<PAGE> 1
As filed with the Securities and Exchange Commission on April 12, 1994
Registration No.
- ------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
First Alabama Bancshares, Inc.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35103
(205) 326-7060
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------
L. Burton Barnes, III
Corporate Secretary and General Counsel
417 North 20th Street
Birmingham, AL 35203
(205) 326-7060
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------
Copies to:
<TABLE>
<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III VAN R. MAYHALL, JR.
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD BREAZEALE, SACHSE & WILSON, L.L.P.
SOMERVILLE SUITE 350 TWENTY-THIRD FLOOR, ONE AMERICAN PLACE
1700 FIRST ALABAMA BANK BUILDING 700 THIRTEENTH STREET, N.W. BATON ROUGE, LA 70821
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20005 (504) 387-4000
(205) 250-5000 (202) 508-3303
</TABLE>
--------------------
Approximate date of commencement of proposed sale of securities to the
public: as soon as practicable after this Registration Statement has become
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit* offering price* registration fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,027,584 $12.239564 $12,577,180 $4,336.95
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Calculated in accordance with Rule 457(f).
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),
shall determine.
24
<PAGE> 2
FIRST ALABAMA BANCSHARES, INC.
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
- ---------------------------------------------------------- -------------------------------------------------------
<S> <C>
1. Forepart of registration statement and outside front
cover page of prospectus.............................. Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of
Registration Statement; Cross-Reference
Sheet.
2. Inside front and outside back cover of prospectus..... Available Information; Documents
Incorporated by Reference; Table of
Contents.
3. Risk factors, ratio of earnings to fixed charges and
other information..................................... Summary; Comparative Market Prices and Dividends.
4. Terms of the transaction.............................. Summary; Description of the Transaction;
Effect of the Merger on Rights of
Stockholders; Description of First Alabama
Common Stock.
5. Pro forma financial information....................... Summary.
6. Material contacts with the company being acquired..... Summary; Description of the Transaction.
7. Additional information required for re-offering by
persons and parties deemed to be underwriters......... Not applicable.
8. Interest of named experts and counsel................. Opinions.
9. Disclosure of Commission position on indemnification
for Securities Act liabilities........................ Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants........... Documents Incorporated by Reference;
Summary; Business of First Alabama.
11. Incorporation of certain information by reference..... Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3 registrants.... Documents Incorporated by Reference.
13. Incorporation of certain information by reference..... Documents Incorporated by Reference.
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...................................... Not Applicable.
18. Information if proxies, consents, or authorizations
are to be solicited................................... Documents Incorporated by Reference;
Summary; The Special Meeting; Description
of the Transaction; Interest of Certain
Persons in Matters to be Acted Upon;
Description of First Alabama Common Stock.
19. Information if proxies, consents, or authorizations
are not to be solicited or in an exchange offer....... Not Applicable.
</TABLE>
<PAGE> 3
Dear Guaranty Bancorp Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Guaranty Bancorp, Inc. ("Guaranty") to be held at Guaranty's main office, 5353
Essen Lane, Baton Rouge, Louisiana 70809 on , 1994, at :00 p.m.,
local time. At this meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Agreement"), entered
into with First Alabama Bancshares, Inc. ("First Alabama") pursuant to which
Guaranty will merge (the "Merger") with and into First Alabama, and Guaranty
Bank and Trust Company (the "Bank"), a wholly-owned subsidiary of Guaranty,
will become a wholly-owned subsidiary of First Alabama and will continue
serving its current markets as a state-chartered commercial bank. Upon
consummation of the Merger, each share of Guaranty common stock issued and
outstanding (except for certain shares held by Guaranty or First Alabama and
shares held by stockholders who perfect their dissenters' rights of appraisal)
will be converted into 1.09375 shares of First Alabama common stock, subject to
adjustment under the terms of the Agreement in the event the average market
price of First Alabama common stock during a specified period is equal to or
less than $31.00 or equal to or greater than $36.00.
Stockholders of Guaranty who perfect their dissenters' rights of appraisal
prior to the proposed Merger and comply with applicable law will be entitled to
receive the fair value of their Guaranty shares in cash, as provided by
applicable law.
The enclosed Proxy Statement/Prospectus includes a description of the
proposed Merger and provides specific information concerning the Special
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.
The Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Consummation of the Merger is
subject to certain conditions, including approval of the Agreement by Guaranty
stockholders and approval of the Merger by various regulatory agencies.
Approval of the Agreement requires the affirmative vote of at least
two-thirds of the voting power of Guaranty common stock represented at the
Special Meeting. Consequently, an abstention will have the same effect as a
vote against the proposal, but a non- vote, unlike an abstention, would reduce
the number of affirmative votes required for approval. Whether or not you plan
to attend the Special Meeting, you are urged to complete, sign, and return
promptly the enclosed proxy card. If you attend the Special Meeting, you may
vote in person if you wish, even if you previously have returned your proxy
card. The proposed Merger with First Alabama is a significant step for
Guaranty, and your vote on this matter is of great importance. On behalf of the
Board of Directors, I urge you to vote for approval of the transaction by
marking the enclosed proxy card "FOR" Item One.
Sincerely,
C. C. Dabadie
President and Chief Executive Officer
<PAGE> 4
GUARANTY BANCORP, INC.
5353 ESSEN LANE, BATON ROUGE, LOUISIANA 70809
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1994
Notice is hereby given that a Special Meeting of Stockholders of Guaranty
Bancorp, Inc. ("Guaranty"), a bank holding company, will be held at Guaranty's
main office, 5353 Essen Lane, Baton Rouge, Louisiana 70809 on ,
1994, at :00 p.m., local time, for the following purposes:
1. To consider and vote upon the Agreement and Plan of Merger, dated
as of December 27, 1993 (the "Agreement"), by and between Guaranty and First
Alabama Bancshares, Inc. ("First Alabama") pursuant to which (i) First Alabama
will acquire all of the issued and outstanding common stock of Guaranty through
the merger of Guaranty with and into First Alabama (the "Merger"), (ii) each
share of Guaranty common stock (except for certain shares held by Guaranty or
First Alabama and shares held by stockholders who perfect their dissenters'
rights of appraisal) will be converted into 1.09375 shares of First Alabama
common stock, subject to adjustment in the event the average market price of
First Alabama common stock during a specified period is equal to or less than
$31.00 or equal to or greater than $36.00, and (iii) each Guaranty stockholder
will receive cash in lieu of any remaining fractional share interest, all as
described more fully in the accompanying Proxy Statement/Prospectus.
2. To transact such other business as may properly come before the
Special Meeting, including adjourning the Special Meeting to permit, if
necessary, further solicitation of proxies.
Only stockholders of record at the close of business on , 1994,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment thereof.
Stockholders of Guaranty have a right to dissent from the Merger and
obtain payment of the fair value of their shares in cash by complying with the
applicable provisions of Louisiana law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix C. 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 MERGER OR CONSOLIDATION IS EFFECTED UPON APPROVAL BY LESS THAN 80% OF THE
CORPORATION'S TOTAL VOTING POWER.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
Guaranty an instrument of revocation or a duly executed proxy bearing a later
date or by electing to vote in person at the Special Meeting.
By Order of the Board of Directors
David K. Kneipp
Secretary
Baton Rouge, Louisiana
, 1994
<PAGE> 5
GUARANTY BANCORP, INC. FIRST ALABAMA BANCSHARES, INC.
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD , 1994 (PAR VALUE $.625)
First Alabama Bancshares, Inc. ("First Alabama") has filed a
registration statement with the Securities and Exchange Commission (the "SEC"),
covering up to 1,027,584 shares of common stock, par value $.625 per share
("First Alabama Common Stock"), to be issued pursuant to the merger of Guaranty
Bancorp, Inc. ("Guaranty") with and into First Alabama (the "Merger"), which is
described herein. That registration statement includes this Proxy
Statement/Prospectus, which constitutes both a prospectus for the First Alabama
Common Stock to be issued upon consummation of the Merger, and a proxy
statement furnished in connection with the solicitation by the Board of
Directors of Guaranty of proxies from holders of the $1.00 par value common
stock of Guaranty ("Guaranty Common Stock") for use at the special meeting of
stockholders of Guaranty to be held at Guaranty's main office, 5353 Essen Lane,
Baton Rouge, Louisiana 70809 on , 1994, at :00 p.m., local time,
and at any adjournment thereof (the "Special Meeting").
At the Special Meeting, Guaranty stockholders of record as of the close of
business on __________, 1994, will consider and vote upon a proposal to approve
the Agreement and Plan of Merger, dated as of December 27, 1993 (the
"Agreement"), by and between Guaranty and First Alabama pursuant to which,
among other results, (i) Guaranty will merge with and into First Alabama, and
(ii) each outstanding share of Guaranty Common Stock (excluding certain shares
held by Guaranty or First Alabama and shares held by stockholders who perfect
their dissenters' rights of appraisal) will be converted into the right to
receive 1.09375 shares of First Alabama Common Stock, subject to adjustment in
the event the average market price of First Alabama Common Stock during a
specified period is equal to or less than $31.00 or equal to or greater than
$36.00. As a result of the Merger, the separate existence of Guaranty will
cease, and Guaranty Bank and Trust Company (the "Bank"), a wholly-owned
subsidiary of Guaranty, will become a wholly-owned subsidiary of First Alabama
and will continue in operation serving its current markets as a state-chartered
commercial bank. For a further description of the terms of the Merger, see
"Description of the Transaction."
This Proxy Statement/Prospectus and the accompanying proxy card are first
being mailed to stockholders of Guaranty on or about , 1994.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS , 1994.
<PAGE> 6
AVAILABLE INFORMATION
First Alabama is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the SEC.
Copies of such reports, proxy statements, and other information can be obtained,
at prescribed rates, from the SEC by addressing written requests for such
copies to the Public Reference Section at the SEC at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy
statements, and other information can be inspected at the public reference
facilities referred to above and at the regional offices of the SEC at 75 Park
Place, Room 1228, New York, New York 10007, and Everett McKinley Dirksen
Building, 219 South Dearborn Street, Room 1204, Chicago, Illinois 60604.
This Proxy Statement/Prospectus constitutes part of the Registration
Statement on Form S-4 of First Alabama (including any exhibits and amendments
thereto, the "Registration Statement") filed with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the securities
offered hereby. This Proxy Statement/Prospectus does not include all of the
information in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. For further
information about First Alabama and the securities offered hereby, reference is
made to the Registration Statement. The Registration Statement may be
inspected and copied, at prescribed rates, at the SEC's public reference
facilities at the addresses set forth above. First Alabama Common Stock is
traded in the Nasdaq National Market. Reports, proxy statements, and other
information concerning First Alabama may be inspected at the offices of the
National Association of Securities Dealers, Inc. (the "NASD"), 1735 K Street,
N.W., Washington, D.C. 20006.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY FIRST ALABAMA OR GUARANTY. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO OR FROM
ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FIRST ALABAMA OR
GUARANTY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
All information included or incorporated by reference in this Proxy
Statement/Prospectus with respect to First Alabama was supplied by First
Alabama, and all information included or incorporated by reference herein with
respect to Guaranty was supplied by Guaranty.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by First Alabama
pursuant to the Exchange Act are hereby incorporated by reference herein:
1. First Alabama's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
2. First Alabama's Current Report on Form 8-K filed with the SEC and
dated as of December 31, 1993.
3. The description of First Alabama Common Stock under the heading
"Item 1. Capital Stock to be Registered" in the registration statement on
Form 8-A of First Alabama relating to First Alabama Common Stock and in
any amendment or report filed for the purpose of updating such
description.
First Alabama's Annual Report on Form 10-K for the year ended December 31,
1993, incorporates by reference specific portions of First Alabama's Annual
Report to Stockholders for that year (the "Annual Report to Stockholders"), but
does not incorporate other portions of the Annual Report to Stockholders. Only
those portions of the Annual Report to Stockholders captioned "Financial
Summary & Review 1993," "Financial Statements and Notes," and "Historical
Financial Summary" are incorporated herein. Other portions of the Annual Report
to Stockholders are NOT incorporated herein and are not a part of the
Registration Statement.
All documents filed by First Alabama pursuant to Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference in this Proxy Statement/Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part hereof, except as so
modified or superseded.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE
UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), FROM RONALD C.
JACKSON, STOCKHOLDER ASSISTANCE, FIRST ALABAMA BANCSHARES, INC., P.O. BOX
1448, MONTGOMERY, ALABAMA 36102 (TELEPHONE (205) 832-8450). IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1994.
2
<PAGE> 7
TABLE OF CONTENTS
AVAILABLE INFORMATION
DOCUMENTS INCORPORATED BY REFERENCE
SUMMARY
The Parties
Special Meeting of Guaranty Stockholders
Record Date; Vote Required
The Merger; Exchange Ratio
Dissenters' Rights
Reasons for the Merger; Recommendation of Guaranty's Board
of Directors
Opinion of Guaranty's Financial Advisor
Effective Date
Exchange of Stock Certificates
Regulatory Approvals and Other Conditions
Waiver, Amendment, and Termination of the Agreement
Interests of Certain Persons in the Merger
Certain Federal Income Tax Consequences of the Merger
Certain Differences in Stockholders' Rights
Comparative Market Prices of Common Stock
Comparative Per Share Data
Selected Financial Data
THE SPECIAL MEETING
General
Record Date; Vote Required
DESCRIPTION OF THE TRANSACTION
General
Adjustment of Exchange Ratio
Treatment of Guaranty Options
Background of and Reasons for the Merger
Opinion of Guaranty's Financial Advisor
Effective Date of the Merger
Distribution of First Alabama Stock Certificates and
Payment for Fractional Shares
Conditions to Consummation of the Merger
Regulatory Approvals
Waiver, Amendment, and Termination of the Agreement
Conduct of Business Pending the Merger
Management Following the Merger
Interests of Certain Persons in the Merger
Dissenting Stockholders
Certain Federal Income Tax Consequences of the Merger
Accounting Treatment
Expenses and Fees
Resales of the First Alabama Common Stock
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
Antitakeover Provisions Generally
Authorized Capital Stock
Amendment of Certificate of Incorporation and Bylaws
Classified Board of Directors and Absence of Cumulative Voting
Removal of Directors
Limitations on Director Liability
Indemnification
Special Meetings of Stockholders
Actions by Stockholders Without a Meeting
Stockholder Nominations and Proposals
Business Combinations with Certain Persons
Mergers, Consolidations, and Sales of Assets Generally
Dissenters' Rights of Appraisal
Stockholders' Rights to Examine Books and Records
Dividends
COMPARATIVE MARKET PRICE AND DIVIDENDS
GUARANTY MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Interest Rate Sensitivity
Liquidity
Capital Resources
Results of Operations
Impact of Inflation and Changing Prices
Financial Condition
Problem Assets and Asset Classification
Allowance for Possible Losses on Loans and Real Estate
3
<PAGE> 8
BUSINESS OF GUARANTY
Business and Properties
Competition
Legal Proceedings
Management
Employee Benefit Plans
Transactions With Management
BUSINESS OF FIRST ALABAMA
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF GUARANTY
SUPERVISION AND REGULATION
DESCRIPTION OF FIRST ALABAMA COMMON STOCK
STOCKHOLDER PROPOSALS
EXPERTS
OPINIONS
INDEX TO FINANCIAL STATEMENTS
APPENDIX A--Agreement and Plan of Merger
APPENDIX B--Opinion of The Robinson-Humphrey Company, Inc.
APPENDIX C--Copy of Section 12:131 of Louisiana Act
4
<PAGE> 9
SUMMARY
The following is a summary of certain information relating to the proposed
Merger and the offering of shares of First Alabama Common Stock to be issued
upon consummation thereof. This summary does not purport to be complete and is
qualified in its entirety by the more detailed information appearing elsewhere
or incorporated by reference in this Proxy Statement/Prospectus. Stockholders
are urged to read carefully the entire Proxy Statement/Prospectus, including
the Appendices. As used in this Proxy Statement/Prospectus, the terms "First
Alabama" and "Guaranty" refer to those entities, respectively, and, where the
context requires, to those entities and their respective subsidiaries.
THE PARTIES
GUARANTY. Guaranty is a bank holding company organized under the laws of
the State of Louisiana with its principal executive offices located in Baton
Rouge, Louisiana. Guaranty operates principally through the Bank, which is a
state-chartered commercial bank and which provides a range of retail banking
services through six offices in East Baton Rouge Parish, Louisiana. At December
31, 1993, Guaranty had total consolidated assets of approximately $180 million,
total consolidated deposits of approximately $167 million, and total
consolidated stockholders' equity of approximately $12.6 million. Guaranty's
principal executive office is located at 5353 Essen Lane, Baton Rouge,
Louisiana 70809, and its telephone number at such address is (504) 767-9300.
