected to be voted in favor of the Merger Agreement.
THE PARTIES
Deposit Guaranty Corp. Deposit Guaranty is a bank holding company
headquartered at 210 East Capitol Street, Jackson, Mississippi 39201, telephone
(601) 354-8497. Its principal subsidiaries are Deposit Guaranty National Bank,
a
1
<PAGE> 12
national banking association with its principal office in Jackson, Mississippi;
Commercial National Bank, a national banking association with its principal
office in Shreveport, Louisiana; Deposit Guaranty National Bank of Louisiana, a
national banking association with its principal office in Hammond, Louisiana;
Merchants National Bank, a national banking association with its principal
office in Fort Smith, Arkansas; and three (3) full-service mortgage banking
firms, Deposit Guaranty Mortgage Company, headquartered in Jackson,
Mississippi, McAfee Mortgage Company, headquartered in Lubbock, Texas and First
Mortgage Corp., headquartered in Omaha, Nebraska. Deposit Guaranty, through
its subsidiaries, provides comprehensive corporate, commercial, correspondent
and individual banking services, mortgage loan servicing, and personal and
corporate trust services.
As of June 30, 1996, Deposit Guaranty had total assets of $6.1 billion,
total deposits of $4.8 billion, total loans of $3.8 billion and shareholders'
equity of $556.4 million. Based on total assets at December 31, 1995, Deposit
Guaranty ranked first among Mississippi-based bank holding companies.
Deposit Guaranty Louisiana Corp. Deposit Guaranty Louisiana is a
Louisiana corporation, which owns one hundred percent (100%) of Commercial
National Bank and DGNB Louisiana. Deposit Guaranty acquired one hundred
percent (100%) of the stock of Deposit Guaranty Louisiana in February, 1990.
Other than its ownership of Commercial National Bank and DGNB of Louisiana,
Deposit Guaranty Louisiana does not engage in substantial business activities.
Deposit Guaranty National Bank of Louisiana. DGNB Louisiana is a
national bank headquartered at 201 NW Railroad Ave., Hammond, Louisiana. DGNB
Louisiana provides a full complement of consumer and commercial banking
services in Tangipahoa Parish and Ascension Parish, Louisiana.
Tuscaloosa Bancshares, Inc. Tuscaloosa Bancshares is a bank holding
company headquartered at 1509 S. Range Avenue, Denham Springs, Louisiana
70726-4896, telephone number (504) 665-2265. Its only subsidiary is Tuscaloosa
Bank. As of June 30, 1996, Tuscaloosa Bancshares had total assets of $40.9
million, total deposits of $36.3 million, loans of $25.4 million and
shareholders' equity of $4.1 million.
Tuscaloosa Commerce Bank. Tuscaloosa Bank, a Louisiana state banking
association, is a full service commercial bank offering consumer and commercial
banking services primarily in Livingston Parish, Louisiana. It conducts its
business through its main office at 1509 S. Range Avenue, Denham Springs,
Louisiana 70726-4896 and at three branch offices in Livingston Parish,
Louisiana. Tuscaloosa Bank offers a full range of traditional commercial
banking services, excluding trust services.
REASONS FOR THE MERGERS; RECOMMENDATION OF THE BOARD OF DIRECTORS
The Tuscaloosa Bancshares Board has unanimously approved the Mergers
and the Merger Agreement and has determined that the Mergers are in the best
interests of Tuscaloosa Bancshares and its shareholders. In approving the
Mergers, Tuscaloosa Bancshares' directors considered among other factors the
financial terms of the transaction; the liquidity afforded to shareholders of
Tuscaloosa Bancshares through ownership of a publicly traded stock; a review of
the business and prospects of Tuscaloosa Bancshares and Deposit Guaranty; the
federal income tax consequences of the Mergers; the likelihood of the Mergers
being approved by regulatory authorities without undue conditions or delays;
and an opinion from Chaffe regarding the fairness of the terms of the Mergers,
from a financial point of view, to Tuscaloosa Bancshares' shareholders. THE
TUSCALOOSA BANCSHARES BOARD OF DIRECTORS BELIEVES THE MERGERS ARE IN THE BEST
INTEREST OF TUSCALOOSA BANCSHARES' SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
TUSCALOOSA BANCSHARES' SHAREHOLDERS VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT.
The Board of Directors of Deposit Guaranty has approved the Merger
Agreement because it believes that the Merger will enhance Deposit Guaranty's
earnings capacity by enabling it to deliver products and provide services to a
larger geographic customer base and that the combination of Deposit Guaranty
and Tuscaloosa Bancshares can take advantage of increased overall efficiencies
and economies of scale. See "The Mergers -- Reasons for the Mergers."
2
<PAGE> 13
FAIRNESS OPINION
[to be added by amendment]
REGULATORY APPROVALS
It is a condition to the consummation of the Mergers that all required
regulatory approvals, including the approval of the Office of the Comptroller
of the Currency (OCC) , be obtained. OCC approval is anticipated in October,
1996, although there can be no assurance that such approval will be forthcoming
or as to the conditions to or timing of such approval. See "The Mergers --
Regulatory Approvals."
OTHER CONDITIONS TO CONSUMMATION OF THE MERGERS
In addition to regulatory approvals and the approval by the
shareholders of Tuscaloosa Bancshares, the respective obligations of each party
under the Merger Agreement are subject, among other conditions, to receipt of
an opinion of Watkins Ludlam & Stennis, P.A. substantially to the effect that
the transactions contemplated by the Merger Agreement will be treated for
federal income tax purposes as a tax-free reorganization under Section 368 of
the Code, and the absence of a material adverse change in the financial
condition, results of operations or business of the other party's consolidated
group. See "The Mergers -- Other Conditions to the Mergers" for a fuller
discussion of the conditions to consummation.
EXCHANGE OF TUSCALOOSA BANCSHARES CERTIFICATES; NO FRACTIONAL SHARES
As soon as practicable after the Effective Date, The Bank of New York
(the "Exchange Agent") will mail to each holder of record of Tuscaloosa
Bancshares Common Stock, a letter of transmittal and instructions for use in
effecting the surrender of the certificates which, immediately prior to the
Effective Date, represented outstanding shares of Tuscaloosa Bancshares Common
Stock in exchange for certificates representing Deposit Guaranty Common Stock.
See "The Mergers -- Exchange of Tuscaloosa Bancshares Certificates." Cash will
be paid in lieu of any fractional share interests in Deposit Guaranty Common
Stock. See "The Mergers -- Structure and Terms of the Mergers." Certificates
representing Tuscaloosa Bancshares Common Stock should not be surrendered until
the transmittal form is received.
EFFECTIVE DATE
If the Merger Agreement is approved by the requisite vote of the
shareholders of Tuscaloosa Bancshares and the Mergers are approved by all
required regulatory agencies and the other conditions to the Mergers are
satisfied or waived (where permissible), the Mergers will become effective at
the date (the "Effective Date") a certificate of merger (the "Certificate of
Merger") is filed with the Secretary of State of Louisiana, or as of such later
date to which Deposit Guaranty and Tuscaloosa Bancshares agree, which may be
specified in the Certificate of Merger to be filed with the Louisiana Secretary
of State pursuant to the Business Corporation Law of the State of Louisiana
(the "Louisiana BCL"). It is expected that the Effective Date will occur in
the last quarter of 1996; however, there can be no assurance that the
conditions to the Mergers will be satisfied or waived so that the Mergers can
be consummated. See "The Mergers -- Effective Date" and "The Mergers -- Other
Conditions to the Mergers."
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
Certain members of Tuscaloosa Bancshares' management and Board of
Directors have interests in the Mergers in addition to their interests as
shareholders of Tuscaloosa Bancshares generally. Those interests relate to
employment contracts that will be assumed by DGNB Louisiana and to employee
benefits that will be provided by DGNB Louisiana. See "The Mergers -- Interests
of Certain Persons in the Mergers."
TERMINATION
Among other reasons, the Merger Agreement may be terminated at any time
prior to the Effective Date (i) in the event the Merger Agreement is not
approved by the shareholders of Tuscaloosa Bancshares at the Meeting, (ii) if
the number
3
<PAGE> 14
of shares of Tuscaloosa Bancshares Common Stock, the holders of which perfect
dissenters' rights, exceeds ten percent (10%) of the outstanding shares of
Tuscaloosa Bancshares Common Stock, and (iii) if the Closing has not occurred
by March 31, 1997. The Merger Agreement may also be terminated by mutual
consent, by either party, if at the time of such termination there shall have
been a material adverse change in the financial conditions, results of
operations, business or prospects of the other party. See "The Mergers --
Amendment; Waiver; Termination."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Consummation of the Mergers is conditioned upon receipt of an opinion
of counsel substantially to the effect that the Mergers will be treated, for
federal income tax purposes, as tax-free reorganizations, with the result that,
no gain or loss will be recognized by Tuscaloosa Bancshares or by holders of
Tuscaloosa Bancshares Common Stock who exchange all of their Tuscaloosa
Bancshares Common Stock solely for Deposit Guaranty Common Stock pursuant to
the Mergers (except with respect to cash, if any, received in lieu of
fractional shares). Tuscaloosa Bancshares' shareholders are urged to consult
their own tax advisors as to the specific tax consequences to them of the
Mergers. See "The Mergers -- Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The purchase method of accounting will be used to reflect the Mergers
upon consummation. See "The Mergers - - Accounting Treatment."
DISSENTERS' RIGHTS
Under certain conditions and by complying with the specific procedures
required by Louisiana law and described herein, Tuscaloosa Bancshares'
shareholders will have the right to dissent from the Holding Company Merger, in
which event, if the Holding Company Merger is consummated, such shareholders
may be entitled to receive in cash the fair value of their shares of Tuscaloosa
Bancshares Common Stock. See "Dissenters' Rights" and Exhibit C hereto.
DEPOSIT GUARANTY - RECENT DEVELOPMENTS
On August 22, 1996, Deposit Guaranty entered into an agreement to
acquire Jefferson Guaranty Bancorp, Inc. in Metairie, Louisiana for a
combination of stock and cash consideration. Each of the 1,745,491 shares of
Jefferson Guaranty Bancorp, Inc. expected to be outstanding at closing
(including common and preferred stock and warrants) will receive either $29.00
in cash or .637363 shares of Deposit Guaranty Common Stock. The stock portion
of the consideration may range from fifty-five percent (55%) to eighty percent
(80%). As of June 30, 1996, Jefferson Guaranty Bancorp had total assets of
$298.7 million, total deposits of $273.9 million, loans of $158.2 million and
shareholders' equity of $21.2 million.
SELECTED FINANCIAL DATA
The following selected financial data for Deposit Guaranty and
Tuscaloosa Bancshares has been derived from the consolidated financial
statements of Deposit Guaranty and Tuscaloosa Bancshares.
4
<PAGE> 15
TUSCALOOSA BANCSHARES, INC. AND SUBSIDIARY - SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited) Years Ended December 31,
Six Months Ended
June 30,
-------------------- ------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------------------- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $1,785 $1,474 $3,205 $2,492 $2,337 $2,350 $2,409
Interest expense 510 449 927 623 652 949 1,193
-------------------- ------------------------------------------------------------
Net interest income 1,275 1,025 2,278 1,869 1,685 1,401 1,216
Provision for possible loan losses 3 19 129 (15) 60 60 60
-------------------- ------------------------------------------------------------
Net interest income after
provision for possible loan
losses 1,272 1,006 2,149 1,884 1,625 1,341 1,156
Other operating income 423 432 826 681 535 494 404
Other operating expenses 1,149 992 2,096 1,775 1,511 1,269 1,226
-------------------- ------------------------------------------------------------
Income before income taxes and
cumulative effect of change
in accounting principle 546 446 879 790 649 566 334
Income tax expense 186 156 262 284 225 -- --
-------------------- ------------------------------------------------------------
Income before cumulative effect of
change in accounting principle 360 290 617 506 424 566 334
Cumulative effect of accounting
change -- -- -- -- 464 -- --
-------------------- ------------------------------------------------------------
Net income $360 $290 $617 $506 $888 $566 $334
==================== ============================================================
NET INCOME PER SHARE
Income before cumulative effect of
change in accounting principle $.10 $.08 $.17 $.14 $.12 $.16 $.09
Cumulative effect of change in
accounting principle -- -- -- -- 0.13 -- --
-------------------- ------------------------------------------------------------
Net income per share $.10 $.08 $.17 $.14 $.25 $.16 $.09
==================== ============================================================
Weighted average shares outstanding 3,574,000 3,574,000 3,574,000 3,574,000 3,574,000 3,574,000 3,574,000
Cash dividends per share -- -- $.07 $.02 $.01 $.01 --
STATEMENTS OF CONDITION - AVERAGES
Total assets $40,302 $36,429 $37,602 $34,624 $32,037 $31,332 $27,300
Earning assets 35,118 32,600 33,577 31,511 28,554 27,419 23,693
Investment securities 7,041 9,222 8,178 9,270 9,313 9,475 6,392
Loans, net of unearned income 25,254 20,502 22,120 16,756 12,916 13,117 14,351
Total deposits 36,338 34,043 33,427 29,355 29,087 28,303 24,828
Long-term debt -- -- -- -- 183 433 250
Total stockholders' equity 3,932 3,372 3,501 3,060 2,450 1,759 1,327
SELECTED RATIOS
Return on average assets 1.79% 1.59% 1.64% 1.46% 2.77% 1.81% 1.22%
Return on average equity 18.31 17.20 17.62 16.54 36.24 32.18 25.17
Net interest margin - tax
equivalent 7.29 6.30 6.70 5.85 5.80 5.21 5.27
Loans to deposits 69.50 60.22 66.17 57.08 44.40 46.34 57.80
Allowanced for possible loan losses
to loans, net of unearned income 1.17 .96 1.20 1.24 2.21 2.14 2.00
Net charge-offs (recoveries) to
average loans, net of unearned
income (.02) .55 .45 .14 .30 .67 .57
Dividend payout -- -- 40.50 14.11 4.02 6.31 --
Average equity to average assets 9.76 9.26 9.31 8.84 7.65 5.61 4.86
Leverage ratio 10.07 9.92 9.48 9.84 8.99 6.58 5.47
</TABLE>
5
<PAGE> 16
DEPOSIT GUARANTY CORP. AND SUBSIDIARIES - SELECTED FINANCIAL DATA
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended Years Ended December 31,
June 30,
------------------------ ------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------------------ ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF EARNINGS
Interest income $209,594 $191,042 $ 402,704 $ 307,272 $299,327 $ 322,114 $382,432
Interest expense 90,442 81,574 173,432 125,881 124,687 155,459 231,473
------------------------ ------------------------------------------------------------------
Net interest income 119,152 109,468 229,272 181,391 174,640 166,655 150,959
Provision for possible loan
losses 2,670 1,000 2,160 (4,750) (16,000) 10,378 17,260
------------------------ ------------------------------------------------------------------
Net interest income after
provision for possible
loan losses 116,482 108,468 227,112 186,141 190,640 156,277 133,699
Other operating income 57,583 42,215 91,989 93,499 74,781 67,977 61,439
Other operating expense 112,460 98,915 211,452 180,047 171,567 164,470 152,828
------------------------ ------------------------------------------------------------------
Income before income taxes 61,605 51,768 107,649 99,593 93,854 59,784 42,310
Income tax expense 19,680 16,423 35,029 32,463 27,302 14,270 10,090
------------------------ ------------------------------------------------------------------
Net income $41,925 $35,345 $ 72,620 $ 67,130 $ 66,552 $ 45,514 $ 32,220
======================== ==================================================================
NET INCOME PER SHARE
Primary $2.18 $1.84 $3.78 $3.80 $3.77 $2.67 $2.04
Fully diluted 2.18 1.84 3.78 3.80 3.77 2.63 1.93
WEIGHTED AVERAGE SHARES
OUTSTANDING
Primary 19,193,877 19,187,536 19,215,581 17,668,062 17,649,852 17,033,664 15,799,996
Fully diluted 19,193,877 19,187,536 19,215,581 17,668,062 17,649,852 17,465,282 17,442,388
CASH DIVIDENDS PER SHARE $.68 $.58 $1.21 $1.06 $.93 $.80 $.78
STATEMENTS OF CONDITION -
AVERAGES
Total assets $5,948,987 $5,355,417 $5,571,697 $4,940,977 $4,826,726 $4,777,596 $4,814,533
Earning assets 5,318,556 4,782,541 4,961,261 4,413,938 4,333,740 4,275,345 4,329,336
Securities available for
sale 1,294,080 33,589 186,194 712,184 1,308,634 --- ---
Investment securities 127,790 1,524,301 1,365,070 718,891 396,011 1,616,658 1,417,299
Loans, net of unearned
income 3,655,285 3,085,791 3,273,408 2,581,724 2,293,416 2,261,034 2,411,731
Deposits 4,677,628 4,296,162 4,438,797 3,997,038 3,867,669 3,876,927 3,990,963
Long-term debt 36,039 --- --- --- --- 6,320 24,020
Total stockholders'
equity 531,615 485,025 498,023 429,967 367,592 315,833 275,345
SELECTED RATIOS
Return on average assets 1.42% 1.33% 1.30% 1.36% 1.38% .95% .67%
Return on average equity 15.86 14.70 14.58 15.61 18.10 14.41 11.70
Net interest margin - tax
equivalent 4.64 4.73 4.75 4.24 4.18 4.12 3.77
Allowance for possible
loan losses to loans,
net of unearned income 1.56 1.81 1.64 1.95 2.56 3.30 3.74
Net charge-offs (recoveries)
to average loans, net of
unearned income .15 .05 .12 .10 (.14) 1.02 .77
Dividend payout 31.19 31.52 32.01 27.89 24.67 29.96 38.24
Average equity to average
assets 8.94 9.06 8.94 8.70 7.62 6.61 5.72
Leverage ratio 8.27 8.26 7.87 8.43 8.13 6.80 5.42
Tier I risk-based capital 11.01 11.71 11.05 12.49 13.28 12.00 9.95
Total risk-based capital 12.26 12.97 12.30 13.75 14.54 13.27 12.11
</TABLE>
6
<PAGE> 17
COMPARATIVE PER SHARE INFORMATION
<TABLE>
<CAPTION>
Pro Forma
Historical -----------------------------------
Deposit
------------------------------------ Guaranty and
Deposit Tuscaloosa Tuscaloosa
Guaranty Tuscaloosa Pro Forma Pro Forma
Per Common Share Corp. Bank Combined Equivalent(a)
---------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
NET INCOME(b)
For the six months ended $2.18 $.10 $2.18 $.13
June 30, 1996
For the year ended
December 31,
1995 3.78 .17 3.77 .22
1994 3.80 .14 3.79 .22
1993 3.77 .25 3.78 .22
CASH DIVIDENDS(c)
For the six months ended .68 -- .68 .04
June 30, 1996
For the year ended
December 31,
1995 1.21 .07 1.21 .07
1994 1.06 .02 1.06 .06
1993 .93 .01 .93 .05
1992 .80 .01 .80 .05
BOOK VALUE(d)
As of June 30, 1996 28.31 1.14 28.31 1.67
As of December 31, 1995 27.82 1.05 27.82 1.64
As of December 31, 1994 25.23 .91 25.23 1.49
</TABLE>
(a) Tuscaloosa Bancshares pro forma equivalent amounts are computed by
multiplying the pro forma combined amounts by the assumed Conversion
Number of .059.
(b) Net income per common share is based on weighted average common shares
outstanding.
(c) Pro forma cash dividends represent historical cash dividends of
Deposit Guaranty.
(d) Book value per common share is based on total period-end shareholders'
equity.
7
<PAGE> 18
INTRODUCTION
GENERAL
This Proxy Statement/Prospectus is being furnished to shareholders of
Tuscaloosa Bancshares in connection with the solicitation by the Board of
Directors of Tuscaloosa Bancshares of proxies for use at a Special Meeting of
Shareholders (the "Meeting") to be held at 12:00 noon, local time, on October
__, 1996 at the main office of Tuscaloosa Commerce Bank, and at any adjournment
or postponement thereof.
At the Meeting, shareholders will consider and vote upon a proposal to
approve the Merger Agreement, by and among Deposit Guaranty, Deposit Guaranty
Louisiana, DGNB Louisiana, Tuscaloosa Bancshares, and Tuscaloosa Bank pursuant
to which Tuscaloosa Bancshares will merge into Deposit Guaranty Louisiana,
Tuscaloosa Bank will merge into DGNB Louisiana and each share of Tuscaloosa
Bancshares Common Stock issued and outstanding immediately prior to the
Effective Date of the Merger (except Dissenting Shares, as hereinafter defined)
will be converted into and exchangeable for a number of shares of Deposit
Guaranty Common Stock, determined by dividing 210,989 by the number of shares
of Tuscaloosa Bancshares Common Stock outstanding on the date immediately
preceding the Effective Date. Based on the number of shares of Tuscaloosa
Bancshares Common Stock outstanding on June 30, 1996, Tuscaloosa Bancshares
shareholders will receive .059034 shares of Deposit Guaranty Common Stock for
each share of Tuscaloosa Bancshares Common Stock. As a result of the Merger,
the shareholders of Tuscaloosa Bancshares will become shareholders of Deposit
Guaranty.
This Proxy Statement/Prospectus constitutes a proxy statement of
Tuscaloosa Bancshares with respect to the Meeting and a prospectus of Deposit
Guaranty with respect to the shares of Deposit Guaranty Common Stock to be
issued in connection with the Mergers. The information in this Proxy
Statement/Prospectus concerning Deposit Guaranty and its subsidiaries and
Tuscaloosa Bancshares and its subsidiary has been furnished by each of such
entities, respectively.
The principal executive office of Deposit Guaranty is located at 210
East Capitol Street, Jackson, Mississippi 39201, and its telephone number is
(601) 354-8497. The principal executive office of Tuscaloosa Bancshares is
located at 1509 S. Range Avenue, Denham Springs, Louisiana 70726-4896, and its
telephone number is (504) 665-2265.
This Proxy Statement/Prospectus is first being mailed to shareholders
of Tuscaloosa Bancshares on or about September ___, 1996.
RECORD DATE; VOTING RIGHTS; PROXIES
The Board of Directors of Tuscaloosa Bancshares has fixed the close of
business on September 12, 1996 as the Record Date for determining holders of
outstanding shares of Tuscaloosa Bancshares Common Stock entitled to notice of
and to vote at the Meeting. Only holders of Tuscaloosa Bancshares Common Stock
of record on the books of Tuscaloosa Bancshares at the close of business on the
Record Date are entitled to vote at the Meeting or at any adjournment or
postponement thereof. As of the Record Date, there were 3,574,000 shares of
Tuscaloosa Bancshares Common Stock issued and outstanding, each of which is
entitled to one vote. The presence, in person or by proxy, of a majority of
the total voting power of Tuscaloosa Bancshares Common Stock is necessary to
constitute a quorum of the shareholders to take action at the Meeting. Shares
of Tuscaloosa Bancshares Common Stock represented by properly executed proxies
will be voted in accordance with the instructions indicated on the proxies or,
if no instructions are indicated, will be voted FOR the proposal to approve the
Merger Agreement and, in the discretion of the proxy holders, as to any other
matter which may properly come before the Meeting or any adjournment or
postponement thereof. A shareholder who has given a proxy may revoke it at any
time before it is voted by (a) filing with the Secretary of Tuscaloosa
Bancshares (i) a notice in writing revoking it, or (ii) a duly executed proxy
bearing a later date or (b) voting in person at the Meeting.
Approval of the Merger Agreement requires the affirmative vote at the
Meeting of the holders of a majority of the outstanding shares of the
Tuscaloosa Bancshares Common Stock. Therefore, an abstention or failure to
return a properly executed proxy will have the same effect as a vote against
the Merger Agreement, as will a broker's submitting a proxy without exercising
discretionary authority with respect to approval of the Merger Agreement. As
of the Record Date, the executive officers and directors of Tuscaloosa
Bancshares as a group had the power to vote approximately 1,832,230 shares of
Tuscaloosa Bancshares Common Stock,
8
<PAGE> 19
representing approximately fifty-one percent (51%) of the outstanding shares,
all of which are expected to be voted in favor of the Merger Agreement.
Deposit Guaranty's shareholders are not required to approve the Merger
Agreement or the issuance of shares of Deposit Guaranty Common Stock.
Tuscaloosa Bancshares will bear the costs of soliciting proxies from
its shareholders. In addition to the use of the mail, proxies may be solicited
by the directors, officers and employees of Tuscaloosa Bancshares in person, or
by telephone or telegram. Such directors, officers and employees will not be
additionally compensated for such solicitation but may be reimbursed for
out-of-pocket expenses incurred in connection therewith. Arrangements will
also be made with custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of Tuscaloosa Bancshares Common
Stock held of record by such persons, and Tuscaloosa Bancshares may reimburse
such custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred in connection therewith.
THE MERGERS
GENERAL
The Merger Agreement provides that, subject to the satisfaction or
waiver (where permissible) of certain conditions, including, among other
things, the receipt of all necessary regulatory approvals, the expiration of
all related waiting periods and the approval by the shareholders of Tuscaloosa
Bancshares, Tuscaloosa Bancshares will be merged with and into Deposit Guaranty
Louisiana, and Tuscaloosa Bank will be merged with and into DGNB Louisiana. As
a result of the Mergers, the separate corporate existence of Tuscaloosa
Bancshares and Tuscaloosa Bank will cease and the shareholders of Tuscaloosa
Bancshares will become shareholders of Deposit Guaranty. The date on which the
Mergers will be consummated is herein referred to as the "Effective Date." See
"The Mergers -- Effective Date."
The description of the Merger Agreement included in this Proxy
Statement/Prospectus is qualified in its entirety by reference to the Merger
Agreement, which is incorporated herein by reference and a copy of which is
attached hereto as Exhibit A.
STRUCTURE AND TERMS OF THE MERGERS
Upon consummation of the Holding Company Merger, Tuscaloosa Bancshares
will be merged with and into Deposit Guaranty Louisiana and each share of
Tuscaloosa Bancshares Common Stock issued and outstanding at the Effective Date
(other than shares owned by shareholders who, pursuant to the Louisiana BCL,
perfect any right to receive the fair value of such shares ("Dissenting
Shares")) will be converted into and exchangeable for a number of shares of
Deposit Guaranty Common Stock determined by dividing 210,989 by the number of
shares of Tuscaloosa Bancshares Common Stock outstanding on the date
immediately preceding the Effective Date (the "Exchange Ratio"). Based on the
number of shares of Tuscaloosa Bancshares Common Stock outstanding on June 30,
1996, Tuscaloosa Bancshares shareholders will receive .059034 shares of
Deposit Guaranty Common Stock for each share of Tuscaloosa Bancshares Common
Stock. If prior to the Effective Date Deposit Guaranty should split or combine
Deposit Guaranty Common Stock, or pay a dividend or other distribution in
Deposit Guaranty Common Stock, then the Exchange Ratio shall be appropriately
adjusted to reflect such split, combination, dividend or distribution.
The Exchange Ratio was determined by a process of arm's length
negotiations involving the managements of Tuscaloosa Bancshares and Deposit
Guaranty and their respective financial advisors. The 210,989 shares of
Deposit Guaranty Common Stock to be issued upon consummation of the Mergers
will constitute approximately one percent (1%) of the shares of Deposit
Guaranty Common Stock outstanding immediately after the Effective Date. This
calculation does not make any adjustment for fractional shares or Dissenting
Shares and is based upon the number of shares of Tuscaloosa Bancshares Common
Stock and Deposit Guaranty Common Stock outstanding on the Record Date.
No fractional shares of Deposit Guaranty Common Stock will be issued in
the Mergers. Any shareholder otherwise entitled to receive a fractional share
of Deposit Guaranty Common Stock will be paid a cash amount in lieu of any such
fractional share determined by multiplying (i) the closing sale price of a
share of Deposit Guaranty Common Stock on the date immediately
9
<PAGE> 20
preceding the Effective Date as quoted on the National Association of
Securities Dealers Automated Quotation System, by (ii) the fraction of a share
of Deposit Guaranty Common Stock to which such holder would otherwise be
entitled.
BACKGROUND OF THE MERGERS
During the last several years there have been significant developments
in the banking industry. These developments have included the increased
emphasis and dependence on automation, specialization of products and services,
increased competition from other financial institutions, and a trend toward
geographic expansion and consolidation. Because of these developments, the
Board of Directors of Tuscaloosa Bancshares and Tuscaloosa Bank determined that
they could best serve their shareholders, customers, employees and communities
by combining with a regional banking organization, provided that Tuscaloosa
Bancshares could obtain a fair price for its shareholders. In 1995, the Board
began discussions and inquiries with numerous state and regional financial
institutions. In the summer of 1996 the Board received and evaluated written
offers from three regional financial institutions including Deposit Guaranty.
Deposit Guaranty's offer was determined to be the best offer and after further
negotiations the parties entered into the Merger Agreement on July 22, 1996.
REASONS FOR THE MERGERS; RECOMMENDATION OF BOARD OF DIRECTORS
In reaching its decision that the Merger Agreement is in the best
interests of Tuscaloosa Bancshares and its shareholders, the Board considered a
number of factors in addition to the financial terms, including, but not
limited to the following:
(a) the financial condition and results of operations of, and
prospects for, each of Tuscaloosa Bancshares and Deposit
Guaranty;
(b) the likelihood that Tuscaloosa Bank would experience
significant increased competitive pressures in its market area
from larger banking and other financial institutions capable
of offering a broader array of technologically advanced
financial services and products;
(c) the lack of marketability of Tuscaloosa Bancshares Common
Stock and the liquidity that would be offered to Tuscaloosa
Bancshares' shareholders through the ownership of securities
of a publicly traded company such as Deposit Guaranty;
(d) the financial terms of the Mergers, including the relationship
of the value of the Deposit Guaranty Common Stock issuable in
the Mergers to the market value, book value, and earnings per
share of Tuscaloosa Bancshares Common Stock;
(e) the nonfinancial terms of the Mergers, including the treatment
of the Mergers as a tax-free exchange of Tuscaloosa Bancshares
Common Stock for Deposit Guaranty Common Stock for federal and
state income tax purposes;
(f) the likelihood of the Mergers being approved by applicable
regulatory authorities without undue conditions or delay; and
(g) the opinion rendered by Chaffe, Tuscaloosa Bancshares'
financial advisor, to the effect that the terms of the
Mergers, as provided in the Merger Agreement, are fair from a
financial point of view, to the holders of Tuscaloosa
Bancshares Common Stock.
Tuscaloosa Bancshares' Board did not assign any specific or relative
weight to the foregoing factors in its considerations. Tuscaloosa Bancshares'
Board believes that the Merger Agreement will provide significant value to all
Tuscaloosa Bancshares' shareholders and will enable them to participate in
opportunities for growth that Tuscaloosa Bancshares' Board believes the Mergers
make possible.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS OF TUSCALOOSA BANCSHARES
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, BELIEVES THAT THE MERGER
AGREEMENT IS IN
10
<PAGE> 21
THE BEST INTERESTS OF TUSCALOOSA BANCSHARES' SHAREHOLDERS AND RECOMMENDS THAT
ALL SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
DEPOSIT GUARANTY. The Deposit Guaranty Board of Directors believes that
by expanding Deposit Guaranty's customer base into the southern portion of
Louisiana, the Mergers should enhance Deposit Guaranty's earnings capacity by
enabling it to deliver products and provide services to that enlarged customer
base, and by permitting cost savings through consolidation of operations. In
addition, the Deposit Guaranty Board of Directors believes that the combination
of Deposit Guaranty and Tuscaloosa Bancshares will allow Deposit Guaranty and
Tuscaloosa Bancshares to increase overall efficiency and take advantage of
economies of scale in several areas. In evaluating the Mergers, the Deposit
Guaranty Board of Directors considered a variety of factors, including the
respective results of operations, financial condition and prospects of Deposit
Guaranty and Tuscaloosa Bancshares; the compatibility and complimentary nature
of the respective businesses and managerial philosophies of Deposit Guaranty and
Tuscaloosa Bancshares; and the relative prices paid in recent acquisitions of
financial institutions.
OPINION OF FINANCIAL ADVISOR
[to be added by amendment]
EFFECTIVE DATE
The Mergers will be consummated and become effective at the time a
certificate of merger (the "Certificate of Merger") is filed with the Secretary
of State of Louisiana, or as of such later date or time to which Deposit
Guaranty and Tuscaloosa Bancshares agree, which may be specified in the
Certificate of Merger. Unless Deposit Guaranty and Tuscaloosa Bancshares
otherwise agree, the Mergers will be consummated as soon as practicable
following receipt of Tuscaloosa Bancshares' shareholder and necessary regulatory
approvals and satisfaction or waiver of the other conditions to the Mergers. It
is expected that the Effective Date will occur in the last quarter of 1996;
however, there can be no assurance that the conditions to the Mergers will be
satisfied or waived so that the Mergers can be consummated. See "The Mergers --
Regulatory Approvals" and -- "Other Conditions to the Mergers."