FIRST ALABAMA. First Alabama is a regional bank holding company
headquartered in Birmingham, Alabama, with at December 31, 1993, 231 banking
offices located in Alabama, Florida, Georgia, Louisiana, and Tennessee. On
such date, First Alabama had total consolidated assets of approximately $10.5
billion, total consolidated deposits of approximately $8.8 billion, and total
consolidated stockholders' equity of approximately $851 million. First Alabama
is the third largest bank holding company headquartered in Alabama in terms of
assets, based on December 31, 1993 information. Through its subsidiaries,
First Alabama offers a broad range of banking and bank-related services.
First Alabama has entered into letters of intent or definitive
agreements to acquire certain additional financial institutions in the States
of Alabama, Georgia, and Louisiana, information with respect to which is
included under "Business of First Alabama." Such acquisitions are collectively
referred to in this Proxy Statement/Prospectus as the "Other Pending
Acquisitions."
First Alabama was incorporated under the laws of the State of Delaware and
commenced operations in 1971 as a registered bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). First Alabama's
principal executive offices are located at 417 North 20th Street, Birmingham,
Alabama 35203, and its telephone number at such address is (205) 326-7100.
Additional information with respect to First Alabama and its subsidiaries
is included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of First Alabama."
SPECIAL MEETING OF GUARANTY STOCKHOLDERS
The Special Meeting will be held at .m., local time, on ,
1994, at Guaranty's main office, 5353 Essen Lane, Baton Rouge, Louisiana 70809,
for the purpose of considering and voting upon approval of the Agreement. See
"The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of Guaranty Common Stock at the close of business
on , 1994 (the "Record Date"), will be entitled to vote at the Special
Meeting. The affirmative vote of at least two-thirds of the voting power of
Guaranty Common Stock represented at the Special Meeting will be required to
approve the Agreement. As of the Record Date, there were shares of
Guaranty Common Stock outstanding and entitled to be voted.
The directors and executive officers of Guaranty and their affiliates
beneficially owned, as of the Record Date, shares (or approximately % of
the outstanding shares) of Guaranty Common Stock. The directors and executive
officers of First Alabama and their affiliates beneficially owned, as of the
Record Date, no shares of Guaranty Common Stock. As of that date, Guaranty
held no shares of Guaranty Common Stock in a fiduciary capacity for others;
First Alabama held no shares of Guaranty Common Stock in a fiduciary capacity
for others with the authority to vote such shares. See "The Special Meeting --
Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of Guaranty by First Alabama
pursuant to the Merger of Guaranty with and into First Alabama. At the time
the Merger is consummated (the "Effective Date"), each share of Guaranty Common
Stock (excluding any shares held by Guaranty, First Alabama, or their
respective subsidiaries, other than shares held in a fiduciary capacity or in
satisfaction of debts previously contracted, and shares held by stockholders
who perfect their dissenters' rights of approval) issued and outstanding at the
Effective Date will be converted into the right to receive 1.09375 shares of
First Alabama Common Stock (subject to adjustment in the event the "Base Period
Trading Price" (as defined below) of First Alabama Common Stock is equal to or
less than $31.00 or equal to or greater than $36.00 (the "Exchange Ratio"). No
fractional shares of First Alabama Common Stock will be issued. Rather, cash
will be paid in lieu of any fractional share interest to which any Guaranty
stockholder would be entitled upon consummation of the Merger, based on the
Base Period Trading Price. See "Description of the Transaction -- General."
If the average closing price of First Alabama Common Stock (the "Base
Period Trading Price") as reported on the Nasdaq National Market during the ten
consecutive full trading days in which such shares are traded on the Nasdaq
National Market, ending on the fifth trading day immediately preceding the date
on which the approval of the Board of Governors of the Federal Reserve System
(the "Federal Reserve") is received, is (i) equal to or less than $31.00, the
Exchange Ratio shall equal that multiple of a share of First Alabama Common
Stock (rounded to the nearest one-thousandth) obtained by dividing (1) $33.91
by (2) the Base Period Trading Price or (ii) equal to or greater than $36.00,
the Exchange Ratio shall equal that multiple of a share of First Alabama Common
Stock (rounded to the nearest one-thousandth) obtained by dividing (1) $39.37
by (2) the Base Period Trading Price. If the Base Period Trading Price is
greater than $31.00 but less than $36.00, the Exchange Ratio will remain at
1.09375. See "Description of the
5
<PAGE> 10
Transaction -- Adjustment of Exchange Ratio."
In the event the Base Period Trading Price is equal to or less than
$25.00, the Board of Directors of First Alabama has the right to terminate the
Agreement and abandon the Merger.
DISSENTERS' RIGHTS
Holders of Guaranty Common Stock entitled to vote on approval of the
Agreement have the right to dissent from the Merger and, upon consummation of
the Merger and the satisfaction of certain specified procedures and conditions,
to receive cash in respect of the fair value of such holder's shares of
Guaranty Common Stock in accordance with the applicable provisions of Section
12:131 of the Louisiana Business Corporation Law (the "Louisiana Act"). In the
event that the Merger is approved by 80% or more of the total voting power of
Guaranty, then no stockholder would be entitled to exercise dissenter's rights
of appraisal. The procedures to be followed by dissenting stockholders are
summarized under "Description of the Transaction -- Dissenting Stockholders,"
and a copy of the applicable provisions of the Louisiana Act is set forth in
Appendix C to this Proxy Statement/Prospectus.
REASONS FOR THE MERGER; RECOMMENDATION OF GUARANTY'S BOARD OF DIRECTORS
Guaranty's Board of Directors has unanimously approved the Merger and the
Agreement and has determined that the Merger is fair to, and in the best
interests of, Guaranty and its stockholders. Accordingly, Guaranty's Board
unanimously recommends that Guaranty's stockholders vote FOR approval of the
Agreement. In approving the Merger, Guaranty's directors considered Guaranty's
financial condition; the financial terms and the income tax consequences of the
Merger (both on their own and in comparison with other mergers proposed by
third parties); the likelihood of the Merger being approved by regulatory
authorities without undue conditions or delay; legal advice concerning the
comparative merits of the two merger proposals; and a report and opinion from
The Robinson-Humphrey Company, Inc. ("Robinson-Humphrey") regarding the value
of Guaranty and the fairness of the terms of the Merger to Guaranty
stockholders. See "Description of the Transaction -- Background of and Reasons
for the Merger."
OPINION OF GUARANTY'S FINANCIAL ADVISOR
Robinson-Humphrey has rendered an opinion to Guaranty that the Exchange
Ratio is fair, from a financial point of view, to the holders of Guaranty
Common Stock. The opinion of Robinson-Humphrey is attached as Appendix B to
this Proxy Statement/Prospectus. Guaranty stockholders are urged to read the
opinion in its entirety for a description of the procedures followed, matters
considered, and limitations on the reviews undertaken in connection therewith.
See "Description of the Transaction -- Opinion of Guaranty's Financial
Advisor."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger are
filed and become effective with, respectively, the Delaware Secretary of State
and the Louisiana Secretary of State. Unless otherwise agreed upon by First
Alabama and Guaranty, and subject to the conditions to the obligations of the
parties to effect the Merger, the parties will use their reasonable efforts to
cause the Effective Date to occur on the first business day following the last
to occur of (i) the effective date (including the expiration of any applicable
waiting period) of the last federal or state regulatory approval required for
the Merger and (ii) the date on which the Agreement is approved by the
requisite vote of Guaranty stockholders; or such later date within 30 days
thereof as specified by First Alabama. The parties expect that all conditions
to consummation of the Merger will be satisfied so that the Merger can be
consummated during the second quarter of 1994, although there can be no
assurance as to whether or when the Merger will occur. See "Description of the
Transaction -- Effective Date of the Merger," "-- Conditions to Consummation of
the Merger," and "-- Waiver, Amendment, and Termination of the Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, First Alabama will cause First Alabama
Bank, acting in its capacity as exchange agent for First Alabama (the "Exchange
Agent"), to mail to the former stockholders of Guaranty a form letter of
transmittal, together with instructions for the exchange of such stockholders'
certificates representing shares of Guaranty Common Stock for certificates
representing shares of First Alabama Common Stock. GUARANTY STOCKHOLDERS
SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE THE FORM LETTER
OF TRANSMITTAL AND INSTRUCTIONS. See "Description of the Transaction --
Distribution of First Alabama Stock Certificates and Payment for Fractional
Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The proposed Merger is subject to approval by the Federal Reserve and
the Louisiana Commissioner of Financial Institutions (the "Louisiana
Commissioner"). An application has been filed with each of these agencies for
the requisite approvals. There can be no assurance whether such approvals will
be given, or as to the timing or conditions of such approvals. Consummation of
the Merger is subject to various other conditions, including receipt of the
required approval of Guaranty stockholders, receipt of opinions of counsel or a
ruling from the Internal Revenue Service as to the tax-free nature of certain
aspects of the Merger, and certain other customary conditions. See
"Description of the Transaction -- Conditions to Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual action of the Board of Directors of both
Guaranty and First Alabama, or by action of the Board of Directors of either
company under certain circumstances, including if the Merger is not consummated
by July 31, 1994, unless the failure to consummate by such time is due to a
breach of the Agreement by the party seeking to terminate. If for any reason
the Merger is not consummated, Guaranty will continue to operate as a bank
holding company under its present management. See "Description of the
Transaction -- Waiver, Amendment, and Termination of the Agreement."
6
<PAGE> 11
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Guaranty's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of
Guaranty generally. Those interests relate to, among other things, provisions
in the Agreement regarding indemnification, treatment of outstanding options to
purchase Guaranty Common Stock, and eligibility for certain First Alabama
employee benefits. See "Description of the Transaction -- Interests of Certain
Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned upon the receipt of an opinion
of counsel or a ruling from the Internal Revenue Service to the effect that,
among other things, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the exchange in the Merger of Guaranty Common Stock for First
Alabama Common Stock will not give rise to gain or loss to Guaranty
stockholders, except to the extent of any cash received in lieu of fractional
share interests or as a result of a stockholder's perfecting such holder's
dissenters' rights of appraisal. See "Description of the Transaction -- Certain
Federal Income Tax Consequences of the Merger."
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER,
GUARANTY STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE SPECIFIC EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL, AND
FOREIGN TAX LAWS.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, Guaranty stockholders, whose rights are governed by
Guaranty's Articles of Incorporation and Bylaws and by Louisiana law, will
automatically become First Alabama stockholders, and their rights as First
Alabama stockholders will be determined by the Delaware General Corporation Law
and by First Alabama's Certificate of Incorporation and Bylaws.
The rights of First Alabama stockholders differ from the rights of
Guaranty stockholders in certain important respects, some of which constitute
additional antitakeover provisions provided for in First Alabama's governing
documents. See "Effect of the Merger on Rights of Stockholders."
COMPARATIVE MARKET PRICES OF COMMON STOCK
First Alabama Common Stock is traded in the over-the-counter market and
quoted on the Nasdaq National Market. Guaranty Common Stock is not traded in
any established market.
The following table sets forth (i) the last sale price of First Alabama
Common Stock and the equivalent per share price (as explained below) of
Guaranty Common Stock on December 28, 1993, the last trading day immediately
preceding public announcement of the proposed acquisition of Guaranty by First
Alabama, and , 1994, the last practicable date prior to the mailing of this
Proxy Statement/Prospectus, and (ii) the sale price in the last known
transaction of purchase and sale of Guaranty Common Stock, which occurred in
the third quarter of 1993.
<TABLE>
<CAPTION>
Equivalent
per
Share Price
First Alabama Guaranty of Guaranty
Market Price Per Share at: Common Stock Common Stock Common Stock
- ------------------------- ------------- ------------ ------------
<S> <C> <C> <C>
December 28, 1993 $32.00 12.00 $35.00
, 1994 . . .
</TABLE>
The equivalent per share price of Guaranty Common Stock at each
specified date represents the last sale price of a share of First Alabama
Common Stock on such date multiplied by the assumed Exchange Ratio that would
apply if such last sale price were the Base Period Trading Price of First
Alabama Common Stock. Stockholders are advised to obtain current market
quotations for First Alabama Common Stock. No assurance can be given as to the
market price of First Alabama Common Stock at or after the Effective Date.
COMPARATIVE PER SHARE DATA
The following table sets forth certain comparative per share data relating
to net income, cash dividends, and book value on (i) an historical basis for
First Alabama and Guaranty, (ii) a pro forma combined basis per share of First
Alabama Common Stock, and (iii) an equivalent pro forma basis per share of
Guaranty Common Stock. The pro forma information gives effect to the Merger on
a pooling-of-interests accounting basis and assumes an Exchange Ratio of
1.09375. See "Description of the Transaction -- Accounting Treatment." The
pro forma data are not necessarily indicative of the results of operations or
combined financial position that would have resulted had the Merger been
consummated during the periods indicated, nor are they necessarily indicative
of future results of operations or combined financial position. As discussed
under "Description of the Transaction -- Adjustment of Exchange Ratio," the
Exchange Ratio is subject to adjustment based upon the average market price of
First Alabama Common Stock during a specified period. The pro forma
information presented would be different if the Exchange Ratio were so
adjusted.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of First
Alabama and Guaranty, including the respective notes thereto, included or
incorporated by reference herein. See "Documents Incorporated by Reference,"
"Selected Financial Data," and "Index to Financial Statements."
7
<PAGE> 12
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1993 1992 1991
------- ------- -------
(UNAUDITED EXCEPT FIRST
ALABAMA AND GUARANTY HISTORICAL)
<S> <C> <C> <C>
NET INCOME PER COMMON SHARE
First Alabama historical...................... $ 3.01 $ 2.60 $ 2.16
Guaranty historical .......................... 3.21 2.84 1.95
First Alabama and Guaranty pro forma combined(1)(4) 3.01 2.60 2.15
Guaranty pro forma equivalent(2)(4).............. 3.29 2.84 2.35
DIVIDENDS DECLARED PER COMMON SHARE
First Alabama historical...................... $ 1.04 $ 0.91 $ 0.87
Guaranty historical.............................. 0.00 0.00 0.00
Guaranty pro forma equivalent(3)(4).............. 1.14 1.00 0.95
BOOK VALUE PER COMMON SHARE (PERIOD END)
First Alabama historical..................... $20.73 $17.62 $15.76
Guaranty historical.............................. 16.60 13.27 10.33
First Alabama and Guaranty pro forma combined.... 20.62 17.50 15.62
Guaranty pro forma equivalent(2)(4).............. 22.55 19.14 17.08
</TABLE>
- ---------------
(1) Represents the combined results of First Alabama and Guaranty as if
the Merger were consummated on January 1, 1991, and were accounted
for as a pooling-of-interests.
(2) Represents pro forma combined information multiplied by the assumed
Exchange Ratio of 1.09375 of a share of First Alabama Common Stock for
each share of Guaranty Common Stock.
(3) Represents historical dividends per share paid by First Alabama
multiplied by the assumed Exchange Ratio of 1.09375 of a share of
First Alabama Common Stock for each share of Guaranty Common Stock.
(4) Combined and equivalent pro forma per share data assuming illustrative
minimum and maximum Exchange Ratios of 0.937 and 1.356, respectively,
of a share of First Alabama Common Stock for each share of Guaranty
Common Stock is as follows:
<TABLE>
<CAPTION>
EXCHANGE RATIO
-----------------------------------------------------------
0.937 (MINIMUM) 1.356 (MAXIMUM)
--------------------------- ---------------------------
YEAR ENDED
DECEMBER 31, 1993
(UNAUDITED)
<S> <C> <C>
NET INCOME PER COMMON SHARE
First Alabama and Guaranty pro forma
combined............................. $ 3.02 $ 3.00
Guaranty pro forma equivalent............. 2.83 4.06
DIVIDENDS DECLARED PER COMMON SHARE
Guaranty pro forma equivalent............. $ .97 $1.41
BOOK VALUE PER COMMON SHARE (PERIOD
END)
First Alabama and Guaranty pro forma
combined............................. $20.68 $20.52
Guaranty pro forma equivalent............. 19.38 27.83
</TABLE>
This information is presented for illustration purposes only, and no
inference is intended or may be drawn concerning the actual Exchange
Ratio which may occur.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for First Alabama and Guaranty. The data should be read in
conjunction with the historical financial statements, related notes, and other
financial information concerning First Alabama and Guaranty incorporated by
reference or included herein. See "Documents Incorporated by Reference,"
"Guaranty Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business of Guaranty," and "Index to Financial
Statements."