REGULATORY APPROVALS
Consummation of the Mergers is conditioned on approval by all required
regulatory authorities, including approval by the OCC. OCC approval is
anticipated in October, 1996, although there can be no assurance that such
approval will be forthcoming or as to the conditions to or timing of such
approval. The Board of Governors of the Federal Reserve System, the Louisiana
Office of Financial Institutions and the Federal Deposit Insurance Corporation
must also review the Bank Merger and comment on the competitive factors
involved. The Bank Merger may not be consummated until the expiration of
fifteen (15) days after approval by the OCC has been obtained. During this
15-day period, the United States Department of Justice, if it objects to the
proposed Bank Merger for antitrust reasons, may file suit to enjoin the Bank
Merger.
OTHER CONDITIONS TO THE MERGERS
In addition to Tuscaloosa Bancshares' shareholder and regulatory
approval, the respective obligations of each party under the Merger Agreement
are subject, among other conditions, to (i) the absence of any order, decree or
injunction of a court or agency of competent jurisdiction enjoining or
prohibiting consummation of the Mergers, (ii) receipt of an opinion of Watkins
Ludlam & Stennis, P.A. substantially to the effect that the transactions
contemplated by the Merger Agreement will be treated for federal income tax
purposes as a tax-free reorganization under Section 368 of the Code, (iii) on
the date of closing the representations and warranties made in the Merger
Agreement by each party being true and correct in all material respects, (iv)
prior to the Effective Date there not being a material adverse change in the
financial condition, results of operations or business of the other party's
consolidated group and (v) the receipt of customary legal opinions.
INTERESTS OF CERTAIN PERSONS IN THE MERGERS
EMPLOYMENT AND SEVERANCE ARRANGEMENTS. Contingent upon consummation of
the Mergers, DGNB Louisiana has agreed to continue the employment of Mr. H.
Lloyd Cockerham, Jr. and Mr. Maurice J. Melancon for a period of eighteen (18)
11
<PAGE> 22
months after the Mergers, or alternatively, to pay severance pay upon
termination, in the absence of just cause for termination, equal to the greater
of four (4) months salary or the salary for the balance of the eighteen (18)
month period.
EMPLOYEE BENEFITS. The Merger Agreement provides that, after the
Effective Date of the Mergers, Deposit Guaranty will, subject to compliance with
applicable legal and regulatory requirements, provide coverage for all employees
of Tuscaloosa Bancshares and Tuscaloosa Bank under Deposit Guaranty's benefit
plans for which they are eligible, as soon as practicable after the Effective
Date. All prior years of service of Tuscaloosa Bank employees will be counted
for vesting and eligibility purposes under all applicable Deposit Guaranty
employee benefit plans to the extent permitted by applicable law. Any
Tuscaloosa Bank employee who, immediately prior to the Effective Date, is
covered by or is a participant in a Tuscaloosa Bank employee benefit plan,
shall, on the Effective Date, be covered by or participate in the comparable
Deposit Guaranty employee benefit plan if a comparable plan otherwise is
maintained by Deposit Guaranty and if the eligibility requirements of the
Deposit Guaranty plan are met.
EXCHANGE OF TUSCALOOSA BANCSHARES CERTIFICATES
At the Effective Date, each Tuscaloosa Bancshares shareholder will cease
to have any rights as a shareholder of Tuscaloosa Bancshares and his or her sole
rights will pertain to the shares of Deposit Guaranty Common Stock to which such
holder's shares of Tuscaloosa Bancshares Common Stock shall have been converted
pursuant to the Mergers, except for the right to receive cash for any fractional
shares.
As soon as practicable following the Effective Date, the Exchange Agent
for the Deposit Guaranty Common Stock will mail to each holder of record of
Tuscaloosa Bancshares Common Stock a letter of transmittal and instructions for
effecting the surrender of the stock certificates which, immediately prior to
the Effective Date, represented outstanding shares of Tuscaloosa Bancshares
Common Stock in exchange for certificates representing shares of Deposit
Guaranty Common Stock. SHAREHOLDERS OF TUSCALOOSA BANCSHARES ARE REQUESTED NOT
TO SURRENDER THEIR TUSCALOOSA BANCSHARES CERTIFICATES FOR EXCHANGE UNTIL SUCH
LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE RECEIVED. Upon surrender of a
certificate representing Tuscaloosa Bancshares Common Stock for exchange and
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal, the holder of such Tuscaloosa Bancshares Common Stock shall be
entitled to receive in exchange therefor a Deposit Guaranty certificate
representing the number of whole shares of Deposit Guaranty Common Stock to
which such holder of Tuscaloosa Bancshares Common Stock shall have become
entitled pursuant to the Merger Agreement, and a check in payment for any
fractional share of Deposit Guaranty Common Stock to which such holder may be
entitled.
After the Effective Date and until surrendered, certificates
representing Tuscaloosa Bancshares Common Stock will be deemed for all purposes,
other than the payment of dividends or other distributions, if any, in respect
of Deposit Guaranty Common Stock, to represent the number of whole shares of
Deposit Guaranty Common Stock into which such shares of Tuscaloosa Bancshares
Common Stock have been converted. Deposit Guaranty will not pay former
shareholders of Tuscaloosa Bancshares who become holders of Deposit Guaranty
Common Stock pursuant to the Mergers any dividends or other distributions that
may have become payable to holders of record of Deposit Guaranty Common Stock
following the Effective Date until they have surrendered their certificates
evidencing ownership of shares of Tuscaloosa Bancshares Common Stock along with
a properly completed letter of transmittal.
Tuscaloosa Bancshares shareholders who cannot locate their certificates
are urged to promptly contact the Secretary of Tuscaloosa Bancshares at 1509 S.
Range Avenue, Post Office Box 1749, Denham Springs, Louisiana 70726- 4896,
telephone number (504) 665-2265. A new certificate will be issued to replace the
lost certificate(s) only upon execution by the shareholder of an affidavit
certifying that his or her certificate(s) cannot be located and an agreement to
indemnify Tuscaloosa Bancshares and Deposit Guaranty and their transfer agents
and registrars against any claim that may be made against Tuscaloosa Bancshares
or Deposit Guaranty by the owner of the certificate(s) alleged to have been lost
or destroyed. Tuscaloosa Bancshares or Deposit Guaranty may also require the
shareholder to post a bond in such sum as is sufficient to support the
shareholders' agreement to indemnify Tuscaloosa Bancshares and Deposit Guaranty.
AMENDMENT; WAIVER; TERMINATION
The Merger Agreement may be amended at any time before or after its
approval by the shareholders of Tuscaloosa Bancshares by written agreement of
Tuscaloosa Bancshares and Deposit Guaranty, except that no amendment may be made
after
12
<PAGE> 23
Tuscaloosa Bancshares shareholder approval that changes the amount or form of
consideration to be received by Tuscaloosa Bancshares' shareholders unless such
further shareholder approval is obtained.
The Merger Agreement provides that the parties by action taken by their
respective Boards may (i) extend the time for performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement or (iii) waive compliance
with any of the agreements or conditions contained in the Merger Agreement other
than the satisfaction of all requirements prescribed by law for consummation of
the Mergers and certain other requirements that are conditions to the
obligations of each party.
The Merger Agreement may be terminated at any time prior to the
Effective Date (a) by mutual written consent of the parties, properly authorized
by their respective Boards of Directors; (b) by Deposit Guaranty, Deposit
Guaranty Louisiana, and DGNB Louisiana, (i) if at the time of such termination
there shall be a material adverse change in the consolidated financial condition
of Tuscaloosa Bank or Tuscaloosa Bancshares from that set forth in Tuscaloosa
Bank's or Tuscaloosa Bancshares' financial statements for the period ended
December 31, 1995; (ii) in the event there are dissenting shareholders who hold
more than ten percent (10%) of the shares of Tuscaloosa Bancshares Common Stock,
or (iii) if any executive officer of Tuscaloosa Bank ceases to be employed by
Tuscaloosa Bank and Deposit Guaranty determines that the loss will have a
material adverse affect on the profitability of Tuscaloosa Bank; (c) by any
party, if (i) a United States District Court shall rule upon application of the
Department of Justice after a full trial on the merits or a decision on the
merits based on a stipulation of facts that the transactions contemplated by the
Merger Agreement violate the antitrust laws of the United States, (ii) the
Merger Agreement shall not have been approved by the affirmative vote of the
holders of at least a majority of the outstanding shares of Tuscaloosa
Bancshares Common Stock, or (iii) if the transaction is not consummated by March
31, 1997; or (d) by Tuscaloosa Bancshares, if at the time of such termination
there shall have been a material adverse change in the financial conditions,
results of operations, business or prospects of Deposit Guaranty.
CONDUCT OF BUSINESS PENDING THE MERGERS
The Merger Agreement provides that Tuscaloosa Bank and Tuscaloosa
Bancshares will conduct their businesses and engage in transactions only in the
ordinary course and consistent with prudent banking practice. Without the prior
consent of Deposit Guaranty, neither Tuscaloosa Bank nor Tuscaloosa Bancshares
shall (i) increase by more than ten percent (10%) the compensation payable by
Tuscaloosa Bank or Tuscaloosa Bancshares to any of its directors, officers,
agents, consultants, or any of its employees whose total compensation after such
increase would be in excess of $25,000 per annum, grant or pay any extraordinary
bonus, percentage compensation, service award or other like benefit to any such
director, officer, agent, consultant or employee, or make or agree to any
extraordinary welfare, pension, retirement or similar payment or arrangement for
the benefit of any such director, officer, agent, consultant or employee, (ii)
sell or dispose of material assets except in the ordinary course of business,
(iii) enter into any new capital commitments or make any capital expenditures,
except commitments or expenditures within existing operating and capital budgets
or otherwise in the ordinary course of business, or (iv) authorize or issue any
additional shares of any class of its capital stock or any securities
exchangeable for or convertible into any such shares or any options or rights to
acquire any such shares, or otherwise authorize or affect any change in its
capitalization. In addition, no dividends shall be paid by Tuscaloosa
Bancshares, except for a regular dividend by Tuscaloosa Bancshares in August,
1996 of $.07 per share.
In addition, Tuscaloosa Bancshares has agreed that, without the prior
approval of Deposit Guaranty, it will not solicit or encourage inquiries or
proposals with respect to, or, furnish any information relating to or
participate in any negotiations or discussion concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or a substantial
equity interest in, or any business combination with, Tuscaloosa Bancshares or
Tuscaloosa Bank, other than as contemplated by the Merger Agreement. Tuscaloosa
Bancshares has also agreed to instruct its officers, directors, agents and
affiliates to refrain from doing any of the above and to notify Deposit Guaranty
within twenty-four (24) hours if any such inquiries or proposals are received
by, any such information is requested from, or any negotiations or discussions
are sought to be initiated with it or any of its officers, directors, agents and
affiliates.
13
<PAGE> 24
RESALES OF DEPOSIT GUARANTY COMMON STOCK
The shares of Deposit Guaranty Common Stock to be issued to the holders
of Tuscaloosa Bancshares Common Stock pursuant to the Merger Agreement are being
registered under the Securities Act pursuant to a Registration Statement on Form
S-4, of which this Proxy Statement/Prospectus is a part, thereby allowing such
shares to be freely transferred without restriction by persons who will not be
"affiliates" of Deposit Guaranty or who were not "affiliates" of Tuscaloosa
Bancshares within the meaning of Rule 145 under the Securities Act. In general,
affiliates of Tuscaloosa Bancshares include its executive officers and directors
and any person who controls, is controlled by or is under common control with
Tuscaloosa Bancshares. Holders of Tuscaloosa Bancshares Common Stock who are
affiliates of Tuscaloosa Bancshares will not be able to resell the Deposit
Guaranty Common Stock received by them in the Mergers unless the Deposit
Guaranty Common Stock is registered for resale under the Securities Act, is sold
in compliance with Rule 145 under the Securities Act or is sold in compliance
with another exemption from the registration requirements of the Securities Act.
Pursuant to Rule 145 under the Securities Act, the sale of Deposit
Guaranty Common Stock held by former affiliates of Tuscaloosa Bancshares will be
subject to certain restrictions. Such persons may sell Deposit Guaranty Common
Stock under Rule 145 only if (i) Deposit Guaranty has filed all reports required
to be filed by it under Section 13 or 15(d) of the Exchange Act during the
preceding twelve (12) months, (ii) such Deposit Guaranty Common Stock is sold in
a "broker's transaction," which is defined in Rule 144 under the Securities Act
as a sale in which (a) the seller does not solicit or arrange for orders to buy
the securities, (b) the seller does not make any payment other than to the
broker, (c) the broker does no more than execute the order and receive a normal
commission and (d) the broker does not solicit customer orders to buy the
securities, and (iii) such sale and all other sales made by such person within
the preceding three (3) months do not exceed the greater of (x) one percent (1%)
of the outstanding shares of Deposit Guaranty Common Stock or (y) the average
weekly trading volume of Deposit Guaranty Common Stock on the NASDAQ National
Market during the four-week period preceding the sale. Any affiliate of
Tuscaloosa Bancshares who is not an affiliate of Deposit Guaranty after the
Mergers may sell Deposit Guaranty Common Stock without restriction following the
second anniversary of the Effective Date.
Tuscaloosa Bancshares has agreed to use its best efforts to cause each
of its directors and executive officers and each person who is a beneficial
owner of five percent (5%) or more of the outstanding Tuscaloosa Bancshares
Common Stock (each of whom may be deemed to be an affiliate under the Securities
Act) to enter into an agreement not to sell shares of Deposit Guaranty Common
Stock received by him or her in violation of the Securities Act or the rules and
regulations of the Commission thereunder.
EXPENSES AND FEES
All legal and other costs and expenses incurred in connection with the
Mergers and the transactions contemplated thereby will be paid by the party
incurring such costs and expenses.
ACCOUNTING TREATMENT
The Mergers, if consummated as proposed, will be treated as a purchase
for accounting and financial reporting purposes. The purchase method accounts
for a business combination as the acquisition of one enterprise by another, the
value of the company's shares issued in the transaction is included in
stockholders' equity and any of such amount in excess of net fair values of
tangible and identifiable intangible assets of the acquired company is treated
as an intangible asset on the acquiring company's financial statements.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the principal federal income tax
consequences of the Mergers is based on provisions of the Internal Revenue Code
of 1986 (the "Code"), the regulations thereunder, judicial authority, and
administrative rulings and practice as of the date hereof or before the
Effective Date. Consummation of the Mergers is conditioned on the receipt by
Deposit Guaranty and Tuscaloosa Bancshares of an opinion of counsel to Deposit
Guaranty to the effect that the Mergers will be treated, for federal income tax
purposes, as tax-free reorganizations under Section 368(a) of the Code.
Any Tuscaloosa Bancshares shareholder who, pursuant to the Mergers,
exchanges all of the Tuscaloosa Bancshares Common Stock that such holder owns
solely for Deposit Guaranty Common Stock will not recognize any gain or loss
upon such exchange. The aggregate tax basis of Deposit Guaranty Common Stock
received by such a holder in exchange for Tuscaloosa
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Bancshares Common Stock will equal such holder's tax basis in the Tuscaloosa
Bancshares Common Stock surrendered. If such shares of Tuscaloosa Bancshares
Common Stock are held as capital assets at the Effective Date, the holding
period of the Deposit Guaranty Common Stock received will include the holding
period of the Tuscaloosa Bancshares Common Stock surrendered therefor.
Tuscaloosa Bancshares' shareholders should consult their tax advisors as to the
determination of their tax basis and holding period in any one share of Deposit
Guaranty Common Stock, as several methods of determination may be available.
To avoid the expense and inconvenience to Deposit Guaranty of issuing
fractional shares, no fractional shares of Deposit Guaranty Common Stock will be
issued pursuant to the Mergers. Any Tuscaloosa Bancshares shareholder who
receives cash pursuant to the Mergers in lieu of a fractional share interest
will be treated as having received such fractional share pursuant to the
Mergers, and then as having exchanged such fractional share for cash in a
redemption by Deposit Guaranty subject to Section 302(a) of the Code, provided
that such deemed redemption is not "substantially disproportionate" with respect
to such Tuscaloosa Bancshares shareholder or is "not essentially equivalent to a
dividend." If the Deposit Guaranty Common Stock represents a capital asset in
the hands of the shareholder, then the shareholder will generally recognize
capital gain or loss on such a deemed redemption of the fractional share in an
amount determined by the difference between the amount of cash received for such
fractional share and the shareholder's tax basis in the fractional share.
Tuscaloosa Bancshares' shareholders who perfect dissenters' rights will
be treated as having received the fair value of the Tuscaloosa Bancshares Common
Stock, as determined in the dissenters' rights proceeding, in redemption of the
Tuscaloosa Bancshares Common Stock subject to the proceeding. Such deemed
redemption will be subject to Section 302(a) of the Code, if such deemed
redemption is "substantially disproportionate" with respect to the Tuscaloosa
Bancshares shareholder who exercises dissenters' rights or is "not essentially
equivalent to a dividend," with the result that a holder who exercises
dissenters' rights will recognize gain or loss equal to the difference between
the amount realized and such holder's tax basis in the Tuscaloosa Bancshares
Common Stock subject to the proceeding. Any such gain or loss recognized on
such redemption will be treated as capital gain or loss if the Tuscaloosa
Bancshares Common Stock with respect to which dissenters' rights were exercised
were held as capital assets. Each Tuscaloosa Bancshares shareholder who
contemplates exercising dissenters' rights should consult a tax advisor as to
the possibility that all or a portion of the payment received pursuant to the
dissenters' proceeding will be treated as dividend income.
Unless an exemption applies under the applicable law and regulations,
the Exchange Agent will be required to withhold thirty-one percent (31%) of any
cash payments to which a shareholder or other payee is entitled pursuant to the
Mergers unless the shareholder or other payee provides its taxpayer
identification number (social security number or employer identification number)
and certifies that such number is correct. Each shareholder and, if applicable,
each other payee should complete and sign the substitute Form W-9 included as
part of the transmittal letter so as to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is established in a manner satisfactory to Deposit Guaranty
and the Exchange Agent.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGERS WITHOUT REGARD TO THE PARTICULAR FACTS
AND CIRCUMSTANCES OF EACH TUSCALOOSA BANCSHARES SHAREHOLDER. TUSCALOOSA
BANCSHARES SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGERS, INCLUDING THE APPLICABILITY
AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
DISSENTERS' RIGHTS
Under Section 131 of the Louisiana BCL (a copy of which is attached
hereto as Exhibit C), any holder of record of shares of Tuscaloosa Bancshares
Common Stock, who files a written objection to the Mergers prior to or at the
Meeting at which the vote on the Mergers is taken, and who votes against the
Mergers, may demand in writing that such shareholder be paid in cash the fair
cash value of such shares ("Dissenters' Rights"). HOWEVER, INTERESTED PARTIES
SHOULD NOTE THAT, IF THE MERGER AGREEMENT IS APPROVED BY EIGHTY PERCENT (80%) OR
MORE OF THE OUTSTANDING SHARES OF TUSCALOOSA BANCSHARES COMMON STOCK, SECTION
131 OF THE LOUISIANA BCL PROVIDES THAT NO TUSCALOOSA BANCSHARES SHAREHOLDER WILL
HAVE DISSENTERS' RIGHTS. A person who is a beneficial owner, but not a
registered owner, of shares of Tuscaloosa Bancshares Common Stock who wishes to
exercise the rights of a dissenting shareholder under the Louisiana BCL cannot
do so in his own name but should have the record ownership of the shares
transferred to his or her name or instruct the record owner thereof to take all
required action to comply on his behalf with the procedures under Section 131 of
the Louisiana BCL.
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Any shareholder of record contemplating exercising Dissenters' Rights is
urged to review carefully the provisions of Section 131 of the Louisiana BCL,
particularly the procedural steps required to perfect Dissenters' Rights
thereunder. DISSENTERS' RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF
SECTION 131 ARE NOT FULLY SATISFIED.
Set forth below is a summary of the procedures relating to the exercise
of Dissenters' Rights. The following summary does not purport to be a complete
statement of the provisions of Section 131 of the Louisiana BCL and is qualified
in its entirety by reference to Exhibit C 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 MERGERS
To exercise the right of dissent, a shareholder (each a "Dissenter")
must (i) deliver to Tuscaloosa Bancshares a written objection to the Merger
Agreement prior to or at the Meeting AND ALSO (ii) vote the shares of Tuscaloosa
Bancshares Common Stock held by him (in person or by proxy) against the Merger
Agreement at the Meeting. Neither a vote against the Merger Agreement nor a
specification in a proxy to vote against the Merger Agreement will in and of
itself constitute the necessary written objection to the Merger Agreement.
Moreover, by voting in favor of, or abstaining from voting on, the Merger
Agreement, or by returning the enclosed proxy without instructing the proxy
holders to vote against the Merger Agreement, a shareholder waives his or her
rights under Section 131.
NOTICE OF THE EFFECTIVE DATE
If the Merger Agreement is approved by less than eighty percent (80%) of
the outstanding shares of Tuscaloosa Bancshares Common Stock, then, promptly
after the Effective Date, notice will be given to each Dissenter that the
Mergers have become effective. The notice shall be sent by registered mail,
addressed to the Dissenter at such Dissenter's last address on Tuscaloosa
Bancshares' records immediately prior to the Effective Date.
WRITTEN DEMAND
Within twenty (20) days after the mailing of such notice a Dissenter
must file with Deposit Guaranty Louisiana a demand in writing (the "Demand") for
payment of the fair cash value of such Dissenter's shares as of the day prior to
the Meeting, stating the amount demanded and a post office address to which
Deposit Guaranty Louisiana may reply. Simultaneously with the filing of the
Demand, the Dissenter shall also deposit the certificate(s) representing his
shares of Tuscaloosa Bancshares Common Stock (duly endorsed and transferred to
Deposit Guaranty Louisiana upon the sole condition that the certificate(s) will
be delivered to Deposit Guaranty Louisiana upon payment of the value of the
shares in accordance with Section 131 of the Louisiana BCL) in escrow with a
chartered bank or trust company located in Livingston Parish, Louisiana (the
"Escrow Bank"). Along with the Demand, the Dissenter shall deliver to Deposit
Guaranty Louisiana a written acknowledgment of the Escrow Bank that it holds
such certificate(s), endorsed as specified above.
A Dissenter who fails to satisfy any of the foregoing conditions within
the proper time periods will conclusively be presumed to have acquiesced to the
Mergers and will forfeit any right to seek payment pursuant to Section 131 of
the Louisiana BCL. Such written demand may be sent to Deposit Guaranty
Louisiana.
APPRAISAL
If Deposit Guaranty Louisiana does not agree to the amount demanded by
the Dissenter, or does not agree that any payment is due, it will, within twenty
(20) days after receipt of such Demand and acknowledgment, notify such Dissenter
in writing of either (i) the value it will agree to pay, or (ii) its belief that
no payment is due. If the Dissenter does not agree to accept the offered
amount, or disagrees with Deposit Guaranty Louisiana's assertion that no payment
is due, he must within sixty (60) days after the receipt of such notice file
suit against Deposit Guaranty Louisiana in Livingston Parish, Louisiana for a
judicial determination of the fair cash value of his shares. Any Dissenter who
is also entitled to file such suit may, within such 60-day period but not
thereafter, intervene as a plaintiff in any suit filed against Deposit Guaranty
Louisiana by another former shareholder of Tuscaloosa Bancshares for a judicial
determination of the fair cash value of such other shareholder's shares. If a
Dissenter fails to bring or to intervene in such a suit within the applicable
60-day period, the Dissenter will be deemed to have consented to accept either
Deposit Guaranty Louisiana's statement that no payment is due or, if Deposit
Guaranty Louisiana does not contend that no payment is due, to accept the value
of his shares specified by Deposit Guaranty Louisiana in its notice of
disagreement.
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Dissenters considering exercising Dissenters' Rights should bear in mind
that the fair cash value of their shares determined under Section 131 of the
Louisiana BCL could be more than, the same as or less than the consideration
they would otherwise receive pursuant to the Merger Agreement if they do not
seek such rights, and that opinions of financial advisors as to fairness are not
opinions as to fair cash value under Section 131 of the Louisiana BCL.
Any Dissenter who has duly filed a Demand in compliance with Section 131
of the Louisiana BCL will, after filing the Demand, cease to have any of the
rights of a shareholder, except those rights generally provided to Dissenters
under Section 131 of the Louisiana BCL.
A Dissenter has the right to voluntarily withdraw his or her Demand and
to accept the terms offered in the Merger Agreement at any time before Deposit
Guaranty Louisiana gives its notice of disagreement, but thereafter the
Dissenter may withdraw his or her Demand only with the consent of Deposit
Guaranty Louisiana. If a Demand is properly withdrawn, or the Dissenter
otherwise loses his Dissenters' Rights, a Dissenter shall only be entitled to
receive the consideration offered pursuant to the Merger Agreement.
When the fair cash value of the Dissenter's Shares is agreed upon
between the Dissenter and Deposit Guaranty Louisiana, or Deposit Guaranty
Louisiana has become liable for the value demanded by the Dissenter because of
its failure to give notice of disagreement, or the Dissenter has become bound to
accept the value which Deposit Guaranty Louisiana agrees is due because of his
failure to bring suit within sixty (60) days after receipt of the notice of
disagreement, Deposit Guaranty Louisiana may, at its option, pay to the Escrow
Bank the amount which the Dissenter is entitled to receive for his shares, and
Deposit Guaranty Louisiana shall be entitled to receive such shares from the
Escrow Bank. Any action by the Dissenter to recover such value must be brought
within five (5) years from the date the value was agreed upon, or the liability
of Deposit Guaranty Louisiana became fixed.
PAYMENT AND COSTS
If upon the filing of any such suit or intervention Deposit Guaranty
Louisiana deposits with the court the amount, if any, which it specified in its
notice of disagreement, and if in that notice Deposit Guaranty Louisiana offered
to pay such amount to the Dissenter on demand, then the costs (not including
legal fees) of the suit or intervention will be taxed against the Dissenter if
the amount finally awarded to the Dissenter, exclusive of interest and costs, is
equal to or less than the amount so deposited; otherwise, the costs (not
including legal fees) will be assessed against Deposit Guaranty Louisiana.
NOTICES
Prior to the Effective Date, dissenting shareholders of Tuscaloosa
Bancshares should send any communications regarding their rights to Maurice
Melancon, Secretary, Tuscaloosa Bancshares, Inc., 1509 S. Range Avenue, Post
Office Box 1749, Denham Springs, Louisiana 70726-4896. On or after the Effective
Date, dissenting shareholders should send any communications regarding their
rights to J. Clifford Harrison, Secretary, Deposit Guaranty Louisiana Corp.,
Post Office Box 1200, Jackson, Mississippi 39215-1200. All such communications
should be signed by or on behalf of the dissenting shareholder in the form in
which his shares are registered on the books of Tuscaloosa Bancshares. Deposit
Guaranty, Deposit Guaranty Louisiana and DGNB Louisiana have the right to
terminate the Merger Agreement if the number of shares of Tuscaloosa Bancshares
Common Stock as to which holders thereof are legally entitled to assert
dissenters' rights exceeds ten percent (10%) of the outstanding shares of
Tuscaloosa Bancshares Common Stock. See "The Mergers - Amendment; Waiver;
Termination."
ANY TUSCALOOSA BANCSHARES SHAREHOLDER WHO DESIRES TO EXERCISE
DISSENTERS' RIGHTS SHOULD CAREFULLY REVIEW THE LOUISIANA BCL AND IS URGED TO
CONSULT SUCH SHAREHOLDER'S LEGAL ADVISOR BEFORE EXERCISING OR ATTEMPTING TO
EXERCISE SUCH RIGHTS.
COMPARATIVE RIGHTS OF SHAREHOLDERS
Tuscaloosa Bancshares is incorporated in the State of Louisiana and
Deposit Guaranty is incorporated in the State of Mississippi. If the Mergers
are consummated, shareholders of Tuscaloosa Bancshares, whose rights as
shareholders are currently governed by Louisiana law and by Tuscaloosa
Bancshares' Articles of Incorporation (the "Tuscaloosa Bancshares Articles") and
Bylaws, will, upon consummation of the Mergers, become shareholders of Deposit
Guaranty and their rights as such will be governed by Mississippi law and by
Deposit Guaranty's Articles of Incorporation (the "Deposit Guaranty Articles")
and Bylaws.
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Certain significant differences between the rights of shareholders of
Tuscaloosa Bancshares and shareholders of Deposit Guaranty are set forth below.
This summary is not intended to be relied upon as an exhaustive list or a
detailed description of the provisions discussed and is qualified in its
entirety by the Louisiana BCL and the Mississippi Business Corporation Act (the
"Mississippi BCA") and by the Articles of Incorporation and Bylaws of each of
Tuscaloosa Bancshares and Deposit Guaranty, respectively, to which Tuscaloosa
Bancshares' shareholders are referred.
AUTHORIZED CAPITAL
TUSCALOOSA BANCSHARES. Tuscaloosa Bancshares has 20,000,000 shares of
authorized common stock having a par value of $.10 per share. As of the Record
Date 3,574,000 shares were issued and outstanding. Tuscaloosa Bancshares'
Articles of Incorporation do not authorize the issuance of preferred stock.
DEPOSIT GUARANTY. Deposit Guaranty has 100,000,000 shares of authorized
stock having no par value, 25,000,000 Class A Voting Preferred Stock having no
par value and 25,000,000 Class B Non-Voting Preferred having no par value.
As of the Record Date, 19,507,316 shares of Deposit Guaranty Common
Stock and no shares of preferred stock were issued and outstanding. Holders of
Preferred Stock shall be entitled to receive dividends subject to statutory
restrictions, when and as declared by the Board of Directors, and at such
periods as shall be fixed by the Board of Directors has the power to establish
the number of shares of each series, redemption rights, dividend rights,
conversion rights, and other preferences of such preferred stock. No shares of
preferred stock are currently issued and outstanding.
PREEMPTIVE RIGHTS
TUSCALOOSA BANCSHARES. Tuscaloosa Bancshares' Articles grant preemptive
rights. The LBCL provides that a provision in a corporation's articles that
"Shareholders shall have preemptive rights" shall have the meaning stated in
Section 72 of the LBCL. Section 72 of the LBCL provides that each holder of
shares having voting rights shall, upon issuance for cash of shares having
voting rights, have a preemptive right, during a reasonable period to be fixed
by the board of directors which need not exceed fifteen days to subscribe for
such proportion of the shares to be issued, as the number of shares having
voting rights held by him bears to the total number of shares having voting
rights then outstanding.
DEPOSIT GUARANTY. The holders of Deposit Guaranty Common Stock do not
have any preemptive rights to purchase or subscribe for any additional shares of
Deposit Guaranty Common Stock.
CUMULATIVE VOTING RIGHTS
TUSCALOOSA BANCSHARES. Each outstanding share of Tuscaloosa Bancshares
stock is entitled to one (1) vote on each matter submitted to a vote. The
Tuscaloosa Bancshares Articles do not provide for cumulative voting in the
election of directors. Directors are elected by plurality vote.
DEPOSIT GUARANTY. Pursuant to the Mississippi BCA and Deposit
Guaranty's Bylaws, each outstanding share of Deposit Guaranty stock is entitled
to one (1) vote on each matter submitted to a vote. However, in connection with
the election of directors, holders of Deposit Guaranty Common Stock have
cumulative voting rights. Pursuant to the Deposit Guaranty Bylaws, every
shareholder entitled to vote in the election of directors shall have the right
to vote, in person or by proxy, the number of shares owned by him for as many
persons as there are directors to be elected, or to cumulate his votes by giving
one (1) candidate the number of votes equal to the number of directors to be
elected multiplied by the number of his shares, or by distributing such votes on
the same principle among any number of candidates.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
TUSCALOOSA BANCSHARES. Tuscaloosa Bancshares' Articles provide that no
director or officer of Tuscaloosa Bancshares shall be liable to Tuscaloosa
Bancshares or its shareholders for monetary damages for breach of fiduciary duty
as a director or officer, provided that the foregoing provision shall not
eliminate or limit the liability of a director or officer for (a) any breach of
his duty of loyalty to the corporation or its shareholders; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (c) unlawful payment of dividends, distribution of assets, or
purchase or redemption of Tuscaloosa Bancshares shares, or (d) any transaction
from which he derived an improper personal benefit. Tuscaloosa Bancshares'
Articles
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further provide that the Board of Directors may cause the corporation to enter
into contracts with directors and officers providing for such limitation of
liability and may cause the corporation to approve comparable limitation of
liability provisions for its subsidiaries.
DEPOSIT GUARANTY. Deposit Guaranty's Articles and Bylaws do not contain
any provision limiting the personal liability of Deposit Guaranty's directors
and officers for monetary damages resulting from breach of fiduciary duty.
SUPERMAJORITY VOTING REQUIREMENTS; BUSINESS COMBINATIONS; CONTROL SHARES
TUSCALOOSA BANCSHARES. Tuscaloosa Bancshares is subject to Louisiana's
Fair Price Protection Statute (Sections 132-134 of the Louisiana BCL), which
requires that, in addition to any vote otherwise required by law or a
corporation's articles of incorporation, any "business combination" (as defined
in the statute) between a corporation and the holder of ten percent (10%) or
more of its total voting power be recommended by the corporation' s board of
directors and approved by (i) at least eighty percent (80%) of the total voting
power of the corporation and (ii) at least two-thirds (2/3) of the votes
entitled to be cast by shareholders other than the ten percent (10%)
shareholder, unless certain minimum price, form of consideration and procedural
requirements are satisfied by the ten percent (10%) shareholder, or if the board
approves the business combination before the ten percent (10%) shareholder
becomes a ten percent (10%) shareholder. The Fair Price Protection Statute does
not apply to the Mergers.
DEPOSIT GUARANTY. Deposit Guaranty's Articles require that any business
combination involving Deposit Guaranty or a subsidiary of Deposit Guaranty and
an Interested Shareholder, or any affiliate or associate of an Interested
Shareholder or any person that following such transaction would be an affiliate
or associate of an Interested Shareholder be approved by the affirmative vote of
at least eighty percent (80%) of the votes entitled to be cast by the holders of
all the then outstanding shares of voting stock of Deposit Guaranty, excluding
shares held by the Interested Shareholder, unless board approval requirements
are satisfied or unless certain fair price and procedural requirements are
satisfied. Generally, an Interested Shareholder is a person who owns ten
percent (10%) or more of the voting stock of Deposit Guaranty.
REMOVAL OF DIRECTORS
TUSCALOOSA BANCSHARES. Tuscaloosa Bancshares' Bylaws provide that
Tuscaloosa Bancshares shareholders may remove a director upon the affirmative
vote of a majority of shareholders at any special meeting called for that
purpose. The shareholders may proceed to elect a successor or successors for
the unexpired term of the director or directors removed.
DEPOSIT GUARANTY. Deposit Guaranty's Articles provide that Deposit
Guaranty shareholders may remove a director with or without cause, but only at a
meeting expressly called for that purpose and upon the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all shares of
stock entitled to vote generally in the election of directors, and in the event
that less than the entire Board is to be removed, not one of the directors may
be removed if the votes cast against his removal would be sufficient to elect
him if then cumulatively voted at an election of the class of directors of which
he is a part.
VACANCIES IN THE BOARD OF DIRECTORS
TUSCALOOSA BANCSHARES. Under Tuscaloosa Bancshares' Bylaws, the
remaining directors may fill any vacancy occurring in the Tuscaloosa Bancshares
Board of Directors (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 the unexpired term, even though such
remaining directors constitute less than a quorum, by a vote of two-thirds (2/3)
of the directors remaining in office, provided that the shareholders have the
right, at any special meeting called for the purpose prior to such action by the
Board, to fill the vacancy.
DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, any vacancy,
including one occurring as a result of an increase in the number of directors,
may be filled only by the shareholders.
AMENDMENT OF THE ARTICLES OF INCORPORATION OR BYLAWS
TUSCALOOSA BANCSHARES. Pursuant to the Louisiana BCL the Tuscaloosa
Bancshares Articles may be amended, repealed or adopted by two-thirds (2/3) of
the total voting power present. The Tuscaloosa Bancshares Bylaws provide that
the Bylaws may be amended or repealed by the Tuscaloosa Bancshares Board of
Directors at any regular or special meeting or by the shareholders at
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any annual or special meeting, provided notice of the proposed amendment or
repeal be contained in the notice of such annual or special meeting of the
shareholders.
DEPOSIT GUARANTY. Under the Mississippi BCA, the board of directors has
the power to amend or repeal the bylaws of a Mississippi corporation such as
Deposit Guaranty, unless such power is expressly reserved for the shareholders.
Deposit Guaranty's Articles provide that an amendment to the Bylaws relating to
composition of the Board of Directors and removal of directors must be approved
by the affirmative vote of at least eighty percent (80%) of the shareholders
(the same proportion required in order to effect the removal of a director),
excluding (except for purposes of determining whether a quorum is present) those
shares beneficially owned by any Interested Shareholder. The affirmative vote
of at least eighty percent (80%) of the shareholders is also required to amend
the provisions of the Articles of Incorporation requiring a supermajority
approval of business combinations. Amendments to the Articles of Incorporation
that result in Dissenters' rights require the affirmative vote of a majority of
the outstanding shares entitled to vote on the amendment. Otherwise, the
Articles of Incorporation may be amended by a majority vote of the shares
present at a meeting where a quorum is present.
SPECIAL MEETINGS OF SHAREHOLDERS
TUSCALOOSA BANCSHARES. Under Tuscaloosa Bancshares's Bylaws, special
meetings of the shareholders, for any purpose or purposes, may be called by the
President or the Board of Directors, or, upon the written request of any two (2)
directors or of any shareholder group holding in the aggregate not less than
one-fifth (1/5) of the total voting power of Tuscaloosa Bancshares' voting
stock.
DEPOSIT GUARANTY. Under Deposit Guaranty's Bylaws, special meetings of
the shareholders, for any purpose or purposes, may be called by the Chairman of
the Board, the President or the Board of Directors, or upon the written request
of shareholders holding in the aggregate not less than ten percent (10%) of the
total voting power entitled to vote on an issue.
SHAREHOLDER PROPOSALS AND NOMINATIONS
TUSCALOOSA BANCSHARES. Neither Tuscaloosa Bancshares' Articles nor
Bylaws set forth any procedures with respect to submission by a shareholder of a
proposal or nomination for consideration at a shareholders' meeting.
DEPOSIT GUARANTY. Deposit Guaranty's Bylaws provide procedures that
must be followed to properly bring a proposal before a shareholders' meeting or
to nominate candidates for election as directors. At least sixty (60) days
prior notice to the Secretary of Deposit Guaranty is required if a shareholder
intends to nominate an individual for election to the Board of Directors or
propose any shareholder action. These Bylaw provisions also require information
to be supplied about both the shareholder making such nomination or proposal and
the person nominated.
REDEMPTION AND RETIREMENT
TUSCALOOSA BANCSHARES. A Louisiana corporation cannot purchase or
redeem its shares when it is insolvent, or at a price, in the case of shares
subject to redemption, exceeding the redemption price thereof, or when its net
assets are less than, or such purchase would reduce its net assets below, the
aggregate amount payable on liquidation upon any issued shares having a
preferential right to participate in the assets in the event of liquidation
which remain after the purchase or redemption and cancellation of any shares in
connection with the purchase or redemption.
DEPOSIT GUARANTY. Under Mississippi law, a corporation is permitted to
purchase or redeem shares of its own stock except where upon doing so, the
corporation would not be able to pay its debts as they become due in the usual
course of business. This prohibition also applies to where the corporation's
total assets would be less than the sum of the corporation's total liabilities,
plus, unless the articles of incorporation permit otherwise, the amount that
would be needed to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those whose shares are
purchased or redeemed, if the corporation were to be dissolved at the time of
such purchase or redemption. Mississippi law permits a Board of Directors to
base its determination as to whether such purchase or redemption is prohibited
either on financial statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair valuation or
other method that is reasonable under the circumstances.
20
<PAGE> 31
STOCKHOLDERS' INSPECTION RIGHTS
TUSCALOOSA BANCSHARES. Under the Louisiana BCL, upon at least five (5)
days' written notice, any shareholder, except a business competitor, who is and
has been the holder of record of at least five percent (5%) of the outstanding
shares of any class of a corporation for at least six (6) months has the right
to examine, in person or by agent or attorney, at any reasonable time, for any
proper and reasonable purpose, any and all of the records and accounts of the
corporation and to make extracts therefrom. Louisiana law allows two (2) or
more shareholders, each of whom has been a holder of record for six (6) months,
whose aggregate holdings equal five percent (5%) to inspect the records.
DEPOSIT GUARANTY. Under the Mississippi BCA, any shareholder may
inspect the shareholders' list if the demand is made in good faith and for a
proper purpose. Such shareholder must describe his purpose and establish that
the list is directly connected to his purpose. Moreover, the stockholders' list
must be available for inspection by any shareholder beginning two (2) days after
notice of a shareholders' meeting is given and continuing until the meeting
takes place.
INDEMNIFICATION
The Louisiana BCL permits a corporation to indemnify any person who is
or was a party or is threatened to be made a party to any action, suit,
proceeding, whether civil, criminal, administrative, or investigative. This
includes any action by or in the right of the corporation (a "derivative
action"), by reason of fact that he is or was a director, officer, employee, or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent, against expenses (including
attorney's fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit, or proceeding if the
director acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of the corporation. With respect to any
criminal action or proceeding, the director must show that he or she had no
reasonable cause to believe his or her conduct was unlawful.
In the case of derivative actions, the Louisiana BCL limits the
indemnity to expenses (including attorney's fees) and amounts paid in settlement
not exceeding, in the judgment of the Board of Directors, the estimated expense
of litigating the action to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such action.
The Mississippi BCA provides that a director, officer or agent of a
corporation may be indemnified for such service if he conducted himself in good
faith, and he reasonably believed in the case of conduct in his official
capacity with the corporation, that his conduct was in the corporation's best
interests; and in all other cases that his conduct was at least not opposed to
the corporation's best interests. In the case of a criminal proceeding, a
director must show that he had no reasonable cause to believe his conduct was
unlawful. Indemnification permitted under this section in connection with a
derivative action is limited to reasonable expenses incurred in connection with
the proceeding.
Under both the Louisiana BCL and Mississippi law, the corporation may
pay, prior to final disposition, the expenses (including attorney's fees)
incurred by a director or officer in defending a proceeding. Under Louisiana
and Mississippi law, expenses incurred by an officer or director in defending
any action may be advanced prior to final disposition upon receipt of an
undertaking by the director or officer of the corporation to repay such advances
if it is ultimately determined that he is not entitled to indemnification.
Under Mississippi law, however, a determination must be made that the facts
known to those making the determination would not preclude indemnification.
Neither Louisiana law nor Mississippi law require the undertaking to be secured
and the undertaking may be accepted without reference to financial ability to
make the repayment.
In both Louisiana and Mississippi, however, indemnification is
unavailable to a person who has been found liable to the corporation.
TUSCALOOSA BANCSHARES. Tuscaloosa Bancshares' Articles provide that the
Board of Directors may cause the corporation to enter into contracts with
directors and officers providing for indemnification of directors and officers
to the fullest extent permitted by law, and may cause the corporation to approve
for its subsidiaries comparable indemnification provisions. Tuscaloosa
Bancshares' Bylaws provide that Tuscaloosa Bancshares shall indemnify to the
fullest extent of the law its directors, officers and employees.
DEPOSIT GUARANTY. Article Nine of Deposit Guaranty's Articles provide
for indemnification of officers and directors under the same conditions as are
set forth in the Mississippi BCA.
21
<PAGE> 32
Deposit Guaranty, as authorized by its Articles, has purchased a
liability policy which, subject to any limitations set forth in the policy,
indemnifies Deposit Guaranty's directors and officers for damages that they
become legally obligated to pay as a result of any negligent act, error or
omission committed by such person in his capacity as an officer or director.
APPRAISAL RIGHTS
TUSCALOOSA BANCSHARES. The Louisiana BCL provides appraisal rights to
shareholders in connection with mergers and consolidations and the sale, lease
or exchange of all of the corporation's assets, if such are approved by less
than eighty percent (80%) of a corporation's total voting power. Appraisal
rights are not available under the Louisiana BCL in the case of: (1) a sale
pursuant to a court order; (2) a sale for cash requiring distribution of all or
substantially all of the net proceeds to shareholders in accordance with their
respective interests within one (1) year of the date of the sale; and (3)
shareholders holding shares of any class of stock which, at the record date
fixed to determine shareholders entitled to receive notice of and to vote at the
meeting of shareholders at which a merger or consolidation was acted on, were
listed on a national securities exchange unless the shares of such shareholders
were not converted by the merger or consolidation solely into shares of the
surviving or new corporation.
DEPOSIT GUARANTY. The Mississippi BCA provides appraisal rights to
shareholders in any of the following corporate actions: (1) a merger if
shareholder approval is required or if the corporation is a subsidiary that
merges with its parent; (2) a plan of share exchange if the corporation is being
acquired and the shareholder is entitled to vote; and (3) a sale or exchange of
all or substantially all of the property of the corporation that is not in the
usual and regular course of business, but not including a court ordered sale or
sale pursuant to a plan where the shareholders will receive the proceeds within
one (1) year after the date of sale.
MARKET PRICES OF AND DIVIDENDS ON TUSCALOOSA BANCSHARES COMMON STOCK
No established public trading market for Tuscaloosa Bancshares Common
Stock exists. As of June 30, 1996, there were 256 holders of record of
Tuscaloosa Bancshares Common Stock.
Tuscaloosa Bancshares paid an annual dividend of $.07 per share in 1996,
$.07 per share in 1995, and $.02 per share in 1994. The holders of Tuscaloosa
Bancshares Common Stock are entitled to receive dividends when and if declared
by the Tuscaloosa Bancshares Board out of funds that are legally available
therefor. If the Mergers are not consummated, it is the intention of the
Tuscaloosa Bancshares Board to continue declaring annual cash dividends.
However, there can be no assurance that Tuscaloosa Bancshares' dividend policy
would remain unchanged.
22
<PAGE> 33
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF TUSCALOOSA BANCSHARES
The following table indicates the beneficial ownership as of September
12, 1996 of Tuscaloosa Bancshares Common Stock by (i) each director of
Tuscaloosa Bancshares, (ii) the CEO, and (iii) all directors and executive
officers of Tuscaloosa Bancshares as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Position Beneficial Ownership Class
----------------- -------------------- ---------
<S> <C> <C>
Rebecca Kiger Bradley, Director 374,561 10.5%
Calvin C. Fayard, Jr., Director 636,323(1) 17.8%
Roy Fore, Director 51,191 1.4%
Dr. Richard E. Keeton, Director 281,906 7.9%
Alex Theriot, Jr., Director 481,947(2) 13.5%
Lloyd C. Cockerham, Jr.,
President 5,742 *
All Directors and Executive
Officers as a group (7 persons) 1,832,230 51.3%
</TABLE>
*Less than 1%.
(1) Includes 38,617 shares held by family members.
(2) Includes 3,878 shares held by family members.
23
<PAGE> 34
The following table sets forth certain information as of September
12, 1996 concerning persons, other than the directors listed in the prior
table, known to Tuscaloosa Bancshares to be the beneficial owner of more than
five percent (5%) of Tuscaloosa Bancshares Common Stock.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership Class
---------------- -------------------- -------
<S> <C> <C>
Little River Gravel Company 329,793 9.2%
35051 Newsom Lane
Denham Springs, LA 70726
</TABLE>
INFORMATION CONCERNING TUSCALOOSA BANCSHARES
GENERAL
Tuscaloosa Bancshares is a Louisiana business corporation and a
one-bank holding company registered under the federal Bank Holding Company Act
of 1956. It was formed in 1984 primarily for the purpose of holding all of the
outstanding stock of Tuscaloosa Bank, which is Tuscaloosa Bancshares' sole
subsidiary. Tuscaloosa Bank was formed in 1982 under the banking laws of the
State of Louisiana. Tuscaloosa Bank conducts a general commercial banking
business through its main office at 1509 S. Range Avenue, Denham Springs,
Louisiana 70726-4896 and at three (3) branch offices in Livingston Parish,
Louisiana. Tuscaloosa Bank offers a full range of traditional commercial
banking services, except for trust services.
COMPETITION
Tuscaloosa Bank competes actively with national and state banks and
savings and loan institutions in Louisiana for all types of loans and deposits.
Tuscaloosa Bank also competes for loans with other financial institutions, such
as insurance companies, real estate investment trusts, savings and loans, small
loan companies, credit unions and certain government agencies. Four other
financial institutions have banking offices located in Livingston Parish.
EMPLOYEES
As of June 30, 1996, Tuscaloosa Bancshares and Tuscaloosa Bank had
approximately 44 full time equivalent employees. Tuscaloosa Bancshares has no
salaried employees, although certain executive officers hold parallel positions
with Tuscaloosa Bank. No employees are represented by unions or other
bargaining units, and management considers its relations with employees to be
satisfactory.
SUPERVISION AND REGULATION
Tuscaloosa Bancshares and Tuscaloosa Bank are extensively regulated
under both federal and state laws. To the extent that the following
information describes particular statutory provisions, it is qualified in its
entirety by reference to the particular statutory and regulatory provisions.
Any change in applicable law or regulation may have a material effect on the
business and prospects of Tuscaloosa Bancshares.
Tuscaloosa Bancshares is a bank holding company within the meaning of
the Bank Holding Company Act of 1956, as amended (the "BHCA"), and, as such, is
subject to the provisions of the BHCA and to regulation and supervision by the
Board of Governors of the Federal Reserve System (the "Reserve Board").
Tuscaloosa Bancshares is required to file with the Reserve Board annual reports
containing such information as the Reserve Board may require pursuant to the
BHCA and also is subject to periodic examination by the Reserve Board. The
BHCA limits, with certain exceptions, the business in which a bank holding
company may engage, directly or through subsidiaries, to banking, managing or
controlling banks, and furnishing or performing activities so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
In determining whether a particular activity is a proper incident to banking or
managing or controlling banks, the Reserve Board must consider whether its
performance by an affiliate of a bank holding company can reasonably be
expected to produce benefits to the public, such as greater convenience,
24
<PAGE> 35
increased competition or gains in efficiency that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or other unsound banking practices. The
Reserve Board has adopted regulations implementing the provisions of the BHCA
with respect to the activities of bank holding companies. Whether or not a
particular non-banking activity is permitted under the BHCA, the Reserve Board
is authorized to require a bank holding company to terminate any activity or to
divest itself of any non-banking subsidiary if its actions represent unsafe or
unsound practices or violations of law.
Under the BHCA, a bank holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection with the
extension of credit, the lease or sale of property or provision of any
services. In addition, the BHCA prohibits a bank holding company from
borrowing from its bank subsidiaries unless such loans are secured by
specified amounts and types of collateral. Such secured loans are also subject
to certain limitations based upon the subsidiary bank's capital and surplus.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDIC Act") subjected bank holding companies as well as banks to significantly
increased regulation and supervision. Among other things, the FDIC Act
provides that undercapitalized institutions, as defined by regulatory
authorities, must submit recapitalization plans, and a parent company of such
an institution must either (i) guarantee the institution's compliance with the
capital plan, up to an amount equal to the lesser of five percent (5%) of the
institution's assets at the time it becomes undercapitalized or the amount of
the capital deficiency when the institution fails to comply with the plan, or
(ii) suffer certain adverse consequences such as a prohibition of dividends by
the parent company to its shareholders.
Tuscaloosa Bancshares is also subject to the Louisiana Bank Holding
Company Act, as amended (the "Louisiana Act") which, among other things,
provides that a bank holding company and its subsidiaries may not engage in any
insurance activity in which a bank may not engage. The Louisiana Commissioner
of Financial Institutions is authorized to administer the Louisiana Act and to
issue orders and regulations thereunder.
Federal and Louisiana laws provide for the enforcement of any pro rata
assessment of shareholders of a bank to cover impairment of capital stock by
sale, to the extent necessary, of the stock of any assessed shareholder failing
to pay the assessment. Tuscaloosa Bancshares, as shareholder of Tuscaloosa
Bank, is subject to these provisions.
Both federal and state laws extensively regulate various aspects of
Tuscaloosa Bank's business, including requirements regarding the maintenance of
reserves against deposits, limitations on the rates that can be charged on
loans or paid on deposits, branching and restrictions on the nature and amounts
of loans and investments that can be made. As a state bank, Tuscaloosa Bank
is subject to the supervisory authority of the Louisiana Commissioner of
Financial Institutions, whose office conducts periodic examinations of
Tuscaloosa Bank. As a federally insured bank, Tuscaloosa Bank is also subject
to supervision and regulation by the Federal Deposit Insurance Corporation (the
"FDIC"). Under certain circumstances, regulatory authorities may prohibit the
payment of dividends by a bank or its parent holding company. The FDIC Act and
regulations promulgated thereunder classify banks into five (5) categories
generally relating to their regulatory capital ratios and institute a system of
supervisory actions indexed to a bank's particular classification. Generally,
banks that are classified as "well capitalized," or "adequately capitalized"
are not subject to the supervisory actions specified in the FDIC Act for prompt
corrective action, but may be restricted from taking certain actions that
will lower their classification. Banks classified as "undercapitalized,"
"significantly undercapitalized," or "critically undercapitalized" are subject
to restrictions in supervisory actions of increasing stringency based on the
level of classification. Under present regulation, Tuscaloosa Bank is "well
capitalized." While such a classification would exclude Tuscaloosa Bank from
the restrictions and actions envisioned by the prompt corrective action
provisions of the FDIC Act, the regulatory agencies have broad powers under
other provisions of federal law that would permit them to place restrictions on
Tuscaloosa Bank or to take other supervisory action regardless of such
classification.
SUPPLEMENTAL FINANCIAL INFORMATION
Supplemental financial information for Tuscaloosa Bancshares and
Tuscaloosa Bank is set forth below and on the following pages.
25
<PAGE> 36
INVESTMENT SECURITIES
The following table sets forth the carrying amounts of investment
securities at the dates indicated (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
---------------------------
<S> <C> <C>
U.S. Treasury securities and obligations of other U.S.
Government agencies and corporations $2,472 $3,448
Obligations of state and political subdivisions 380 205
Mortgage-backed bonds and collateralized
mortgage obligations 3,920 4,442
------ ------
Total $6,772 $8,095
====== ======
</TABLE>
26
<PAGE> 37
LOAN PORTFOLIO
The table below sets forth Tuscaloosa Bank's loan distribution at the
end of each of the last two (2) years (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
----------------------------
<S> <C> <C>
Commercial, financial and agricultural $3,594 $4,828
Real estate - mortgage 13,503 9,328
Real estate - construction 2,687 2,548
Installment 4,737 3,894
------- -------
Total $24,521 $20,598
======= =======
</TABLE>
The following table shows the maturity or repricing frequency of loans
outstanding as of December 31, 1995 (In thousands of dollars).
<TABLE>
<S> <C>
Maturity of fixed rate loans:
Within one year $12,887
After one but within five years 9,564
After five years 803
-------
Total fixed rate loans 23,254
Variable rate loans repricing at least quarterly 1,228
Nonaccrual loans 39
-------
Total loans $24,521
=======
</TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes Tuscaloosa Bank's loan loss experience
for each of the two (2) years ended (In thousands of dollars):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
-----------------------
<S> <C> <C>
Balance at beginning of period $ 255 $ 292
Charge-offs:
Commercial, financial and agricultural 18 35
Installment 82 14
------- -------
Total Charge-offs 100 49
------- -------
Recoveries:
Commercial, financial and agricultural 10 22
Installment -- 5
-------- -------
Total Recoveries 10 27
-------- -------
Net charge-offs 90 22
Provision charged (credited) to operations 129 (15)
-------- ------
Balance at end of period $ 294 $ 255
======== =======
Ratio of net charge-offs to average loans
outstanding .45% .14%
</TABLE>
27
<PAGE> 38
The provision for loan losses, which is charged to income from
operations, is based upon the changes in the loan portfolio, the amount of net
loan losses incurred, and management's estimation of potential future losses
based on several factors including, but not limited to, current economic
conditions, loan portfolio composition, nonaccrual loans, problem loans and
prior loan loss experience.
RISK ELEMENTS
The following table summarizes nonperforming loans at December 31,
1995 and 1994 (In thousands of dollars):
<TABLE>
<CAPTION>
1995 1994
-----------------------
<S> <C> <C>
Nonaccrual loans $39 $14
Accruing loans past due 90 days or more 64 59
Restructured loans not included above -- --
DEPOSITS
</TABLE>
The average deposits are summarized for the period indicated in the
following tables (In thousands of dollars):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1995 1994
------------------------------------
AMOUNT AMOUNT
------------------------------------
<S> <C> <C>
Noninterest-bearing demand deposits $8,889 $7,112
Interest-bearing demand deposits 1,901 1,951
Savings deposits 13,187 12,847
Time deposits 9,450 7,445
------- -------
Total $33,427 $29,355
======= =======
</TABLE>
Maturities of time deposits of $100,000 or more outstanding as of
December 31, 1995 are summarized as follows (In thousands of dollars):
<TABLE>
<CAPTION>
TIME CERTIFICATES OF DEPOSIT
----------------------------
<S> <C>
3 months or less $ 848
Over 3 through 12 months 1,277
Over 12 months 500
-------
Total $ 2,625
=======
RETURN ON EQUITY AND ASSETS
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1995 1994
------------------------
<S> <C> <C>
Return on average assets 1.64% 1.46%
Return on average equity 17.62 16.54
Dividend payout ratio 40.50 14.11
Average equity to average assets 9.31 8.84
</TABLE>
28
<PAGE> 39
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF TUSCALOOSA BANCSHARES, INC.
The following discussion and analysis of the financial condition and
results of operations of Tuscaloosa Bancshares should be read in conjunction
with the consolidated financial statements, accompanying footnotes, and other
supplemental financial information appearing elsewhere in this prospectus.
1995 COMPARED WITH 1994
BALANCE SHEET
Total assets were $39.4 million at December 31, 1995 compared to $33.6
million in 1994 . Total loans, net of unearned income, increased $3.9 million,
or 19%, to $24.5 million compared to $20.6 million in 1994. Total securities
decreased $1.3 million from $8.1 million at December 31, 1994 to $6.8 million
at December 31, 1995 to fund loan demand. The allowance for loan losses
increased $39 thousand to $294 thousand.
Total deposits increased $5.7 million, or 19%, to $35.0 million at
December 31, 1995 compared to $29.3 million in 1994. Demand deposits and
certificates of deposit increased significantly, while savings accounts
remained constant. Total stockholders' equity for year-end 1995 increased to
$3.8 million from $ 3.2 million in 1994 as a result of earnings from operations
and an increase of $68 thousand in unrealized gains on securities available for
sale, net of income taxes.
NET INCOME
Tuscaloosa Bancshares' net income for 1995 increased $111 thousand, or
22%, from the $506 thousand earned during the year ended December 31, 1994.
Net income per share rose 21% to $.17 for the year ended December 31, 1995
compared to $.14 for the same period in 1994. The increase in net income is
primarily due to a $409 thousand increase in net interest income resulting from
a 32% increase in average loan volumes.
NET INTEREST INCOME
Net interest income, the largest component of revenue, increased $409
thousand to $2.3 million for the twelve month period ended December 31, 1995.
Tuscaloosa Bancshares' net interest margin at December 31, 1995 was 6.70%
compared to 5.85% at December 31, 1994 due to more favorable loan yields and an
increase in loan volumes.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 AND 1995
BALANCE SHEET
Total assets were $40.9 million at June 30, 1996, compared to $39.4
million at December 31, 1995. Total loans increased $1.0 million from $24.5
million at December 31, 1995, to $25.5 million at June 30, 1996. The increase
in loans included a $2.9 million increase in commercial and industrial loans
which was somewhat offset by a decrease of $1.7 million loans secured by real
estate. Total securities increased $423 thousand from $6.8 million at December
31, 1995, to $7.2 million at June 30, 1996.
Total deposits increased approximately $1.3 million from $35.0 million
at December 31, 1995 to $36.3 million at June 30, 1996. Total stockholders'
equity was $3.8 million at December 31, 1995 compared to $4.1 million at June
30, 1996.
NET INCOME
Net income for the six months ended June 30, 1996 was $360 thousand, an
increase of 24% from $290 thousand at June 30, 1995.
29
<PAGE> 40
NET INTEREST INCOME
Net interest income for the six months ended June 30, 1996 increased
$250 thousand, or 25%, greater than the six month period ended June 30, 1995.
This increase in interest income is primarily a result of interest earned on
commercial and other loans increasing $574 thousand from $609 thousand at June
30, 1995 to $1.2 million at June 30, 1996. This increase was somewhat offset by
a decrease of $200 thousand in interest earned on installment loans which
decreased to $294 thousand. Interest expense for the first six months of 1996
increased $61 thousand to $510 thousand compared to $449 thousand for the same
period in 1995. Tuscaloosa Bancshares' net interest margin at June 30, 1996 was
7.29% compared to 6.30% for the same period in 1995.
PROVISION FOR POSSIBLE LOAN LOSSES
As a result of management's assessment of the adequacy of the allowance
for possible loan losses, Tuscaloosa Bank recorded a provision of $3 thousand
for the six month period ended June 30, 1996 compared to a provision of $19
thousand for the six month period ended June 30, 1995.
The allowance for possible loan losses at June 30, 1996 was $299
thousand, or 1.17% of total loans, increasing slightly from $294 thousand, or
1.20% of total loans, at December 31, 1995.
NONINTEREST INCOME
Noninterest income for the six months ended June 30, 1996 was $423
thousand, decreasing from $432 thousand for the six month period ended June 30,
1995. This decrease was primarily as a result of a $12 thousand decrease in
service charges on deposit accounts.
NONINTEREST EXPENSE
Noninterest expense for the first six months of 1996 was $1.15 million
compared to $992 thousand for the six month period ended June 30, 1995. This
increase reflects a $36 thousand, or 7%, increase in salaries and employee
benefits. Other noninterest expense increased $106 thousand to $463 thousand
for the six month period ended June 30, 1996 as compared to the same period in
1995.
LEGAL OPINION
Watkins Ludlam & Stennis, P.A., of Jackson, Mississippi has rendered
its opinion that the shares of Deposit Guaranty 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 Merger Agreement, will be validly issued, fully
paid and non-assessable.
EXPERTS
The consolidated financial statements of Deposit Guaranty as of
December 31, 1995 and 1994, and for each of the years in the three-year period
ended December 31, 1995, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, also incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1994,
consolidated financial statements refers to a change in the method of
accounting for debt securities.
With respect to the unaudited interim financial information for the
periods ended March 31, 1996 and 1995 and June 30, 1996 and 1995, incorporated
by reference herein, KPMG Peat Marwick LLP has reported that they applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate reports included in Deposit
Guaranty's quarterly reports on Form 10-Q for the quarters ended March 31, 1996
and June 30, 1996, incorporated by reference herein, state that they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of section 11 of
the Securities Act of 1933 for their reports on the unaudited interim financial
information because those reports are not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of sections 7 and 11 of the Act.
30
<PAGE> 41
The consolidated financial statements of Tuscaloosa Bancshares as of
December 31, 1995, and for the year then ended have been audited by Hannis T.
Bourgeois & Co., L.L.P., independent public accountants, as indicated in their
report with respect thereto and have been included herein and in the
registration statement in reliance upon the authority of said firm as experts
in accounting and auditing in giving said report. The consolidated financial
statements of Tuscaloosa Bancshares as of December 31, 1994 and for the year
then-ended, have been audited by Arthur Andersen, LLP, independent public
accountants, as indicated in their report with respect thereto and have been
included herein and in the registration statement in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Board of
Directors of Tuscaloosa Bancshares knows of no matters which will be presented
for consideration at the Meeting other than as set forth in the Notice of such
Meeting attached to this Proxy Statement/Prospectus. However, if any other
matters shall come before the Meeting or any adjournment or postponement
thereof and be voted upon, the enclosed proxy shall be deemed to confer
discretionary authority to the individuals named as proxies therein to vote the
shares represented by such proxy as to any such matters.
31
<PAGE> 42
INDEX TO FINANCIAL STATEMENTS
TUSCALOOSA BANCSHARES, INC.
AND SUBSIDIARY
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report - Hannis T. Bourgeois & Co., L.L.P. F-2
Report of Independent Public Accountants - Arthur Andersen, LLP F-3
Consolidated Balance Sheets at June 30, 1996 and 1995 and F-4
December 31, 1995 and 1994
Consolidated Statements of Income for the Six Months Ended F-5
June 30, 1996 and 1995 and each of the Years in the Two
Year Period Ended December 31, 1995
Consolidated Statements of Changes in Stockholders' Equity for
the Six Months Ended June 30, 1996 and for each of the Years
in the Two Year Period Ended December 31, 1995 F-6
Consolidated Statements of Cash Flows for each of the Years in the F-7
Two Year Period Ended December 31, 1995
Notes to Consolidated Financial Statements for each of the Years in
the Two Year Period Ended December 31, 1995 F-9
</TABLE>
F-1
<PAGE> 43
May 2, 1996
Independent Auditor's Report
To the Board of Directors
Tuscaloosa Bancshares, Inc.
and Subsidiary
Denham Springs, Louisiana
We have audited the Consolidated Balance Sheet of Tuscaloosa
Bancshares, Inc. and Subsidiary as of December 31, 1995, and the related
Consolidated Statements of Income, Changes in Stockholders' Equity, and Cash
Flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the 1995 financial statements referred to above
present fairly, in all material respects, the financial position of Tuscaloosa
Bancshares, Inc. and Subsidiary as of December 31, 1995, and the results of
their operations, changes in their stockholders' equity, and their cash flows
for the year then ended in conformity with generally accepted accounting
principles.