25
<PAGE> 13
SELECTED HISTORICAL FINANCIAL DATA OF FIRST ALABAMA
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income $ 555,667 $ 536,747 $ 556,821 $ 519,753 $ 496,392
Total interest expense 213,614 224,068 292,017 297,613 292,687
Net interest income 342,053 312,679 264,804 222,140 203,705
Provision for loan losses 21,533 27,072 24,005 24,208 15,800
Net interest income after
loan loss provision 320,520 285,607 240,799 197,932 187,905
Total noninterest income
excluding security gains (losses) 131,949 119,130 101,964 94,730 71,976
Security gains (losses) 78 (53) (507) (982) 506
Total noninterest expense 287,026 264,659 230,340 195,611 176,707
Income tax expense 53,476 44,977 33,660 27,175 21,046
Net income $ 112,045 $ 95,048 $ 78,256 $ 68,894 $ 62,634
Per Share:
Net Income $ 3.01 $ 2.60 $ 2.16 $ 1.91 $ 1.72
Cash dividends 1.04 0.91 0.87 0.84 0.76
Book value 20.73 17.62 15.76 14.54 13.48
Other Information:
Average number of shares outstanding 37,205 36,532 36,191 36,097 36,331
Balance Sheet Data (period end):
Total assets $10,476,348 $7,881,026 $6,745,053 $6,344,406 $5,549,612
Investment securities 2,368,445 1,670,170 1,575,725 1,489,200 1,133,087
Loans, net of unearned income 6,833,246 5,142,531 4,274,958 4,092,262 3,552,082
Total deposits 8,770,694 6,701,142 5,917,028 5,353,211 4,744,364
Long-term debt 462,862 136,990 18,782 19,707 45,343
Stockholders' equity 850,965 656,655 572,971 524,132 489,441
Performance Ratios:
Return on average assets 1.40% 1.34% 1.23% 1.23% 1.20%
Return on average stockholders'
equity 16.14 15.64 14.27 13.64 13.25
Net interest margin 4.82 4.98 4.78 4.67 4.65
Efficiency (1) 59.24 59.87 60.77 59.22 60.68
Dividend payout 34.55 35.00 40.28 43.98 44.19
Asset Quality Ratios:
Net charge-offs to average loans,
net of unearned income .19% 0.28% 0.35% 0.44% 0.42%
Problem assets to net loans and
other real estate (2) .84 0.70 0.89 0.98 0.72
Nonperforming assets to net loans and
other real estate (3) 1.03 0.81 1.01 1.12 0.94
Allowance for loan losses to loans,
net of unearned income 1.47 1.43 1.28 1.10 1.05
Allowance for loan losses to
nonperforming assets (3) 143.05 175.92 126.32 98.18 110.71
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets 8.70% 8.59% 8.63% 9.03% 9.06%
Average loans to average deposits 78.14 72.46 73.40 76.67 75.23
Tier 1 risk-based capital (4) 11.13 11.68 11.85 11.31 n/a
Total risk-based capital (4) 13.48 14.44 13.19 12.51 n/a
Tier 1 leverage (4) 10.11 8.44 8.40 7.65 8.36
- --------------------
</TABLE>
(1) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(2) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(3) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(4) The required minimum Tier 1 and total risk-based capital ratios are 4.0%
and 8.0%, respectively. The minimum leverage ratio of Tier 1 capital to
total adjusted assets is 3.0% to 5.0%
9
<PAGE> 14
SELECTED HISTORICAL FINANCIAL DATA OF GUARANTY
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest income $ 13,429 $ 13,010 $ 12,219 $ 10,438 $ 8,638
Total interest expense 4,909 5,117 6,234 5,777 4,902
Net interest income 8,520 7,893 5,985 4,661 3,736
Provision for loan losses 680 962 806 817 768
Net interest income after
loan loss provision 7,840 6,931 5,179 3,844 2,968
Total noninterest income
excluding security gains (losses) 1,394 1,147 1,096 838 684
Security gains (losses) 52 105 (46) (177) -0-
Total noninterest expense 5,514 4,864 4,079 3,211 2,874
Income tax expense 1,250 1,109 703 456 235
Net income $ 2,522 $ 2,210 $ 1,447 $ 838 $ 543
Per Share:
Net Income $ 3.21 $ 2.84 $ 1.95 $ 1.23 $ 0.83
Cash dividends -0- -0- -0- -0- -0-
Book value 16.60 13.27 10.33 8.31 6.97
Other Information:
Average number of shares outstanding 785 777 743 680 655
Balance Sheet Data (period end):
Total assets $180,948 $168,984 $147,285 $111,817 $ 88,108
Investment securities 36,090 24,812 24,954 16,026 11,041
Loans, net of unearned income 130,722 126,530 103,634 82,870 62,874
Total deposits 167,342 157,735 137,987 104,179 81,988
Long-term debt 515 691 791 871 932
Stockholders' equity 12,577 9,986 7,776 5,924 4,566
Performance Ratios:
Return on average assets 1.42% 1.42% 1.17% 0.92% 0.77%
Return on average stockholders'
equity 21.55 23.45 19.90 14.95 11.68
Net interest margin 5.07 5.37 5.06 5.24 5.22
Efficiency (1) 56.54 54.26 53.94 55.44 61.37
Dividend payout 0.00 0.00 0.00 0.00 0.00
Asset Quality Ratios:
Net charge-offs to average loans,
net of unearned income 0.56% 0.52% 0.68% 0.59% 1.14%
Problem assets to net loans and
other real estate (2) 1.71 2.62 3.52 4.32 4.66
Nonperforming assets to net loans and
other real estate (3) 1.71 2.62 3.52 4.42 5.00
Allowance for loan losses to loans,
net of unearned income 1.50 1.59 1.60 1.70 1.77
Allowance for loan losses to
nonperforming assets (3) 86.73 59.92 44.84 40.08 34.48
Liquidity and Capital Ratios:
Average stockholders' equity to
average assets 6.85% 6.04% 5.86% 6.12% 6.56%
Average loans to average deposits 78.26 78.76 78.60 79.47 79.40
Tier 1 risk-based capital (4) 10.56 8.53 8.10 7.95 n/a
Total risk-based capital (4) 11.81 9.78 9.35 9.20 n/a
Tier 1 leverage (4) 6.86 6.09 5.43 5.46 5.34
- --------------------
</TABLE>
(1) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
(2) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(3) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(4) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%
10
<PAGE> 15
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
Guaranty Common Stock in connection with the solicitation by the Guaranty Board
of Directors of proxies for use at the Special Meeting, at which Guaranty
stockholders will be asked to vote upon a proposal to approve the Agreement.
The Special Meeting will be held at a.m., local time, on
, 1994, at the main offices of Guaranty, located at 5353 Essen Lane, Baton
Rouge, Louisiana 70809.
Guaranty stockholders are requested promptly to sign, date, and return the
accompanying proxy card to Guaranty in the enclosed postage-paid, addressed
envelope. Failure to return your properly executed proxy card or to vote at
the Special Meeting will have the same effect as a vote against the Agreement.
Any Guaranty stockholder who has delivered a proxy may revoke it at any
time before it is voted by giving notice of revocation in writing or submitting
to Guaranty a signed proxy card bearing a later date, provided that such notice
or proxy card is actually received by Guaranty before the vote of stockholders
or in open meeting prior to the taking of the stockholder vote at the Special
Meeting. Any notice of revocation should be sent to Guaranty Bancorp, Inc.,
5353 Essen Lane, Baton Rouge, Louisiana 70809; Attention: David K. Kneipp,
Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Secretary. The shares of
Guaranty Common Stock represented by properly executed proxies received at or
prior to the Special Meeting and not subsequently revoked will be voted as
directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY
PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND IN THE
DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME
BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE
GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE
SPECIAL MEETING TO PERMIT FURTHER SOLICITATION OF PROXIES IN ORDER TO OBTAIN
SUFFICIENT VOTES TO APPROVE THE AGREEMENT. As of the date of this Proxy
Statement/Prospectus, Guaranty is unaware of any other matter to be presented
at the Special Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
Guaranty, who will receive no additional compensation for such solicitation but
may be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
Guaranty stockholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
Guaranty's Board of Directors has established the close of business on
, 1994, as the Record Date for determining the Guaranty stockholders entitled
to notice of and to vote at the Special Meeting. Only Guaranty stockholders of
record as of the Record Date will be entitled to vote at the Special Meeting.
The affirmative vote of the holders of two-thirds of the voting power of
Guaranty Common Stock represented at the Special Meeting is required in order
to approve the Agreement. Therefore, returning an executed proxy card marked
as an abstention will have the same effect as a vote against the Agreement, as
will a broker's submitting a proxy card without exercising discretionary voting
authority with respect to the Agreement. Non-votes in the form of failing to
return a properly executed proxy card, unlike explicit abstentions, will have
the effect of reducing the number of affirmative votes required for approval of
the Agreement, but will not be counted toward a quorum at the Special Meeting.
As of the Record Date, there were shares of Guaranty Common Stock
outstanding and entitled to vote at the Special Meeting, with each share
entitled to one vote. For information as to persons known by Guaranty to
beneficially own more than 5.0% of the outstanding shares of Guaranty Common
Stock as of the Record Date, see "Voting Securities and Principal Stockholders
of Guaranty."
The presence, in person or by proxy, of a majority of the outstanding
shares of Guaranty Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these
purposes, shares of Guaranty Common Stock that are present, or represented by
proxy, at the Special Meeting will be counted for quorum purposes regardless of
whether the holder of the shares or proxy fails to vote on the Agreement or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to the Agreement. As discussed
above, once a quorum is established, approval of the Agreement requires the
affirmative vote of the holders of two-thirds of the voting power of Guaranty
Common Stock represented at the Special Meeting.
The directors and executive officers of Guaranty and their affiliates
beneficially owned, as of the Record Date, shares (or approximately %
of the outstanding shares) of Guaranty Common Stock. The directors and
executive officers of First Alabama and their affiliates beneficially owned, as
of the Record Date, no shares of Guaranty Common Stock. As of that date, no
subsidiary of either Guaranty or First Alabama held any shares of Guaranty
Common Stock in a fiduciary capacity for others.
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the proposed Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Agreement, which
is attached as Appendix A to this Proxy Statement/Prospectus and incorporated
herein by reference. All stockholders are urged to read the Appendices in
their entirety.
GENERAL
Each share of Guaranty Common Stock (excluding any shares held by
Guaranty, First Alabama, or their respective subsidiaries, other than shares
held in a fiduciary capacity or in satisfaction of debts previously contracted,
and shares held by stockholders who perfect their dissenters' rights of
appraisal) issued and outstanding at the Effective Date will be converted into
the right to receive 1.09375 shares of First Alabama Common Stock, which is
subject to adjustment in the event the Base Period Trading Price (as defined
below) is equal to or less than $31.00 or equal to or greater than $36.00.
Each share of First Alabama Common Stock outstanding immediately prior to the
Effective Date will remain outstanding and unchanged as a result of the Merger.
11
<PAGE> 16
No fractional shares of First Alabama Common Stock will be issued in
connection with the Merger. In lieu of issuing fractional shares, First
Alabama will make a cash payment equal to the fractional interest which a
Guaranty stockholder would otherwise receive multiplied by the Base Period
Trading Price.
ADJUSTMENT OF EXCHANGE RATIO
If the Base Period Trading Price of First Alabama Common Stock is equal to
or less than $31.00, the Exchange Ratio will be adjusted to equal the quotient
(rounded to the nearest one-thousandth) obtained by dividing (i) $33.91 by (ii)
the Base Period Trading Price. If the Base Period Trading Price of First
Alabama Common Stock is equal to or greater than $36.00, the Exchange Ratio
will be adjusted to equal the quotient (rounded to the nearest one-thousandth)
obtained by dividing (i) $39.37 by (ii) the Base Period Trading Price. If the
Base Period Trading Price is greater than $31.00 but less than $36.00, the
Exchange Ratio will remain at 1.09375.
The Base Period Trading Price is defined to mean the average closing
price of First Alabama Common Stock as reported on the Nasdaq National Market
during the ten consecutive full trading days in which such shares are traded on
the Nasdaq National Market ending on the fifth trading date prior to the date
on which the approval of the Merger by the Federal Reserve is received.
The operation of the formula is illustrated by the following table, which
shows the effect that various Base Period Trading Prices would have on the
Exchange Ratio and on the number of shares of First Alabama Common Stock that
would be issuable in the Merger.
<TABLE>
<CAPTION>
BASE PERIOD CLOSING CORRESPONDING VALUE NUMBER OF SHARES
PRICE OF FIRST EXCHANGE PER SHARE OF GUARANTY OF FIRST ALABAMA COMMON STOCK
ALABAMA COMMON STOCK RATIO COMMON STOCK ISSUABLE
- -------------------- -------- -------------------- -----------------------------
<S> <C> <C> <C>
$25.00 1.356 $33.91 1,027,584
26.00 1.304 33.91 988,178
27.00 1.256 33.91 951,804
28.00 1.211 33.91 917,702
29.00 1.169 33.91 885,875
30.00 1.130 33.91 856,320
31.00 1.094 33.91 829,039
33.00 1.09375 36.09 828,850
32.00 1.09375 35.00 828,850
34.00 1.09375 37.19 828,850
35.00 1.09375 38.28 828,850
36.00 1.094 39.37 829,039
37.00 1.064 39.37 806,305
38.00 1.036 39.37 785,086
39.00 1.009 39.37 764,626
40.00 0.984 39.37 745,681
41.00 0.960 39.37 727,493
42.00 0.937 39.37 710,064
</TABLE>
This table is presented for illustration purposes only, and no inference
is intended or may be drawn concerning the actual Base Period Trading Price
which may occur or the resulting Exchange Ratio. Moreover, Guaranty
stockholders should be aware that the actual market value of a share of First
Alabama Common Stock at the Effective Date and at the time certificates for
those shares are delivered following surrender and exchange of certificates for
shares of Guaranty Common Stock may be more or less than the Base Period
Trading Price. Guaranty stockholders are urged to obtain information on the
trading value of First Alabama Common Stock that is more recent than that
provided in this Proxy Statement/Prospectus. See "Comparative Market Price and
Dividends."
In the event the Base Period Trading Price is equal to or less than
$25.00, the Board of Directors of First Alabama has the right to terminate the
Agreement and abandon the Merger.
TREATMENT OF GUARANTY OPTIONS
The Agreement provides that all rights with respect to Guaranty Common
Stock pursuant to stock options or stock appreciation rights granted by
Guaranty under its stock option and other stock-based compensation plans which
are outstanding at the Effective Date, whether or not then exercisable, will be
converted into and will become rights with respect to First Alabama Common
Stock, and First Alabama will assume each of such options in accordance with
the terms of the plan under which it was issued and the agreement by which it
is evidenced. After the Effective Date, those options will become options to
purchase First Alabama Common Stock, with the exercise price and number of
shares of First Alabama Common Stock purchasable thereunder adjusted to reflect
the Exchange Ratio.
BACKGROUND OF AND REASONS FOR THE MERGER
GUARANTY'S REASONS FOR THE MERGER. In approving the Merger, the directors
of Guaranty considered a number of factors. Without
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<PAGE> 17
assigning any relative or specific weights to the factors, the Guaranty Board
of Directors considered the following material factors:
(a) the information presented to the directors by the management of
Guaranty concerning the business, operations, earnings, asset quality, and
financial condition of Guaranty, including compliance with regulatory capital
requirements on an historical and prospective basis;
(b) the financial terms of the Merger, including the relationship of the
merger price to the market value, tangible book value, and earnings per share
of Guaranty Common Stock, the partial protection against a decline in the
market value of First Alabama Common Stock, and the partial participation in
any appreciation in value of First Alabama Common Stock;
(c) the financial terms and federal income tax consequences of the
merger proposal offered by other parties, and a comparison of other parties'
stock with First Alabama Common Stock;
(d) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of Guaranty Common Stock for First Alabama Common
Stock for federal and state income tax purposes;
(e) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay;
(f) the report of Robinson-Humphrey reviewing a comparison of Guaranty
to selected peer banks, premiums paid in other merger transactions, a
mark-to-market analysis of Guaranty, and a discounted cash-flow analysis of
Guaranty; and
(g) the opinion rendered by Robinson-Humphrey to the effect that, from
a financial point of view, the exchange of Guaranty Common Stock for First
Alabama Common Stock on the terms and conditions set forth in the Agreement is
fair to the holders of Guaranty Common Stock.
The terms of the Merger were the result of arms-length negotiations
between representatives of Guaranty and representatives of First Alabama.
Based upon the consideration of the foregoing factors, the Board of Directors of
Guaranty unanimously approved the Merger as being in the best interests of
Guaranty and its stockholders.
GUARANTY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT GUARANTY
STOCKHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT.
FIRST ALABAMA'S REASONS FOR THE MERGER. The First Alabama Board of
Directors has approved the Agreement and determined that the Merger is in the
best interests of First Alabama and its stockholders. In approving the
Agreement, the First Alabama Board considered a number of factors. Without
assigning any relative or specific weights to the factors, the First Alabama
Board of Directors considered the following material factors:
(a) a review, based in part on a presentation by First Alabama
management, of (i) the business, operations, earnings, and financial condition,
including the capital levels and asset quality, of Guaranty on an historical,
prospective, and pro forma basis and in comparison to other financial
institutions in the area, (ii) the demographic, economic, and financial
characteristics of the markets in which Guaranty operates, including existing
competition, history of the market areas with respect to financial
institutions, and average demand for credit, on an historical and prospective
basis, and (iii) the results of First Alabama's due diligence review of
Guaranty; and
(b) a variety of factors affecting and relating to the overall strategic
focus of First Alabama, including First Alabama's desire to expand into markets
in the general vicinity of its core markets.