Respectfully submitted,
/s/ Hannis T. Bourgeois & Co., L.L.P.
F-2
<PAGE> 44
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
of Tuscaloosa Bancshares, Inc.:
We have audited the accompanying consolidated balance sheet of Tuscaloosa
Bancshares, Inc. (a Louisiana corporation) and subsidiary as of December 31,
1994 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tuscaloosa Bancshares, Inc.
and subsidiary as of December 31, 1994 and, the results of their operations and
cash flows for the year then ended in conformity with generally accepted
accounting principles.
New Orleans, Louisiana
May 8, 1995
F-3
<PAGE> 45
Tuscaloosa Bancshares, Inc.
and Subsidiary
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
(Unaudited) ----------------------------
June 30, 1996 1995 1994
------------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks - Note B $ 3,411,259 $ 3,110,503 $ 2,320,910
Interest Bearing Deposits in Banks 0 0 1,089,000
Total Cash and Cash Equivalents ----------- ----------- -----------
3,411,259 3,110,503 3,409,910
Federal Funds Sold 3,325,000 3,425,000 0
Securities - Note C:
Held to Maturity (Fair Value 1996 - $368,000,
1995 - $389,000 and 1994 - $4,956,834) 365,000 380,000 5,209,742
Available for Sale 6,829,577 6,392,081 2,885,690
----------- ----------- -----------
7,194,577 6,772,081 8,095,432
Loans - Notes D and L 25,454,899 24,520,939 20,598,245
Less: Allowance for Loan Losses - Note E (299,413) (293,588) (255,330)
----------- ----------- -----------
25,155,486 24,227,351 20,342,915
Bank Premises and Equipment - Note F 1,346,750 1,332,595 1,275,658
Other Real Estate 71,233 95,700 131,134
Accrued Interest Receivable 271,881 249,839 233,374
Other Assets 134,734 147,236 77,053
----------- ----------- -----------
Total Assets $40,910,920 $39,360,305 $33,565,476
=========== =========== ===========
LIABILITIES
Deposits - Note G:
Noninterest Bearing $10,218,216 $10,064,939 $ 7,713,244
Interest Bearing 26,100,717 24,946,912 21,572,116
----------- ----------- -----------
36,318,933 35,011,851 29,285,360
Securities Sold Under Agreement to Repurchase 0 0 850,000
Other Liabilities 485,069 591,028 186,236
----------- ----------- -----------
Total Liabilities 36,804,002 35,602,879 30,321,596
Commitments and Contingencies -
Notes K, M, N and P
STOCKHOLDERS' EQUITY
Common Stock - $0.10 Par Value; 20,000,000
Shares Authorized; 3,574,000 Shares Issued and
Outstanding - Note H 357,440 357,440 357,440
Surplus and Retained Earnings 3,759,292 3,398,909 2,953,094
Unrealized Gain (Loss) on Securities
available for Sale, Net - Note C (9,814) 1,077 (66,654)
----------- ----------- -----------
Total Stockholders' Equity 4,106,918 3,757,426 3,243,880
----------- ----------- -----------
Total Liabilities and Stockholders' Equity $40,910,920 $39,360,305 $33,565,476
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 46
Tuscaloosa Bancshares, Inc.
and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended Year Ended
June 30, December 31,
-------------------------- -----------------------
1996 1995 1995 1994
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Interest and Fees on Loans $1,479,143 $1,165,641 $2,607,926 $1,868,197
Interest on Securities:
Taxable Interest 194,915 219,884 405,714 410,797
Nontaxable Interest 9,844 4,665 12,322 5,258
Interest on Federal Funds Sold 99,452 69,930 161,688 133,796
Other Interest Income 1,810 14,006 17,101 74,516
---------- ---------- --------- ----------
Total Interest Income 1,785,164 1,474,126 3,204,751 2,492,564
Interest Expense:
Interest Expense on Deposits - Note G 510,227 444,986 922,620 615,911
Other Interest Expense 287 4,226 4,226 6,681
---------- ---------- --------- ----------
Total Interest Expense 510,514 449,212 926,846 622,592
Net Interest Income 1,274,650 1,024,914 2,277,905 1,869,972
Provision (Credit) for Loan Losses - Note E 3,000 19,000 128,954 (15,000)
---------- ---------- --------- ----------
Net Interest Income after Provision
for Possible Loan Losses 1,271,650 1,005,914 2,148,951 1,884,972
Other Income:
Service Charges on Deposit Accounts 377,169 389,532 724,266 612,100
Other Operating Income 46,696 42,082 102,108 68,581
---------- ---------- --------- ----------
Total Other Income 423,865 431,614 826,374 680,681
Other Expenses:
Salaries and Employee Benefits 542,852 507,003 1,033,209 867,118
Other Operating Expenses - Note I 606,626 484,754 1,063,688 907,670
---------- ---------- ---------- -----------
Total Other Expenses 1,149,478 991,757 2,096,897 1,774,788
---------- ---------- ---------- -----------
Income before Income Taxes 546,037 445,771 878,428 790,865
Applicable Income Tax - Note J 185,653 155,898 261,730 284,405
---------- ---------- --------- ----------
Net Income $360,383 $289,873 $616,698 $506,460
========== ========== ========== ==========
Per Share:
Net Income $0.10 $0.08 $0.17 $0.14
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 47
Tuscaloosa Bancshares, Inc.
and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> (Unaudited) December 31,
June 30, -----------------------------------------------
1996 1995 1994
------------ ----------------- ----------------
<S> <C> <C> <C>
Common Stock:
Balance - Beginning and End of Period $ 357,440 $ 357,440 $ 357,440
============ ================= ================
Surplus:
Balance - Beginning of Period $ 3,942,860 $ 3,863,999 $ 3,863,999
Issuance of Stock Previously Held
by Bank - 78,861 -
------------ ----------------- ----------------
Balance - End of Period $ 3,942,860 $ 3,942,860 $ 3,863,999
============ ================= ================
Retained Earnings (Deficit):
Balance - Beginning of Period $ (543,951) $ (910,905) $ (1,345,885)
Net Income 360,383 616,698 506,460
Cash Dividends (1995 - $.07 per share;
1994 - $.02 per share) - (249,744) (71,480)
------------ ----------------- ----------------
Balance - End of Period $ (183,568) $ (543,951) $ (910,905)
============ ================= ================
Unrealized Gain (Loss) on Securities
Available for Sale:
Balance - Beginning of Period $ 1,077 $ (66,654) $ -
Net Change in Unrealized Gain
(Loss) on Securities Available
for Sale (10,891) 67,731 (66,654)
------------ ----------------- ----------------
Balance - End of Period $ (9,814) $ 1,077 $ (66,654)
============ ================= ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 48
Tuscaloosa Bancshares, Inc.
and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------------- ---------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 616,698 $ 506,460
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Provision for Depreciation 105,770 98,039
Provision (Credit) for Loan Losses 128,954 (15,000)
Provision (Credit) for Deferred Tax (83,888) 268,792
Accretion of Discounts on Securities - Net (46,952) (29,721)
Loss on Sale of Other Real Estate 8,980 -
Writedowns on Other Real Estate - 18,592
Increase in Accrued
Interest Receivable (16,465) (10,904)
(Increase) Decrease in Other Assets (21,187) 49,129
Increase (Decrease) in Accrued
Interest Payable 83,834 (4,594)
Increase in Other
Liabilities 392,438 877,564
-------------- ---------------
Net Cash Provided by Operating
Activities $ 1,168,182 $ 1,758,357
Cash Flows From Investing Activities:
Net Increase in Federal
Funds Sold $ (3,425,000) $ -
Purchase of investment securities available for sale (11,455,846) -
Purchase of investment securities held to maturity (225,000) -
Proceeds from maturities and calls of investment
securities available for sale 13,103,772 -
Proceeds from maturities and calls of investment
securities held to maturity 50,000 2,868,909
Net Increase in Loans (4,016,256) (7,396,223)
Purchases of Bank Premises and Equipment (180,957) (114,603)
Proceeds from Sale of Bank Premises and
Equipment 18,250 -
Proceeds from Sale of Other Real Estate 29,320 8,990
-------------- ---------------
Net Cash Used in Investing Activities $ (6,101,717) $ (4,632,927)
</TABLE>
(CONTINUED)
F-7
<PAGE> 49
<TABLE>
<CAPTION>
1995 1994
------------- ---------------
<S> <C> <C>
Cash Flows From Financing Activities:
Repayment of Securities Under Repurchase
Agreement $ (850,000) $ -
Net Increase (Decrease) in Demand
Deposits, NOW, Money Market and Savings
Accounts 1,874,320 (578,223)
Net Increase (Decrease) in Certificates
of Deposits 3,852,171 (1,291,817)
Proceeds from Issuance of Stock Previously
Held by Bank 78,861 -
Payment of Dividends to Shareholders (321,224) (71,480)
------------- ---------------
Net Cash Provided by (Used in)
Financing Activities $ 4,634,128 $ (1,941,520)
------------- ---------------
Net Decrease in Cash and Cash
Equivalents $ (299,407) $ (4,816,090)
Cash and Cash Equivalents - Beginning of Year 3,409,910 8,226,000
------------- ---------------
Cash and Cash Equivalents - End of Year $ 3,110,503 $ 3,409,910
============= ===============
Supplemental Disclosures of Cash Flow
Information:
Cash Payments for:
Interest Paid on Deposits $ 838,786 $ 627,186
============= ===============
Interest Paid on Repurchase Agreements $ 4,226 $ -
============= ===============
Income Tax Payments $ 13,626 $ 8,000
============= ===============
Supplemental Schedule of Noncash
Investing and Financing Activities:
Other Real Estate Acquired in
Settlement of Loans $ 2,866 $ -
============= ===============
Dividends Declared and Not Paid $ - $ 71,480
============= ===============
Changes in Unrealized Gain (Loss)
on Securities Available for Sale $ 102,612 $ 100,977
============= ===============
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities
Available for Sale $ (34,891) $ 34,332
============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE> 50
Tuscaloosa Bancshares, Inc.
and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
Note A - Business and Summary of Significant Accounting Policies
BUSINESS
The Company is engaged only in the general banking business and
provide this service primarily to customers in Livingston Parish, Louisiana,
through its banking subsidiary.
The accounting principles followed by Tuscaloosa Bancshares, Inc. and
its wholly-owned Subsidiary, Tuscaloosa Commerce Bank, are those which are
generally practiced within the banking industry. The methods of applying those
principles conform with generally accepted accounting principles and have been
applied on a consistent basis. The principles which significantly affect the
determination of financial position, results of operations, changes in
stockholders' equity and cash flows are summarized below.
Principles of Consolidation
The consolidated financial statements include the accounts of
Tuscaloosa Bancshares, Inc. (the Company), and its wholly-owned subsidiary,
Tuscaloosa Commerce Bank (the Bank). All significant intercompany balances and
transactions have been eliminated. Certain reclassifications to previously
published financial statements have been made to comply with current reporting
requirements.
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
reported period. Actual results could differ from those estimates.
Securities
Securities are being accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Investments in
Debt and Equity Securities," which requires the classification of securities as
held to maturity, trading, or available for sale.
Securities classified as held to maturity are those debt securities
that the Bank has both the intent and ability to hold to maturity regardless of
changes in market conditions, liquidity needs or changes in general economic
conditions. These securities are carried at cost adjusted for amortization of
premium and accretion of discount, computed by the interest method over their
contractual lives.
Securities classified as available for sale are those debt securities
that the Bank intends to hold for an indefinite period of time but not
necessarily to maturity. Any decision to sell a security classified as
available for sale would be based on various factors, including significant
movements in interest rates, changes in the maturity mix of the Bank's assets
and liabilities, liquidity needs, regulatory capital considerations, and other
similar factors. Securities available for sale are carried at fair value.
Unrealized gains or losses are reported as increases or decreases in
F-9
<PAGE> 51
stockholders' equity, net of the related deferred tax effect. Realized gains or
losses, determined on the basis of the cost of specific securities sold, are
included in earnings. The Bank does not engage in trading activities.
Loans
Loans are stated at principal amounts outstanding, less unearned
income and allowance for loan losses. Interest on commercial loans is accrued
daily based on the principal outstanding. Interest on installment loans is
recognized and included in interest income using the sum-of-the-digits method,
which does not differ materially from the interest method.
The Bank discontinues the accrual of interest income when a loan
becomes 90 days past due as to principal or interest. Interest on impaired
loans is discontinued when, in management's opinion, the borrower may be unable
to meet payments as they become due. When a loan is placed on non-accrual
status, previously recognized but uncollected interest is reversed to income or
charged to the allowance for loan losses. Interest income is subsequently
recognized only to the extent cash payments are received.
Allowance for Loan Losses
The allowance for loan losses is an amount which in management's
judgment is adequate to absorb potential losses in the loan portfolio. The
allowance for loan losses is based upon management's review and evaluation of
the loan portfolio. Factors considered in the establishment of the allowance
for loan losses include management's evaluation of specific loans; the level
and composition of classified loans; historical loss experience; results of
examinations by regulatory agencies; an internal asset review process;
expectations of future economic conditions and their impact on particular
borrowers; and other judgmental factors.
The allowance for loan losses is based on estimates of potential
future losses, and ultimate losses may vary from the current estimates. These
estimates are reviewed periodically and as adjustments become necessary, the
effect of the change in estimate is charged to operating expenses in the period
incurred. All losses are charged to the allowance for loan losses when the loss
actually occurs or when management believes that the collectibility of the
principal is unlikely. Recoveries are credited to the allowance at the time of
recovery.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is provided at rates based upon estimated useful
service lives using the straight-line method for financial reporting purposes
and accelerated methods for tax reporting purposes.
The cost of assets retired or otherwise disposed of and the related
accumulated depreciation are eliminated from the accounts in the year of
disposal and the resulting gains or losses are included in current operations.
Expenditures for maintenance and repairs are charged to operations as
incurred. Cost of major additions and improvements are capitalized.
Other Real Estate
Other real estate is comprised of properties acquired through
foreclosure or negotiated settlement. The carrying value of these properties is
lower of cost or fair market value. Loan losses arising from the acquisition of
these properties are charged against the allowance for loan losses. Any
subsequent market reductions required are charged to other operating expense.
Revenues and expenses associated with maintaining or disposing of foreclosed
properties are recorded during the period in which they are incurred.
F-10
<PAGE> 52
Income Taxes
The provision for income taxes is based on income as reported in the
financial statements after interest income from state and municipal securities
is excluded. Also certain items of income and expenses are recognized in
different time periods for financial statement purposes than for income tax
purposes. Thus provisions for deferred taxes are recorded in recognition of
such timing differences.
Deferred taxes are provided utilizing a liability method in accordance
with SFAS No. 109 whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of
assets and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
The corporation and its subsidiary file a consolidated federal income
tax return. In addition, state income tax returns are filed individually by
company in accordance with state statutes.
Statements of Cash Flows
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand and funds due from banks (including cash items in process
of clearing).
Earnings Per Common Share
The computation of earnings per share and other per share amounts of
common stock is based on the weighted average number of shares of common stock
outstanding during each year, which is 3,574,400 in 1995 and 1994.
Current Accounting Developments
In December, 1991, the Financial Accounting Standards Board issued
Statement No. 107, "Disclosures about Fair Value of Financial Instruments."
This statement requires disclosure of the fair value of financial instruments,
both assets and liabilities, whether or not such instruments are recognized in
the Balance Sheet. As it relates to the Bank, financial instruments include
primarily cash equivalents, securities, loans, and deposits. SFAS No. 107 was
adopted by the Bank for the fiscal year ended December 31, 1995. Reference
should be made to Note O regarding adoption of this statement.
The Financial Accounting Standards Board issued Statement No. 114,
"Accounting by Creditors for Impairment of a Loan," which became effective for
years beginning after December 15, 1994. The Statement generally requires
impaired loans to be measured on the present value of expected future cash
flows discounted at the loan's effective interest rate, or as an expedient, at
the loan's observable market price or the fair value of the collateral if the
loan is collateral dependent. A loan is impaired when it is probable the
creditor will be unable to collect all contractual principal and interest
payments due in accordance with the terms of the loan agreement. Reference
should be made to Note D regarding adoption of this statement.
In March 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires that long-lived
assets and certain identifiable intangibles to be held and used by the Company
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Measurement of an
impairment loss for long-lived assets and identifiable intangibles that an
entity expects to hold and
F-11
<PAGE> 53
use is based on the fair value of the asset. This statement requires that the
majority of long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or fair value less cost
to sell.
SFAS No. 121 is effective for fiscal years beginning after December 15,
1995. The adoption of this statement will not have a material impact on the
consolidated financial statements.
Note B - Cash and Due from Banks
The Bank is required to maintain average cash reserve balances. The
amounts of those reserves at December 31, 1995 and 1994, were approximately
$164,000 and $61,000, respectively.
Note C - Securities
The amortized cost and estimated fair values of securities at December
31, 1995 and 1994, are summarized as follows:
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Held to Maturity:
- ----------------
Obligations of State
and Political
Subdivisions $ 380,000 $ 9,000 $ - $ 389,000
-------------- -------------- --------------- -------------
Total Held to
Maturity $ 380,000 $ 9,000 $ - $ 389,000
============== ============== =============== =============
1995
-----------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- -------------- --------------- -------------
Available for Sale:
- ------------------
U.S. Treasury
Securities $ 1,489,569 $ 1,202 $ 453 $ 1,490,318
U.S. Government
Agencies:
Mortgage-Backed
Securities
and Collateral
Mortgage
Obligations 4,900,877 41,764 40,878 4,901,763
-------------- -------------- --------------- -------------
Total Available
for Sale $ 6,390,446 $ 42,966 $ 41,331 $ 6,392,081
============== ============== =============== =============
</TABLE>
F-12
<PAGE> 54
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Held to Maturity:
- ----------------
U.S. Treasury
Securities $ 1,501,527 $ 1,860 $ 24,949 $ 1,478,438
U.S. Government
Agencies:
Mortgage-Backed
Securities
and Collateral
Mortgage
Obligations 3,503,215 - 230,541 3,272,674
Obligations of
State and
Political
Subdivisions 205,000 722 - 205,722
-------------- -------------- --------------- -------------
Total Held to
Maturity $ 5,209,742 $ 2,582 $ 255,490 $ 4,956,834
============== ============== =============== =============
</TABLE>
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Available for Sale:
- ------------------
U.S. Government
Agencies:
Mortgage-Backed
Securities and
Collateral
Mortgage
Obligations $ 2,029,710 $ - $ 89,444 $ 1,940,266
Other Securities 956,957 - 11,533 945,424
-------------- -------------- --------------- -------------
Total Available
for Sale $ 2,986,667 $ - $ 100,977 $ 2,885,690
============== ============== =============== =============
</TABLE>
Included in the category of U.S. Government Agencies at December 31,
1995 and 1994 is a structured note with a par value of $500,000. At December
31, 1995 and 1994, this security has an amortized cost of $500,000 and $500,073
and a fair value of $486,850 and $443,265, respectively. This structured note
is a step-up note issued by a U.S. Government Agency that has its interest rate
scheduled to increase by predetermined amounts on pre-determined
F-13
<PAGE> 55
dates, and is callable at par on each date the interest rate is scheduled to
increase. This security was called subsequent to year end.
In December, 1995, concurrent with the initial adoption of the
Financial Accounting Standards Board's SFAS No. 115 implementation guidance,
the Bank transferred approximately $3,200,000 of investment securities from the
held to maturity portfolio to the available for sale portfolio. The transfer
was recorded at fair value on the date of transfer. The net unrealized gain on
the transferred securities of approximately $12,000 is included in
stockholders' equity within the caption Unrealized Gain (Loss) on Securities
Available for Sale, Net.
The amortized cost and fair values of securities at December 31, 1995
and 1994 by contractual maturity are shown below. Maturities may differ from
contractual maturities in mortgage-backed securities because the mortgages
underlying the securities may be called or repaid without any penalties.
Therefore, these securities are not included in the maturity categories in the
following maturity summary.
<TABLE>
<CAPTION>
1995 1994
-------------------------------- --------------------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
-------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Held to Maturity:
- ----------------
Within One Year $ 65,000 $ 65,686 $ 1,551,527 $ 1,528,669
One to Five Years 180,000 185,114 155,000 155,491
Five to Ten Years 135,000 138,200 - -
-------------- ------------- ---------------- --------------
Subtotal $ 380,000 $ 389,000 $ 1,706,527 $ 1,684,160
Mortgage-Backed
Securities and
Collateral Mortgage
Obligations - - 3,503,215 3,272,674
-------------- ------------- ---------------- --------------
Total Held to
Maturity $ 380,000 $ 389,000 $ 5,209,742 $ 4,956,834
============== ============= ================ ==============
Available for Sale:
- ------------------
Within One Year $ 1,237,636 $ 1,237,896 $ - $ -
One to Five Years 251,933 252,422 956,957 945,424
Five to Ten Years - - - -
-------------- ------------- ---------------- --------------
Subtotal $ 1,489,569 $ 1,490,318 $ 956,957 $ 945,424
Mortgage-Backed
Securities and
Collateral Mortgage
Obligations 4,900,877 4,901,763 2,029,710 1,940,266
------------- ------------ -------------- -------------
Total Available
for Sale $ 6,390,446 $ 6,392,081 $ 2,986,667 $ 2,885,690
============== ============= ================ ==============
</TABLE>
F-14
<PAGE> 56
Securities with carrying amounts of approximately $6,364,000 and
$6,426,000 at December 31, 1995 and 1994, respectively, were pledged as
collateral on public deposits and for other purposes as required or permitted
by law.
Gross realized gains and losses from sales of securities for the years
ended December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------- ---------------
<S> <C> <C>
Realized Gains $ - $ -
Realized Losses - -
---------------- ---------------
$ - $ -
================ ===============
</TABLE>
Note D - Loans
An analysis of the loan portfolio at December 31, 1995 and 1994, is as
follows:
<TABLE>
<CAPTION>
1995 1994
--------------- ----------------
<S> <C> <C>
Commercial Loans $ 3,552,164 $ 4,575,000
Real Estate Loans:
Residential 8,242,345 5,143,000
Commercial 7,954,103 6,733,000
Installment Loans 4,737,323 3,894,000
Other Loans 41,683 280,338
--------------- ----------------
$ 24,527,618 $ 20,625,338
Less: Unearned Discount (6,679) (27,093)
--------------- ----------------
Total Loans $ 24,520,939 $ 20,598,245
=============== ================
</TABLE>
The Bank had non-performing loans on a non-accrual basis totaling
approximately $39,106 and $13,739 at December 31, 1995 and 1994. Interest
income related to these loans was immaterial during both 1995 and 1994. Loans
contractually past due 90 days or more, in addition to loans on non-accrual,
were $64,468 and $59,165 at December 31, 1995 and 1994. The Bank had no
impaired loans at December 31, 1995.
The Bank is permitted under the laws of the State of Louisiana to make
extensions of credit to its executive officers, directors and their affiliates
in the ordinary course of business. An analysis of the aggregate of these loans
for 1995 is as follows:
<TABLE>
<CAPTION>
1995
----------------
<S> <C>
Balance - Beginning of Year $ 308,330
New Loans 950,174
Repayments (421,433)
----------------
Balance - End of Year $ 837,071
================
</TABLE>
F-15
<PAGE> 57
Note E - Allowances for Loan Losses
Following is a summary of the activity in the allowance for loan
losses:
<TABLE>
<CAPTION>
1995 1994
-------------- ------------------
<S> <C> <C>
Balance - Beginning of Year $ 255,330 $ 292,200
Current Provision (Credit) from
Income 128,954 (15,000)
Recoveries of Amounts
Previously Charged Off 9,308 26,710
Amounts Charged Off (100,004) (48,580)
-------------- ------------------
Balance - End of Year $ 293,588 $ 255,330
============== ==================
Ratio of Allowance for
Loan Losses to Non-
Performing Loans at
End of Year 750.75% 1,858.43%
============== ==================
Ratio of Allowance for
Loan Losses to Loans
Outstanding at End
of Year 1.20% 1.24%
============== ==================
Ratio of Net Loans
Charged Off to Average
Loans Outstanding
for the Year .45% .14%
============== ==================
</TABLE>
Note F - Bank Premises and Equipment
Bank premises and equipment costs and the related accumulated
depreciation at December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
ACCUMULATED
ASSET COST DEPRECIATION NET
----------------- --------------- ------------
<S> <C> <C> <C>
December 31, 1995:
Land $ 704,616 $ - $ 704,616
Bank Premises 553,623 216,291 337,332
Furniture and Equipment 1,051,689 761,042 290,647
----------------- --------------- ------------
$ 2,309,928 $ 977,333 $ 1,332,595
================= =============== ============
</TABLE>
F-16
<PAGE> 58
<TABLE>
<CAPTION>
ACCUMULATED
ASSET COST DEPRECIATION NET
----------------- --------------- ------------
<S> <C> <C> <C>
December 31, 1994:
Land $ 596,230 $ - $ 596,230
Bank Premises 546,169 188,091 358,078
Furniture and Equipment 1,005,217 683,867 321,350
----------------- --------------- ------------
$ 2,147,616 $ 871,958 $ 1,275,658
================= =============== ============
</TABLE>
The provision for depreciation charged to operating expenses was
$105,770 and $98,039 for the years ended December 31, 1995 and 1994.
Note G - Deposits
Following is a detail of deposits:
<TABLE>
<CAPTION>
1995 1994
---------------- --------------
<S> <C> <C>
Demand Deposit Accounts $ 10,064,939 $ 7,713,244
NOW and Super NOW accounts 2,015,332 2,108,458
Money Market Accounts 7,442,640 7,711,924
Savings Accounts 5,092,825 5,207,790
Certificates of Deposit Over $100,000 2,623,817 800,000
Other Certificates of Deposit 7,772,298 5,743,944
---------------- --------------
$ 35,011,851 $ 29,285,360
================ ==============
</TABLE>
Interest expense on certificates of deposit over $100,000 for the year
ended December 31, 1995 amounted to approximately $105,000.
Public fund deposits at December 31, 1995 and 1994, were approximately
$5,868,000 and $5,189,000, respectively.
Note H - Stockholders' Equity and Regulatory Matters
Dividends are paid by the Company from its assets which are provided
primarily by dividends from the Bank. Dividends are payable only out of
retained earnings and current earnings of the Company. Certain restrictions
exist regarding the ability of the Bank to transfer funds to the Company in the
form of cash dividends. Regulatory approval is required to pay dividends in
excess of the Bank's earnings in the current year, plus retained net profits
for the preceding year.
During the fiscal year ended December 31, 1995, the Company declared
and paid a cash dividend on the outstanding common stock of $.07 per share or
approximately $249,000.
The banking subsidiary is limited in the amount it may lend to the
Company to 10% of the bank's capital and surplus. Such loans are required to be
on a fully secured basis.
F-17
<PAGE> 59
The Bank is also required to maintain minimum amounts of capital to
total risk weighted assets, as defined by banking regulators. At December 31,
1995, the Bank is required to have minimum Tier 1 and Total Capital ratios of
4.00% and 8.00%, respectively. The Bank's actual ratios at that date were
22.20% and 23.58%, respectively. The Bank's Stockholders' Equity to Total Asset
Ratio at December 31, 1995, was 9.42%.
Note I - Other Operating Expenses
An analysis of Other Operating Expenses for the years ended December
31, 1995 and 1994, is as follows:
<TABLE>
<CAPTION>
1995 1994
---------------- --------------
<S> <C> <C>
Ad Valorem Taxes $ 55,217 $ 48,899
Advertising and Promotions 58,291 37,210
Data Processing Fees 95,292 86,167
Directors Fees 55,800 52,600
Equipment Expense 142,173 121,635
Insurance 74,742 108,109
Legal and Professional Fees 88,429 38,236
Office Supplies, Stationary, Printing 117,231 57,349
Net Occupancy and Equipment Expense 128,706 116,902
Net Other Real Estate Holding Costs 22,513 24,921
Postage 53,313 42,928
Telephone 30,092 30,983
Other 141,889 141,731
---------------- --------------
$ 1,063,688 $ 907,670
================ ==============
</TABLE>
Note J - Income Taxes
The total provision for income taxes charged to income amounted to
$261,730 for 1995 and $284,405 for 1994. The applicable income tax for
financial reporting purposes historically differs from the amount computed by
applying the federal statutory tax rate of 34% to income before income taxes
due to increases and decreases in timing differences and utilization of
alternative minimum tax credits. The effective income tax rate for the years
ended December 31, 1995 and 1994 was 30% and 36%, respectively.
Following is a reconciliation between income tax expense based on the
federal statutory tax rates and income taxes reported in the statements of
income.
<TABLE>
<CAPTION>
1995 1994
---------------- --------------
<S> <C> <C>
Income Taxes Based on Statutory
Rate - 34% in 1995 and 1994 $ 298,666 $ 268,894
Tax Exempt Income (3,550) (4,641)
Other - Net (12,090) 20,764
General Business Credits (21,296) (612)
---------------- --------------
$ 261,730 $ 284,405
================ ==============
Components of the Provision for Income Taxes:
Provision for Current Taxes $ 345,618 $ 18,005
Provision (Benefit) for Deferred Taxes (83,888) 266,400
---------------- --------------
$ 261,730 $ 284,405
================ ==============
</TABLE>
A net deferred tax asset of $59,000 and $10,000 is included in other
assets at December 31, 1995 and 1994.
F-18
<PAGE> 60
The deferred tax provision (benefit) for 1995 consists of the
following timing differences:
<TABLE>
<S> <C>
General Business Credit Carryforward $ 21,296
Provision for Loan Losses for Financial Reporting in Excess
of Amount for Tax Reporting (43,845)
Other Real Estate Write-offs for Financial Reporting in Excess
of Amount for Tax Reporting 7,820
Loan Fees for Tax Reporting in Excess of Amount for Financial
Reporting (2,125)
Depreciation Expense for Tax Reporting in Excess of Amount for
Financial Reporting 6,339
Prepaid Items Expenses for Tax Reporting and Not for
Financial Reporting (14,693)
Accretion Income for Financial Reporting in Excess of Tax Reporting (58,680)
-------------
Provision (Benefit) for Deferred Taxes $ (83,888)
=============
</TABLE>
The net deferred tax asset consist of the following components at
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---------------- -------------
<S> <C> <C>
General Business Credit Carryforward $ - $ 21,296
Minimum Tax Credit Carryforward 7,388 7,388
Deferred Loan Fees 18,519 16,394
Provision for Loan Losses 8,913 (34,932)
Other Real Estate 93,454 101,274
Prepaid Items (10,117) (24,810)
Depreciation (33,539) (27,200)
Accretion and Adjustments on Securities (25,062) (83,742)
Unrealized (Gain) Loss on Securities
Available for Sale (556) 34,332
---------------- -------------
Net Deferred Tax Asset $ 59,000 $ 10,000
================ =============
</TABLE>
Note K - Off-Balance-Sheet Instruments
The Company is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and
F-19
<PAGE> 61
letters of credit. Those instruments involve, to varying degrees, elements of
credit risk in excess of the amount recognized in the Balance Sheets.
The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend credit
and letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit policies in making commitments and
conditional obligations as they do for on-balance-sheet instruments.
In the normal course of business the Bank has made commitments to
extend credit of $4,793,060 at December 31, 1995. This amount includes unfunded
loan commitments aggregating $4,549,785 and letters of credit of $243,275.
Note L - Concentrations of Credit
All of the Bank's business activities are with customers in the Bank's
market area, which consists primarily of Livingston and adjacent parishes. The
majority of such customers are depositors of the Bank. The concentrations of
credit by type of loan are shown in Note D. Most of the Bank's credits are to
individuals and small businesses secured by real estate. The Bank, as a matter
of policy, does not extend credit to any single borrower or group of related
borrowers in excess of legal lending limits.
As of December 31, 1995, the Bank has extended 10 lines of credit to
individuals, their companies, and/or other related parties in excess of
$250,000. These lines comprise approximately 24% of total loans.
Note M - Short-Term Borrowings
The Bank maintains open lines of credit with three of its
correspondent banks to assist in maintaining short-term liquidity. The
agreements provide for interest based upon the federal funds rate on
outstanding balances. In addition, one of the lines is secured by securities
with a market value of $495,469 and $471,406 at December 31, 1995 and 1994,
respectively. The two other lines of credit are unsecured. These three lines of
credit were unfunded as of December 31, 1995 and 1994.
F-20
<PAGE> 62
Note N - Commitments
On September 23, 1993, the Bank entered into a leasing agreement for a
supermarket banking site. This operating lease is for an initial term of five
years and has a monthly rental of $1,800. This lease has two five year renewal
options. In addition, on July 6, 1994, the Bank entered into an operating lease
for rental of its Watson branch office facility. This lease is for an initial
term of two years with an option to renew upon expiration. The monthly rental
expense on this lease is $563. Amounts charged to net occupancy and equipment
expense on these leases were $28,351 and $24,413 for 1995 and 1994. Future
minimum rental payments required under these operating leases are as follows:
<TABLE>
<CAPTION>
December 31,
------------
<S> <C>
1996 $ 24,978
1997 21,600
1998 16,200
----------
$ 62,778
==========
</TABLE>
Note O - 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 and Short-Term Investments - For those short-term instruments,
the carrying amount is a reasonable estimate of fair value.
Securities - Fair value of securities held to maturity is based on
quoted market prices or dealer quotes. If a quoted market price is not
available, fair value is estimated using quoted market prices for similar
securities.
Loans - The fair value for loans is estimated using discounted cash
flow analyses, with interest rates currently being offered for similar loans to
borrowers with similar credit rates. Loans with similar classifications are
aggregated for purposes of the calculations. The allowance for loan loss which
was used to measure the credit risk, is subtracted from loans.
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 discounted cash flow analyses, with interest rates currently offered for
deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit - The fair
value of commitments to extend credit and standby letters of credit were not
significant.
The estimated approximate fair values of the Bank's financial
instruments as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE
---------------- ----------------
<S> <C> <C>
Financial Assets:
Cash and Short-Term Investments $ 6,535,503 $ 6,535,503
Securities Held to Maturity 380,000 389,000
Securities Available for Sale 6,392,081 6,392,081
Loans-Net 24,227,351 24,249,400
---------------- ----------------
$ 37,534,935 $ 37,565,984
================ ================
Financial Liabilities:
Deposits $ 35,011,851 $ 34,992,200
================ ================
</TABLE>
F-21
<PAGE> 63
Note P - Contingencies
In the normal course of business, the Bank is involved in various
legal proceedings. In the opinion of management and counsel, any liability
resulting from such proceedings would not have a material adverse effect on the
Bank's financial statements.
Note Q - Financial Statements - Parent Company Only
The financial statements for Tuscaloosa Bancshares, Inc. (Parent
Company) are as follows:
BALANCE SHEETS
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Assets:
Cash $ 48,440 $ 122,737
Investment in Subsidiary 3,708,986 3,192,624
---------------- ----------------
Total Assets $ 3,757,426 $ 3,315,361
================ ================
Liabilities:
Dividends Payable $ - $ 71,480
Stockholders' Equity:
Common Stock $ 357,440 $ 357,440
Surplus 3,942,860 3,863,999
Retained Earnings (Deficit) (543,951) (910,905)
Unrealized Gain (Loss) on Securities
Available for Sale 1,077 (66,653)
---------------- ----------------
Total Stockholders' Equity $ 3,757,426 $ 3,243,881
---------------- ----------------
Total Liabilities and Stockholders'
Equity $ 3,757,426 $ 3,315,361
================ ================
</TABLE>
F-22
<PAGE> 64
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
<S> <C> <C>
Income:
Dividends from Subsidiary $ 249,488 $ 71,480
---------------- ----------------
$ 249,488 $ 71,480
================ ================
Expenses:
Miscellaneous Operating Expenses 2,561 8,377
---------------- ----------------
Income before Equity in Undistributed
Net Income of Subsidiary $ 246,927 $ 63,103
Equity in Undistributed Net Income of Subsidiary 369,771 442,357
---------------- ----------------
Net Income $ 616,698 $ 505,460
================ ================
</TABLE>
F-23
<PAGE> 65
STATEMENTS OF CASH FLOWS
<TABLE>
1995 1994
---------------- ---------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 616,698 $ 505,460
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Equity in Undistributed Net Income of Subsidiary (369,771) (442,357)
---------------- ---------------
Net Cash Provided by Operating Activities $ 246,927 $ 63,103
Cash Flows From Financing Activities:
Payment of Dividends to Shareholders $ (321,224) $ (71,480)
---------------- --------------
Net Cash Used in Financing Activities $ (321,224) $ (71,480)
----------------- --------------
Decrease in Cash $ (74,297) $ (8,377)
Cash - Beginning of Year 122,737 131,114
---------------- --------------
Cash - End of Year $ 48,440 $ 122,737
================ ==============
</TABLE>
F-24
<PAGE> 66
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DEPOSIT GUARANTY CORP.,
DEPOSIT GUARANTY LOUISIANA CORP.,
DEPOSIT GUARANTY NATIONAL BANK OF LOUISIANA,
TUSCALOOSA BANCSHARES, INC.
AND
TUSCALOOSA COMMERCE BANK
<PAGE> 67
TABLE OF CONTENTS
<TABLE>
ARTICLE I.
<S> <C>
THE HOLDING COMPANY MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Holding Company Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Effective Date of the Holding Company Merger. . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Effect of the Holding Company Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 Additional Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Conversion of Tuscaloosa Bancshares Shares. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 Exchange of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 DGC to Make Shares Available. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.08 Shares of DG Louisiana. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II.
THE BANK MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 The Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.03 Cancellation of Capital Stock of Tuscaloosa Bank. . . . . . . . . . . . . . . . . . . . . . 5
2.04 Capital Structure of the Receiving Association. . . . . . . . . . . . . . . . . . . . . . . 5
2.05 Effects of the Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.06 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
TUSCALOOSA BANK AND TUSCALOOSA BANCSHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.02 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.03 Investments; No Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.04 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.05 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.06 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.07 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.08 No Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.09 Title to Properties; Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Trademarks; Trade Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 68
<TABLE>
<S> <C>
3.15 Absence of Questionable Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Powers of Attorney; Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.19 Benefit and Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Contracts and Commitments; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.21 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.22 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.23 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.24 Contract Termination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DGC, DG LOUISIANA AND
DGNB LOUISIANA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.01 Corporate Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.02 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.03 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.04 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.05 Legality of DGC Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V.
COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.01 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.02 Limitation on Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.03 Current Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.04 Access to Properties and Records; Confidentiality. . . . . . . . . . . . . . . . . . . . 23
5.05 Interim Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.06 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.07 Approval of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.08 Compliance with SEC Rules 144 and 145. . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.09 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11 Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI.
CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.01 Conditions to Each Party's Obligations under this Agreement. . . . . . . . . . . . . . . . 26
6.02 Conditions to the Obligations of DGC, DG Louisiana, and DGNB Louisiana
under this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.03 Conditions to the Obligations of Tuscaloosa Bank and Tuscaloosa
Bancshares, Inc. under this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII.
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.01 Time and Place. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.02 Deliveries at the Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII.
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.01 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.03 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.04 Amendment, Extension and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.05 Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.06 Non-Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 35
9.07 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.08 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.09 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
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<PAGE> 70
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of July 22, 1996, by and
among Tuscaloosa Bancshares, Inc. ("Tuscaloosa Bancshares"), a corporation
organized under the laws of the State of Louisiana, and its wholly-owned
subsidiary Tuscaloosa Commerce Bank ("Tuscaloosa Bank"), a state banking
association organized under the laws of Louisiana, and Deposit Guaranty Corp.
("DGC"), a corporation organized under the laws of the State of Mississippi,
its wholly-owned subsidiary Deposit Guaranty Louisiana Corp. ("DG Louisiana"),
a corporation organized under the laws of Louisiana, and DG Louisiana's
wholly-owned subsidiary Deposit Guaranty National Bank of Louisiana ("DGNB
Louisiana"), a banking association organized under the laws of the United
States, each acting pursuant to a resolution of its Board of Directors.
In consideration of the mutual covenants, representations, warranties
and agreements herein contained, the parties agree that Tuscaloosa Bancshares
shall be merged into DG Louisiana (the "Holding Company Merger") on the terms
and subject to the conditions set forth in this Agreement and simultaneously
therewith or immediately following the Holding Company Merger, Tuscaloosa Bank
shall be merged into DGNB Louisiana (the "Bank Merger" and together with the
Holding Company Merger, the "Mergers"), on the terms and subject to the
conditions set forth in this Agreement.
ARTICLE I.
THE HOLDING COMPANY MERGER
1.01 Holding Company Merger. In accordance with the
applicable provisions of the Louisiana Business Corporation Law ("LBCL"),
Tuscaloosa Bancshares shall be merged with and into DG Louisiana pursuant to a
certificate of merger substantially in the form attached as Exhibit A and
executed and acknowledged in the manner required by law; the separate existence
of Tuscaloosa Bancshares shall cease; and DG Louisiana shall be the
corporation surviving the Holding Company Merger.
1.02 Effective Date of the Holding Company Merger. The
Holding Company Merger shall become effective on the date (the "Effective
Date") set forth in the certificate of merger filed in the office of the
Secretary of State of Louisiana.
1.03 Effect of the Holding Company Merger. On the
Effective Date, (i) the separate existence of Tuscaloosa Bancshares shall cease
and Tuscaloosa Bancshares shall be merged with and into DG Louisiana, (ii) DG
Louisiana shall continue to possess all of the rights, privileges and
franchises possessed by it and shall, on the Effective Date, become vested with
and possess all rights, privileges and franchises possessed by Tuscaloosa
Bancshares, (iii) DG Louisiana shall be responsible for all of the liabilities
and obligations of Tuscaloosa Bancshares in the same manner as if DG Louisiana
had itself incurred such liabilities or obligations, and the Holding Company
Merger shall not affect or impair the rights of the creditors or of any persons
dealing with Tuscaloosa Bancshares,
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(iv) the Holding Company Merger will not of itself cause a change, alteration
or amendment to the Articles of Incorporation or the Bylaws of DG Louisiana ,
(v) the Holding Company Merger will not of itself affect the tenure in office
of any officer or director of DG Louisiana and no such person will succeed to
such positions solely by virtue of the Holding Company Merger, and (vi) the
Holding Company Merger shall, from and after the Effective Date, have all the
effects provided by applicable Louisiana law.
1.04 Additional Actions. If, at any time after the
Effective Date, DG Louisiana shall consider or be advised that any further
assignments or assurances in law or any other acts are necessary or desirable
(i) to vest, perfect or confirm, of record or otherwise, in DG Louisiana, title
to or the possession of any property or right of Tuscaloosa Bancshares acquired
or to be acquired by reason of, or as a result of, the Holding Company Merger,
or (ii) otherwise to carry out the purposes of this Agreement, Tuscaloosa
Bancshares and its proper officers and directors shall be deemed to have
granted to DG Louisiana 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 DG Louisiana and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of DG
Louisiana are fully authorized in the name of Tuscaloosa Bancshares to take
any and all such action.
1.05 Conversion of Tuscaloosa Bancshares Shares. Each
share of common stock, no par value, of Tuscaloosa Bancshares (the "Tuscaloosa
Bancshares Common Stock") issued and outstanding immediately prior to the
Effective Date other than shares of Tuscaloosa Bancshares Common Stock owned by
stockholders who, pursuant to the LBCL, perfect dissenters' rights ("Dissenting
Shares"), shall, by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into and exchangeable for the number of
shares of common stock, no par value, of DGC (the "DGC Common Stock") equal to
the Exchange Ratio, as defined below, subject to adjustment as provided herein
and, in respect of fractional shares, subject to Section 1.06 hereof. The
Exchange Ratio shall equal 210,989 shares divided by the number of shares of
Tuscaloosa Bancshares Common Stock outstanding on the date immediately
preceding the Effective Date. If prior to the Effective Date DGC should split
or combine DGC Common Stock, or pay a dividend or other distribution in DGC
Common Stock, then the exchange ratio shall be appropriately adjusted to
reflect such split, combination, dividend or distribution.
1.06 Exchange of Shares. (a) As soon as practicable after the
Effective Date, Deposit Guaranty National Bank, acting as exchange agent (the
"Exchange Agent"), shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Date represented issued
and outstanding shares of Tuscaloosa Bancshares Common Stock (the
"Certificates"), a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing DGC Common Stock. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of shares of DGC Common Stock to which such holder of Tuscaloosa
Bancshares Common Stock shall
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have become entitled pursuant to the provisions hereof, and the Certificate so
surrendered shall forthwith be canceled. Lost Certificates shall be treated in
accordance with the existing procedures of Tuscaloosa Bancshares.
(b) No dividends or other distributions declared after the
Effective Date with respect to DGC Common Stock and payable to the holders of
record thereof after the Effective Date shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a Certificate, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with respect to the
shares of DGC Common Stock into which the shares represented by such
Certificate have been converted.
(c) If any certificate representing shares of DGC Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by reason of
the issuance of a certificate representing shares of DGC Common Stock in any
name other than that of the registered holder of the Certificate surrendered,
or required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Date there shall be no transfers on the
stock transfer books of Tuscaloosa Bancshares of the shares of Tuscaloosa
Bancshares Common Stock which are outstanding immediately prior to the
Effective Date. If, after the Effective Date, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be canceled
and exchanged for certificates representing shares of DGC Common Stock as
provided herein.
(e) No certificates or scrip representing fractional shares of DGC
Common Stock shall be issued upon the surrender for exchange of such
Certificates, no dividend or distribution with respect to DGC Common Stock
shall be payable on or with respect to any fractional share, and such
fractional share interests shall not entitle the owner thereof to vote or to
any other rights of a shareholder of DGC. In lieu of any such fractional
share, DGC shall pay to each former stockholder of Tuscaloosa Bancshares who
otherwise would be entitled to receive a fractional share of DGC Common Stock
an amount in cash determined by multiplying (i) the closing sale price of a
share of DGC Common Stock on the date immediately proceeding the Effective Date
as quoted on the National Association of Securities Dealers Automated Quotation
System, by (ii) the fraction of a share of DGC Common Stock to which such
holder would otherwise be entitled.
1.07 DGC to Make Shares Available. DGC shall make
available a sufficient number of shares for conversion and exchange in
accordance with Section 1.05, by transferring such shares to the Exchange Agent
for the benefit of the stockholders of Tuscaloosa Bancshares.
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1.08 Shares of DG Louisiana. The shares of capital stock
of DG Louisiana outstanding immediately prior to the Effective Date shall not
be changed or converted by virtue of the Holding Company Merger.
1.09 Tax Consequences. It is intended that the Holding
Company Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), and
that this Agreement shall constitute a "plan of reorganization" within the
meaning of Section 368 of the Code.
ARTICLE II.
THE BANK MERGER
2.01 The Bank Merger. On the Effective Date (as defined
in Section 2.02 hereof), Tuscaloosa Bank shall be merged with and into DGNB
Louisiana under the Articles of Association of DGNB Louisiana, as amended,
existing under Charter No. 13648, pursuant to the provisions of, and with the
effect provided in, 12 U.S.C. Section 215a and La. R.S. 6:351 et seq. On the
Effective Date, DGNB Louisiana, the Receiving Association, shall continue to be
a national banking association, and its business shall continue to be conducted
at its main office in Hammond, Louisiana, and at its legally established
branches (including, without limitation, the legally established offices from
which Tuscaloosa Bank conducted business immediately prior to the Effective
Date). The Articles of Association of DGNB Louisiana shall not be altered or
amended by virtue of the Bank Merger, and the incumbency of the directors and
officers of DGNB Louisiana shall not be affected by the Bank Merger nor shall
any person succeed to such positions by virtue of the Bank Merger. DGNB
Louisiana shall file this Agreement with the Louisiana Commissioner of
Financial Institutions (the "Commissioner") pursuant to La. R.S. 6:352 and make
appropriate filings with the Office of the Comptroller of the Currency (the
"OCC"). Tuscaloosa Bank and DGNB Louisiana are sometimes referred to together
as the "Merging Associations."
2.02 Effective Date. The Bank Merger shall become effective on the
Effective Date.
2.03 Cancellation of Capital Stock of Tuscaloosa Bank.
On the Effective Date, by virtue of the Bank Merger, all shares of the capital
stock of Tuscaloosa Bank shall be canceled and no cash, securities or other
property shall be issued in the Bank Merger in respect thereof.
2.04 Capital Structure of the Receiving Association. As
of June 30, 1996, DGNB Louisiana had capital of $2,341,210 divided into
234,121 shares of common stock authorized, each of $10 par value ("DGNB
Louisiana Common Stock"), surplus of $31,264,354 and undivided profits,
including capital reserves, of $13,878,635. As of June 30, 1996, Tuscaloosa
Bank had capital of $35,650 divided into 356,500 shares of common stock
authorized, each of $.10 par value ("Tuscaloosa Bank Common Stock"), surplus of
$3,404,000 and an accumulated deficit, including capital reserves, of $618,000.
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On the Effective Date, the amount of capital of the Receiving
Association shall be $2,341,210 divided into 234,121 shares of common stock,
each of the par value of $10, and on the Effective Date, the Receiving
Association shall have a surplus of $31,264,354, plus the value of the
consideration to be paid by DGC in the Holding Company Merger, and undivided
profits, including capital reserves, which when combined with capital and
surplus will be equal to the capital structure of DGNB Louisiana, as set forth
above, adjusted, however, for the results of operations of DGNB Louisiana
between June 30, 1996 and the Effective Date.
2.05 Effects of the Bank Merger. On the Effective Date,
the corporate existence of each of the Merging Associations shall be merged
into and continued in DGNB Louisiana, 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 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. Section 215a(f).
The Receiving Association shall, from and after the Effective Date, be liable
for all liabilities of the Merging Associations.
2.06 Tax Consequences. It is intended that the Bank
Merger shall constitute a tax-free reorganization pursuant to Section
368(a)(1)(A) of the Code, and that the transactions made the subject matter of
the plan shall constitute a "plan of reorganization" for purposes of the rules
and regulations governing Code Section 368.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF
TUSCALOOSA BANK AND TUSCALOOSA BANCSHARES
Tuscaloosa Bank and Tuscaloosa Bancshares hereby make the following
representations and warranties to DGC, DGNB Louisiana, and DG Louisiana:
3.01 Corporate Organization. (a) Tuscaloosa Bank is a banking
association duly organized, validly existing and in good standing under the laws
of the State of Louisiana. Tuscaloosa Bank has the power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted.
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<PAGE> 75
(b) Tuscaloosa Bancshares is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana. Tuscaloosa Bancshares has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary.
3.02 Capitalization. (a) The authorized capital stock of Tuscaloosa
Bank consists of 375,000 shares of common stock, $.10 par value. At the close
of business on December 31, 1995, there were 356,500 shares of Tuscaloosa Bank
Common Stock issued and outstanding and no shares held in Tuscaloosa Bank's
treasury. Except as set forth on Schedule 3.02 hereto, all issued and
outstanding shares of Tuscaloosa Bank Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights
with no personal liability attaching to the ownership thereof. Except as set
forth on Schedule 3.02 hereof, Tuscaloosa Bank has not issued any additional
shares of Tuscaloosa Bank Common Stock since December 31, 1995, and does not
have and is not bound by any outstanding subscription, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Tuscaloosa Bank Common Stock or any security representing the
right to purchase or otherwise receive any Tuscaloosa Bank Common Stock.
Tuscaloosa Bancshares has good, valid and marketable title to, the Tuscaloosa
Bank Common Stock, and on the Effective Date the same will be free and clear of
all liens, encumbrances, pledges, claims, options, charges and assessments of
any nature whatsoever.
(b) The authorized capital stock of Tuscaloosa Bancshares consists
of 20,000,000 shares of Tuscaloosa Bancshares Common Stock. At the close of
business on December 31, 1995, 3,574,400 shares of Tuscaloosa Bancshares Common
Stock were issued and outstanding. Except as set forth on Schedule 3.02
hereto, all issued and outstanding shares of Tuscaloosa Bancshares Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights with no personal liability attaching to the
ownership thereof. Except as set forth on Schedule 3.02 hereof, Tuscaloosa
Bancshares has not issued any additional shares of Tuscaloosa Bancshares Common
Stock since December 31, 1995, and does not have and is not bound by any
outstanding subscription, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of
Tuscaloosa Bancshares Common Stock or any security representing the right to
purchase or otherwise receive any Tuscaloosa Bancshares Common Stock.
3.03 Investments; No Subsidiaries. The "Tuscaloosa
Consolidated Group," as such term is used in this Agreement, consists of
Tuscaloosa Bancshares and Tuscaloosa Bank. Except as set forth on Schedule
3.03 hereof, neither Tuscaloosa Bank nor Tuscaloosa Bancshares has any
subsidiaries or equity interest or other investment, direct or indirect, in any
corporation, partnership, joint venture or other entity except for such equity
interest or other investment which Tuscaloosa Bank may have acquired as a
result of foreclosure and is as of the date hereof holding subject to sale.
3.04 Loan Portfolio. All loans, discounts and financing
leases (in which any member of the Tuscaloosa Consolidated Group is lessor)
reflected on the Tuscaloosa Latest Balance Sheet (as defined in Section 3.07)
(a) were, at the time and under the circumstances in which made, made for
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good, valuable and adequate consideration in the ordinary course of business of
the Tuscaloosa Consolidated Group, (b) are evidenced by genuine notes,
agreements or other evidences of indebtedness and (c) to the extent secured,
have been secured by valid liens and security interests which have been
perfected. Set forth in Schedule 3.04 hereto is a true and complete list of
all real property in which Tuscaloosa Bank has an interest as creditor or
mortgagee in an amount greater than $50,000. Except as set forth in Schedule
3.04 hereto, there are no outstanding loans held by Tuscaloosa Bank with an
unpaid balance of $25,000 or more in which a material default has occurred. A
material default for purposes of this Section 3.04 includes, without
limitation, the failure to pay indebtedness or an installment thereof more than
sixty (60) days after it is due and payable.
3.05 Authority; No Violation. Each of Tuscaloosa Bank and
Tuscaloosa Bancshares has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Tuscaloosa Bank have been duly and validly
approved by the Board of Directors of Tuscaloosa Bank, and, except for approval
by Tuscaloosa Bancshares as the sole shareholder of Tuscaloosa Bank, no other
corporate proceedings on the part of Tuscaloosa Bank are necessary to consummate
the transactions so contemplated. The Board of Directors of Tuscaloosa
Bancshares has duly and validly approved this Agreement and the transactions
contemplated hereby and has authorized the execution and delivery of this
Agreement by Tuscaloosa Bancshares, and, except for the approval of this
Agreement by its shareholders, no other corporate proceedings on the part of
Tuscaloosa Bancshares are necessary to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by Tuscaloosa Bank and Tuscaloosa Bancshares and constitutes a valid and binding
obligation of Tuscaloosa Bank and of Tuscaloosa Bancshares enforceable against
each in accordance with its terms, 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.
3.06 Consents and Approvals. Except as set forth in
Schedule 3.06 hereto, no permit, consent, approval or authorization of, or
declaration, filing or registration with, any public body or authority or to
the knowledge of Tuscaloosa Bank and Tuscaloosa Bancshares any third party is
necessary in connection with (i) the execution and delivery by Tuscaloosa Bank
or Tuscaloosa Bancshares of this Agreement, or (ii) the consummation by
Tuscaloosa Bancshares or Tuscaloosa Bank of the Mergers and the other
transactions contemplated hereby.
3.07 Financial Statements. (a) Tuscaloosa Bancshares has
previously delivered to DGC, DG Louisiana and DGNB Louisiana copies of the
consolidated balance sheets of Tuscaloosa Bancshares as of December 31 in each
of the three fiscal years 1993 through 1995, inclusive, and the related
consolidated statements of income, changes in shareholders' equity and changes
in financial position for the periods then ended, accompanied by the audit
report of Hannis T. Bourgeois & Co., L.L.P., independent public accountants and
for the years prior to 1995, the audit report of Arthur Andersen, LLP.,
independent public accountants ("Tuscaloosa Bancshares Financial Statements").
The December 31, 1995, consolidated balance sheet (the "Tuscaloosa Latest
Balance Sheet") of Tuscaloosa Bancshares (including the related notes, where
applicable) fairly presents the consolidated financial
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<PAGE> 77
position of Tuscaloosa Bancshares and its subsidiaries as of the date thereof,
and the other financial statements referred to herein (including the related
notes, where applicable) fairly present the results of the consolidated
operations and changes in shareholders' equity and consolidated financial
position of Tuscaloosa Bancshares and its subsidiaries for the respective
fiscal periods or as of the respective dates therein set forth.
(b) Tuscaloosa Bancshares has previously delivered to DGC, DG
Louisiana and DGNB Louisiana accurate and complete copies of the balance sheets
of Tuscaloosa Bank as of December 31 in each of the three fiscal years 1993
through 1995, inclusive, and the related statements of income, changes in
shareholders' equity and changes in financial position for the periods then
ended, in each case accompanied by the notes thereto (the "Tuscaloosa Bank
Financial Statements"). The December 31, 1995 balance sheet of Tuscaloosa Bank
(the "Tuscaloosa Bank Balance Sheet") (including the related notes, where
applicable) fairly present the results of the consolidated operations and
changes in shareholders' equity and consolidated financial position of
Tuscaloosa Bank and its subsidiaries for the fiscal period or as of the
respective dates therein set forth.
(c) Each of the financial statements above is true and correct in all
material respects, and has been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with other periods, except
as otherwise noted.
3.08 No Broker's Fees. Except as fully described and
set forth in Schedule 3.08 hereto, neither Tuscaloosa Bank, Tuscaloosa
Bancshares nor any of their officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement.
3.09 Title to Properties; Encumbrances. Except as set
forth in Schedule 3.09 hereto, Tuscaloosa Bank and Tuscaloosa Bancshares have
good, valid and marketable title to, or a valid leasehold interest in, (a) all
their real properties and (b) all other properties and assets reflected in the
Tuscaloosa Latest Balance Sheet, other than any of such properties or assets
which have been sold or otherwise disposed of since the date of the Tuscaloosa
Latest Balance Sheet in the ordinary course of business and consistent with
past practice. Except as set forth in Schedule 3.09 hereto, all of such
properties and assets are free and clear of all title defects, mortgages,
pledges, liens, claims, charges, security interests or other encumbrances of
any nature whatsoever, including, without limitation, leases, options to
purchase, conditional sales contracts, collateral security arrangements and
other title or interest retention arrangements, and are not, in the case of
real property, subject to any easements, building use restrictions, exceptions,
reservations or limitations of any nature whatsoever, except, with respect to
all such properties and assets, liens for current taxes and assessments not in
default, minor imperfections of title, and encumbrances, if any, which have
arisen in the ordinary course of business, which are not substantial in
character, amount or extent and which do not detract from the value of or
interfere with the present or contemplated use of any of the properties subject
thereto or affected thereby or otherwise impair the business operations
conducted or contemplated by Tuscaloosa Bank or Tuscaloosa Bancshares. All
personal property material to the business, operations or financial condition
of Tuscaloosa Bank or Tuscaloosa Bancshares, and all buildings, structures and
fixtures used by Tuscaloosa Bank or Tuscaloosa Bancshares in the conduct of
their businesses, are in good
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operating condition and repair. Except as set forth in Schedule 3.09 hereto,
neither Tuscaloosa Bank nor Tuscaloosa Bancshares has received any notification
of any violation (which has not been cured) of any building, zoning or other
law, ordinance or regulation in respect of such property or structures, or
Tuscaloosa Bank's or Tuscaloosa Bancshares' use thereof.
3.10 No Undisclosed Liabilities. Except as set forth in Schedule
3.10 hereto, as of the date hereof neither Tuscaloosa Bank nor Tuscaloosa
Bancshares has any liabilities or obligations of any nature (whether absolute,
accrued, contingent or otherwise and whether due or to become due), except
liabilities and obligations (i) fully reflected or reserved against in the
Tuscaloosa Latest Balance Sheet or disclosed in the notes thereto or (ii)
incurred since the date of the Tuscaloosa Latest Balance Sheet in the ordinary
course of business and consistent with past practice.
3.11 Absence of Certain Changes or Events. (a) Except as set forth
in Schedule 3.11 hereto, since the date of the Tuscaloosa Latest Balance Sheet,
there has not been:
i) any material adverse change in the business,
operations, properties, assets or financial condition of Tuscaloosa
Bank or Tuscaloosa Bancshares, or any event which has had or will have
a material adverse effect on any of the foregoing;
ii) any loss, damage, destruction or other casualty
materially and adversely affecting any of the properties, assets or
business of Tuscaloosa Bank or Tuscaloosa Bancshares or any of their
subsidiaries (whether or not covered by insurance);
iii) any increase of more than ten percent (10%) in the
compensation payable by Tuscaloosa Bank or Tuscaloosa Bancshares to any
of their directors, officers, agents, consultants, or any of their
employees whose total compensation after such increase was in excess of
$25,000 per annum, or any extraordinary bonus, percentage compensation,
service award or other like benefit granted, made or accrued to the
credit of any such director, officer, agent, consultant or employee, or
any extraordinary welfare, pension, retirement or similar payment or
arrangement made or agreed to by Tuscaloosa Bank or Tuscaloosa
Bancshares for the benefit of any such director, officer, agent,
consultant or employee;
iv) any change in any method of accounting or accounting
practice of Tuscaloosa Bank or Tuscaloosa Bancshares;
v) any loan in excess of $25,000 or portion thereof
rescheduled as to payments thereon, subject to a moratorium on payment
thereof or written off by Tuscaloosa Bank or Tuscaloosa Bancshares as
uncollectible; or
vi) any agreement or understanding, whether in writing or
otherwise, of Tuscaloosa Bank or Tuscaloosa Bancshares to do any of the
foregoing.
(b) Except as set forth in Schedule 3.11 hereto, since the date of
the Tuscaloosa Latest Balance Sheet, neither Tuscaloosa Bank nor Tuscaloosa
Bancshares has:
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i) issued or sold any promissory note, stock, bond or
other corporate security of which it is the issuer in an amount greater
than $25,000;
ii) discharged or satisfied any lien or encumbrance or
paid or satisfied any obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become due) in
an amount greater than $25,000 as to each such lien, encumbrance,
obligation or liability other than current liabilities shown on the
Tuscaloosa Latest Balance Sheet and current liabilities incurred since
the date of the Tuscaloosa Latest Balance Sheet in the ordinary course
of business and consistent with past practice and other than any such
lien, encumbrance, obligation or liability of the nature (regardless of
amount) required to be disclosed pursuant to Section 3.11(a)(iii)
hereto;
iii) declared, paid or set aside for payment any dividend
or other distribution (whether in cash, stock or property) in respect
of its capital stock, except for (i) a dividend by Tuscaloosa
Bancshares in August, 1996 of $.07 per share and (ii) dividends by
Tuscaloosa Bank to Tuscaloosa Bancshares to the extent necessary to
fund authorized dividends of Tuscaloosa Bancshares and to pay necessary
and routine expenses of Tuscaloosa Bancshares;
iv) split, combined or reclassified any shares of its
capital stock, or redeemed, purchased or otherwise acquired any shares
of its capital stock or other securities;
v) sold, assigned or transferred any of its assets (real,
personal or mixed, tangible or intangible) canceled any debts or claims
or waived any rights of substantial value, except, in each case, in the
ordinary course of business and consistent with past practice;
vi) sold, assigned, transferred or permitted to lapse any
patents, trademarks, trade names, copyrights or other similar assets,
including applications or licenses therefor;
vii) paid any amounts or incurred any liability to or in
respect of, or sold any properties or assets (real, personal or mixed,
tangible or intangible) to, or engaged in any transaction (other than
any transaction of the nature (regardless of amount) required to be
disclosed pursuant to Section 3.11(a)(iii) hereof) or entered into any
agreement or arrangement with, any corporation or business in which
Tuscaloosa Bank, Tuscaloosa Bancshares or any of their officers or
directors, or any "affiliate" or "associate" (as such terms are defined
in the rules and regulations promulgated under the Securities Act) of
any such person, has any direct or indirect interest;
viii) entered into any collective bargaining agreements; or
ix) entered into any other transaction other than in the
ordinary course of business and consistent with past practice or in
connection with the transactions contemplated by this Agreement.
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3.12 Leases. Set forth in Schedule 3.12 hereto is an accurate and
complete list of all leases calling for annual rent payments in excess of
$10,000 pursuant to which Tuscaloosa Bank or Tuscaloosa Bancshares, as lessee,
leases real or personal property, including, without limitation, all leases of
computer or computer services and all arrangements for time-sharing or other
data processing services, describing for each lease Tuscaloosa Bank's or
Tuscaloosa Bancshares' financial obligations under such lease its rental
payments, expiration date and renewal terms. Except as set forth in Schedule
3.12 hereto: (a) all such leases are in full force and effect in accordance
with their terms; (b) there exists no event of default or event, occurrence,
condition or act which with the giving of notice, the lapse of time or the
happening of any further event or condition would become a default under any
such lease; and (c) neither Tuscaloosa Bank nor Tuscaloosa Bancshares is a
lessee under a lease having an unexpired term greater than thirty-six (36)
months that requires Tuscaloosa Bank or Tuscaloosa Bancshares to make payments
for the use of any property at rates currently higher than prevailing market
rates for similar properties in the localities where such properties are
located.