OPINION OF GUARANTY'S FINANCIAL ADVISOR
GENERAL. Guaranty retained Robinson-Humphrey to act as its financial
advisor in connection with the Merger. Robinson-Humphrey has rendered an
opinion to Guaranty's Board of Directors that, based on the matters set forth
therein, the consideration to be received pursuant to the Merger is fair, from a
financial point of view, to the Guaranty stockholders. The text of such
opinion is set forth in Appendix B to this Proxy Statement/Prospectus and
should be read in its entirety by stockholders of Guaranty.
The consideration to be received by Guaranty stockholders in the
Merger was determined by Guaranty and First Alabama in their negotiations. No
limitations were imposed by the Board of Directors or management of Guaranty
upon Robinson-Humphrey with respect to the investigations made or the
procedures followed by Robinson-Humphrey in rendering its opinion.
In connection with rendering its opinion to Guaranty's Board of
Directors, Robinson-Humphrey performed a variety of financial analyses.
However, the preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances, and therefore,
such an opinion is not readily susceptible to summary description.
Robinson-Humphrey, in conducting its analysis and in arriving at its opinion,
has not conducted a physical inspection of any of the properties or assets of
Guaranty and has not made or obtained any independent valuation or appraisals
of any properties, assets, or liabilities of Guaranty. Robinson-Humphrey has
assumed and relied upon the accuracy and completeness of the financial and
other information that was provided to it by Guaranty or that was publicly
available. Its opinion is necessarily based on economic, market, and other
conditions as in effect on, and the information made available to it as of the
date of, its analyses.
The following is a brief summary of the analyses performed by
Robinson-Humphrey in connection with rendering its opinion on the Merger.
VALUATION METHODOLOGIES. In connection with its opinion on the Merger
and the presentation of that opinion to Guaranty's Board of Directors,
Robinson-Humphrey performed three valuation analyses with respect to Guaranty:
(i) a comparison with comparable publicly traded companies; (ii) an analysis of
comparable prices and terms of recent transactions involving banks buying
banks; and (iii) a discounted cash flow analysis. For purposes of the
comparable company and comparable transaction analyses, First Alabama Common
Stock was
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<PAGE> 18
valued at $31.00 per share. Each of these methodologies is discussed briefly
below.
COMPARABLE COMPANY ANALYSIS. In performing its comparable company
analysis, Robinson-Humphrey analyzed the market trading of Guaranty
Common Stock relative to publicly traded banks that had total assets
comparable to Guaranty. The institutions included in the comparison
to Guaranty consisted of: American Bancorp of Nevada (ABCN), Allied
Bankshares, Inc. (ABGA), Ambanc Corp. (AMBK), ANB Corporation (ANBC),
Aspen Bancshares (ASBK), BancFirst Ohio Corp. (BFOH), Bank of San
Perdo (BOSP), Community Banks, Inc. (CBKI), Community Bancorp (CBNK),
Commercial Bancorp of Colorado (CBOCA), Commercial Bancorp (CBOR),
Centennial Bancorp (CEBC), Chattahoochee Bancorp, Inc. (CHBC),
Citizens National Corp. (CNCN), CoBancorp, Inc. (COBI), Century South
Banks, Inc. (CSBI), Cornerstone Financial Corp. (CSTN), First Bancorp
(FBNC), First Charter Corporation (FCTR), First Fidelity Bancorp, Inc.
(FFWV), First of Long Island Corp (FLIC), 1st United Bancorp (FUBC),
First United Corporation (FUNC), George Mason Bankshares, Inc. (GMBS),
Bank of Granite Corporation (GRAN), Independent Bank Corporation
(IBCP), Interchange Financial (ISB), Landmark Bancorp (LMBC), LSB
Bancshares (LXBK), Miners National Bancorp, Inc. (MNBC), Mason-Dixon
Bancshares, Inc. (MSDX), First National Bank Corp. (MTCL), National
City Bancshares (NCBE), Northim Bank (NRIM), Northwest Illinois
Bancorp (NWIB), Penn Central Bancorp (PCBC), Peoples Bank (PEBK),
Peoples Bancorp Inc. (PEBO), Pacific Inland Bancorp (PIBC), Princeton
National Bancorp (PNBC), Pinnacle Financial Services (PNFI), Royal
Bank of Pennsylvania (RBPAA), Redwood Empire Bancorp (REB), Rock
Financial Corp (RFIN), South Alabama Bancorp (SABC), Sterling
Bancshares (SBIB), State Financial Services (SFSW), SJNB Financial
Corp. (SJNB), Sierra Tahoe Bancorp (STBS), Sun Bancorp (SUBI), S.Y.
Bancorp, Inc. (SYBA), Tompkins County Trust Company (TCTC), University
National B&TC (UNNB), and Washington Trust Bancorp, Inc. (WASH).
Among the market trading information compared was market price to book
value and tangible book value, of which the mean multiples for the
comparables was 156.4 percent and 160.4 percent respectively, compared
to the multiple of approximately 222.0 percent of book value and
tangible book value represented by the consideration to be received by
Guaranty stockholders in the Merger. Also examined was market price
to the latest 12 months earnings per share, for which the average
multiple for the comparable banks was 12.7, compared to a multiple of
approximately 11.3 represented by the consideration to be received by
Guaranty stockholders in the Merger.
COMPARABLE TRANSACTION ANALYSIS. Robinson-Humphrey performed an
analysis of premiums paid for selected banks with comparable
characteristics to Guaranty. Comparable transactions were considered
to be transactions since January 1, 1993, where the seller had assets
between $100 and $500 million and a return on average assets of
greater than 1.25 percent for trailing 12 months earnings.
Based on the foregoing transactions, the analysis yielded a range of
transaction values to book value of 124.69 percent to 310.85 percent
with a mean of 181.51 percent and a median of 179.25 percent. These
compare to a transaction value for the Merger of approximately 222.0
percent of Guaranty book value as of September 30, 1993.
In addition, the analysis yielded a range of transaction values as a
percentage of tangible book value for the comparable transactions
ranging from 124.69 percent to 310.85 percent, with a mean of 185.36
percent and a median of 180.33 percent. These compare to a
transaction value to tangible book value at September 30, 1993 of
approximately 222.0 percent for the Merger.
Lastly, the analysis yielded a range of transaction values as a
multiple of trailing 12 months earning per share. These values
ranged from 4.67 times to 25.22 times, with a mean of 11.77 times and
a median of 11.54 times. These compare to a transaction value to the
September 30, 1993 trailing 12 months earnings per share of 11.30
times for the Merger.
No company or transaction used in the comparable company or comparable
transaction analyses is identical to Guaranty. Accordingly, an
analysis of the foregoing necessarily involves complex considerations
and judgments, as well as other factors that affect the public trading
value or the acquisition value of the company to which it is being
compared.
DISCOUNTED CASH FLOW ANALYSIS. Using discounted cash flow analysis,
Robinson-Humphrey estimated the present value of the future stream of
after-tax cash flows that Guaranty could produce through 1998, under
various circumstances, assuming that Guaranty performed in accordance
with the earnings/return projections of management at the time that
Guaranty entered into acquisition discussions in December, 1993.
Robinson-Humphrey estimated the terminal value for Guaranty at the end
of the period by applying multiples of earnings ranging from 9.0 times
to 11.0 times and then discounting the cash flow streams, dividends
paid to stockholders, and terminal value using differing discount rates
(ranging from 9.0 percent to 11.0 percent) chosen to reflect different
assumptions regarding the required rates of return of Guaranty and the
inherent risk surrounding the underlying projections. This discounted
cash flow analysis indicated a reference range of $19.2 million to
$25.7 million, or $23.81 to $31.87 per share, for Guaranty.
COMPENSATION OF ROBINSON-HUMPHREY. Pursuant to an engagement letter
between Guaranty and Robinson-Humphrey, Guaranty agreed to pay
Robinson-Humphrey (at closing) an incremental success fee equal to 1.5 percent
on the total consideration received by the Guaranty stockholders. Guaranty
has also agreed to indemnify and hold harmless Robinson-Humphrey and its
officers and employees against certain liabilities in connection with its
services under the engagement letter, except for liabilities resulting from
the negligence of Robinson-Humphrey.
As part of its investment banking business, Robinson-Humphrey is
regularly engaged in the valuation of securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate,
and other purposes. Guaranty's Board of Directors decided to retain
Robinson-Humphrey based on its experience as a financial advisor in mergers and
acquisitions of financial institutions, particularly transactions in the
Southern region of the United States, and its knowledge of financial
institutions and Guaranty in particular.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Louisiana Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Louisiana Secretary of State. Unless otherwise
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<PAGE> 19
agreed upon by First Alabama and Guaranty, and subject to the conditions to the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur on the last business
day of the month in which the last of the following events occur: (i) the
effective date (including the expiration of any applicable waiting period) of
the last federal or state regulatory approval required for the Merger and (ii)
the date on which the Agreement is approved by the requisite vote of Guaranty
stockholders; or such later date within 30 days thereof as specified by First
Alabama.
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. First Alabama and Guaranty anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated during the second quarter of 1994. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either First Alabama or Guaranty generally may
terminate the Agreement if the Merger is not consummated by July 31, 1994. See
" -- Conditions to Consummation of the Merger" and " -- Waiver, Amendment, and
Termination of the Agreement."
DISTRIBUTION OF FIRST ALABAMA STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL
SHARES
Promptly after the Effective Date, First Alabama will cause First Alabama
Bank, acting in the capacity of Exchange Agent, to mail to the former
stockholders of Guaranty a form letter of transmittal, together with
instructions for the exchange of such stockholders' certificates representing
shares of Guaranty Common Stock for certificates representing shares of First
Alabama Common Stock.
GUARANTY STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to the
Exchange Agent of certificates for Guaranty Common Stock, together with a
properly completed letter of transmittal, there will be issued and mailed to
each holder of Guaranty Common Stock surrendering such items a certificate or
certificates representing the number of shares of First Alabama Common Stock to
which such holder is entitled, if any, and a check for the amount to be paid in
lieu of any fractional share interest, without interest. After the Effective
Date, to the extent permitted by law, Guaranty stockholders of record as of the
Effective Date will be entitled to vote at any meeting of holders of First
Alabama Common Stock the number of whole shares of First Alabama Common Stock
into which their Guaranty Common Stock has been converted, regardless of
whether such stockholders have surrendered their Guaranty Common Stock
certificates. No dividend or other distribution payable after the Effective
Date with respect to First Alabama Common Stock, however, will be paid to the
holder of any unsurrendered Guaranty certificate until the holder duly
surrenders such certificate. Upon such surrender, all undelivered dividends
and other distributions and, if applicable, a check for the amount to be paid
in lieu of any fractional share interest will be delivered to such stockholder,
in each case without interest.
After the Effective Date, there will be no transfers of shares of Guaranty
Common Stock on Guaranty's stock transfer books. If certificates representing
shares of Guaranty Common Stock are presented for transfer after the Effective
Date, they will be canceled and exchanged for the shares of First Alabama
Common Stock and a check for the amount due in lieu of fractional shares, if
any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions,
including, but not limited to:
(a) approval from the Federal Reserve and the Louisiana Commissioner,
without any conditions or restrictions that would, in the reasonable good faith
judgment of First Alabama's Board of Directors, so materially adversely impact
the economic benefits of the transactions contemplated by the Agreement as to
render inadvisable the consummation of the Merger and compliance with the BHC
Act;
(b) the approval by the holders of at least two-thirds of the voting
power of Guaranty Common Stock represented at the Special Meeting;
(c) the absence of any action by any governmental authority restraining
or prohibiting the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under Section
368(a) of the Code and that the exchange of Guaranty Common Stock for First
Alabama Common Stock will not give rise to recognition of gain or loss to
Guaranty stockholders, except to the extent of any cash received; and
(e) the approval for listing on the Nasdaq National Market of the shares
of First Alabama Common Stock to be issued in the Merger.
Consummation of the Merger also is subject to the satisfaction or waiver
of various other conditions specified in the Agreement, including, among
others: (i) the delivery by First Alabama and Guaranty of opinions of their
respective counsel and certificates executed by their respective Chief
Executive Officers and Chief Financial Officers as to compliance with the
Agreement; (ii) as of the Effective Date, the accuracy of certain
representations and warranties and the compliance in all material respects with
the agreements and covenants of each party; and (iii) the receipt by First
Alabama of a letter from Guaranty's independent accountants with respect to
certain financial information regarding Guaranty.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. There also can be no
assurance that such approvals will not be accompanied by a conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Agreement. Applications for the approvals described below have
been submitted to the appropriate regulatory agencies.
First Alabama and Guaranty are not aware of any material governmental
approvals or actions that are required for consummation
15
<PAGE> 20
of the Merger, except as described below. Should any other approval or action
be required, it presently is contemplated that such approval or action would be
sought.
The Merger will require the prior approval of the Federal Reserve,
pursuant to Section 3 of the BHC Act. In granting its approval under Section 3
of the BHC Act, the Federal Reserve must take into consideration, among other
factors, the financial and managerial resources and future prospects of the
institutions and the convenience and needs of the communities to be served.
The relevant statutes prohibit the Federal Reserve from approving the Merger
(i) if it would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or attempt to monopolize the business of banking in
any part of the United States or (ii) if its effect in any section of the
country may be to substantially lessen competition or to tend to create a
monopoly, or if it would be a restraint of trade in any other manner, unless
the Federal Reserve finds that any anticompetitive effects are outweighed
clearly by the public interest and the probable effect of the transaction in
meeting the convenience and needs of the communities to be served. Under the
BHC Act, the Merger may not be consummated until the 30th day following the
date of Federal Reserve approval, during which time the United States
Department of Justice may challenge the transaction on antitrust grounds. The
commencement of any antitrust action would stay the effectiveness of the
Federal Reserve's approval, unless a court specifically orders otherwise.
The Merger also is subject to the approval of the Louisiana Commissioner.
In its evaluation, the Louisiana Commissioner will take into account
considerations similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefited
by the provision or (ii) amended by a written agreement between First Alabama
and Guaranty approved by their respective Boards of Directors; provided,
however, that after approval by the Guaranty stockholders, no amendment
decreasing the consideration to be received by Guaranty stockholders may be
made without the further approval of such stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by Guaranty
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required regulatory approval, provided that the terminating party is not then
in material breach of any provision of the Agreement, or by the Board of
Directors of First Alabama if any required regulatory approval is conditioned
or restricted in the manner described under " -- Conditions to Consummation of
the Merger" above;
(b) by the Board of Directors of either party, if the holders of at
least two-thirds of the voting power of Guaranty Common Stock represented at
the Special Meeting shall not have approved the Agreement, provided that the
terminating party is not then in material breach of any provision of the
Agreement;
(c) by mutual agreement of the Boards of Directors of First Alabama and
Guaranty;
(d) by the Board of Directors of either party, in the event of a breach
of any provision of the Agreement which meets certain standards specified in
the Agreement;
(e) by the Board of Directors of either party if the Merger shall not
have been consummated by July 31, 1994, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's breach of
the Agreement; or
(f) by the Board of Directors of First Alabama in the event the Base
Period Trading Price is equal to or less than $25.00.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination will not relieve the parties from the
consequences of any uncured willful breach of the Agreement giving rise to such
termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Guaranty and First Alabama generally has agreed, unless the prior
consent of the other party is obtained, and except as otherwise contemplated by
the Agreement, to operate its business only in the ordinary course, preserve
intact its business organizations and assets, maintain its rights and
franchises, and take no action that would affect, adversely and materially, the
ability of either party to perform its covenants and agreements under the
Agreement or to obtain any consent or approval required for the consummation of
the transactions contemplated by the Agreement. In addition, the Agreement
contains certain other restrictions applicable to the conduct of the business
of either Guaranty or First Alabama prior to consummation of the Merger, as
described below.
GUARANTY. Guaranty has agreed not to take certain action relating to the
operation of its business pending consummation of the Merger without the prior
approval of First Alabama. Those actions generally include, without
limitation: (i) amending its Articles of Incorporation or Bylaws; (ii)
becoming responsible for any obligation for borrowed money in excess of an
aggregate of $50,000 (except in the ordinary course of business consistent with
past practices); (iii) acquiring or exchanging any shares of its capital stock
or paying any dividend or other distribution in respect of its capital stock;
(iv) issuing or selling any additional shares of any Guaranty capital stock,
any rights to acquire any such stock, or any security convertible into such
stock (except as set forth in the Agreement or pursuant to the exercise of
outstanding stock options); (v) adjusting or reclassifying any of its capital
stock; (vi) acquiring control over any other entity; (vii) granting any
increase in compensation or benefits to employees or officers (except as
previously disclosed to First Alabama or as required by law), paying any bonus
(except as previously disclosed to First Alabama or in accordance with any
existing program or plan), entering into or amending any severance agreements
with officers (except as previously disclosed to First Alabama), or granting
any increase in compensation or other benefits to directors;
16
<PAGE> 21
(viii) entering into or amending any employment contract that it does not have
the unconditional right to terminate (except as previously disclosed to First
Alabama and except for any amendment required by law); (ix) adopting any new
employee benefit plan or program, or materially changing any existing plan or
program (except as previously disclosed to First Alabama and except for any
change required by law or advisable to maintain the tax qualified status of any
such plan); (x) making any significant change in any tax or accounting methods
or systems of internal accounting controls (except in conformity to changes in
tax laws or generally accepted accounting principles ("GAAP")); (xi) commencing
any litigation (except in accordance with past practices); or (xii) modifying
or terminating any material contract.
In addition, Guaranty has agreed not to solicit, directly or indirectly,
any acquisition proposal from any other person or entity. Guaranty also has
agreed not to negotiate with respect to any such proposal, provide nonpublic
information to any party making such a proposal, or enter into any agreement
with respect to any such proposal, except in compliance with the fiduciary
obligations of its Board of Directors. In addition, Guaranty has agreed to use
reasonable efforts to cause its advisors and other representatives not to
engage in any of the foregoing activities.
FIRST ALABAMA. The Agreement prohibits First Alabama, prior to the
earlier of the Effective Date or the termination of the Agreement, from taking
any action that would materially adversely affect the ability of either party to
obtain the requisite governmental approvals or to perform its covenants and
agreements under the Agreement.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of First Alabama. Information concerning the management of First
Alabama is included in the documents incorporated herein by reference. See
"Documents Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement provides that First Alabama will, and will cause Guaranty
to, maintain all rights of indemnification existing in favor of each person
entitled to indemnification from Guaranty or any of its subsidiaries on terms
no less favorable than the rights provided in the Certificate of Incorporation
or Bylaws of Guaranty or its subsidiaries, as the case may be, or the rights
otherwise in effect on the date of the Agreement, and that such rights will
continue in full force and effect for six years from the Effective Date with
respect to matters occurring at or prior to the Effective Date. In addition,
the Agreement further provides for a period of one year after the Effective
Date, First Alabama shall use its reasonable efforts to maintain in effect
Guaranty's existing directors' and officers' liability insurance policy (or
comparable policies) with respect to claims arising from facts or events which
occurred prior to the Effective Date and covering persons who are currently
covered by such insurance; provided that First Alabama shall not be obligated
to make premium payments for such one-year period in respect of such policy
which exceed 150% of the annual premium payment on Guaranty's current policy in
effect as of the date of the Agreement.
The Agreement also provides that, after the Effective Date, First Alabama
will provide generally to officers and employees of Guaranty and its
subsidiaries who become officers or employees of First Alabama or its
subsidiaries, employee benefits under employee benefit plans (other than stock
option or other plans involving the potential issuance of First Alabama Common
Stock) on terms and conditions that, taken as a whole, are substantially
similar to those currently provided by First Alabama and its subsidiaries to
their similarly situated officers and employees. For purposes of participation
and vesting (but not benefit accrual) under such employee benefit plans,
service with Guaranty or its subsidiaries prior to the Effective Date will be
treated as service with First Alabama or its subsidiaries. The Agreement
further provides that First Alabama will cause Guaranty to honor all employment,
severance, consulting, and other compensation contracts previously disclosed to
First Alabama between Guaranty or its subsidiaries and any current or former
director, officer, or employee, and all provisions for vested amounts earned or
accrued through the Effective Date under Guaranty's benefit plans.
As described above under " -- Treatment of Guaranty Options," the
Agreement also provides that all rights with respect to Guaranty Common Stock
pursuant to stock options or stock appreciation rights granted by Guaranty
under its stock option and other stock-based compensation plans which are
outstanding at the Effective Date, whether or not then exercisable, will be
converted into and will become rights with respect to First Alabama Common
Stock, and First Alabama will assume each of such options in accordance with
its terms.
As of the Record Date, , 1994, directors and executive officers of
Guaranty owned an aggregate of shares of First Alabama Common Stock
which represented % of the outstanding shares of such stock.
DISSENTING STOCKHOLDERS
GENERAL. Each Guaranty stockholder who objects to the Merger shall be
entitled to the rights and remedies of dissenting stockholders provided in
Section 12:131 of the Louisiana Act, a copy of which is included as Appendix C
to this Proxy Statement/Prospectus.
STATUTORY REQUIREMENTS. The following is a summary of the steps to be
taken by a Guaranty stockholder who is interested in perfecting such holder's
dissenters' rights, and should be read in conjunction with the full text of
Section 12:131 of the Louisiana Act. Each of the steps enumerated below must be
taken in strict compliance with the applicable provisions of the statute in
order for holders of Guaranty Common Stock to perfect their dissenters' rights.
If the Merger is approved by 80% or more of the total voting power of Guaranty,
then no stockholder will be entitled to exercise dissenters' rights of
appraisal.
Any written objection, demand, or notice required by the Louisiana Act in
connection with the exercise of dissenters' rights must be sent to Guaranty, at
5353 Essen Lane, Baton Rouge, Louisiana 70809, Attention: David A. Kneipp,
Secretary. It is recommended that all required documents to be delivered by
mail be sent by registered or certified mail with return receipt requested.
Any holder of Guaranty Common Stock who disapproves of or objects to the
proposed Merger and who wishes to receive in cash the "fair value" of such
shares (determined immediately before the Merger is consummated without
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regard to any appreciation or depreciation thereof in anticipation of the
Merger) may elect to do so by taking all of the following steps:
(a) Such stockholder must file with Guaranty, prior to or at the Special
Meeting, a written objection to the proposed Merger.
(b) Such stockholder must vote such holder's shares against the Merger. If
the Merger is approved by the required vote, but by less than 80% of the total
voting power, and the Merger authorized thereby is effected, Guaranty promptly
thereafter shall give written notice thereof, by registered mail, to each
stockholder who filed such written objection to, and voted such holder's
shares against, the Merger, at such stockholder's last address on Guaranty's
records.
(c) Each such stockholder must, within 20 days after the mailing of such
notice to such holder, but not thereafter, file with Guaranty a demand in
writing for the fair cash value of such holder's shares as of the day before
such vote was taken, and such holder must state in such demand the value
demanded, and a post office address to which the reply of Guaranty may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in East Baton Rouge Parish the
certificates representing such holder's shares, duly endorsed and transferred
to Guaranty upon the sole condition that such certificates shall be delivered
to Guaranty upon payment of the value of the shares determined in accordance
with the provisions of Section 12:131.
(e) With the demand, the stockholder must deliver to Guaranty the written
acknowledgment of such bank or trust company that it so holds such holder's
certificates of stock.
Unless the objection, demand, and acknowledgment are made and
delivered by the stockholder within the required time period, such holder
conclusively shall be presumed to have acquiesced in the Merger. If Guaranty
does not agree to the value so stated and demanded, or does not agree that a
payment is due, it shall, within 20 days after receipt of such demand and
acknowledgment, notify the stockholder in writing, at the 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 stockholder, the value
demanded.
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
described above, the dissatisfied stockholder, within 60 days after receipt of
notice in writing of Guaranty's disagreement, but not thereafter, may file suit
against Guaranty, or the merged or consolidated corporation, as the case may
be, in the district court of East Baton Rouge Parish, praying the court to fix
and decree the fair cash value of the dissatisfied stockholder's shares of
Guaranty Common Stock as of the day before the Merger was consummated, 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 stockholder entitled to file such suit, within such
60-day period, but not thereafter, may intervene as a plaintiff in such suit
filed by another stockholder and recover therein judgment against Guaranty for
the fair cash value of such holder's shares of Guaranty Common Stock. Failure
of the stockholder to bring suit, or to intervene in such a suit, within 60
days after receipt of notice of disagreement by Guaranty conclusively shall
bind the stockholder (i) by Guaranty's statement that no payment is due or (ii)
if Guaranty does not contend that no payment is due, to accept the value of
such holder's shares of Guaranty Common Stock as fixed by Guaranty in its
notice of disagreement.
Any stockholder who fails to timely take each of the required actions
outlined above conclusively will be presumed to have consented to the Agreement
and will not be entitled to exercise the rights of a dissenting stockholder.
Any stockholder who timely takes each of the required actions outlined above
thereafter shall retain all rights of a stockholder, except the right to
receive 1.09375 shares of First Alabama Common Stock, subject to adjustment,
for each share of Guaranty Common Stock held thereby upon the effectuation of
the proposed Merger, until those rights are modified by the effectuation of the
proposed Merger.
A stockholder, upon filing a demand for the value of such holder's shares,
shall cease to have any of the rights of a stockholder, except the rights
accorded by Section 12:131 of the Louisiana Act. Such a demand may be withdrawn
by the stockholder at any time before Guaranty gives notice of disagreement, as
provided by the Louisiana Act. After such notice of disagreement is given,
withdrawal of a notice of election shall require the written consent of
Guaranty. If a notice of election is withdrawn, or the Merger is abandoned or
rescinded, or a court shall determine that the stockholder is not entitled to
receive payment for such holder's shares of Guaranty Common Stock, or the
stockholder shall otherwise lose such holder's dissenter's rights, such holder
shall not have the right to receive payment for such holder's shares of
Guaranty Common Stock, such holder's share certificates shall be returned (and,
on such holder's request, new certificates shall be issued in exchange for the
old ones endorsed to Guaranty), and such holder shall be reinstated to all
rights as a stockholder 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 Guaranty, the fair value thereof in cash as
determined by the First Alabama 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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX
LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER
ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO
THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE
APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS,
AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
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A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to First Alabama, has rendered an opinion to First Alabama and Guaranty
concerning certain federal income tax consequences of the proposed Merger under
federal income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger
under the General Corporation Law of Delaware and the Louisiana Act, the Merger
will be a reorganization within the meaning of Section 368(a)(1)(A). Guaranty
and First Alabama will each be "a party to a reorganization" within the meaning
of Section 368(b).
(b) Guaranty will recognize no gain or loss upon the
transfer of its assets to First Alabama in exchange solely for First Alabama
Common Stock and the assumption by First Alabama of the liabilities of
Guaranty.
(c) No gain or loss will be recognized by First Alabama on
receipt of Guaranty's assets in exchange for First Alabama Common Stock.
(d) The basis of Guaranty's assets in the hands of First
Alabama will, in each case, be the same as the basis of those assets in the
hands of Guaranty immediately prior to the transaction.
(e) The holding period of the assets of Guaranty in the hands
of First Alabama will, in each case, include the period during which such
assets were held by Guaranty.
(f) The stockholders of Guaranty will recognize no gain or
loss upon the exchange of their Guaranty Common Stock solely for shares of
First Alabama Common Stock.
(g) The basis of the First Alabama Common Stock received by
the Guaranty stockholders in the proposed transaction will, in each instance,
be the same as the basis of the Guaranty Common Stock surrendered in exchange
therefor.
(h) The holding period of the First Alabama Common Stock
received by the Guaranty stockholders will, in each instance, include the
period during which the Guaranty Common Stock surrendered in exchange therefor
was held, provided that the Guaranty Common Stock was held as a capital asset
on the date of the exchange.
(i) The payment of cash to Guaranty stockholders in lieu of
fractional share interests of First Alabama Common Stock will be treated for
federal income tax purposes as if the fractional shares were distributed as
part of the exchange and then were redeemed by First Alabama. These cash
payments will be treated as having been received as distributions in full
payment in exchange for the stock redeemed as provided in Section 302(a).
(j) Where solely cash is received by a Guaranty stockholder
in exchange for his Guaranty Common Stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of his Guaranty Common Stock, subject to the provisions and
limitations of Section 302.
The tax opinion does not address any state, local, or other tax
consequences of the Merger. GUARANTY STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a
"pooling-of-interests," as that term is used pursuant to GAAP, for accounting
and financial reporting purposes. Under the pooling-of-interests method of
accounting, assets, liabilities, and equity of the acquired company are carried
forward to the combined entity at their historical amounts.
All unaudited pro forma financial information contained in this Proxy
Statement/Prospectus has been prepared using the pooling-of-interests method to
account for the Merger. See "Summary -- Comparative Per Share Data."
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that First
Alabama will bear and pay the filing fees and printing costs in connection with
this Proxy Statement/Prospectus. Notwithstanding the foregoing, the Agreement
provides that, under certain circumstances involving termination of the
Agreement or failure to consummate the Merger, for a specified time period (not
exceeding 12 months) following such termination or failure to consummate, it
will be a binding condition to Guaranty's entering into any letter of intent or
agreement with respect to any business combination with any third party (the
"Business Combination") that such third party will pay First Alabama its direct
expenses, plus an amount not to exceed 2% of the consideration paid in the
Business Combination, for the indirect costs and expenses incurred by First
Alabama in negotiating and carrying out the transactions contemplated by the
Agreement.
RESALES OF THE FIRST ALABAMA COMMON STOCK
The First Alabama Common Stock to be issued to Guaranty stockholders in
the Merger has been registered under the Securities Act, but that registration
does not cover resales of those shares by persons who control, are controlled
by, or are under common control with, Guaranty (such persons are referred to
hereinafter as "affiliates" and generally include executive officers,
directors, and 10% stockholders) at the time of the Special Meeting.
Affiliates may not sell shares of First Alabama Common Stock acquired in
connection with the Merger, except pursuant to an effective registration
statement under the Securities Act or in compliance with SEC Rule 145 or
another applicable exemption from the Securities Act registration requirements.
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Each person who Guaranty reasonably believes will be an affiliate of
Guaranty has delivered to First Alabama a written agreement providing that such
person generally will not sell, pledge, transfer, or otherwise dispose of any
First Alabama Common Stock to be received by such person upon consummation of
the Merger, except in compliance with the Securities Act and the rules and
regulations of the SEC promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of Guaranty Common Stock will be
exchanging their shares of a Louisiana corporation governed by the Louisiana
Act and Guaranty's Articles of Incorporation, as amended, (the "Articles"), and
Bylaws, for shares of First Alabama, a Delaware corporation governed by the
Delaware General Corporation Law, as amended (the "Delaware GCL"), and First
Alabama's Certificate of Incorporation (the "Certificate") and Bylaws. Certain
significant differences exist between the rights of Guaranty stockholders and
those of First Alabama stockholders. The differences deemed material by
Guaranty and First Alabama are summarized below. In particular, First Alabama's
Certificate and Bylaws contain several provisions that may be deemed to have an
antitakeover effect in that they could impede or prevent an acquisition of
First Alabama unless the potential acquirer has obtained the approval of First
Alabama's Board of Directors. The following discussion is necessarily general;
it is not intended to be a complete statement of all differences affecting the
rights of stockholders and their respective entities, and it is qualified in
its entirety by reference to the Louisiana Act and the Delaware GCL as well as
to First Alabama's Certificate and Bylaws and Guaranty's Articles and Bylaws.
ANTITAKEOVER PROVISIONS GENERALLY
The provisions of First Alabama's Certificate and Bylaws described below
under the headings, "Authorized Capital Stock," "Amendment of Certificate of
Incorporation and Bylaws," "Classified Board of Directors and Absence of
Cumulative Voting," "Removal of Directors," "Director Exculpation," "Special
Meetings of Stockholders," "Actions by Stockholders Without a Meeting,"
"Stockholder Nominations and Proposals," and "Mergers, Consolidations, and
Sales of Assets Generally," and the provisions of the Delaware GCL described
under the heading "Business Combinations With Certain Persons," are referred to
herein as the "Protective Provisions." In general, one purpose of the
Protective Provisions is to assist First Alabama's Board of Directors in
playing a role in connection with attempts to acquire control of First Alabama,
so that the Board can further and protect the interests of First Alabama and
its stockholders as appropriate under the circumstances, including, if the
Board determines that a sale of control is in their best interests, by
enhancing the Board's ability to maximize the value to be received by the
stockholders upon such a sale.
Although First Alabama's management believes the Protective Provisions
are, therefore, beneficial to First Alabama's stockholders, the Protective
Provisions also may tend to discourage some takeover bids. As a result, First
Alabama's stockholders may be deprived of opportunities to sell some or all of
their shares at prices that represent a premium over prevailing market prices.
On the other hand, defeating undesirable acquisition offers can be a very
expensive and time-consuming process. To the extent that the Protective
Provisions discourage undesirable proposals, First Alabama may be able to avoid
those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of First
Alabama Common Stock temporarily, enabling stockholders to sell their shares at
a price higher than that which otherwise would prevail. In addition, the
Protective Provisions may decrease the market price of First Alabama Common
Stock by making the stock less attractive to persons who invest in securities
in anticipation of price increases from potential acquisition attempts. The
Protective Provisions also may make it more difficult and time consuming for a
potential acquirer to obtain control of First Alabama through replacing the
Board of Directors and management. Furthermore, the Protective Provisions may
make it more difficult for First Alabama's stockholders to replace the Board of
Directors or management, even if a majority of the stockholders believe such
replacement is in the best interests of First Alabama. As a result, the
Protective Provisions may tend to perpetuate the incumbent Board of Directors
and management.