3.13 Trademarks; Trade Names. Set forth in Schedule 3.13 hereto is
an accurate and complete list and brief description of all trademarks (either
registered or common law), trade names and copyrights (and all applications and
licenses therefor) owned by Tuscaloosa Bank or Tuscaloosa Bancshares or in which
they have any interest. Tuscaloosa Bank and Tuscaloosa Bancshares own, or have
the rights to use, all trademarks, trade names and copyrights used in or
necessary for the ordinary conduct of their existing businesses as heretofore
conducted, and the consummation of the transactions contemplated hereby will not
alter or impair any such rights. Except as set forth in Schedule 3.13 hereto, no
claims are pending by any person for the use of any trademarks, trade names or
copyrights or challenging or questioning the validity or effectiveness of any
license or agreement relating to the same, nor is there any valid basis for any
such claim, challenge or question, and use of such trademarks, trade names and
copyrights by Tuscaloosa Bank or Tuscaloosa Bancshares does not infringe on the
rights of any person.
3.14 Compliance with Applicable Law. Tuscaloosa Bank
and Tuscaloosa Bancshares hold, and have at all times held, all licenses,
franchises, permits and governmental authorizations necessary for the lawful
conduct of their respective businesses under and pursuant to all, and have
complied in all material respects with and are not in default in any respect
under any, applicable statutes, laws, ordinances, rules, regulations, and
orders of all federal, state and local governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over them or over any
part of their operations (to the extent that such default could result in a
material limitation on the conduct of Tuscaloosa Bank's or Tuscaloosa
Bancshares' business, or could cause Tuscaloosa Bank or Tuscaloosa Bancshares
to incur a substantial financial penalty); and, except as set forth in Schedule
3.14 hereto, neither Tuscaloosa Bank nor Tuscaloosa Bancshares has received
notice of a violation of, and does not know of any violation of or of any valid
basis for any claim of a violation of, any of the above.
3.15 Absence of Questionable Payments. Tuscaloosa Bank and
Tuscaloosa Bancshares have not, and, to the knowledge of Tuscaloosa Bank or
Tuscaloosa Bancshares, no director, officer, agent, employee, consultant or
other person acting on behalf of, Tuscaloosa Bank or Tuscaloosa Bancshares has,
(a) used any Tuscaloosa Bank or Tuscaloosa Bancshares corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity or (b) made
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any direct or indirect unlawful payments to government officials from any
Tuscaloosa Bank or Tuscaloosa Bancshares corporate funds, or established or
maintained any unlawful or unrecorded accounts with funds received from
Tuscaloosa Bank or Tuscaloosa Bancshares.
3.16 Insurance. Set forth in Schedule 3.16 hereto is an accurate
and complete list of all policies of insurance, including the amounts thereof,
owned by Tuscaloosa Bank or Tuscaloosa Bancshares or in which Tuscaloosa Bank
or Tuscaloosa Bancshares is named as the insured party. All such policies are
valid, outstanding and enforceable and will remain in full force and effect at
least through the consummation of the transactions contemplated by this
Agreement. Such insurance with respect to Tuscaloosa Bank's and Tuscaloosa
Bancshares' property and the conduct of their businesses is in such amounts and
against such risks as are usually insured against by persons operating similar
properties and businesses in the State of Louisiana and are adequate for the
conduct of Tuscaloosa Bank's and Tuscaloosa Bancshares' businesses. Except as
set forth in Schedule 3.16 hereto, neither Tuscaloosa Bank nor Tuscaloosa
Bancshares has ever been refused any insurance nor have their coverages been
limited by any insurance carrier to which they have applied for insurance or
with which they have carried insurance during the last five (5) years.
3.17 Powers of Attorney; Guarantees. Except as set forth in
Schedule 3.17 hereto, other than in the ordinary course of business neither
Tuscaloosa Bank nor Tuscaloosa Bancshares has given any power of attorney to
any person to act on its behalf, or has any obligation or liability, either
actual, accruing or contingent, as guarantor, surety, cosigner, endorser,
co-maker or indemnitor in respect of the obligation of any person, corporation,
partnership, joint venture, association, organization or other entity.
3.18 Tax Matters. Tuscaloosa Bank and Tuscaloosa Bancshares make
the following representations with respect to tax matters:
(a) For purposes of this Section, the following definitions shall
apply:
(1) The term "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, imposed by any federal, state or local government
or any agency or political subdivision of any such government, which taxes
shall include, without limiting the generality of the foregoing, all income or
profits taxes (including, but not limited to, federal income taxes and state
income taxes), real property gains taxes, payroll and employee withholding
taxes, unemployment insurance taxes, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers' compensation,
Pension Benefit Guaranty Corporation premiums and other governmental charges,
and other obligations of the same or of a similar nature to any of the
foregoing, which any member of the Tuscaloosa Consolidated Group is required to
pay, withhold or collect.
(2) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating to,
or required to be filed in connection with, any Taxes,
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including information returns or reports with respect to backup withholding and
other payments to third parties.
(b) To the knowledge of the Tuscaloosa Consolidated Group, all
Returns required to be filed by or on behalf of members of the Tuscaloosa
Consolidated Group have been duly filed and, to the knowledge of the Tuscaloosa
Consolidated Group, such Returns are true, complete and correct in all material
respects. All Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis, and
except as set forth on Schedule 3.18, no other Taxes are payable by the
Tuscaloosa Consolidated Group with respect to items or periods covered by such
Returns or with respect to any period prior to the date of this Agreement.
Each member of the Tuscaloosa Consolidated Group has withheld and paid over all
Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with
amounts paid or owing to any employee, creditor, independent contractor, or
other third party. There are no liens on any of the assets of any member of
the Tuscaloosa Consolidated Group with respect to Taxes, other than liens for
Taxes not yet due and payable or for Taxes that a member of the Tuscaloosa
Consolidated Group is contesting in good faith through appropriate proceedings
and for which appropriate reserves have been established.
(c) The Returns of the Tuscaloosa Consolidated Group have never
been audited by a government or taxing authority, nor to the knowledge of the
Tuscaloosa Consolidated Group, is any such audit in process, pending or
threatened. To the knowledge of the Tuscaloosa Consolidated Group, no
deficiencies exist or have been asserted or are expected to be asserted with
respect to Taxes of the Tuscaloosa Consolidated Group, and no member of the
Tuscaloosa Consolidated Group has received notice or expects to receive notice
that it has not filed a Return or paid Taxes required to be filed or paid by
it. No member of the Tuscaloosa Consolidated Group is a party to any action or
proceeding for assessment or collection of Taxes, nor to the knowledge of the
Tuscaloosa Consolidated Group, has such event been asserted or threatened
against any member of the Tuscaloosa Consolidated Group or any of its assets.
No waiver or extension of any statute of limitations is in effect with respect
to Taxes or Returns of the Tuscaloosa Consolidated Group.
3.19 Benefit and Employee Matters. (a) Schedule 3.19(a) lists all
pension, retirement, stock option, stock purchase, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation, employment,
compensation arrangements, consulting, bonus, collective bargaining, group
insurance, severance and other employee benefit, incentive and welfare
policies, contracts, plans and arrangements, and all trust agreements related
thereto established or maintained by Tuscaloosa Bancshares or Tuscaloosa Bank,
for the benefit of any of the present or former directors, officers, or other
employees of Tuscaloosa Bank and Tuscaloosa Bancshares. Schedule 3.19(a) also
identifies each "employee benefit plan," as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") maintained or contributed to by any member of the Tuscaloosa
Consolidated Group. Except as set forth in Schedule 3.19(a) hereto, neither
Tuscaloosa Bank nor Tuscaloosa Bancshares maintains or contributes to any
"employee benefit plan," as such term is defined in Section 3(3) of ERISA.
Except as set forth in Schedule 3.19(a), all "employee benefit plans"
maintained by Tuscaloosa Bank or Tuscaloosa Bancshares (all
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such plans being listed in Schedule 3.19(a) hereto) (collectively, the
"Tuscaloosa Bank Plans") are in material compliance with the provisions of
ERISA and the applicable provisions of the Code. No member of the Tuscaloosa
Consolidated Group has ever maintained or become obligated to contribute to any
"employee benefit plan" as such term is defined in Section 3(3) of ERISA, (i)
that is subject to Title IV of ERISA or (ii) that is a multiemployer plan under
Title IV of ERISA. To the knowledge of the Tuscaloosa Consolidated Group, no
"prohibited transaction," as defined in Section 406 of ERISA or Section 4975 of
the Code, has occurred that could result in liability to Tuscaloosa Bancshares,
Tuscaloosa Bank, DGC, DG Louisiana or DGNB Louisiana. No member of the
Tuscaloosa Consolidated Group has any current or projected liability in
respect of post-employment welfare benefits for retired, current or former
employees, except as required to avoid excise tax under Section 4980B of the
Code.
(b) Except as set forth in Schedule 3.19(b) hereto, since July,
1996, neither Tuscaloosa Bank nor Tuscaloosa Bancshares has been or is a party
to any collective bargaining or other labor contract. Since July, 1996, there
has not been, there is not presently pending or existing, and there is not
threatened, (i) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (ii) any proceeding against or affecting Tuscaloosa Bank or
Tuscaloosa Bancshares relating to the alleged violation of any legal
requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment
dispute against or affecting Tuscaloosa Bank or Tuscaloosa Bancshares or their
premises, or (iii) any application for certification of a collective bargaining
agent. No event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. There is no lockout of any
employees by Tuscaloosa Bank or Tuscaloosa Bancshares, and no such action is
contemplated by either. Tuscaloosa Bank and Tuscaloosa Bancshares have
complied in all respects with all legal requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, and occupational safety and health. Neither Tuscaloosa Bank nor
Tuscaloosa Bancshares is liable for the payment of any compensation, damages,
taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing legal requirements.
3.20 Contracts and Commitments; No Default. (a) The following
information relating to Tuscaloosa Bank and Tuscaloosa Bancshares has been made
available to DGC, DG Louisiana or DGNB Louisiana:
i) to the extent permitted by law, any bank regulatory
agency reports relating to the examination of Tuscaloosa Bank which have been
made available to Tuscaloosa Bank or Tuscaloosa Bancshares for the past five
(5) years;
ii) the name of each bank with which Tuscaloosa Bank or
Tuscaloosa Bancshares has an account or safekeeping or custodial arrangement or
correspondent relationship and the names of all persons who are authorized with
respect thereto;
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iii) all mortgages, indentures, promissory notes, deeds of
trust, loan or credit agreements or similar instruments under which Tuscaloosa
Bank or Tuscaloosa Bancshares is indebted in an amount greater than $50,000 for
borrowed money or the price of purchased property, accompanied by originals or
certified copies thereof and all amendments or modifications of any thereof;
iv) any loans, including any other credit arrangements by
Tuscaloosa Bank, to any holder of ten percent (10%) or more of Tuscaloosa
Bancshares Common Stock, to any of Tuscaloosa Bank's or Tuscaloosa Bancshares'
directors or executive officers, to any members of the immediate families of
any of Tuscaloosa Bank's or Tuscaloosa Bancshares' directors or executive
officers or to any corporation, firm or other organization in which any of such
directors or executive officers has a financial interest; and
v) any pending application, including any documents or
materials relating thereto, which has been filed by Tuscaloosa Bank or
Tuscaloosa Bancshares with any bank regulatory authority in order to obtain the
approval of such bank regulatory authority for the establishment of a new
branch bank or a new subsidiary bank.
(b) Except as set forth in Schedule 3.20 hereto, neither
Tuscaloosa Bank nor Tuscaloosa Bancshares is a party to or bound by, nor have
any bids or proposals been made by or to Tuscaloosa Bank or Tuscaloosa
Bancshares with respect to, any written or oral, express or implied:
i) contract relating to the matters referred to in
paragraph (a) above;
ii) contract with or arrangement for directors, officers,
employees, former employees, agents or consultants with respect to salaries,
bonuses, percentage compensation, pensions, deferred compensation or retirement
payments, or any profit-sharing, stock option, stock purchase or other employee
benefit plan or arrangement;
iii) collective bargaining or union contract or agreement;
iv) contract, commitment or arrangement for the borrowing
of money or for a line of credit in an amount greater than $50,000;
v) contract, commitment or arrangement for the lending
of money or for the granting of a line of credit in an amount greater than
$100,000;
vi) contract or agreement for the future purchase by it
of any materials, equipment, services or supplies, which is not in the ordinary
course of business, and has a term of more than twelve (12) months (including
periods covered by any option to renew by either party);
vii) contract containing covenants purporting to limit its
freedom to compete; or
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viii) contract or commitment for the acquisition,
construction or refurbishment of any property, plant or equipment, other than
contracts and commitments for the acquisition, construction or refurbishment of
any property, plant or equipment not in excess of $20,000 for any one
establishment or $50,000 in the aggregate.
(c) Tuscaloosa Bank and Tuscaloosa Bancshares have performed all
the obligations required to be performed by them under any contract, agreement,
arrangement, commitment or other instrument to which they are a party
(including, without limitation, any of those described in paragraphs (a) and
(b) of this Section 3.20), and there is not, with respect to any such contract,
agreement, commitment or other instrument, (i) any notice of violation, or (ii)
any existing default (or event which, with or without due notice or lapse of
time or both, would constitute a default) on the part of Tuscaloosa Bank or
Tuscaloosa Bancshares, which default would have a material adverse effect on
its business, operations, properties, assets or financial condition, and
neither Tuscaloosa Bank nor Tuscaloosa Bancshares has received notice of any
such default, nor has Tuscaloosa Bank or Tuscaloosa Bancshares knowledge of any
facts or circumstances which would reasonably indicate that it will be or may
be in default under, any such contract, agreement, arrangement, commitment or
other instrument subsequent to the date hereof.
3.21 Disclosure. All facts material to the business, operations,
properties, assets, liabilities (contingent or otherwise), financial condition
and prospects of Tuscaloosa Bank and Tuscaloosa Bancshares have been disclosed
to DGC, DG Louisiana and DGNB Louisiana in writing or pursuant to this
Agreement. No representation or warranty contained in this Agreement, and no
statement contained in any schedule or certificate, list or other writing
furnished to DGC, DG Louisiana or DGNB Louisiana pursuant to the provisions
hereof, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. No information material to this transaction which is necessary to
make the representations and warranties herein contained not misleading has been
withheld from, or has not been delivered in writing to, DGC, DG Louisiana and
DGNB Louisiana.
3.22 Litigation. Except as listed on Schedule 3.22,
there are no actions, suits, proceedings, arbitrations or investigations
pending or, to the knowledge of Tuscaloosa Bancshares or Tuscaloosa Bank,
threatened, before any court, any governmental agency or instrumentality or any
arbitration panel, against or affecting Tuscaloosa Bancshares or Tuscaloosa
Bank or any of their subsidiaries or any of the directors, officers, or
employees of the foregoing, and to the knowledge of Tuscaloosa Bancshares or
Tuscaloosa Bank no facts or circumstances exist that would be likely to result
in the filing of any such action that would have a material adverse effect on
Tuscaloosa Bancshares or Tuscaloosa Bank. Neither Tuscaloosa Bancshares or
Tuscaloosa Bank nor any of their subsidiaries is subject to any currently
pending judgment, order or decree entered in any lawsuit or proceeding.
3.23 Environmental Matters. (a) To the best knowledge
of each, Tuscaloosa Bancshares and Tuscaloosa Bank are, and have been, in
compliance with all applicable federal, state and local laws, regulations,
rules and decrees pertaining to pollution or protection of the environment
("Environmental Laws"), including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601 et seq., the Resource Conservation and Recovery
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Act, 42 U.S.C. Section 6901 et seq., the Louisiana Environmental Quality Act,
La. R.S. 30: 2001 et seq., or any similar federal, state or local law, except
for such instances of non-compliance that are not - reasonably likely to have,
individually or in the aggregate, a material adverse effect on the financial
condition, results of operations, business or prospects of Tuscaloosa
Bancshares and Tuscaloosa Bank.
(b) To the best knowledge of each, all property owned, leased,
operated or managed by Tuscaloosa Bancshares or Tuscaloosa Bank, or in which
Tuscaloosa Bancshares or Tuscaloosa Bank has any interest, including any
mortgage or security interest ("Business Property"), and all businesses and
operations conducted on any of the Business Property (whether by Tuscaloosa
Bancshares or Tuscaloosa Bank, a mortgagor, or any other person), are, and have
been, in compliance with all applicable Environmental Laws, except for such
instances of non-compliance that are not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the financial
condition, results of operations, business or prospects of Tuscaloosa
Bancshares or Tuscaloosa Bank.
(c) To the best knowledge of each, there is no judicial,
administrative, arbitration or other similar proceeding pending or threatened
before any court, governmental agency, authority or other forum in which
Tuscaloosa Bancshares or Tuscaloosa Bank or any prior owner of any Business
Property has been or, with respect to threatened matters, is threatened to be
named as a party relating to (i) alleged noncompliance with any applicable
Environmental Law or (ii) the release or threatened release into the
environment of any Hazardous Substance (as defined below), and relating to any
of the Business Property, except for such proceedings pending or threatened
that are not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the financial condition, results of operations,
business or prospects of Tuscaloosa Bancshares or Tuscaloosa Bank, and to the
knowledge of each there is no reasonable basis for any such proceeding. The
term "Hazardous Substance" means any pollutant, contaminant, or toxic or
hazardous substance, chemical, or waste defined, listed or regulated by any
Environmental Law (and specifically shall include, but not be limited to,
asbestos, polychlorinated biphenyls, and petroleum and petroleum products).
(d) To the best knowledge of each, there has been no release or
threatened release of a Hazardous Substance in, on, under, or affecting any of
its Business Property, except such release or threatened release that is not
reasonably likely to have, individually or in the aggregate, a material adverse
effect on the financial condition, results of operations, business or prospects
of Tuscaloosa Bancshares or Tuscaloosa Bank.
3.24 Contract Termination Provisions. Except for those contracts
set forth in Schedule 3.24 hereto, all contracts between Tuscaloosa Bank or
Tuscaloosa Bancshares and any employee thereof or independent contractor thereto
shall, by the terms of such contracts or a written addendum thereto, be
terminable by DGC, DG Louisiana or DGNB Louisiana following the Mergers, upon no
more than thirty (30) day's written notice to the employee or independent
contractor.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF DGC, DG LOUISIANA AND
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DGNB LOUISIANA
DGC, DG Louisiana and DGNB Louisiana represent and warrant to
Tuscaloosa Bank and Tuscaloosa Bancshares as follows:
4.01 Corporate Organization. DGC and DG Louisiana are
corporations duly organized, validly existing and in good standing under the
laws of the States of Mississippi and Louisiana, respectively, and DGNB
Louisiana is a national banking association duly organized, validly existing and
in good standing under the laws of the United States. DGC, DG Louisiana and
DGNB Louisiana, respectively, have the corporate power and authority (and DGNB
Louisiana has received appropriate authorizations from the OCC) to own or lease
all of their properties and assets and to carry on their businesses as they are
now being conducted.
4.02 Capitalization. The authorized capital stock of
DGC consists of 100,000,000 shares of DGC Common Stock, 25,000,000 shares of
Class A Voting Preferred Stock, no par value, and 25,000,000 shares of Class B
Non- Voting Preferred Stock, no par value (collectively, "the DGC Preferred
Stock"). At the close of business on December 31, 1995, there were 19,379,643
shares of DGC Common Stock issued and outstanding and no shares of DGC
Preferred Stock had been issued. In addition, options to acquire 442,852
shares of DGC Common Stock were outstanding. The authorized capital stock of
DG Louisiana consists of 5,000,000 shares of DG Louisiana Common Stock, no par
value. At the close of business on December 31, 1995, there were 4,200,000
shares of DG Louisiana Common Stock issued and outstanding, one hundred
percent (100%) of which shares were owned by DGC. The authorized capital stock
of DGNB Louisiana consists of 234,121 shares of DGNB Louisiana Common Stock.
At the close of business on December 31, 1995, there were 234,121 shares of
DGNB Louisiana Common Stock issued and outstanding, one hundred percent (100%)
of which shares were owned by DG Louisiana . All issued and outstanding shares
of DGC Common Stock have been, and the shares of DGC Common Stock to be issued
pursuant to the Holding Company Merger will be, duly authorized and validly
issued, and all such shares are and will be fully paid. Except as referred to
above, DGC does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of DGC Common Stock or DGC Preferred
Stock or any security representing the right to purchase or otherwise receive
any DGC Common Stock or DGC Preferred Stock.
4.03 Authority; No Violation. (a) DGC, DG Louisiana and DGNB
Louisiana, respectively, have full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The respective Boards of Directors of DGC, DG Louisiana and DGNB Louisiana, or a
majority thereof, and DGC as the sole shareholder of DG Louisiana have duly and
validly approved and adopted this Agreement and the transactions contemplated
hereby, have executed or authorized the execution of and have authorized the
delivery of this Agreement, and except for approval by DG Louisiana, as the sole
shareholder of DGNB Louisiana, no other corporate proceedings on the part of
DGC, DG Louisiana or DGNB Louisiana are necessary or desirable to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by DGC, DG Louisiana and DGNB Louisiana and constitutes
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a valid and binding obligation of each of DGC, DG Louisiana and DGNB
Louisiana, enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by DGC,
DG Louisiana or DGNB Louisiana nor the consummation by DGC, DG Louisiana or
DGNB Louisiana of the transactions contemplated hereby, nor compliance by DGC,
DG Louisiana or DGNB Louisiana with any of the provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of DGC or
DG Louisiana, or the Articles of Association or Bylaws of DGNB Louisiana, (ii)
to the best knowledge of DGC, DG Louisiana and DGNB Louisiana violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to DGC, DG Louisiana, DGNB Louisiana, or any of their
subsidiaries or any of their respective properties or assets, or (iii) to the
best knowledge of DGC, DG Louisiana and DGNB Louisiana violate, conflict with,
result in a breach of any provisions of, constitute a default (or an event
which, with or without due notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge
or other encumbrance upon any of the respective properties or assets of DGC, DG
Louisiana, DGNB Louisiana or any of their subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which DGC, DG
Louisiana, DGNB Louisiana or any of their respective subsidiaries is a party,
or by which they or any of their respective properties or assets may be bound
or affected, except for such conflicts, breaches or defaults as are set forth
in Schedule 4.03 hereto, or which either individually or in the aggregate will
not have a material adverse effect on the business, operations, properties,
assets or financial condition of DGC, DG Louisiana, DGNB Louisiana or any of
their respective subsidiaries.
4.04 Consents and Approvals. Except for consents and approvals of,
or filings or registrations, with the SEC, OCC, the Federal Reserve Bank, the
FDIC, and the Commissioner, no consents or approvals of or filings or
registrations with any third party or any public body or authority are necessary
in connection with (i) the execution and delivery by DGC, DG Louisiana and DGNB
Louisiana of this Agreement or (ii) the consummation of the Mergers and the
other transactions contemplated hereby.
4.05 Legality of DGC Common Stock. The DGC Common Stock to be
issued in connection with the Holding Company Merger, when issued and
delivered in accordance with the terms hereof, will be duly authorized, validly
issued, fully paid and non-assessable, and free of pre-emptive rights.
4.06 SEC Documents; Financial Statements. DGC has filed all required
reports, schedules, forms, statements and other documents with the SEC since
January 1, 1993 (the "DGC SEC Documents"), complete copies of which have been
provided to Tuscaloosa Bancshares. The DGC financial statements included in
the DGC SEC Documents have been audited by KPMG Peat Marwick LLP, certified
public accountants (in the case of the DGC audited financial statements) in
accordance with generally accepted auditing standards, have been prepared in
accordance with generally accepted accounting principles and, except as
disclosed therein, applied on a basis consistent with prior periods, and
present fairly the financial position of DGC and its consolidated subsidiaries
at such dates and the
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results of operations and cash flows for the periods then ended, except, in the
case of the DGC interim financial statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC. The DGC interim financial statements reflect all
adjustments (consisting only of normal recurring adjustments) that are
necessary for a fair statement of the results for the interim periods presented
therein.
4.06 Disclosure. No representations or warranties by DGC, DGC
Louisiana or DGNB Louisiana in this Agreement and no statement contained in the
schedules or exhibits or in any certificates to be delivered pursuant to this
Agreement, contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
ARTICLE V.
COVENANTS OF THE PARTIES
5.01 Conduct of Business. Except with the consent of the other
parties hereto, during the period from the date of this Agreement to the
Effective Date:
(a) Tuscaloosa Bank and Tuscaloosa Bancshares will
conduct their businesses and engage in transactions only in the ordinary course
and consistent with prudent banking practice.
(b) Neither Tuscaloosa Bancshares nor Tuscaloosa Bank shall (i)
increase by more than ten percent (10%) the compensation payable by Tuscaloosa
Bank or Tuscaloosa Bancshares to any of its directors, officers, agents,
consultants, or any of its employees whose total compensation after such
increase would be in excess of $25,000 per annum, (ii) grant or pay any
extraordinary bonus, percentage compensation, service award or other like
benefit to any such director, officer, agent, consultant or employee, or (iii)
make or agree to any extraordinary welfare, pension, retirement or similar
payment or arrangement for the benefit of any such director, officer, agent,
consultant or employee.
(c) Neither Tuscaloosa Bancshares nor Tuscaloosa Bank shall sell
or dispose of material assets except in the ordinary course of business.
(d) Neither Tuscaloosa Bancshares nor Tuscaloosa
Bank shall enter into any new capital commitments or make any capital
expenditures, except commitments or expenditures within existing operating and
capital budgets or otherwise in the ordinary course of business.
(e) Neither Tuscaloosa Bank nor Tuscaloosa Bancshares shall
authorize or issue any additional shares of any class of its capital stock or
any securities exchangeable for or convertible into any such shares or any
options or rights to acquire any such shares, nor shall Tuscaloosa Bank or
Tuscaloosa Bancshares otherwise authorize or affect any change in its
capitalization.
(f) No dividends shall be paid by Tuscaloosa Bancshares or
Tuscaloosa Bank, except for (i) a dividend by Tuscaloosa Bancshares in August,
1996 of $.07 per share, and (ii) dividends by Tuscaloosa
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Bank to Tuscaloosa Bancshares to the extent necessary to fund authorized
dividends of Tuscaloosa Bancshares and to pay necessary and routine expenses of
Tuscaloosa Bancshares.
5.02 Limitation on Actions. Prior to the Effective Date or until
the termination of this Agreement, Tuscaloosa Bancshares shall not, without the
prior approval of the chief executive officer of DGC,
(a) solicit or encourage inquiries or proposals with respect to; or
(b) furnish any information relating to or participate in any
negotiations or discussions concerning, any acquisition or purchase of all or a
substantial portion of the assets of, or of a substantial equity interest in,
Tuscaloosa Bancshares or any subsidiary thereof, or any business combination
with Tuscaloosa Bancshares or any subsidiary thereof, other than as contemplated
by this Agreement; and shall instruct its officers, directors, agents and
affiliates to refrain from doing any of the above.
Tuscaloosa Bank and Tuscaloosa Bancshares agree to notify DGC by
telephone within twenty-four (24) hours of receipt of any inquiry with respect
to a proposed merger, consolidation, assets acquisition, tender offer or other
takeover transaction with another person or receipt of a request for
information from the FDIC, OCC or other governmental authority with respect to
a proposed acquisition of Tuscaloosa Bank or Tuscaloosa Bancshares by another
party.
5.03 Current Information. During the period from the
date of this Agreement to the Effective Date, Tuscaloosa Bank and Tuscaloosa
Bancshares will cause one or more of its designated representatives to confer
on a regular and frequent basis with representatives of DGC and to report the
general status of its ongoing operations. In addition, separate reporting on
matters involving the loan portfolio will occur monthly and will include, but
not be limited to, (i) all board reports, (ii) new and renewed loans (including
loan applications), (iii) delinquency reports, (iv) loan extensions, (v) to the
extent possible, loan policy exceptions, loan documentation exceptions, and
financial statement exceptions, (vi) watch list reports, (vii) all written
communications concerning problem loan accounts greater than $50,000, (viii)
notification and written details involving new loan products and/or loan
programs, and (ix) such other information regarding specific loans, the loan
portfolio and management of the loan portfolio as may be requested. Tuscaloosa
Bank and Tuscaloosa Bancshares will promptly notify DGC of any material change
in the normal course of their business or in the operation of their properties
and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the
institution or the threat of litigation involving either party, and will keep
DGC fully informed of such events.
5.04 Access to Properties and Records; Confidentiality.
(a) For purposes of allowing DGC, DG Louisiana and DGNB Louisiana and their
counsel to prepare regulatory submissions, and for other relevant purposes,
Tuscaloosa Bank and Tuscaloosa Bancshares shall permit DGC reasonable access to
their properties during normal business hours, and shall disclose and make
available to DGC and its agents all books, papers and records relating to their
assets, stock ownership, properties, operations, obligations and liabilities,
including, but not limited to: their books of account (including their general
ledgers); tax records; minute books of directors' and shareholders' meetings;
charter documents; bylaws;
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material contracts and agreements; filings with any regulatory authority;
litigation files; compensatory plans affecting its employees; and any other
materials pertaining to business activities, projects or programs in which the
other parties may have a reasonable interest in light of the proposed Mergers.
No member of the Tuscaloosa Consolidated Group shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of any customer or other person, would
jeopardize the attorney-client privilege of the institution in possession or
control of such information, or would contravene any law, rule, regulation,
order, judgment, decree or binding agreement. The parties will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) All information furnished by any member of the Tuscaloosa
Consolidated Group pursuant hereto shall be treated as the sole property of the
party furnishing the information until consummation of the Mergers contemplated
hereby and, if such Mergers shall not occur, DGC, DG Louisiana and DGNB
Louisiana shall return to Tuscaloosa Bancshares all documents or other
materials containing, reflecting or referring to such information, shall use
its best efforts to keep confidential all of such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue for two (2) years from the date the proposed Mergers are abandoned and
shall not apply to (a) any information which (i) DGC, DG Louisiana and DGNB
Louisiana can establish by convincing evidence was already in its possession
prior to the disclosure thereof by Tuscaloosa Bancshares or Tuscaloosa Bank,
(ii) was then generally known to the public or set forth in public records,
(iii) became known to the public through no fault of DGC, DG Louisiana or DGNB
Louisiana, or (iv) was disclosed to the party receiving the information by a
third party not bound by an obligation of confidentiality, or (b) disclosures
in accordance with an order of a court of competent jurisdiction.
5.05 Interim Financial Statements. As soon as reasonably
available, but in no event more than fifteen (15) days after the end of each
month ending after the date of this Agreement, Tuscaloosa Bank and Tuscaloosa
Bancshares will deliver to DGC copies of their monthly financial statements.
5.06 Regulatory Matters. (a) DGC shall prepare and file a
registration statement with the SEC on Form S-4 under the Securities Act (the
"Registration Statement"), including a proxy statement (the "Proxy Statement")
to be mailed to Tuscaloosa Bancshares' shareholders in connection with the
meeting to be called to consider the Holding Company Merger, as soon as
reasonably practicable following the date of this Agreement. The Registration
Statement shall comply in all material respects with the Securities Act and DGC
will use its best efforts to cause the Registration Statement to be declared
effective as soon as practicable, to qualify the DGC 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.
(b) DGC will use its best efforts to prepare all necessary
documentation, to effect all necessary filings and to obtain all necessary
permits, consents, approvals and authorizations of all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement, including those required by the OCC, the Federal Reserve Board,
the FDIC and the Commissioner.
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(c) Tuscaloosa Bancshares shall cooperate in preparing the
Registration Statement and the Proxy Statement. Tuscaloosa Bancshares will
promptly furnish all such data and information relating to it and its
subsidiaries as DGC may reasonably request for the purpose of including such
data and information in the Registration Statement.
5.07 Approval of Shareholders. Tuscaloosa Bancshares will (i)
take all steps necessary to call, give notice of, convene and hold a special
meeting of its shareholders as soon as practicable for the purpose of approving
this Agreement and the transactions contemplated hereby and for such other
purposes as may be necessary or desirable, (ii) recommend to its shareholders
the approval of this Agreement and the transactions contemplated hereby and such
other matters as may be submitted to its shareholders in connection with this
Agreement, and (iii) cooperate and consult with DGC, DG Louisiana and DGNB
Louisiana with respect to each of the foregoing matters. Tuscaloosa Bancshares,
as the sole shareholder of Tuscaloosa Bank, shall approve this Agreement and the
Bank Merger. DG Louisiana, as the sole shareholder of DGNB Louisiana, shall
approve this Agreement and the Bank Merger.
5.08 Compliance with SEC Rules 144 and 145. Tuscaloosa
Bancshares shall identify in a letter to DGC, after consultation with its
counsel and with DGC and its counsel, persons who may be deemed to be
affiliates of Tuscaloosa Bancshares as that term is defined in Rule 145 under
the Securities Act and who will become beneficial owners of Common Stock of DGC
pursuant to the Holding Company Merger ("Tuscaloosa Bancshares Affiliates").
Tuscaloosa Bancshares shall use its best efforts to cause all Tuscaloosa
Bancshares Affiliates to execute and deliver to DGC written agreements to
comply with the applicable resale restrictions set forth in Rules 144 and 145
under the Securities Act.
5.09 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the Effective Date any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of each party to this Agreement shall take all
such necessary or desirable action.