AUTHORIZED CAPITAL STOCK
FIRST ALABAMA. The Certificate authorizes the issuance of up to
60,000,000 shares of First Alabama Common Stock, of which 42,520,025 shares
were issued, including 1,470,700 treasury shares as of December 31, 1993. First
Alabama's Board of Directors may authorize the issuance of additional
authorized shares of First Alabama Common Stock without further action by First
Alabama's stockholders, unless such action is required in a particular case by
applicable laws or regulations or by any stock exchange upon which First
Alabama's capital stock may be listed.
At the 1994 Annual Meeting of Stockholders of First Alabama, First
Alabama is soliciting stockholder approval of a proposal to increase the number
of authorized shares of First Alabama Common Stock from 60 million to 120
million. If such proposal is approved, such additional authorized shares of
First Alabama Common Stock will be available for issuance for various corporate
purposes without further approval of the stockholders of First Alabama.
The authority to issue additional shares of First Alabama Common Stock
provides First Alabama with the flexibility necessary to meet its future needs
without the delay resulting from seeking stockholder approval. The authorized
but unissued shares of First Alabama Common Stock will be issuable from time to
time for any corporate purpose, including, without limitation, stock splits,
stock dividends, employee benefit and compensation plans, acquisitions, and
public or private sales for cash as a means of raising capital. Such shares
could be used to dilute the stock ownership of persons seeking to obtain
control of First Alabama. In addition, the sale of a substantial number of
shares of First Alabama Common Stock to persons who have an understanding with
First Alabama concerning the voting of such shares, or the distribution or
declaration of a dividend of shares of First Alabama Common Stock (or the right
to receive First Alabama Common Stock) to First Alabama stockholders, may have
the effect of discouraging or increasing the cost of unsolicited attempts to
acquire control of First Alabama.
GUARANTY. Guaranty's authorized capital stock consists of 1,250,000
shares of Guaranty Common Stock, of which 766,025 shares were issued, including
8,220 treasury shares, as of February 11, 1994.
Pursuant to the Louisiana Act, Guaranty's Board of Directors may authorize
the issuance of additional authorized shares of Guaranty Common Stock without
further action by Guaranty's stockholders. Guaranty's Articles, as amended,
deny the stockholders of Guaranty preemptive rights to purchase or subscribe to
any unissued authorized shares of Guaranty Common Stock or any option or
warrant for the purchase thereof.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
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FIRST ALABAMA. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class, is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock, election, classification, and removal of directors, the approval
required for certain business combinations, meetings of stockholders, and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
First Alabama voting stock, voting together as a single class.
The Certificate also provides that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws. Any action taken by the stockholders with
respect to adopting, amending, or repealing any Bylaws may be taken only upon
the affirmative vote of the holders of at least 75% of the voting power of
First Alabama's voting stock.
GUARANTY. The Louisiana Act generally provides that a Louisiana
corporation's articles of incorporation may be amended by the affirmative vote
of at least two-thirds of the voting power present, or by such larger or
smaller percentage of the voting power present at an annual or special meeting
of the stockholders or of the total voting power, but not less than a majority,
as such articles of incorporation may require. Guaranty's Articles provide
that, except as otherwise provided in the Articles, the Bylaws, or by provision
of law, a majority of votes actually cast shall decide any matter properly
before any stockholders' meeting organized for the transaction of business.
The Articles also provide that Guaranty's Board of Directors has the power
to alter, amend, or repeal the Bylaws or to adopt new Bylaws, subject to the
concurrent power of the stockholders of Guaranty to alter, amend, or repeal the
Bylaws or to adopt new Bylaws. Pursuant to Guaranty's Bylaws, the stockholders
have the power to (i) provide that any or all Bylaws altered, amended,
repealed, or adopted by the stockholders shall not be altered, amended, or
repealed by the Board of Directors and (ii) repeal the power and authority of
the Board of Directors to alter, amend, or repeal the Bylaws or to adopt new
Bylaws.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
FIRST ALABAMA. The Certificate provides that First Alabama's Board of
Directors is divided into three classes, with each class to be as nearly equal
in number as possible. The directors in each class serve three-year terms of
office.
The effect of First Alabama's having a classified Board of Directors is
that only approximately one-third of the members of the Board is elected each
year, which effectively requires two annual meetings for First Alabama's
stockholders to change a majority of the members of the Board.
Pursuant to the Certificate, each stockholder generally is entitled to one
vote for each share of First Alabama stock held and is not entitled to
cumulative voting rights in the election of directors. With cumulative voting,
a stockholder has the right to cast a number of votes equal to the total number
of such holder's shares multiplied by the number of directors to be elected.
The stockholder has the right to cast all of such holder's votes in favor of
one candidate or to distribute such holder's votes in any manner among any
number of candidates. Directors are elected by a plurality of the total votes
cast by all stockholders. With cumulative voting, it may be possible for
minority stockholders to obtain representation on the Board of Directors.
Without cumulative voting, the holders of more than 50% of the shares of First
Alabama Common Stock generally have the ability to elect 100% of the directors.
As a result, the holders of the remaining First Alabama Common Stock
effectively may not be able to elect any person to the Board of Directors. The
absence of cumulative voting thus could make it more difficult for a
stockholder who acquires less than a majority of the shares of First Alabama
Common Stock to obtain representation on First Alabama's Board of Directors.
GUARANTY. Guaranty's Bylaws generally provide that the number of
directors constituting the Board of Guaranty shall be determined by resolution
of the Board or the stockholders of Guaranty at any meeting thereof, but shall
not be less than one. There were 15 directors constituting the Board as of
February 11, 1994. Directors are elected by plurality vote of the stockholders
of Guaranty and hold office until the next annual meeting of stockholders or
until their successors are elected and qualified. The Articles prohibit
cumulative voting by the stockholders for the election of directors.
REMOVAL OF DIRECTORS
FIRST ALABAMA. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of 75% of First Alabama's voting stock.
GUARANTY. Pursuant to Guaranty's Articles and Bylaws, any director or the
entire Board may be removed, with or without cause, by the affirmative vote of
the holders of a majority of the shares of Guaranty voting stock.
LIMITATIONS ON DIRECTOR LIABILITY
FIRST ALABAMA. The Certificate provides that a director of First Alabama
will have no personal liability to First Alabama or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability for (i) any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) the
payment of certain unlawful dividends and the making of certain unlawful stock
purchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of his duties, if the action is among those as to
which liability is limited. This provision may reduce the likelihood of
stockholder derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duties, even though such action, if successful, might have benefitted
First Alabama and its stockholders. The SEC has taken the position that similar
provisions added to other corporations' certificates of incorporation would not
protect those corporations' directors from liability for violations of the
federal securities laws.
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GUARANTY. Guaranty's Articles provide that if a director discloses his
interest in any transaction with Guaranty, whether direct or indirect, or his
interest is otherwise known to Guaranty's directors or stockholders who
approved such interested transaction and such transaction was fair as to
Guaranty as of the time it was authorized, approved or ratified by Guaranty's
Board, a director of Guaranty will have no personal liability to Guaranty or
its stockholders which might otherwise exist for entering into such interested
transaction with Guaranty, whether or not such interested director's presence
at a meeting, or his vote, was necessary to obligate Guaranty in such
interested transaction.
INDEMNIFICATION
FIRST ALABAMA. The Certificate provides that First Alabama will indemnify
its officers, directors, employees, and agents to the full extent permitted by
the Delaware GCL. Under Section 145 of the Delaware GCL as currently in effect,
other than in actions brought by or in the right of First Alabama, such
indemnification would apply if it were determined in the specific case that the
proposed indemnitee acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of First Alabama and,
with respect to any criminal proceeding, if such person had no reasonable cause
to believe that the conduct was unlawful. In actions brought by or in the right
of First Alabama, such indemnification probably would be limited to reasonable
expenses (including attorneys' fees) and would apply if it were determined in
the specific case that the proposed indemnitee acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of First Alabama, except that no indemnification may be made with
respect to any matter as to which such person is adjudged liable to First
Alabama, unless, and only to the extent that, the court determines upon
application that, in view of all the circumstances of the case, the proposed
indemnitee is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper. To the extent that any director, officer, employee, or
agent of First Alabama has been successful on the merits or otherwise in
defense of any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, such person must be indemnified against
reasonable expenses incurred by him in connection therewith.
GUARANTY. Guaranty's Articles provide that Guaranty may indemnify its
current or former directors, officers, employees, or agents and persons who are
or were serving as such at the request of Guaranty for another business entity
against expenses, including attorneys' fees, judgments, fines, and amounts paid
in settlement which are actually and reasonably incurred by such proposed
indemnitee provided the proposed indemnitee acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, Guaranty's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. In causes of action by or in the right of
Guaranty, the indemnity shall be limited to expenses, including attorneys' fees
and amounts paid in settlement not exceeding, in the judgment of the Board, the
estimated expense of litigating the action to conclusion, actually and
reasonably incurred in connection with the defense or settlement of the cause.
Notwithstanding the above authorization, Guaranty shall not indemnify any
person in respect to any claim, issue or matter as to which such person shall
have been adjudged by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable for wilful or intentional misconduct in the
performance of his duty to Guaranty, unless and only to the extent that such
court shall determine upon application that despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for expenses which the court deems
proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the proposed indemnitee did not
act in accordance with the applicable standard for indemnification set forth
above.
The determination in a specific case that the indemnification has met the
applicable standard of conduct set forth above shall be made by (i) the
majority vote of a quorum of disinterested directors of the Board; (ii) if such
a quorum is not obtainable, and the Board so directs, by independent legal
counsel; or (iii) by the stockholders.
To the extent a director, officer, employee or agent of Guaranty has been
successful on the merits or otherwise in defense of any action, suits, or
proceeding, or claim, issue, or matter therein, Guaranty shall indemnify such
person against expenses (including attorneys' fees) actually and reasonably
incurred by him.
Guaranty is authorized to pay such expenses in advance of the final
deposition of the case if authorized by the Board, without regard to whether
participating directors are parties to such action, suit, or proceeding, upon
receipt of an undertaking by such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by Guaranty
pursuant to the power and authority of Guaranty under the Articles.
Guaranty may also procure or maintain insurance or other similar
arrangement on behalf of any of the persons who may be indemnified against any
liability asserted against or incurred by him in any such capacity, or arising
out of his status as such, regardless of whether Guaranty may indemnify such
person under the Articles.
SPECIAL MEETINGS OF STOCKHOLDERS
FIRST ALABAMA. First Alabama's Certificate and Bylaws provide that such
meetings may be called at any time, but only by the Chief Executive Officer,
the Secretary, or the Board of Directors of First Alabama. First Alabama
stockholders do not have the right to call a special meeting or to require that
First Alabama's Board of Directors call such a meeting. This provision,
combined with other provisions of the Certificate and the restriction on the
removal of directors, would prevent a substantial stockholder from compelling
stockholder consideration of any proposal (such as a proposal for a business
combination) over the opposition of First Alabama's Board of Directors by
calling a special meeting of stockholders at which such stockholder could
replace the entire Board with nominees who were in favor of such proposal.
GUARANTY. Under Guaranty's Bylaws, special meetings of the stockholders
of Guaranty may be called at any time by the president, the Board, or the
holders of not less than 10% of all shares of Guaranty voting stock.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
22
<PAGE> 27
FIRST ALABAMA. The Certificate provides that any action required or
permitted to be taken by First Alabama stockholders must be effected at a duly
called meeting of stockholders and may not be effected by any written consent
by the stockholders. These provisions would prevent stockholders from taking
action, including action on a business combination, except at an annual or
special meeting called by the Board of Directors, even if a majority of the
stockholders were in favor of such action.
GUARANTY. Guaranty's Bylaws provide that action required or permitted to
be taken at a meeting of stockholders may be taken without a meeting only if a
consent in writing, setting forth the action so taken, is signed by all of the
holders of shares of Guaranty voting stock. The signed consent shall be placed
in the corporate books of Guaranty.
STOCKHOLDER NOMINATIONS AND PROPOSALS
FIRST ALABAMA. First Alabama's Certificate and Bylaws provide that any
nomination by stockholders of individuals for election to the Board of
Directors must be made by delivering written notice of such nomination (the
"Nomination Notice") to the Secretary of First Alabama not less than 14 days
nor more than 50 days before any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days' notice of
the meeting is given to stockholders, the Nomination Notice must be delivered
to the Secretary of First Alabama not later than the seventh day following the
day on which notice of the meeting was mailed to stockholders. The Nomination
Notice must set forth certain background information about the persons to be
nominated, including information concerning (i) the name, age, business, and,
if known, residential address of each nominee, (ii) the principal occupation or
employment of each such nominee, and (iii) the number of shares of First
Alabama capital stock beneficially owned by each such nominee. The Board of
Directors is not required to nominate in the annual proxy statement any person
so proposed; however, compliance with this procedure would permit a stockholder
to nominate the individual at the stockholders' meeting, and any stockholder
may vote such holder's shares in person or by proxy for any individual such
holder desires.
GUARANTY. Neither the Louisiana Act, Guaranty's Articles nor Bylaws sets
forth any procedure for stockholder nominations and proposals.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
FIRST ALABAMA. Section 203 of the Delaware GCL ("Section 203") places
certain restrictions on "business combinations" (as defined in Section 203,
generally including mergers, sales and leases of assets, issuances of
securities, and similar transactions) by Delaware corporations with an
"interested stockholder" (as defined in Section 203, generally the beneficial
owner of 15% or more of the corporation's outstanding voting stock). Section
203 generally applies to Delaware corporations, such as First Alabama, that
have a class of voting stock listed on a national securities exchange,
authorized for quotation on an interdealer quotation system of a registered
national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
First Alabama has not specifically elected to avoid the application of
Section 203. As a result, Section 203 generally would prohibit a business
combination by First Alabama or a subsidiary with an interested stockholder
within three years after the person or entity becomes an interested
stockholder, unless (i) prior to the time when the person or entity becomes an
interested stockholder, First Alabama's Board of Directors approved either the
business combination or the transaction pursuant to which such person or entity
became an interested stockholder, (ii) upon consummation of the transaction in
which the person or entity became an interested stockholder, the interested
stockholder held at least 85% of the outstanding First Alabama voting stock
(excluding shares held by persons who are both officers and directors and
shares held by certain employee benefit plans), or (iii) once the person or
entity becomes an interested stockholder, the business combination is approved
by First Alabama's Board of Directors and by the holders of at least two-thirds
of the outstanding First Alabama voting stock, excluding shares owned by the
interested stockholder.
GUARANTY. Section 12:133 of the Louisiana Act places similar restrictions
on "business combinations" (as defined in Section 12:132(4) of the Louisiana
Act, generally including mergers, consolidations, share exchanges, sales and
leases of assets, issuances of securities, and similar transactions) by
Louisiana corporations with an "interested stockholder" (as defined in Section
12:132(9) of the Louisiana Act, generally the beneficial owner of 10% or more
of the voting power of the then outstanding voting stock). Section 12:133 of
the Louisiana Act generally applies to business combinations of Louisiana
corporations having greater than 100 beneficial owners of its stock or which
did not have an interested stockholder on January 1, 1985, unless the articles
of incorporation expressly provide otherwise. Section 12:133 of the Louisiana
Act generally does not apply provided the stockholders receive in the business
combination substantially similar consideration for their shares of stock in
the corporation in terms of price and method of payment, as determined in
accordance with Section 12:134B of the Louisiana Act, as the interested
stockholder received for its shares of stock in the corporation acquired by
such interested stockholder within two years of such business combination.
As Guaranty has not specifically elected to avoid the application of
Section 12:133 of the Louisiana Act, Section 12:133 of the Louisiana Act
generally would prohibit a business combination by Guaranty with an interested
stockholder unless the business combination is recommended by Guaranty's Board
and approved by the affirmative vote of at least each of the following: (i)
80% of the votes entitled to be cast by outstanding shares of Guaranty voting
stock voting together as a single voting group, and (ii) 66 2/3% of the votes
entitled to be cast by holders of Guaranty voting stock, other than voting
stock held by the interested stockholder who is a party to the business
combination with Guaranty, voting together as a single voting group.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
FIRST ALABAMA. The Certificate generally requires the affirmative vote of
the holders of at least 75% of the outstanding voting stock of First Alabama to
effect (i) any merger or consolidation with or into any other corporation, or
(ii) any sale or lease of any substantial part of the assets of First Alabama
to any party that beneficially owns 5% or more of the outstanding shares of
First Alabama voting stock, unless the transaction was approved by First
Alabama's Board of Directors before the other
23
<PAGE> 28
party became a 5% beneficial owner or is approved by 75% or more of the full
Board after the party becomes such a 5% beneficial owner.
GUARANTY. The Louisiana Act generally requires the affirmative vote of at
least 75% of the voting power present, or by such larger or smaller vote, but
not less than a majority, of the voting power present or of the total voting
power as the articles of incorporation may prescribe to effect (i) any merger
or consolidation with or into any other corporation, or (ii) any sale or lease
of any substantial part of the assets of the corporation if the corporation is
not insolvent. Guaranty's Articles provide that except as otherwise provided
in the Articles, the Bylaws or by provision of law, a majority of votes
actually cast shall decide any matter properly before any stockholders meeting.
DISSENTERS' RIGHTS OF APPRAISAL
FIRST ALABAMA. The rights of appraisal of dissenting stockholders of
First Alabama are governed by the Delaware GCL. Pursuant thereto, except as
described below, any stockholder has the right to dissent from any merger of
which First Alabama could be a constituent corporation. No appraisal rights are
available, however, for (i) the shares of any class or series of stock that is
either listed on a national securities exchange, quoted on the Nasdaq National
Market, or held of record by more than 2,000 stockholders or (ii) any shares of
stock of the constituent corporation surviving a merger if the merger did not
require the approval of the surviving corporation's stockholders, unless, in
either case, the holders of such stock are required by an agreement of merger
or consolidation to accept for that stock something other than: (a) shares of
stock of the corporation surviving or resulting from the merger or
consolidation; (b) shares of stock of any other corporation that will be listed
at the effective date of the merger on a national securities exchange, quoted
on the Nasdaq National Market, or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of stock described in
clause (a) or (b) immediately above; or (d) any combination of the shares of
stock and cash in lieu of fractional shares described in clauses (a) through
(c) immediately above. Because First Alabama Common Stock is quoted on the
Nasdaq National Market and is held of record by more than 2,000 stockholders,
unless the exception described immediately above applies, holders of First
Alabama Common Stock do not have dissenters' rights of appraisal.
GUARANTY. The rights of appraisal of dissenting stockholders under
Louisiana law, while generally similar to those afforded under the Delaware
GCL, differ in certain details. For a full description of the rights of
dissenting stockholders under Louisiana law, see "Description of the
Transaction -- Dissenting Stockholders."
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
FIRST ALABAMA. The Delaware GCL provides that a stockholder may inspect
books and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as
a stockholder.
GUARANTY. Pursuant to the Louisiana Act, upon at least five days' written
notice any stockholder, except a business competitor, who is and has been the
holder of record of at least 5% of the outstanding shares of any class of a
corporation for at least six months, has the right to examine and inspect any
records and accounts of the corporation at any reasonable time so long as there
is a reasonable purpose. In the case of a business competitor, such competitor
must own not less than 25% of all outstanding shares of the corporation for a
period of six months before he may exercise the right to examine and inspect
the records of the corporation.
DIVIDENDS
FIRST ALABAMA. The Delaware GCL provides that, subject to any
restrictions in the corporation's certificate of incorporation, dividends may
be declared from the corporation's surplus, or, if there is no surplus, from
its net profits for the fiscal year in which the dividend is declared and the
preceding fiscal year. Dividends may not be declared, however, if the
corporation's capital has been diminished to an amount less than the aggregate
amount of all capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets. Substantially all
of the funds available for the payment of dividends by First Alabama are
derived from its subsidiary depository institutions. There are various
statutory limitations on the ability of First Alabama's subsidiary depository
institutions to pay dividends to First Alabama. See "Supervision and Regulation
- -- Dividends."
GUARANTY. Pursuant to the Louisiana Act, the board of directors may from
time to time declare dividends in cash, property or its own shares out of
surplus, except earned surplus reserved by the board of directors, unless the
corporation is insolvent or would thereby be made insolvent or the declaration
or payment of the dividend would be contrary to any restrictions contained in
the articles of incorporation. If the corporation has no surplus available for
dividends, it may pay dividends out of its net profits for the then current or
the preceding fiscal year or both. However, no dividend may be paid at a time
when, either before or after the payment of the dividend, the corporation's
liabilities exceed its assets or the net assets are less than the aggregate
amount payable on liquidation upon the issued shares, if any, which have a
preferential right to participate in the corporation's assets in the event of
liquidation. No dividends may be paid in shares, other than treasury shares,
except upon transfer to stated capital from capital surplus of (i) an amount
not less than the aggregate par value of the issued par value shares and (ii)
such amount as the board of directors of the corporation may determine in
respect of issued shares without par value. No dividend payable in shares of
any class shall be paid to stockholders of any other class, unless the articles
of incorporation so permit or such payment is authorized by the holders of a
majority of the shares of the class in which the payment is to be made.
COMPARATIVE MARKET PRICE AND DIVIDENDS
First Alabama Common Stock is listed for quotation on the automated
quotation system of the NASD and is quoted on the Nasdaq National Market under
the symbol "FABC." Guaranty Common Stock is not traded in any established
market. The following table sets forth, for the indicated periods, the high
and low closing sale prices for First Alabama Common Stock as reported by
Nasdaq,
24
<PAGE> 29
the high and low prices for Guaranty Common Stock and the cash dividends
declared per share of First Alabama Common Stock and Guaranty Common Stock for
the indicated periods. The stock prices and historical dividends for First
Alabama have been adjusted to reflect a 10% stock dividend paid by First
Alabama on April 1, 1993. The prices indicated for Guaranty are based on actual
transactions in Guaranty Common Stock in 1992 and 1993 of which Guaranty
management is aware; however, no assurance can be given that the indicated
prices represent the actual market value of the Guaranty Common Stock.
<TABLE>
<CAPTION>
FIRST ALABAMA GUARANTY
PRICE RANGE CASH DIVIDENDS PRICE RANGE CASH DIVIDENDS
----------- DECLARED ------------- DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- -------------- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
1992
First Quarter................. $28.13 $23.75 $.2275 $10.00 $10.00 -0-
Second Quarter................ 30.00 25.13 .2275 10.00 10.00 -0-
Third Quarter................. 30.75 27.50 .2275 14.85 14.85 -0-
Fourth Quarter................ 33.88 28.38 .2275 12.00 12.00 -0-
1993
First Quarter................. 38.38 31.25 .26 12.00 12.00 -0-
Second Quarter................ 38.25 30.25 .26 12.00 11.75 -0-
Third Quarter................. 35.25 31.25 .26 21.43 12.00 -0-
Fourth Quarter ............... 35.00 29.63 .26 (a) (a) -0-
1994
First Quarter ................. 33.50 30.13 .30 (a) (a) -0-
Second Quarter (through ) .
</TABLE>
- --------------
(a) No known transactions.
On , 1994, the last reported sale price of First Alabama Common Stock
as reported on the Nasdaq National Market, and the last known price of
Guaranty Common Stock, were $ and $ . , respectively. On December 28,
1993, the last business day prior to public announcement of the proposed
Merger, the last reported sale price of First Alabama Common Stock as
reported on the Nasdaq National Market, and the last known price of
Guaranty Common Stock, were $32.00 and $12.00, respectively.
The holders of First Alabama Common Stock are entitled to receive
dividends when and if declared by the Board of Directors out of funds legally
available therefor. First Alabama has paid regular quarterly cash dividends
since 1971. Although First Alabama currently intends to continue to pay
quarterly cash dividends on the First Alabama Common Stock, there can be no
assurance that First Alabama's dividend policy will remain unchanged after
completion of the Merger. The declaration and payment of dividends thereafter
will depend upon business conditions, operating results, capital and reserve
requirements, and the Board of Directors' consideration of other relevant
factors.
First Alabama is a legal entity separate and distinct from its
subsidiaries and its revenues depend in significant part on the payment of
dividends from its subsidiary financial institutions, particularly First
Alabama Bank. First Alabama's subsidiary depository institutions are subject to
certain legal restrictions on the amount of dividends they are permitted to
pay. See "Supervision and Regulation -- Dividends."
Guaranty's policy has been to defer the payment of dividends until such
time as the long-term debt has been repaid. The Bank has paid dividends to
Guaranty in an amount sufficient to service the long-term debt.
GUARANTY MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Guaranty derives all of its income from its wholly-owned subsidiary, the
Bank.
The Bank's results of operation are primarily affected by its net
interest income. Net interest income is defined as interest and fees on loans
and investments, less interest expense on deposits. Interest from loans and
investments is a function of the average balance outstanding during the period
and the average rates earned. The Bank's cost of funds is a function of the
average rates paid on such deposits. Gains or losses on the sale of loans and
securities also affect income as do service charges and other fees. The Bank's
net income is further affected by the level of other expenses such as employee
compensation and benefits, occupancy cost and insurance.
INTEREST RATE SENSITIVITY
The relationship between earning assets and interest-bearing liabilities
considered to be interest rate sensitive within given maturity ranges is called
the asset or liability funding gap, depending on whether such earning assets
exceed or are exceeded by interest-sensitive liabilities.
As a policy, budgeted financial goals are monitored on a monthly basis by
the Board of Directors where the actual dollar change in net interest income is
reviewed. The following analysis indicates the rate sensitivity of earning
assets and interest-bearing liabilities at December 31, 1993.
25
<PAGE> 30
INTEREST RATE SENSITIVITY ANALYSIS
As of December 31, 1993 (Dollars in thousands)
<TABLE>
<CAPTION>
REPRICING WITHIN
0 - 90 91 - 365 OVER 1
DAYS DAYS YEAR TOTAL
<S> <C> <C> <C> <C>
EARNING ASSETS
Loans $ 80,702 $ 23,239 $ 26,865 $ 130,806
Investment securities 7,218 20,141 8,830 36,189
Funds sold 5,410 0 0 5,410
Total earning assets 93,330 43,380 35,695 172,405
INTEREST-BEARING LIABILITIES
Interest-bearing deposits 38,491 49,538 45,318 133,347
Total interest-bearing
liabilities 38,491 49,538 45,318 133,347
Interest-sensitivity gap $ 54,839 $ (6,158) $ (9,623) $ 39,058
Cumulative gap at
December 31, 1993 $ 54,839 $ 48,681 $ 39,058
Cumulative gap at
December 31, 1992 $ 86,704 $ 34,689 $ 29,732
</TABLE>
LIQUIDITY
The purpose of liquidity management is to ensure that there is sufficient
cash flow to satisfy demands for credit, deposit withdrawals and other banking
needs. Traditional sources of liquidity include asset maturities and growth in
core deposits. Wholesale purchased liabilities, such as negotiable
certificates of deposit, federal funds purchased, and securities sold under
agreements to repurchase, represent other major sources of funding. Liquidity
has not been a problem, nor does management expect it will be as the economy
expands, given the Bank's current liquidity position. The loan to deposit
ratio at December 31, 1993 and 1992 was 78.1% and 80.2%, respectively.
CAPITAL RESOURCES
Although the Bank has not made commitments for significant capital
expenditures, the Bank's capital is subject to regulatory constraints.
Regulatory agencies measure capital adequacy within a framework that makes
capital requirements sensitive to the risk profiles of individual banks. As
described in further detail under "Supervision and Regulation - Capital
Adequacy", the Bank is required to maintain "Total Capital" of 8.0%, "Tier 1
Capital" of 4.0% and a "Leverage ratio" of at least 3.0% plus an additional
cushion of 100 to 200 basis points. At December 31, 1993, the Bank's
consolidated Tier 1 Capital and Total Capital ratios were 10.56% and 11.81%,
respectively. Also at such date, the Bank's Leverage ratio was 6.86%.
Accordingly, the Bank has the requisite capital levels to qualify it as a "well
capitalized" institution under the prompt corrective action regulations
discussed under "Supervision and Regulation - Prompt Corrective Action."
RESULTS OF OPERATIONS
Net interest income is the Bank's principal source of revenue and is
measured by the difference between interest income earned on loans and
investments and interest expense incurred on deposits and borrowings. In 1993,
net interest income increased by $626,994 or 7.9%, as compared to an increase of
$1,907,990 or 31.9% in 1992. The Bank's net interest margin (that is, net
interest income divided by average interest earning assets) increased from
5.06% in 1991, to 5.37% in 1992, and decreased to 5.07% in 1993. The primary
determinant of the increase in net interest income from 1991 to 1992 was the
decline in interest rates during 1991, and the further decline in 1992. The
Bank was able to reprice its deposits at a faster rate than its loans due to
the Bank's liability sensitive position. The Bank's net interest income
further increased during 1993, as a result of its leverage factor
(interest-earning assets divided by interest-bearing liabilities) increasing
from 1.23 in 1992, to 1.28 in 1993. Therefore, not only was the Bank able to
widen its net interest spread (yield on earning assets less yield on
interest-bearing liabilities) as a result of declining interest rates, it was
able to increase its leverage ratio through decreasing its non-interest-earning
assets from $15,541,024 at the end of 1992 to $11,503,339 at the end of 1993.
26
<PAGE> 31
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. The provision for loan losses was $680,000 in 1993, $961,704 in
1992 and $806,000 in 1991. Management was able to reduce its 1993 provision
for possible loan losses as a result of improvement in the credit quality of
the Company's loan portfolio.
Nonaccrual loans, which are loans on which interest recognition has
been suspended until realized because of doubts as to the borrower's ability to
repay principal or interest, were $922,000, at December 31, 1993, as compared
to $1,690,400 at December 31, 1992. The decrease in the Bank's nonaccrual
loans during 1993 can be attributed to principal pay-downs, charge-downs of
problem loans, and transfers to other real estate. Net charge-offs of loans in
1993, 1992, and 1991 were $732,989, $610,019 and $644,838 respectively.
The allowance for possible loan losses at December 31, 1993 was $1,955,299
or 1.50% of net loans outstanding compared to $2,008,288 or 1.59% of net loans
outstanding at December 31, 1992. It is management's opinion that the
allowance for possible loan losses at December 31, 1993 is adequate, based upon
the Bank's review of the loan portfolio and its aggressive charge-off and
collection practices.
Non-interest income increased from $1,049,200 in 1991, to $1,251,872 in
1992, and $1,446,405 in 1993. Service charges, the largest component of non-
interest income, accounted for most of these increases and was $853,002 in
1991, $938,866 in 1992, and $1,149,597 in 1993. The increase in service charge
income is due to the growth of deposits and increases in scheduled service
charge fees.
The other components of non-interest income totaled $196,198 in 1991
(which included a loss on marketable equity securities of $46,336), $313,006 in
1992, and $296,808 in 1993.
As the Bank has continued to grow, non-interest expenses have also
increased from $4,078,638 in 1991, to $4,863,882 in 1992, a 19.3% increase, and
$5,513,988 in 1993, a 13.4% increase. Salaries and employee benefits increased
by $455,206 from 1991 to 1992, a 25.3% increase, and by $360,076 from 1992 to
1993, a 16.0% increase, due to normal adjustments to salaries for merit and
inflation and increases in total number of employees. At December 31, 1993,
1992 and 1991, the Bank employed 78,73 and 63 full-time equivalent employees,
respectively. Occupancy and equipment expense increased significantly from
1991 to 1992 due to the relocation to larger facilities of the Bank's executive
offices and Essen Lane branch, and was $652,224 in 1991, $951,966 in 1992 and
$1,062,531 in 1993. The operation of other real estate resulted in net income
from these properties in 1993 of $6,450, compared to net costs of $12,480 in
1992, and $311,710 in 1991. The Bank has been successful in divesting itself
of these properties that were acquired in satisfaction of indebtedness to the
Bank.
In 1993, 1992 and 1991, gains on sales of other real estate were $76,852,
$142,131 and $0, respectively, while the provision for losses on other real
estate in these years were $72,021, $108,505 and $259,840.
Net income in 1993 was $2,522,218, a 14.1% increase over 1992, $2,209,953
in 1992, a 52.7% increase over 1991, and $1,446,991 in 1991.
IMPACT OF INFLATION AND CHANGING PRICES
The majority of assets and liabilities of a financial institution are
monetary in nature and therefore differ greatly from those of other commercial
and industrial companies that have significant investments in fixed assets or
inventories. In industries with a high proportion of fixed assets, there is a
greater potential for earnings to be inflated by understated depreciation
charges, as well as the potential for significant understatement of the current
values of these assets. Likewise, in industries with high levels of
inventories, reported earnings may reflect significant increases in inventory
values. Neither of these factors is important in the banking industry.
However, inflation does have an important impact on the growth of total assets
in the banking industry and the resulting need to increase equity capital at
higher than normal rates in order to maintain an appropriate equity-to-assets
ratio.
Although inflation affects the growth of total assets, it is difficult to
measure the impact precisely. Only new assets acquired in each year are
directly affected rather than the total asset portfolio, so a simple adjustment
of asset totals by use of an inflation index is not satisfactory. The results
of operations also have been affected by inflation, but again there is no
simple way to measure the effect on various types of income and expense.
Interest rates in particular are significantly affected by inflation, but
neither the timing nor the magnitude of the changes coincide with changes in
the consumer price index. These factors in turn affect the composition of
sources of funds by reducing growth of core deposits and increasing the need
for purchased funds. On the other hand, many categories of operating expense
are more directly affected by current rates of inflation.