5.10 Public Announcements. DGC, DG Louisiana, DGNB
Louisiana, Tuscaloosa Bank and Tuscaloosa Bancshares will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby. No party to this Agreement shall make any
public announcement or otherwise make any disclosure (either public or
private), other than such disclosure to employees or agents of any such party
as may be required to carry out the transactions contemplated by this Agreement
and except as may be required by law, without the express written consent of
all parties hereto. Each party hereto shall undertake such reasonable steps as
may be required to ensure that its employees and agents comply with the
provisions of this Section 5.10.
5.11 Benefits. From and after the Effective Date, DGC
will, subject to compliance with applicable legal and regulatory requirements,
provide coverage for all Tuscaloosa Bank employees under all DGC employee
benefit plans for which they are eligible, as soon as practicable after the
Effective
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Date. All prior years of service of Tuscaloosa Bank employees will be counted
for vesting and eligibility purposes under all applicable DGC employee benefit
plans to the extent permitted by applicable law. Any Tuscaloosa Bank employee
who, immediately prior to the Effective Date, is covered by or is a participant
in a Tuscaloosa Bank employee benefit plan listed in Schedule 3.19 of this
Agreement, shall, on the Effective Date, be covered by or participate in the
comparable DGC employee benefit plan if a comparable plan otherwise is
maintained by DGC and if the eligibility requirements of the DGC plan are met.
ARTICLE VI.
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations under this Agreement.
The respective obligations of each party under this Agreement shall be
subject to the fulfillment at or prior to the Effective Date of the
following conditions, none of which may be waived:
(a) This Agreement and the transactions contemplated hereby shall
have been approved by the affirmative vote of the holders of at least a
majority of the outstanding shares of Tuscaloosa Bancshares Common Stock,
voted at the special meeting of shareholders of Tuscaloosa Bancshares called
pursuant to Section 5.07 hereof.
(b) None of the parties hereto shall be subject to any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Mergers.
(c) DGC, DG Louisiana, DGNB Louisiana, Tuscaloosa Bancshares and
Tuscaloosa Bank shall have received an opinion of Messrs. Watkins Ludlam &
Stennis, P.A. substantially to the effect that the transactions contemplated by
this Agreement will be treated for federal income tax purposes as a tax-free
reorganization under Section 368 of the Code.
(d) A Registration Statement relating to the shares of DGC Common
Stock to be issued pursuant to this Agreement shall have become effective under
the Securities Act and shall not be subject to any stop order or a threatened
stop order. All necessary consents or permits from or registrations or filings
with state securities commissions shall have been obtained or made.
(e) This Agreement and the transactions contemplated hereby shall
have been approved by the OCC and all other applicable federal and state
authorities.
6.02 Conditions to the Obligations of DGC, DG Louisiana, and
DGNB Louisiana under this Agreement. The obligations of DGC, DG Louisiana
and DGNB Louisiana under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Date, of the following conditions,
any one or more of which may be waived by DGC, DG Louisiana and DGNB
Louisiana:
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(a) Each of the obligations of Tuscaloosa Bank and
Tuscaloosa Bancshares required to be performed by it at or prior to the Closing
pursuant to the terms of this Agreement shall have been duly performed and
complied with and the representations and warranties of Tuscaloosa Bank and
Tuscaloosa Bancshares contained in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Effective
Date as though made at and as of the Effective Date (except as otherwise
contemplated by this Agreement) and DGC, DG Louisiana and DGNB Louisiana shall
have received a certificate to that effect signed by the president of
Tuscaloosa Bank and Tuscaloosa Bancshares.
(b) All action required to be taken by, or on the part of,
Tuscaloosa Bank and Tuscaloosa Bancshares to authorize the execution, delivery
and performance of this Agreement by Tuscaloosa Bank and Tuscaloosa Bancshares
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken by the Boards of Directors of Tuscaloosa Bank and
Tuscaloosa Bancshares and DGC, DG Louisiana and DGNB Louisiana shall have
received certified copies of the resolutions evidencing such authorization.
(c) Any and all permits, consents, waivers, clearances, approvals
and authorizations (in addition to those referred to in Section 6.01 hereof) of
all third parties and governmental bodies shall have been obtained by Tuscaloosa
Bank and Tuscaloosa Bancshares, which are necessary in connection with the
consummation of the Mergers by Tuscaloosa Bancshares and Tuscaloosa Bank and the
other transactions contemplated hereby.
(d) DGC, DG Louisiana and DGNB Louisiana shall have received an
opinion from Preis & Laborde, counsel to Tuscaloosa Bank and Tuscaloosa
Bancshares, dated the date of the Closing, in form satisfactory to DGNB
Louisiana, DGC and DG Louisiana to the effect that:
i) Tuscaloosa Bancshares is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Louisiana and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted. Tuscaloosa Bank is a state banking corporation duly
organized, validly existing and in good standing under the laws of
Louisiana (a) has all requisite corporate power to own, lease and
operate its properties and to carry on its business as now being
conducted, (b) is duly authorized to conduct a general banking business
under the Banking Laws of the State of Louisiana, and (c) is an insured
bank as defined in the Federal Deposit Insurance Act;
ii) This Agreement has been duly and validly authorized,
executed and delivered by Tuscaloosa Bancshares and Tuscaloosa Bank and
is valid and enforceable against each of them, 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;
iii) The authorized capital stock of Tuscaloosa Bancshares
consists of 20,000,000 shares of Tuscaloosa Bancshares Common Stock, of
which, as of December 31, 1995, 3,574,400 shares have been duly issued,
are presently outstanding and are fully paid and non-assessable;
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iv) The authorized capital stock of Tuscaloosa Bank
consists of 375,000 shares of Tuscaloosa Bank Common Stock of which, as
of December 31, 1995, 356,500 shares are issued and outstanding; all of
such outstanding shares are validly issued, fully paid and
non-assessable;
v) The execution and delivery by Tuscaloosa Bancshares
and Tuscaloosa Bank of this Agreement, consummation by Tuscaloosa
Bancshares and Tuscaloosa Bank of the transactions contemplated hereby
and compliance by Tuscaloosa Bancshares and Tuscaloosa Bank with the
provisions hereof will not violate the Articles of Incorporation of
Tuscaloosa Bancshares or Tuscaloosa Bank or violate, result in a breach
of, or constitute a default under, any material lease, mortgage,
contract, agreement, instrument, judgment, order or decree to which
Tuscaloosa Bancshares or Tuscaloosa Bank is a party or to which they
may be subject;
vi) Such counsel has participated in several conferences
with representatives of the parties of this Agreement and their
respective accountants and counsel in connection with the preparation
of the Registration Statement and the Proxy Statement to be filed in
connection with the transactions contemplated by this Agreement and
have considered the matters required to be stated therein and the
statements contained therein, and based on the foregoing (in certain
circumstances relying as to materiality on the opinions of officers and
representatives of the parties to this Agreement) nothing has come to
the attention of such counsel that would lead them to believe that such
Registration Statement or the Proxy Statement, as amended or
supplemented if it has been amended or supplemented, at the time it
became effective and as amended or supplemented, (in the case of the
Registration Statement) or at the time distributed to shareholders (in
the case of the Proxy Statement), contained any untrue statement of a
material fact or omitted a material fact required to be stated therein
or necessary to make the statements therein not misleading (except in
each such case for the financial statements and other financial and
statistical data included therein, as to which no opinion need be
rendered).
As to matters of fact, counsel to Tuscaloosa Bancshares and Tuscaloosa
Bank may rely, to the extent they deem appropriate, upon certificates of
officers of Tuscaloosa Bancshares and Tuscaloosa Bank, provided, such
certificates are delivered to DGC, DG Louisiana and DGNB Louisiana prior to the
Closing or attached to the opinion of counsel.
(e) There shall not have occurred any material adverse change in
the financial condition, results of operations, business or prospects of
Tuscaloosa Bancshares or Tuscaloosa Bank from the date of the Tuscaloosa Latest
Balance Sheet to the Closing.
(f) Tuscaloosa Bancshares shall have used it bests efforts to
cause all Tuscaloosa Bancshares Affiliates to execute and deliver to DGC written
agreements to comply with the applicable resale restrictions set forth in Rule
145 under the Securities Act.
(g) Prior to the date the proxy statement is mailed to the
shareholders of Tuscaloosa Bancshares, an independent accounting firm
satisfactory to DGC shall have completed a review of the June 30, 1996 balance
sheet of Tuscaloosa Bancshares for the purpose of verifying the amount of each
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asset, each liability and stockholders' equity as set forth on the balance
sheet, and the results of the review shall be satisfactory to DGC;
(h) The amount of stockholders' equity of Tusacaloosa Bancshares
at June 30, 1996 as verified by the review required by Section 6.02(g) shall not
be less than $4,106,917.
Tuscaloosa Bank and Tuscaloosa Bancshares will furnish DGC, DG
Louisiana and DGNB Louisiana with such certificates of their officers or others
and such other documents to evidence fulfillment of the conditions set forth in
this Section 6.02 as DGC, DG Louisiana and DGNB Louisiana may reasonably
request.
6.03 Conditions to the Obligations of Tuscaloosa Bank and
Tuscaloosa Bancshares, Inc. under this Agreement. The obligations of
Tuscaloosa Bank and Tuscaloosa Bancshares under this Agreement shall be further
subject to the satisfaction, at or prior to the Effective Date, of the following
conditions, any one or more of which may be waived by Tuscaloosa Bank and
Tuscaloosa Bancshares:
(a) Each of the obligations of DGC, DG Louisiana or DGNB
Louisiana, respectively, required to be performed by them at or prior to the
Closing pursuant to the terms of this Agreement shall have been duly performed
and complied with and the representations and warranties of DGC, DG Louisiana
and DGNB Louisiana contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective Date
as though made at and as of the Effective Date (except as otherwise
contemplated by this Agreement) and Tuscaloosa Bank and Tuscaloosa Bancshares
shall have received certificates to that effect signed by the presidents of
DGC, DG Louisiana and DGNB Louisiana, respectively.
(b) All action required to be taken by, or on the part of, DGC, DG
Louisiana and DGNB Louisiana to authorize the execution, delivery and
performance of this Agreement of DGC, DG Louisiana and DGNB Louisiana and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Boards of Directors of DGC, DG Louisiana and DGNB
Louisiana, respectively, and Tuscaloosa Bank and Tuscaloosa Bancshares shall
have received certified copies of the resolutions evidencing such authorization.
(c) There shall not have occurred any material adverse change in
the financial condition, results of operations, business or prospects of DGC,
DG Louisiana or DGNB Louisiana from the date of the DGC Latest Balance Sheet to
the Closing.
(d) Tuscaloosa Bancshares and Tuscaloosa Bank shall have received
from Messrs. Watkins, Ludlam and Stennis, P.A., counsel for DGC, DG Louisiana
and DGNB Louisiana (or as to certain matters involving Louisiana law from
Louisiana counsel to DGC, DG Louisiana and DGNB Louisiana), an opinion, dated
as of the Closing, in form and substance satisfactory to Tuscaloosa Bancshares
and Tuscaloosa Bank, to the effect that:
i) DGC is a corporation duly organized, validly existing and
in good standing under the laws of the State of Mississippi and has
all requisite power and authority to own, lease and
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operate its properties and to carry on its business as now being
conducted. DGC is qualified to do business as a foreign corporation in
Louisiana. DG Louisiana is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana
and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. DGNB
Louisiana is a national bank duly organized, validly existing and in
good standing under the laws of the United States (a) has all requisite
corporate power to own, lease and operate its properties and to carry
on its business as now being conducted, (b) is duly authorized to
conduct a general banking business under the Banking Laws of the United
States, and (c) is an insured bank as defined in the Federal Deposit
Insurance Act;
ii) This Agreement has been duly and validly authorized,
executed and delivered by DGC, DG Louisiana and DGNB Louisiana and is
valid and enforceable, 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;
iii) The authorized capital stock of DGC consists of
100,000,000 shares of DGC Common Stock, 25,000,000 shares of Class A
Voting Preferred Stock, no par value, and 25,000,000 shares of Class B
Non-Voting Preferred Stock, no par value of which, as of December 31,
1995, 19,379,643 shares of Common Stock have been duly issued, are
presently outstanding and are fully paid and non-assessable. All
shares of DGC Common Stock to be issued to holders of Tuscaloosa
Bancshares Common Stock will be, when issued as described in this
Agreement and the Registration Statement, duly authorized and validly
issued, fully paid and non- assessable, free of liens, security
interests, pledges or other encumbrances and all preemptive or similar
rights other than liens, security interests, pledges or other
encumbrances placed thereon by the holders of Tuscaloosa Bancshares
Common Stock;
iv) The authorized capital stock of DG Louisiana consists of
5,000,000 shares of DG Louisiana Common Stock, of which, as of
December 31, 1995, 4,200,000 shares have been duly issued, are
presently outstanding and are fully paid and non-assessable;
v) The authorized capital stock of DGNB Louisiana consists of
234,121 shares of DGNB Louisiana Common Stock of which, as of December
31, 1995, 234,121 shares are issued and outstanding; all of such
outstanding shares are validly issued, fully paid and non-assessable;
vi) The execution and delivery by DGC, DG Louisiana and DGNB
Louisiana of this Agreement, consummation by DGC, DG Louisiana and DGNB
Louisiana of the transactions contemplated hereby and compliance by
DGC, DG Louisiana and DGNB Louisiana with the provisions hereof will
not violate the Articles of Incorporation or Association of DGC, DG
Louisiana and DGNB Louisiana or violate, result in a breach of, or
constitute a default under, any material lease, mortgage, contract,
agreement, instrument, judgment, order or decree to which DGC, DG
Louisiana and DGNB Louisiana is a party or to which they may be
subject;
28
<PAGE> 98
vii) the Registration Statement has become effective, and to
such counsel's knowledge, no stop order suspending its effectiveness
has been issued nor have any proceedings for that purpose been
instituted;
viii) the Registration Statement and each amendment or
supplement thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the requirements of
the Securities Act and the rules and regulations promulgated
thereunder, and we do not know of any contracts or documents required
to be filed as exhibits to the Registration Statement which are not
filed as required; it being understood that such counsel need express
no opinion as to the financial statements or other financial or
statistical data contained in or omitted from the Registration
Statement or the Proxy Statement; and
ix) Such counsel has participated in several conferences with
representatives of the parties of this Agreement and their respective
accountants and counsel in connection with the preparation of the
Registration Statement and the Proxy Statement to be filed in
connection with the transactions contemplated by this Agreement and
have considered the matters required to be stated therein and the
statements contained therein, and based on the foregoing (in certain
circumstances relying as to materiality on the opinions of officers and
representatives of the parties to this Agreement) nothing has come to
the attention of such counsel that would lead them to believe that such
Registration Statement or the Proxy Statement, as amended or
supplemented if it has been amended or supplemented, at the time it
became effective and as amended or supplemented, (in the case of the
Registration Statement) or at the time distributed to shareholders (in
the case of the Proxy Statement), contained any untrue statement of a
material fact or omitted a material fact required to be stated therein
or necessary to make the statements therein not misleading (except in
each such case for the financial statements and other financial and
statistical data included therein, as to which no opinion need be
rendered).
(e) Tuscaloosa Bancshares shall have received a
letter from Chaffe & Associates, Inc., or another financial advisor selected by
Tusacaloosa Bancshares, dated within five (5) days of the date of mailing of
the proxy statement to its shareholders to the effect that the terms of the
Holding Company Merger are fair to its shareholders from a financial point of
view.
As to matters of fact, counsel to DGC, DG Louisiana and DGNB Louisiana
may rely, to the extent they deem appropriate, upon certificates of officers of
DGC, DG Louisiana and DGNB Louisiana, provided, such certificates are delivered
to Tuscaloosa Bancshares and Tuscaloosa Bank prior to the Closing or attached
to the opinion of counsel.
DGC, DG Louisiana and DGNB Louisiana will furnish Tuscaloosa Bank and
Tuscaloosa Bancshares with such certificates of their officers or others and
such other documents to evidence fulfillment of the conditions set forth in
this Section 6.03 as Tuscaloosa Bank and Tuscaloosa Bancshares may reasonably
request.
ARTICLE VII.
29
<PAGE> 99
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and
VIII hereof, the Closing of the transactions contemplated hereby shall take
place at the offices of DGC, One Deposit Guaranty Plaza, 210 East Capitol
Street, Jackson, Mississippi 39205 at 9:00 A.M., local time, on the first
business day after the date on which all of the conditions contained in Article
VI, to the extent not waived, are satisfied or at such other place, at such
other time, or on such other date as DGC, DG Louisiana, DGNB Louisiana,
Tuscaloosa Bancshares and Tuscaloosa Bank may mutually agree upon for the
Closing to take place.
7.02 Deliveries at the Closing. Subject to the provisions of
Articles VI and VIII hereof, at the Closing there shall be delivered to DGC, DG
Louisiana, DGNB Louisiana, Tuscaloosa Bancshares and Tuscaloosa Bank the
opinions, certificates, and other documents and instruments required to be
delivered under Article VI hereof.
ARTICLE VIII.
TERMINATION
8.01 Termination. This Agreement may be terminated at any time prior
to the Effective Date, whether before or after approval of the Holding Company
Merger by the shareholders of Tuscaloosa Bancshares:
(a) by mutual written consent of the parties, properly
authorized by their respective Boards of Directors;
(b) by DGC, DG Louisiana and DGNB Louisiana, if at the time of such
termination there shall have been any material adverse change in the financial
condition, results of operations, business or prospects of Tuscaloosa Bancshares
or Tuscaloosa Bank from the date of the Tuscaloosa Latest Balance Sheet;
(c) by Tusacaloosa Bancshares and Tusacaloosa Bank, if at the time
of such termination there shall have been any material adverse change in the
financial condition, results of operations, business or prospects of DGC from
December 31, 1995;
(d) by any party hereto, if a United States District Court shall
rule upon application of the Department of Justice after a full trial on the
merits or a decision on the merits based on a stipulation of facts that the
transactions contemplated by this Agreement violate the antitrust laws of the
United States;
(e) by any party hereto, if at the special meeting of shareholders
to be called by Tuscaloosa Bancshares pursuant to this Agreement, this Agreement
shall not have been approved by the affirmative vote of the holders of at least
a majority of the outstanding shares of Tuscaloosa Bancshares Common
30
<PAGE> 100
Stock voted at the special meeting of shareholders of Tuscaloosa Bancshares
called pursuant to Section 5.07 hereof;
(f) by DGC, DG Louisiana and DGNB Louisiana, in the event there are
dissenting shareholders who hold more than ten percent (10%) of the shares of
Tuscaloosa Bancshares Common Stock;
(g) by DGC in the event that any current executive officer of
Tuscaloosa Bank ceases to be employed by Tuscaloosa Bank, and DGC, in its sole
discretion, determines that the loss of the executive officer will have a
material adverse affect on the future profitability of Tuscaloosa Bank;
(h) by any party hereto if Closing shall not have occurred by March
31, 1997.
8.02 Effect of Termination. In the event of termination of this
Agreement by either DGC, DG Louisiana, DGNB Louisiana, Tuscaloosa Bancshares or
Tuscaloosa Bank as provided above, this Agreement shall forthwith become void
and except as provided in Section 5.04 and Section 9.01 hereof there shall be no
further liability on the part of Tuscaloosa Bank, Tuscaloosa Bancshares, DGC,
DG Louisiana, DGNB Louisiana or their respective officers or directors.
31
<PAGE> 101
ARTICLE IX.
MISCELLANEOUS
9.01 Expenses. All out-of-pocket costs and expenses incurred in
connection with the Mergers (including, but not limited to, counsel fees) shall
be paid by the party incurring such costs and expenses. In particular, the cost
of the June 30, 1996 balance sheet review required by Section 6.02(g) shall be
paid by Tuscaloosa Bancshares.
9.02 Notices. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally or
mailed by prepaid registered or certified first class mail (return receipt
requested) or by facsimile, cable, telegram or telex addressed as follows:
(a) If to DGC, DG Louisiana or DGNB Louisiana, to:
Deposit Guaranty Corporation
One Deposit Guaranty Plaza
210 East Capitol Street
P.0. Box 730
Jackson, Mississippi 39205
Attention: Arlen L. McDonald
Fax Number: (601) 354-8192
Copy to:
Watkins Ludlam & Stennis, P.A.
633 North State Street (39202)
Post Office Box 427
Jackson, Mississippi 39205-0427
Attention: L. Keith Parsons, Esq.
Fax Number: (601) 949-4804
(b) If to Tuscaloosa Bank or Tuscaloosa Bancshares, to:
Tuscaloosa Bancshares, Inc.
1509 S. Range Avenue
Denham Springs, LA 70726-4896
Attn: Lloyd Cockerham, Jr.
Fax Number:
32
<PAGE> 102
Copy to:
Preis & Laborde, A Professional Law Corporation
1000 Premier Centre - North Tower, 450 Laurel Street
Baton Rouge, LA 70801
Attention: Phillip W. Preis
Fax Number: (504) 344-0510
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
9.03 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, and their respective
successors and assigns; provided, however, that neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties, and that nothing
in this Agreement is intended to confer, expressly or by implication, upon any
other person any rights or remedies under or by reason of this Agreement.
9.04 Amendment, Extension and Waiver. Subject to applicable law,
at any time prior to the consummation of the Mergers, whether before or after
approval thereof by the Tuscaloosa Bancshares' shareholders, DGC, DG Louisiana,
DGNB Louisiana, Tuscaloosa Bancshares and Tuscaloosa Bank may, by action taken
by their respective Boards of Directors (i) amend this Agreement, (ii) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (iii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or
(iv) waive compliance with any of the agreements or conditions contained in
Articles V and VI (other than the conditions set forth in Section 6.01 hereof);
provided, however, that, except as explicitly set forth in Section 1.05 hereof,
after any approval of the Holding Company Merger by the shareholders of
Tuscaloosa Bancshares, there may not be, without further approval of such
shareholders, any amendment, extension or waiver of this Agreement which changes
the amount or form of consideration to be delivered to shareholders of
Tuscaloosa Bancshares. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto. Any agreement on the
part of a party hereto to any extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party, but such
waiver or failure to insist on strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
9.05 Complete Agreement. This Agreement, including the
documents and other writings referred to herein or delivered pursuant hereto,
contains the entire agreement and understanding of the parties with respect to
its subject matter. There are no restrictions, agreements, promises,
warranties, covenants or undertakings other than those expressly set forth
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties, both written and oral, with respect to its
subject matter.
33
<PAGE> 103
9.06 Non-Survival of Representations and Warranties. None
of the representations and warranties in this Agreement shall survive the
Effective Date, or the earlier termination of this Agreement pursuant to
Article VIII hereof. Each party hereby agrees that its sole right and remedy
with respect to any breach of a representation or a warranty by the other party
shall be to not consummate the transactions described herein if such breach
results in the nonsatisfaction of a condition set forth in Section 6.02(a) or
6.03(a) hereof, provided, however, that the foregoing shall not be deemed a
waiver of any claim for intentional misrepresentation or fraud.
9.07 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
9.08 Governing Law. This Agreement shall be governed by
the laws of the State of Louisiana, without giving effect to the principles of
conflicts of laws thereof.
9.09 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, a majority of the members of the Boards of
Directors of DGNB Louisiana and Tuscaloosa Bank, respectively, have each
executed this Agreement and directed the authorized signature and seal of each
respective bank to be set hereunto by its Chairman of the Board or President
and attested to by its Secretary or Cashier, and the Boards of Directors of
DGC, DG Louisiana and Tuscaloosa Bancshares have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
above written.
Attest: DEPOSIT GUARANTY CORP.
By
- ----------------------------------- ---------------------------------
Secretary President
Attest: DEPOSIT GUARANTY LOUISIANA CORP.
By
- ----------------------------------- ---------------------------------
Secretary President
Attest: TUSCALOOSA BANCSHARES, INC.
By
- ----------------------------------- ---------------------------------
Secretary Chairman of the Board
[EXECUTION BELOW BY DEPOSIT GUARANTY NATIONAL BANK OF LOUISIANA AND TUSCALOOSA
COMMERCE BANK]
34
<PAGE> 104
Attest: DEPOSIT GUARANTY NATIONAL BANK
OF LOUISIANA
By
- ----------------------------------- ------------------------------------
Secretary Chairman of the Board
(Seal of Bank)
Attest: TUSCALOOSA COMMERCE BANK
By
- ----------------------------------- ------------------------------------
Secretary Chairman of the Board
(Seal of Bank)
<PAGE> 105
EXHIBIT B
FAIRNESS OPINION OF CHAFFE & ASSOCIATES, INC.
[to be added by amendment]
<PAGE> 106
EXHIBIT C
SECTION 131 OF THE LOUISIANA BUSINESS
CORPORATION LAW
<PAGE> 107
EXHIBIT C
La. R.S. 12:131 (1993)
Section 131. Rights of a shareholder dissenting from certain corporate
actions
A. Except as provided in subsection B of this section, if a
corporation has, by vote of its shareholders, authorized a sale, lease or
exchange of all of its assets, or has, by vote of its shareholders, become a
party to a merger or consolidation, then, unless such authorization or action
shall have been given or approved by at least eighty percent of the total
voting power, a shareholder who voted against such corporate action shall have
the right to dissent. If a corporation has become a party to a merger pursuant
to R.S. 12:112(H), the shareholders of any subsidiaries party to the merger
shall have the right to dissent without regard to the proportion of the voting
power which approved the merger and despite the fact that the merger was not
approved by vote of the shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist
in the case of:
(1) A sale pursuant to an order of a court having jurisdiction in
the premises.
(2) A sale for cash on terms requiring distribution of all or
substantially all of the net proceeds to the shareholders in accordance with
their respective interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock which, at
the record date fixed to determine shareholders entitled to receive notice of
and to vote at the meeting of shareholders at which a merger or consolidation
was acted on, were listed on a national securities exchange, or were designated
as a national market system security on an inter-dealer quotation system by the
National Association of Securities Dealers, unless the articles of the
corporation issuing such stock provide otherwise or the shares of such
shareholders were not converted by the merger or consolidation solely into
shares of the surviving or new corporation.
C. Except as provided in the last sentence of this subsection,
any shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than
eighty percent of the total voting power, and the merger, consolidation or
sale, lease or exchange of assets authorized thereby be effected, the
corporation shall promptly thereafter give written notice thereof, by
registered mail, to each shareholder who filed such written objection to, and
voted his shares against, such action, at such shareholder's last address on
the corporation's records. Each such shareholder may, within twenty days after
the mailing of such notice to him, but not thereafter, file with the
corporation a demand in writing for the fair cash value of his shares as of the
day before such vote was taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of the corporation may
be sent, and at the same time deposit in escrow in a chartered bank or trust
company located in the parish of the registered office of the corporation, the
certificates representing his shares, duly endorsed and transferred to the
corporation upon the sole condition that said certificates shall be delivered
to the corporation upon payment of the value of the shares determined in
accordance with the provisions of this section. With his demand the
shareholder shall deliver to the corporation, the written acknowledgment of
such bank or trust company that it so holds his certificates of stock. Unless
the objection, demand and acknowledgment aforesaid be made and delivered by the
shareholder within the period above limited, he shall conclusively be presumed
to have acquiesced in the corporate action proposed or taken. In the case of a
merger pursuant to R.S. 12:112(H), the dissenting shareholder need not file an
objection with the corporation nor vote against the merger, but need only file
with the corporation, within twenty days after a copy of the merger certificate
was mailed to him, a demand in writing for the cash value of his shares as of
the day before the certificate was filed with the secretary of state, state in
such demand the value demanded and a post office address to which the
corporation's reply may be sent, deposit the certificates representing his
shares in escrow as hereinabove provided, and deliver to the corporation with
his demand the acknowledgment of the escrow bank or trust company as
hereinabove prescribed.
D. If the corporation does not agree to the value so stated and
demanded, or does not agree that a payment is due, it shall, within twenty days
after receipt of such demand and acknowledgment, notify in writing the
shareholder, at the
<PAGE> 108
designated post office address, of its disagreement, and shall state in such
notice the value it will agree to pay if any payment should be held to be due;
otherwise it shall be liable for, and shall pay to the dissatisfied
shareholder, the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value, or as to
whether any payment is due, after compliance by the parties with the provisions
of subsections C and D of this section, the dissatisfied shareholder, within
sixty days after receipt of notice in writing of the corporation's
disagreement, but not thereafter, may file suit against the corporation, or the
merged or consolidated corporation, as the case may be, in the district court
of the parish in which the corporation or the merged or consolidated
corporation, as the case may be, has its registered office, praying the court
to fix and decree the fair cash value of the dissatisfied shareholder's shares
as of the day before such corporate action complained of was taken, and the
court shall, on such evidence as may be adduced in relation thereto, determine
summarily whether any payment is due, and, if so, such cash value, and render
judgment accordingly. Any shareholder entitled to file such suit may, within
such sixty-day period but not thereafter, intervene as a plaintiff in such suit
filed by another shareholder, and recover therein judgment against the
corporation for the fair cash value of his shares. No order or decree shall be
made by the court staying the proposed corporate action, and any such corporate
action may be carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit, within sixty
days after receipt of notice of disagreement by the corporation shall
conclusively bind the shareholder (1) by the corporation's statement that no
payment is due, or (2) if the corporation does not contend that no payment is
due, to accept the value of his shares as fixed by the corporation in its
notice of disagreement.
F. When the fair value of the shares has been agreed upon between
the shareholder and the corporation, or when the corporation has become liable
for the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation,
as the case may be, shall, in its notice of disagreement, have offered to pay
to the dissatisfied shareholder on demand an amount in cash deemed by it to be
the fair cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as
the case may be; otherwise the costs of the proceeding shall be taxed against
such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a shareholder except the
rights accorded by this section. Such a demand may be withdrawn by the
shareholder at any time before the corporation gives notice of disagreement, as
provided in subsection D of this section. After such notice of disagreement is
given, withdrawal of a notice of election shall require the written consent of
the corporation. If a notice of election is withdrawn, or the proposed
corporate action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him
in exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand
for value, including any intervening preemptive rights, and the right to
payment of any intervening dividend or other distribution, or, if any such
rights have expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
<PAGE> 109
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Deposit Guaranty is incorporated under the laws of Mississippi.
Subarticle E of Article 8 of the Mississippi Business Corporation Act
prescribes the conditions under which indemnification may be obtained by a
present or former director or officer of Deposit Guaranty who incurs expenses
or liability as a consequence of matters arising out of his activities as a
director or officer.
Article Nine of Deposit Guaranty's Articles of Incorporation also
provides for indemnification of officers and directors under certain
circumstances. Deposit Guaranty has purchased a liability policy which, subject
to any limitations set forth in the policy, indemnifies Deposit Guaranty's
directors and officers for damages that they become legally obligated to pay as
a result of any negligent act, error or omission committed by such person in
his capacity as an officer or director.
ITEM 21. EXHIBITS
The following exhibits are furnished (or incorporated by reference) as
a part of this Registration Statement:
<TABLE>
<CAPTION>
<S> <C>
Exhibit Number Description
-------------- -----------
2 Agreement and Plan of Merger dated as of July 22, 1996, as amended, included as
Exhibit A to the Proxy Statement/Prospectus contained herein.
5 Opinion of Watkins Ludlam & Stennis, P.A. regarding legality of common stock
registered hereby.
8 Opinion of Watkins Ludlam & Stennis, P.A. regarding tax matters.
23(a) Consent of KPMG Peat Marwick LLP, independent accountants.
23(b) Consent of Hannis T. Bourgeois & Co., L.L.P., independent accountants.
23(c) Consent of Arthur Andersen, LLP, independent accountants.
23(d) Consent of Watkins Ludlam & Stennis, P.A. is contained in their opinion filed as
Exhibit 5 to this Registration Statement.
23(e)* Consent of Chaffe & Associates, Inc.
24 Power of attorney included as part of signature page.
99 Form of Proxy.
</TABLE>
*To be filed by amendment.
ITEM 22. UNDERTAKINGS
(1) The Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The Registrant hereby undertakes that every prospectus (i) that is
filed pursuant to paragraph immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and issued 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
<PAGE> 110
such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) The Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one (1) 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.
(4) The Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 20 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Deposit
Guaranty certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jackson, State of Mississippi on this the 17th
day of September, 1996.
DEPOSIT GUARANTY CORP.
BY: /s/ E. B. ROBINSON, JR.
----------------------------------------------------
E. B. Robinson, Jr.
Chairman of the Board and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, each person whose signature appears
below constitutes and appoints E. B. Robinson, Jr., Howard L. McMillan, Jr.,
and J. Clifford Harrison, and each of them (with full power to act alone), his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for him and on his behalf and in his name, place and stead,
in any and all capacities, to sign, execute and affix his name and signature to
and file any and all documents relating to the registration under the
Securities Act of 1933 of shares of Deposit Guaranty Common Stock for issuance
to Tuscaloosa Bancshares in accordance with the Merger Agreement, and do hereby
grant to said attorneys, and each of them full power and authority to do and
perform each and every act and thing necessary to be done in and about the
premises in order to effectuate such registration as fully to all intents and
purposes as he might do personally, and do hereby ratify and confirm all that
said attorneys, or any of them, may lawfully do or cause to be done by virtue
hereof. The documents referred to include a Registration Statement under the
Securities Act of 1933 on Form S-4, and any amendments (including post
effective amendments) thereto, and all documents deemed necessary or desirable
by said attorneys-in-fact to be filed with departments or agencies of the
several states regulating the qualification or registration of securities under
Blue Sky laws of said states, together with any and all documents and all
exhibits relating to the registration statement, amendments, or exhibits
required to be filed with any administrative or regulatory agency or authority.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ E. B. ROBINSON, JR.
- -------------------------------- Chairman of the Board September 17, 1996
E. B. Robinson, Jr. and Director (Principal
Executive Officer)
/s/ HOWARD L. McMILLAN, JR.
- -------------------------------- President and Director September 17, 1996
Howard L. McMillan, Jr.
/s/ ARLEN L. McDONALD
- -------------------------------- Vice President September 17, 1996
Arlen L. McDonald (Principal Financial
Officer)
/s/ STEPHEN E. BARKER
- -------------------------------- Controller (Principal September 17, 1996
Stephen E. Barker Accounting Officer)
/s/ MICHAEL B. BEMIS
- -------------------------------- Director September 17, 1996
Michael B. Bemis
</TABLE>
II-3
<PAGE> 112
<TABLE>
<S> <C> <C>
/s/ RICHARD H. BREMER
- -------------------------------- Director September 17, 1996
Richard H. Bremer
/s/ WARREN A. HOOD, JR.
- -------------------------------- Director September 17, 1996
Warren A. Hood, Jr.
/s/ CHARLES L. IRBY
- -------------------------------- Director September 17, 1996
Charles L. Irby
- -------------------------------- Director September 17, 1996
Richard D. McRae, Jr.
/s/ W. R. NEWMAN, III
- -------------------------------- Director September 17, 1996
W. R. Newman, III
- -------------------------------- Director September 17, 1996
John N. Palmer
/s/ STEVEN C. WALKER
- -------------------------------- Director September 17, 1996
Steven C. Walker
/s/ J. KELLEY WILLIAMS
- -------------------------------- Director September 17, 1996
J. Kelley Williams
</TABLE>
II-4
<PAGE> 113
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description Page Number
-------------- ----------- -----------
<S> <C>
2 Agreement and Plan of Merger dated as of July 22, 1996, as amended,
included as Exhibit A to the Proxy Statement/Prospectus contained
herein.
5 Opinion of Watkins Ludlam & Stennis, P.A. regarding legality of common
stock registered hereby.
8 Opinion of Watkins Ludlam & Stennis, P.A. regarding tax matters.
23(a) Consent of KPMG Peat Marwick LLP, independent accountants.
23(b) Consent of Hannis T. Bourgeois & Co., L.L.P., independent accountants.
23(c) Consent of Arthur Andersen, LLP, independent accountants.
23(d) Consent of Watkins Ludlam & Stennis, P.A. is contained in their opinion
filed as Exhibit 5 to this Registration Statement.
23(e)* Consent of Chaffe & Associates, Inc.
24 Power of attorney included as part of signature page.
99 Form of Proxy.
</TABLE>
*To be filed by amendment.
<PAGE> 1
EXHIBIT 5
September __, 1996
Board of Directors
Deposit Guaranty Corp.
210 East Capitol Street
Jackson, Mississippi 39201
Gentlemen:
We have acted as counsel to Deposit Guaranty Corp. in connection with
the preparation of its Registration Statement on Form S-4 for registration of
210,989 shares of Common Stock, no par value, under the Securities Act of 1933.
Such shares are to be issued pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of July 22, 1996, by and among Deposit Guaranty
Corp., Deposit Guaranty Louisiana Corp., Deposit Guaranty National Bank of
Louisiana, Tuscaloosa Bancshares, Inc. and Tuscaloosa Commerce Bank.
We have examined the Merger Agreement, the Articles of Incorporation
and the amendments thereto of Deposit Guaranty Corp., and such other documents
as we deemed relevant.
Based on the foregoing, it is our opinion that the 210,989 shares of
Common Stock of Deposit Guaranty Corp. to be registered under the Securities
Act of 1933, when issued pursuant to the Merger Agreement will be legally
issued, fully paid and non-assessable shares of Common Stock of Deposit
Guaranty Corp.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Opinion" in the Proxy Statement comprising Part I of the Registration
Statement.
Sincerely,
WATKINS LUDLAM & STENNIS, P.A.
<PAGE> 1
EXHIBIT 8
September __, 1996
Board of Directors Board of Directors
Tuscaloosa Bancshares, Inc. Deposit Guaranty National Bank
of Louisiana
---------------------
Board of Directors ---------------------
Tuscaloosa Commerce Bank
Board of Directors
Deposit Guaranty Corp.
One Deposit Guaranty Plaza
210 East Capitol Street
Post Office Box 730
Jackson, Mississippi 39205-0730
Board of Directors
Deposit Guaranty Louisiana Corp.
- ---------------------
- --------------------------
RE: THE FEDERAL INCOME TAX CONSEQUENCES OF CERTAIN MATTERS ARISING
UNDER THE CORPORATE REORGANIZATION PROVISIONS OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED
Gentlemen:
You have requested our opinion regarding the federal income tax
consequences of the proposed merger of Tuscaloosa Bancshares, Inc. ("Tuscaloosa
Bancshares") with and into Deposit Guaranty Louisiana Corp. ("Deposit Guaranty
Louisiana"), immediately followed by the merger of Tuscaloosa Commerce Bank
with and into Deposit Guaranty National Bank of Louisiana ("DGNB Louisiana").
The merger of Tuscaloosa Bancshares with and into Deposit Guaranty Louisiana is
hereinafter referred to as the "Holding Company Merger." The merger of
Tuscaloosa Commerce Bank with and into DGNB Louisiana is hereinafter referred
to as the "Bank Merger." Both mergers are sometimes hereinafter collectively
referred to as the "Mergers," and each merger is more fully described herein.
Unless otherwise noted, the capitalized terms herein shall have the same
meaning ascribed to such terms in that certain Agreement and Plan of Merger by
and among you, dated as of July 22, 1996 (the "Merger Agreement"). This
opinion is rendered in satisfaction of the closing condition described in
Section 6.01(c) of the Merger Agreement.
We have examined and are familiar with the Merger Agreement, the Proxy
Statement/Prospectus of DGC and Tuscaloosa Bancshares dated September __, 1996
regarding the proposed transactions, certain financial statements of the
parties to the proposed Mergers, and such other documents as we have deemed
sufficient to enable us to express our informed opinion. In rendering this
opinion we have relied not only on such documents but also on the
representations and statements
<PAGE> 2
of the parties to the proposed Mergers, some of which are stated in the
Certificates dated September __, 1996, attached hereto as Exhibits "A" and "B",
regarding certain matters addressed in this opinion, and the following factual
information supplied by the parties to the proposed Mergers.
I. BACKGROUND FACTS CONCERNING CORPORATE PARTIES
A. Deposit Guaranty Corp.
Deposit Guaranty Corp. ("DGC") was incorporated in 1968 under the laws
of the State of Mississippi for the primary purpose of acting as a bank holding
company for Deposit Guaranty National Bank ("DGNB"), a national banking
association. DGC is registered as a bank holding company with the Federal
Reserve System.
DGC has an authorized capital structure consisting of 100,000,000
shares of no par value voting common stock ( the "DGC Common Stock"),
25,000,000 shares of no par value Class A voting preferred stock, and
25,000,000 shares of Class B non-voting preferred stock. As of December 31,
1995, DGC had 19,379,643 shares of Common Stock issued and outstanding and no
preferred stock is outstanding. DGC is a publicly held company with over 6,000
shareholders of record as of December 31, 1995, and its stock is traded on the
NASDAQ National Market System. In addition, as of December 31, 1995, options
to acquire 442,852 shares of DGC Common Stock are outstanding.
DGC and its subsidiaries are engaged only in the general banking
business and activities closely related to banking, as authorized by the
banking laws of the United States and the regulations issued pursuant thereto.
The books of account of DGC are maintained on a calendar year basis
and DGC computes its income under the accrual method of accounting. DGC is the
parent of an affiliated group that, for federal income tax purposes, includes,
among other entities, Deposit Guaranty Louisiana (described below), and DGNB
Louisiana.
B. Deposit Guaranty Louisiana Corp.
Deposit Guaranty Louisiana is a bank holding company and is registered
as such with the Federal Reserve System. The authorized capital stock of
Deposit Guaranty Louisiana consists of 5,000,000 shares of common stock, $5.00
par value. There are 4,200,000 shares of Deposit Guaranty Louisiana common
stock issued and outstanding, all of which are owned by DGC. All of Deposit
Guaranty Louisiana's common stock was acquired by DGC in February, 1990.
Deposit Guaranty Louisiana does not engage in any business activities
other than its ownership of DGNB Louisiana and Commercial National Bank. The
books of Deposit Guaranty Louisiana are maintained on a calendar year basis and
Deposit Guaranty Louisiana computes its income under the accrual method of
accounting.
C. Deposit Guaranty National Bank of Louisiana
DGNB Louisiana is a national banking association, duly organized and
validly existing under the laws of the United States with its main office
located in Hammond, Louisiana. All of its branches are located in the State of
Louisiana. DGNB Louisiana conducts a general banking business embracing all of
the customary banking functions as are permitted by Federal regulatory
authorities.
Presently, DGNB Louisiana has authorized capital stock consisting of
234,121 shares of Common Stock (the "DGNB Louisiana Common Stock"). All of the
DGNB Louisiana Common Stock is outstanding and is owned by Deposit Guaranty
Louisiana.
DGNB Louisiana's books of account are maintained on a calendar year,
accrual basis and it files a consolidated federal income tax return with
Deposit Guaranty Louisiana and DGC.
<PAGE> 3
D. Tuscaloosa Bancshares.
Tuscaloosa Bancshares is a Louisiana business corporation and a
one-bank holding company registered under the federal Bank Holding Company Act
of 1956. It was formed in 1984 primarily for the purpose of holding all of the
outstanding stock of Tuscaloosa Commerce Bank, which is Tuscaloosa Bancshares'
sole subsidiary.
Tuscaloosa Bancshares has an authorized capital structure consisting
of ________ shares of Common Stock (the "Tuscaloosa Bancshares Common Stock").
There are ______ shares of Tuscaloosa Bancshares Common Stock issued and
outstanding to ____ stockholders of record. The Tuscaloosa Bancshares Common
Stock is not traded on an established securities market.
Tuscaloosa Bancshares's books of account are maintained on a calendar
year basis and Tuscaloosa Bancshares computes its income under the accrual
method of accounting.
E. Tuscaloosa Commerce Bank.
Tuscaloosa Commerce Bank was formed in 1982 under the banking laws of
the state of Louisiana. The authorized capital structure of Tuscaloosa
Commerce Bank consists of ________ shares of Common Stock (the "Tuscaloosa
Commerce Bank Common Stock"), all of which are outstanding and owned by
Tuscaloosa Bancshares.
Tuscaloosa Commerce Bank offers a full range of traditional commercial
banking services in the Livingston Parish, Louisiana area. Tuscaloosa Commerce
Bank's books of account are maintained on a calendar year basis. It files a
consolidated federal income tax return with Tuscaloosa Bancshares.
II. BUSINESS REASONS FOR AND DESCRIPTION
OF THE PROPOSED MERGERS
A. Tuscaloosa Bancshares's Reasons for the Mergers.
In reaching its decision that the Merger Agreement is in the best
interests of Tuscaloosa Bancshares and its shareholders, the Board of
Tuscaloosa Bancshares considered a number of factors in addition to the
financial terms, including, but not limited to the following: (a) the
financial condition and results of operations of, and prospects for, each of
Tuscaloosa Bancshares and DGC; (b) the likelihood that Tuscaloosa Commerce Bank
would experience significant increased competitive pressures in its market area
from larger banking and other financial institutions capable of offering a
broader array of technologically advanced financial services and products; (c)
the lack of marketability of Tuscaloosa Bancshares Common Stock and the
liquidity that would be offered to Tuscaloosa Bancshares's shareholders through
the ownership of securities of a publicly traded company such as DGC; (d) the
financial terms of the Mergers, including the relationship of the value of the
DGC Common Stock issuable in the Mergers to the market value, book value, and
earnings per share of Tuscaloosa Bancshares Common Stock; (e) the nonfinancial
terms of the Mergers, including the treatment of the Mergers as a tax-free
exchange of Tuscaloosa Bancshares Common Stock for DGC Common Stock for federal
and state income tax purposes; (f) the likelihood of the Mergers being approved
by applicable regulatory authorities without undue conditions or delay; and (g)
the opinion rendered by Chaffe, Tuscaloosa Bancshares's financial advisor, to
the effect that the terms of the Mergers, as provided in the Merger Agreement,
are fair from a financial point of view, to the holders of Tuscaloosa
Bancshares Common Stock.
<PAGE> 4
B. DGC's Reasons for the Mergers.
The DGC Board of Directors believes that by expanding DGC's customer
base into the southern portion of Louisiana, the Mergers should enhance DGC's
earnings capacity by enabling it to deliver products and provide services to
that enlarged customer base, and by permitting cost savings through
consolidation of operations. In addition, the DGC Board of Directors believes
that the combination of DGC and Tuscaloosa Bancshares will allow DGC and
Tuscaloosa Bancshares to increase overall efficiency and take advantage of
economies of scale in several areas. In evaluating the Mergers, the DGC Board
of Directors considered a variety of factors, including the respective results
of operations, financial condition and prospects of DGC and Tuscaloosa
Bancshares; the compatibility and complimentary nature of the respective
businesses and managerial philosophies of DGC and Tuscaloosa Bancshares; and
the relative prices paid in recent acquisitions of financial institutions.
C. Description of Proposed Mergers.
The proposed Mergers will be structured in accordance with the
preceding statements of background facts, the Merger Agreement, the laws of the
State of Louisiana and the United States, the representations of the parties to
the transactions, and the following descriptions:
1. The Holding Company Merger. Pursuant to the Merger Agreement,
Tuscaloosa Bancshares will merge with and into Deposit
Guaranty Louisiana pursuant to the laws of the State of
Louisiana. Deposit Guaranty Louisiana will be the surviving
corporation. On the Effective Date of the Holding Company
Merger, each share of Tuscaloosa Bancshares Common Stock
issued and outstanding (other than shares owned by
shareholders who, pursuant to the Louisiana Business
Corporation Law, perfect any right to receive the fair value
of such shares ("Dissenting Shares")), will be converted into
and exchangeable for a number of shares of DGC Common Stock
determined by dividing 210,989 by the number of shares of
Tuscaloosa Bancshares Common Stock outstanding on the date
immediately preceding the Effective Date (the "Exchange
Ratio").
Any dissenters to the Holding Company Merger who meet the
statutory requirements, will have the right under Louisiana
law to receive cash for their shares from Tuscaloosa
Bancshares. Section 8.01(f) of the Merger Agreement, however,
provides that DGC may terminate the Merger Agreement if more
than ten percent (10%) of the Tuscaloosa Bancshares Common
Stock outstanding at the Effective Date of the Holding Company
Merger would be converted into cash.
2. The Bank Merger. Immediately after the Holding Company
Merger, Tuscaloosa Commerce Bank will merge with and into DGNB
Louisiana in accordance with applicable federal and state law.
DGNB Louisiana will acquire all of the assets and assume all
of the liabilities of Tuscaloosa Commerce Bank, and Tuscaloosa
Commerce Bank will cease to exist. Each share of outstanding
Tuscaloosa Commerce Bank Common Stock will be canceled.
Deposit Guaranty Louisiana will constructively receive DGNB
Louisiana Common Stock as consideration for the Bank Merger.
No new shares of DGNB Louisiana Common Stock will actually be
issued to Deposit Guaranty Louisiana or to Tuscaloosa Commerce
Bank in the Bank Merger. There will be no dissenters to the
Bank Merger.
3. Fractional Shares. No fractional shares of DGC Common Stock
will be issued in the Mergers. Any shareholder otherwise
entitled to receive a fractional share of DGC Common Stock
will be paid a cash amount in lieu of any such fractional
share determined by multiplying (i) the closing sale price of
a share of DGC Common Stock on the date immediately proceeding
the Effective Date as quoted on the National Association of
Securities Dealers Automated Quotation System, by (ii) the
fraction of a share of DGC Common Stock to which such holder
would otherwise be entitled.
4. Effects of the Mergers. After the Mergers are completed, all
of Tuscaloosa Bancshares's former shareholders will own DGC
Common Stock. There will be no cash paid in connection with
either of the Mergers (except for payments for fractional
shares as noted above). The ownership structure of DGC,
<PAGE> 5
Deposit Guaranty Louisiana, and DGNB Louisiana will not
change. After the Holding Company Merger, Deposit Guaranty
Louisiana will continue both its and Tuscaloosa Bancshares's
historical business in a substantially unchanged manner.
After the Bank Merger, DGNB Louisiana will continue both its
and Tuscaloosa Commerce Bank' historical business in a
substantially unchanged manner.
III. DISCUSSION OF APPLICABLE REORGANIZATION PROVISIONS
A. The Holding Company Merger.
The parties intend that the Holding Company Merger will satisfy the
requirements for nonrecognition (i.e., treatment as a tax-free reorganization)
under section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
(the "Code") by reason of the application of Code section1/ 368(a)(2)(D).
These Code sections describe a forward triangular or subsidiary merger under
which the target corporation (Tuscaloosa Bancshares) is merged into a first
tier subsidiary (Deposit Guaranty Louisiana) of the parent corporation (DGC
here) in exchange for parent company stock distributed to the target's historic
shareholders.
Following are the criteria for nonrecognition in the case of a forward
triangular merger (applied in the context of the proposed Holding Company
Merger):
1. "Substantially all" of the properties of Tuscaloosa Bancshares
must be acquired by Deposit Guaranty Louisiana. For Internal Revenue Service
("Service") ruling purposes, this means that Deposit Guaranty Louisiana must
acquire at least seventy percent (70%) of the fair market value of the gross
assets and at least ninety percent (90%) of the fair market value of the net
assets held by Tuscaloosa Bancshares immediately prior to the Holding Company
Merger. See Code section 368(a)(2)(D); Treas. Reg. Section 1.368-2(b)(2); and
Rev. Proc. 77-37, 1977-2 C.B. 568, Section 3.01.
2. A "could have merged with the parent" test must be met. This test
means that it must have been possible for Tuscaloosa Bancshares to have merged
directly into DGC in a transaction qualifying under Code section 368(a)(1)(A)
(a "Type A" merger). A Type A merger is a statutory merger under state or
federal law (although Code section 368(a)(1)(A) also covers consolidations,
consolidations are not permitted in the context of Code section 368(a)(2)(D)).
This test essentially means that it must be shown that the continuity of
interest, business purpose and continuity of business enterprise requirements
would have been met had Tuscaloosa Bancshares merged into DGC. See Treas. Reg.
Section 1.368-2(b)(2).
3. The stock issued in consideration of Deposit Guaranty Louisiana's
acquisition of Tuscaloosa Bancshares's properties must consist solely of parent
(DGC) stock. The use of any Deposit Guaranty Louisiana stock would disqualify
the Holding Company Merger under Code section 368(a)(2)(D).
4. In addition to the requirements under the Code which have been
generally described above, nonrecognition for the Holding Company Merger is
subject to several other nonstatutory rules that have been established through
case law and Treasury Regulations. These requirements involve continuity of
proprietary interest, continuity of business enterprise, and the existence of a
valid business purpose for the transaction. The judicially-developed step
transaction doctrine, wherein a series of formally separate steps are
considered together as component parts of an overall plan, must also be
considered when evaluating whether a transaction, in substance, qualifies as a
valid forward subsidiary merger under Code section 368(a)(1)(A) and section
368(a)(2)(D).
B. The Bank Merger.
--------------------------------
1/Unless otherwise noted, all section references are to the Code.
<PAGE> 6
The Bank Merger will be a statutory merger of downstream
brother-sister corporations. As such, the Bank Merger will qualify, for
federal income tax purposes, as a tax-free reorganization under section
368(a)(1)(A) (a "Type A reorganization").
The Bank Merger is also described in and will qualify as a tax-free
reorganization under section 368(a)(1)(D) (a "Type D reorganization"). The
Code describes a Type D reorganization involving the transfer of assets to a
controlled corporation, as follows:
1. A transfer by one corporation of substantially all of its
assets to a controlled corporation (i.e., a corporation owned
by the transferor or its shareholders2/, followed by a section
354 or section 356 of the distribution of the stock, and
2. In effect, a complete liquidation of the transferor
corporation. (Although section 354(b) does not explicitly
require a complete liquidation of the transferor, the
requisite distribution of all of the transferor's properties
will have the effect of a complete liquidation).
The Service has ruled that in cases involving an overlap of a Type A
and a Type D reorganization, the Type D reorganization controls. See Rev. Rul
75-161, 1975-1 C.B. 114. The difference is that Rev. Rul. 75-161 provides that
section 357(c) applies to the transaction. Section 357(c) requires that if the
sum of the amount of the liabilities assumed by the corporate transferee and
the amount of the liabilities to which the property transferred is subject
exceeds the total of the adjusted basis of the property transferred, then the
excess shall be recognized as gain by the transferor. As stated in the
Certificate, in connection with the Bank Merger, Tuscaloosa Commerce Bank has
represented that the liabilities of Tuscaloosa Commerce Bank which will be
assumed by DGNB Louisiana, plus the amount of the liabilities to which the
property transferred is subject, will not exceed Tuscaloosa Commerce Bank's
total adjusted basis in the property transferred. Based on this representation
and our limited review of pertinent financial statements, we have concluded
that the gain recognition provision of section 357(c) should not apply to the
Bank Merger.
IV. OPINION
In reliance upon the foregoing facts and the representations of the
parties to the Merger transactions, and based upon our review of such documents
and consideration of such legal matters as we have deemed relevant and
sufficient to enable us to render an informed opinion, we are of the opinion
that the federal income tax consequences of the proposed Mergers will be as
follows:
A. With respect to the Holding Company Merger:
1. Provided the proposed Merger of Tuscaloosa Bancshares with and
into Deposit Guaranty Louisiana qualifies as a statutory
merger under applicable Louisiana law, the acquisition by
Deposit Guaranty Louisiana of substantially all of the assets
of Tuscaloosa Bancshares in exchange for shares of DGC Common
Stock and the assumption of liabilities of Tuscaloosa
Bancshares will constitute a reorganization within the meaning
of Code section 368(a)(1)(A) and section 368(a)(2)(D).
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 Tuscaloosa Bancshares held
--------------------------------
2/The determination of whether a "controlled corporation"
exists is made using the 50% ownership test of section 304(c) as
the "control" threshold, as mandated by section 368(a)(2)(H).
<PAGE> 7
immediately prior to the Merger. DGC, Deposit Guaranty
Louisiana, and Tuscaloosa Bancshares will each be "a party to
a reorganization" within the meaning of section 368(b) of the
Code.
2. No gain or loss will be recognized by Tuscaloosa Bancshares
upon the transfer of substantially all of it assets to Deposit
Guaranty Louisiana in exchange solely for DGC Common Stock and
the assumption by Deposit Guaranty Louisiana of the
liabilities of Tuscaloosa Bancshares (Code sections 361(a) and
357(a)). Such non-recognition is not affected by the fact
that Tuscaloosa Bancshares will be deemed to receive cash in
lieu of fractional share interests of Tuscaloosa Bancshares
shareholders, since all of the cash will be deemed distributed
to Tuscaloosa Bancshares shareholders pursuant to the Merger
Agreement.
3. No gain or loss will be recognized to Tuscaloosa Bancshares
upon the transfer of substantially all of it assets to DGC in
exchange solely for DGC Common Stock and the assumption by DGC
of the liabilities of Tuscaloosa Bancshares. (Rev. Rul.
57-278, 1957-1 C.B. 124).
4. No gain or loss will be recognized by DGC upon the receipt by
Deposit Guaranty Louisiana of substantially all of the assets
of Tuscaloosa Bancshares solely in exchange for DGC Common
Stock issued to Tuscaloosa Bancshares and the assumption by
Deposit Guaranty Louisiana of the liabilities of Tuscaloosa
Bancshares and the liabilities to which the transferred assets
are subject (Rev. Rul 57-278, 1957-1 C.B. 124).
5. The basis of the assets of Tuscaloosa Bancshares in the hands
of DGC will be, in each instance, the same as the basis of
those assets in the hands of Tuscaloosa Bancshares immediately
prior to the Holding Company Merger (Code section 362(b)).
7. The holding period of Tuscaloosa Bancshares's assets in the
hands of DGC will include the period during which the assets
were held by Tuscaloosa Bancshares (Code section 1223(2)).
8. No gain or loss will be recognized by the shareholders of
Tuscaloosa Bancshares upon their receipt of DGC Common Stock
(including fractional share interests to which they may be
entitled) solely in exchange for their Tuscaloosa Bancshares
Common Stock (Code section 354(a)(1)).
9. The basis of the DGC Common Stock to be received by the
Tuscaloosa Bancshares shareholders (including any fractional
share interests to which they may be entitled) will be, in
each instance, the same as the basis of the Tuscaloosa
Bancshares Common Stock surrendered in exchange therefor (Code
section 358)).
10. The holding period of the DGC Common Stock to be received by
the Tuscaloosa Bancshares shareholders (including any
fractional share interests to which they may be entitled) will
include, in each case, the period during which the Tuscaloosa
Bancshares Common Stock surrendered in exchange therefor was
held, provided that the Tuscaloosa Bancshares Common Stock is
held as a capital asset in the hands of the Tuscaloosa
Bancshares shareholder on the date of the exchange (Code
section 1223(1)).
11. The payment of cash to Tuscaloosa Bancshares shareholders in
lieu of fractional shares of DGC Common Stock will be treated
for federal income tax purposes as if the fractional shares
were distributed as part of the reorganization exchange and
then redeemed by DGC. The cash payments will be treated as
having been received as distributions in redemption of such
stock, subject to the provisions and limitations of section
302 of the Code.
12. Where a dissenting Tuscaloosa Bancshares shareholder receives
solely cash in exchange for his or her Tuscaloosa Bancshares
Common Stock, such cash will be treated as having been
received by the shareholder as a distribution in redemption of
his or her stock subject to the provisions and limitations of
section 302.
<PAGE> 8
B. With respect to the Bank Merger:
1. Provided that the merger of Tuscaloosa Commerce Bank into DGNB
Louisiana qualifies as a statutory merger under applicable
state or federal law, the proposed Bank Merger will be a
reorganization within the meaning of section 368(a)(1)(A) of
the Code. Tuscaloosa Commerce Bank and DGNB Louisiana will
each be "a party" to a reorganization" within the meaning of
section 368(b)(2).
2. No gain or loss will be recognized to Tuscaloosa Commerce Bank
on the transfer of all of its assets to DGNB Louisiana in
constructive exchange for DGNB Louisiana Common Stock issued
to Deposit Guaranty Louisiana and the assumption by DGNB
Louisiana of the liabilities of Tuscaloosa Commerce Bank (Code
sections 361(a) and 357(a)).
3. No gain or loss will be recognized to DGNB Louisiana upon the
receipt by DGNB Louisiana of all of the assets of Tuscaloosa
Commerce Bank in constructive exchange for DGNB Louisiana
Common Stock issued to Deposit Guaranty Louisiana and the
assumption by DGNB Louisiana of the liabilities of Tuscaloosa
Commerce Bank and the liabilities to which the transferred
assets are subject (Rev. Rul 57-278, 1957-1 C.B. 124).
4. No gain or loss will be recognized by DGC or Deposit Guaranty
Louisiana as a result of the Bank Merger and the surrender of
the Tuscaloosa Commerce Bank Common Stock in constructive
exchange for the DGNB Louisiana Common Stock.
5. The basis of the assets of Tuscaloosa Commerce Bank in the
hands of DGNB Louisiana will, in each case, be the same as the
basis of those assets in the hands of Tuscaloosa Commerce Bank
immediately prior to the Bank Merger (Code section 362(b)).
6. The holding period of the assets of Tuscaloosa Commerce Bank
in the hands of DGNB Louisiana will, in each instance, include
the period for which such assets were held by the Tuscaloosa
Commerce Bank. (Code section 1223(2)).
We have qualified our opinions by reference to the Code, the Treasury
Regulations promulgated thereunder, and existing judicial and administrative
interpretations thereof. In so opining, we have relied upon the foregoing
facts and representations and have reviewed such documents and have considered
such legal matters as we have deemed relevant and sufficient to enable us to
render an informed opinion. We have also relied, to some extent, on the oral
representations and statements of representatives of the parties with respect
to the foregoing factual determinations. While we have not been requested nor
have we undertaken to make independent investigations to verify such
representations and statements, based upon our discussions with representatives
of the parties and our limited review of certain background material, we
believe that it is reasonable for us to rely on such representations and
statements.
Our opinion is limited to the specific opinions expressed above, and
no other opinions are intended nor should they be inferred. An opinion of
counsel has no binding effect upon the Service and no assurances can be given
that the conclusions reached in any opinion will not be contested by the
Service, or if contested, will be sustained by a court.
The opinions we have expressed above are based on the facts and
representations outlined herein being correct in all material respects as of
the dates indicated or at the time of the proposed transactions as the case may
be. In the event that one or more of the facts or representations are
incorrect for any such time, our opinion would likely be substantially
different than that expressed above.
<PAGE> 9
The opinion expressed herein is for the sole benefit of DGC, Deposit
Guaranty Louisiana, DGNB Louisiana, Tuscaloosa Bancshares and Tuscaloosa
Commerce Bank, together with their respective shareholders, and is not to be
delivered to or relied upon by any other party without our prior written
consent.
Very truly yours,
WATKINS LUDLAM & STENNIS, P.A.
<PAGE> 1
EXHIBIT 23(a)
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Deposit Guaranty Corp.:
We consent to the use of our audit report dated February 6, 1996 on
the consolidated financial statements of Deposit Guaranty Corp. and
subsidiaries as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995 incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
Our report refers to a change in the method of accounting for debt securities.
KPMG PEAT MARWICK LLP
Jackson, Mississippi
September 17, 1996
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EXHIBIT 23(b)
CONSENT OF HANNIS T. BOURGEOIS & CO., L.L.P.
Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in
this Registration Statement (Form S-4) and related Prospectus of Deposit
Guaranty Corp. and to the incorporation by reference therein of our report
dated May 2, 1996, with respect to the consolidated financial statements of
Tuscaloosa Bancshares, Inc. included in its Annual Report for the year ended
December 31, 1995.
Hannis T. Bourgeois & Co., L.L.P.
Denham Springs, Louisiana
September 16, 1996
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EXHIBIT 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated May 8, 1995 (and to all references to our Firm) included in or
made a part of this registration statement.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
September 17, 1996
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EXHIBIT 99
TUSCALOOSA BANCSHARES, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF TUSCALOOSA BANCSHARES, INC.
The undersigned shareholder of Tuscaloosa Bancshares, Inc.
("Tuscaloosa Bancshares"), a Louisiana corporation, hereby constitutes and
appoints _____________, and _______________, or either of them, proxies of the
undersigned, with power of substitution, to represent the undersigned, and to
vote all of the shares of Tuscaloosa Bancshares Common Stock that the
undersigned is entitled to vote at the Special Meeting of Shareholders of
Tuscaloosa Bancshares which will be held at the main office of Tuscaloosa
Commerce Bank, on October __, 1996, at 12:00 noon (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 Tuscaloosa Bancshares recommends that you
vote "FOR" approval of the Agreement and Plan of Merger.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
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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 July 22, 1996 (the "Merger Agreement"), by and among
Deposit Guaranty Corp., a Mississippi corporation ("Deposit
Guaranty"), Deposit Guaranty Louisiana Corp. ("Deposit
Guaranty Louisiana"), a Louisiana corporation and a wholly-
owned subsidiary of Deposit Guaranty, and Deposit Guaranty
National Bank of Louisiana ("DGNB Louisiana"), a national
bank and a wholly-owned subsidiary of Deposit Guaranty
Louisiana, on the one hand, and Tuscaloosa Bancshares, and its
wholly-owned subsidiary, Tuscaloosa Commerce Bank ("Tuscaloosa
Bank"), a Louisiana state bank, on the other hand, pursuant to
which (a) Tuscaloosa Bancshares will merge into Deposit
Guaranty Louisiana and Tuscaloosa Bank will merge into DGNB
Louisiana, and (b) each outstanding share of Tuscaloosa
Bancshares common stock will be converted into shares of
Deposit Guaranty common stock in accordance with the terms of
the Merger Agreement.
For Against Abstain
[ ] [ ] [ ]
Item 2. In their discretion, to vote upon such other business as may
properly come before the 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
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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.