FINANCIAL CONDITION
The Bank functions as a financial intermediary, and as such its
financial condition should be examined in terms of trends in its sources and
uses of funds. The Bank's primary use of funds is for loans. Loans
outstanding have continued to increase in recent years due to increased loan
demand and strategic marketing of the Bank's products and services. As a
result, average loans increased from $94,579,000 in 1991 to $116,899,000 in
1992, and $130,356,000 in 1993.
Investment securities increased from $24,811,587 at December 31, 1992 to
$36,089,671 at December 31, 1993, an $11,278,084 or 45.5% increase. Investment
securities serve as a repository for funds and a source for the Bank to meet
its liquidity needs.
Deposits are the Bank's primary source of funds. Total deposits have
continued to increase and were $137,987,137, $157,735,330 and $167,342,448 at
the end of 1991, 1992 and 1993, respectively. Non-interest-bearing demand
deposits made up 18.6% of total deposits at the end of 1991, 19.2% at the end
1992, and 20.3% at the end of 1993. Time deposits under $100,000 have
accounted for most of the increase in total deposits. From year-end 1991 to
1993, these deposits increased by $19,357,758 or 46.0%.
PROBLEM ASSETS AND ASSET CLASSIFICATION
27
<PAGE> 32
Loans are reviewed on a regular basis and are placed on nonaccrual status
when, in the opinion of management, the collection of additional interest is
doubtful. Generally, this occurs when either principal or interest is 90 days
or more past due. Interest accrued and unpaid at the time a loan is placed on
nonaccrual status is charged against interest income. Subsequent payments are
either applied to the outstanding principal balance or recorded as interest
income, depending on the assessment of the ultimate collectibility of the loan.
Real estate acquired by the Bank as a result of foreclosure or by deed in
lieu of foreclosure is classified as real estate owned until such time as it is
sold. When such property is acquired, it is recorded at the lower of the
unpaid principal balance of the related loan or its fair value less estimated
cost to sell. Any writedown of the property subsequent to acquisition is
charged to operations.
The following table presents information concerning loans with risk
elements. Risk elements include (a) loans accounted for on a nonaccrual basis,
(b) accruing loans which are contractually past due 90 days or more as to
principal or interest payments, (c) loans not included above which are
"troubled debt restructurings," and (d) real estate acquired through
foreclosures or repossessions.
NONPERFORMING ASSETS
December 31, 1993, 1992, and 1991
(Dollar Amounts in Thousands)
<TABLE>
<S> <C> <C> <C>
Nonperforming loans: 1993 1992 1991
---- ---- ----
Loans accounted for on a nonaccrual basis $ 922 $ 1,690 $ 1,888
Accruing loans which are contractually
past due 90 days or more as to
principal or interest payments -0- -0- -0-
Restructured loans (exclusive of non-
accrual loans and loans past due ninety
days or more) -0- -0- -0-
Real estate acquired through foreclosure
or repossession 867 1,263 1,377
------- ------- -------
Total $ 1,789 $ 2,953 $ 3,265
------- ------- -------
------- ------- -------
</TABLE>
ALLOWANCE FOR POSSIBLE LOSSES ON LOANS AND REAL ESTATE
In making loans, the Bank recognizes that credit losses will be
experienced and that the risk of loss will vary with, among other things, the
type of loan being made, the credit worthiness of the borrower over the term of
the loan, and, in the case of a secured loan, the quality of the security for
the loan.
It is management's policy to maintain adequate allowances for estimated
losses on loans and real estate acquired. Such allowances are based on, among
other things, estimates of the historical loan loss experience, evaluation of
economic conditions in general and in various sectors of the Bank's customer
base, and periodic reviews of loan portfolio quality by the Bank's personnel.
Specific allowances will be provided for individual loans where the ultimate
collection is considered questionable by management after reviewing the current
status of loans which are contractually past due and considering the net
realizable value of the loan or guarantees, if applicable.
The following analysis sets forth information with respect to the Bank's
loan loss experience and loan loss allowance for the periods indicated.
28
<PAGE> 33
ANALYSIS OF LOAN LOSS EXPERIENCE
December 31, 1993, 1992, and 1991
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Allowance for possible loan losses:
Balance at beginning of year $ 2,008 $ 1,656 $ 1,495
Loans charged off:
Real Estate 286 416 201
Consumer 98 171 149
Commercial 465 230 406
Total 849 817 756
Recoveries:
Real Estate 29 74 35
Consumer 47 86 51
Commercial 40 47 25
Total 116 207 111
Net loans charged off:
Real Estate 257 342 166
Consumer 51 85 98
Commercial 425 183 381
Total 733 610 645
Provision charged to expense 680 962 806
Balance at end of year $ 1,955 $ 2,008 $ 1,656
Net charge-offs as percent of average
loans outstanding during the period 0.56% 0.52% 0.68%
</TABLE>
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
December 31, 1993, 1992, and 1991
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1993 1992 1991
Percent Percent Percent
of Loans of Loans of Loans
to Total to Total to Total
Amount Loans Amount Loans Amount Loans
<S> <C> <C> <C> <C> <C> <C>
Balance at end of period
applicable to:
Real Estate $1,076 70.88% $1,442 66.71% $1,130 62.25%
Consumer 100 6.58 101 6.49 138 7.65
Commercial 779 14.42 465 16.61 388 18.72
Other 0 8.12 0 10.19 0 11.38
Total $1,955 100% $2,008 100% $1,656 100%
</TABLE>
29
<PAGE> 34
BUSINESS OF GUARANTY
BUSINESS AND PROPERTIES
Guaranty is a Louisiana business corporation and a one bank holding
company registered under the BHC Act. It was formed in 1981 for the purpose of
holding all of the outstanding stock of the Bank, which is Guaranty's sole
subsidiary.
The Bank was formed in 1971 under the banking laws of the State of
Louisiana. The Bank conducts a general commercial banking business through its
six locations in East Baton Rouge Parish, Louisiana, and offers a full range of
traditional commercial banking services, including demand, savings, and time
deposits, consumer, commercial, and real estate loans, safe deposit boxes,
access to two retail credit plans ("VISA" and "Mastercard"), and access to 24
hour teller machines (ATM's) through the "Cirrus" and "Pulse" networks.
Although granted limited trust powers, the Bank does not presently offer trust
services. Drive-in banking facilities are located at all banking locations.
As of December 31, 1993, Guaranty and the Bank had approximately 78 full
time equivalent employees. Guaranty has no salaried employees, although
certain executive officers hold parallel positions with the Bank. No employees
are represented by unions or other bargaining units, and management considers
its relations with employees to be satisfactory.
The Bank leases two of its six locations under operating leases, including
the main office located at 5353 Essen Lane, Baton Rouge, Louisiana 70809. The
main office lease includes approximately 3,000 square feet for the banking
facility, and 10,000 square feet for executive offices. A branch banking
facility located at 9590 Florida Boulevard, Baton Rouge, Louisiana 70815
contains approximately 6,600 square feet and is leased from Guaranty's second
largest stockholder, a limited liability company controlled by the Company's
chairman and largest stockholder.
All other banking offices and the Bank's operations center are owned by
the Bank. The operations center is adjacent to the Florida Boulevard branch
and contains approximately 3,500 square feet. Departments housed at the
operations center include proof and transit, bookkeeping, and loan
administration. The remaining four branches are: (i) 3013 College Drive, Baton
Rouge, Louisiana 70808, with approximately 2,400 square feet; (ii) 6051 Jones
Creek Road, Baton Rouge, Louisiana 70817, with approximately 2,600 square feet;
(iii) 12152 Plank Road, Baton Rouge, Louisiana 70811, with approximately 1,700
square feet; and (iv) 4919 Main Street, Zachary, Louisiana 70791, with
approximately 3,700 square feet.
COMPETITION
The Bank encounters vigorous competition in its market area from a number
of sources, including bank holding companies and commercial banks, thrift
institutions, other financial institutions and financial intermediaries.
Regional interstate banking laws and other recent federal and state laws have
resulted in increased competition from both conventional banking institutions
and other businesses offering financial services and products. The Bank also
competes for interest-bearing funds with a number of other financial
intermediaries and investment alternatives, including brokerage firms, "money
market" funds, government bonds, corporate bonds and other securities. Guaranty
Bank competes in the East Baton Rouge Parish market with other banks and
financial institutions, some of which have greater financial resources than the
Bank. At the end of 1993, there were approximately 119 commercial bank
branches, 10 savings bank branches, and 39 credit union branches competing in
East Baton Rouge Parish.
LEGAL PROCEEDINGS
Guaranty and the Bank are not parties to any material legal proceedings
other than ordinary routine litigation incidental to their business.
MANAGEMENT
The directors and executive officers of the Bank will continue in their
capacities as such following consummation of the transaction. Guaranty and the
Bank share a common board of directors. The following table presents
information about the directors and executive officers:
30
<PAGE> 35
<TABLE>
<S> <C> <C> <C> <C> <C>
Director or Number of Shares
Name Age Present Occupation and Position and Offices Executive Beneficially Owned
Principal Occupation for Held with Company and Officer at February 11, 1994 Percent of
Last Five Years Bank Since Directly Indirectly Class (1)
A. "Lee" Barber, III 30 General Manager, Barber Director 1993 1,250 .15%
Brothers Construction Co. ,
Inc.
Marie M. Bickham 57 President, T.D. Bickman Director 1982 6,250 .77%
Corporation
David H. Broussard 56 Vice President, Woodrow Director 1985 2,500 .31%
Wilson Construction Co.,
Inc.
Redfield E. Bryan, MD(2) 56 Physician Chairman of the Board 1983 184,421 184,419 45.66%
and Director
C. C. "Chuck" Dabadie 46 President & Chief Executive President, Chief 1985 52,000 6.40%
Officer of Guaranty Executive Officer and
and the Bank Director
James W. East 79 Retired, Nelson & East Ford Director 1972 2,500 .31%
Donald D. Hunt, Sr. 64 President, Zachary Realty & Director 1971 8,425 125 1.06%
Insurance Agency
Walter G. Monsour 50 President, CitiState Director 1989 4,975 .62%
Advisors
John S. Montegudo 73 Retired, Ethyl Corporation Director 1971 1,250 .15%
David M. Ourso(2) 47 Personal Investments Director 1983 1,250 .15%
James R. Ourso, DDS(2) 53 Dentist Director 1983 1,250 .15%
Dr. Hubert C. Owen, Jr. 65 Retired Physician Director 1973 7,500 .93%
Stephen W. Pol 40 President, Airtrol, Inc. Director 1989 5,000 .62%
William E. Watson 53 President, Bill Watson Director 1983 1,250 .15%
Contractors, Inc.
E. J. Wethey 63 Retired Banker Director 1971 2,500 .31%
Chris M. Pope 41 Executive Vice President Executive Vice 1983 1,550 .19%
and Cashier, of the Bank President, of the Bank
Brigg A. Baechle 43 Executive Vice President, Executive Vice 1981 250 .03%
of the Bank President, of the Bank
David K. Kneipp 34 Secretary to the Board of Secretary to the Board 1985 -0- (3) -0-
Guaranty; Vice of Guaranty, Vice
President and Secretary to President and
the Board of the Bank Secretary to the Board
of the Bank
</TABLE>
(1) Includes 50,000 shares under an option that had not been
exercised as of February 11, 1994.
(2) David M. Ourso and James R. Ourso are brothers and Redfield E.
Bryan is married to their sister.
(3) Kelly B. Kneipp, wife of David K. Kneipp and daughter of Redfield E.
Bryan, owns 50 shares and owns 49% of Redfield E. Bryan LLC,
which in turn owns 184,419 shares. Both assets are the
separate property of Kelly B. Kneipp and David K. Kneipp disclaims
beneficial ownership therein.
Directors were paid $500 for attendance at each meeting of the Board of
Directors, $250 for attendance at each loan committee meeting, and $200 for
attendance at all other committee meetings. In addition, the Chairman of the
Board received an additional $3,000 per month fee during 1993.
C. C. Dabadie, President and Chief Executive Officer of the Bank and Trust
Company, received total cash compensation in 1993, including salary, bonus,
automobile allowance, and director fees of $216,300. Noncash compensation did
not exceed ten percent of
31
<PAGE> 36
cash compensation. Mr. Dabadie exercised stock options on 5,000 shares of
Guaranty Common Stock that were granted to him in 1985. No other officer of
Guaranty or the Bank received annual salary and bonus exceeding $100,000.
EMPLOYEE BENEFIT PLANS
The Bank currently maintains for its employees a comprehensive employee
benefit plan providing such benefits as a qualified defined benefit pension
plan, health insurance, including hospitalization, major medical and dental
coverage, paid sick leave, vacation and long-term disability and life
insurance.
TRANSACTIONS WITH MANAGEMENT
In the ordinary course of business, the Bank has loans, deposits and other
transactions with its executive officers, directors and organizations with
which such persons are associated. Such transactions are on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with others. The aggregate amounts of loans
to the aforementioned persons and companies in which they have a 10% or more
ownership interest as of December 31, 1993 were $2,451,000. At December 31,
1993, $66,000 of these loans were unsecured.
The Florida Boulevard branch is owned by the second largest stockholder of
Guaranty, a limited liability company controlled by Guaranty's chairman and
largest stockholder. The lease is accounted for as an operating lease, and
rent expense was $112,800 for the year ended December 31, 1993. The lease was
for 36 months at $9,400 per month and became effective on June 1, 1989. The
lease was amended in 1992 to extend the term an additional 36 months expiring
on May 31, 1995, under the same provisions of the original lease.
Amounts paid for goods and services to related parties and their
affiliates totaled approximately $22,000 in 1993. Deposits held for related
parties by the Bank were approximately $7,753,000 at December 31, 1993.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF GUARANTY
The following table sets forth certain information concerning the
beneficial owners of more than 5% of Guaranty Common Stock, as of February 11,
1994.
<TABLE>
<CAPTION>
Title of Class Name and Address Amount and Nature Percent of
of Beneficial Owner Beneficial Ownership Class (1)
<S> <C> <C> <C>
Common Stock Redfield E. Bryan 184,421 22.8%
7777 Henessy Blvd., Ste. 2004
Baton Rouge, LA 70808
Common Stock Redfield E. Bryan, LLC 184,419 22.8
7777 Henessy Blvd., Ste. 2004
Baton Rouge, LA 70808
Common Stock C. C. Dabadie 52,000 6.4
315 Nelson Drive (1)
Baton Rouge, LA 70808
</TABLE>
(1) Includes 50,000 shares under an exercisable option.
BUSINESS OF FIRST ALABAMA
First Alabama is a regional bank holding company headquartered in
Birmingham, Alabama, with 231 banking offices located in Alabama,
Florida, Georgia, Louisiana, and Tennessee at December 31, 1993. On such date,
First Alabama had total consolidated assets of approximately $10.5 billion,
total consolidated deposits of approximately $8.8 billion, and total
consolidated stockholders' equity of approximately $851 million. First Alabama
is the third largest bank holding company headquartered in Alabama in terms of
assets, based on December 31, 1993 information. Through its subsidiaries, First
Alabama offers a broad range of banking and bank-related services. First
Alabama operates five state-chartered commercial bank subsidiaries and one
federal stock savings bank (collectively, the "Subsidiary Institutions") in the
States of Alabama, Florida, Georgia, Louisiana, and Tennessee.
In Alabama, First Alabama operates through First Alabama Bank, which at
December 31, 1993, had total consolidated assets of approximately $7.6 billion,
total consolidated deposits of approximately $6.5 billion, and total
consolidated stockholders' equity of approximately $639 million. First Alabama
Bank is a full-service bank with 163 banking offices located throughout Alabama
at December 31, 1993.
In Florida, First Alabama operates through Regions Bank of Florida, which
at December 31, 1993, had total consolidated assets of approximately $493
million, total consolidated deposits of approximately $445 million, and total
consolidated stockholders' equity of approximately $45 million. Regions Bank of
Florida operates 15 banking offices in the panhandle of Florida.
In Georgia, First Alabama operates through Regions Bank of Georgia, which
at December 31, 1993, had total consolidated assets
32
<PAGE> 37
of approximately $107 million, total consolidated deposits of approximately $98
million, and total consolidated stockholders' equity of approximately $9
million. Regions Bank of Georgia operates through three offices in Columbus,
Georgia.
In Louisiana, First Alabama operates through Secor Bank, Federal Savings
Bank ("Secor"), a federal stock savings bank which First Alabama acquired on
December 31, 1993. At such date, Secor had total consolidated assets of
approximately $1.8 billion, total consolidated deposits of approximately $1.4
billion, and total consolidated stockholders equity of approximately $130
million. Also at such date, Secor operated 23 offices in Alabama, four
offices in Florida, and 15 offices in Louisiana. Subsequent to year-end 1993,
all but one of Secor's offices in Alabama have been consolidated with those of
First Alabama Bank and the one remaining office in Alabama and the four offices
in Florida are under contract for sale to unrelated third parties. As a result
of the consolidation and sale of the First Alabama branches in Florida, Secor
will continue to operate 15 offices in Louisiana with total consolidated
deposits of approximately $789 million.
In Tennessee, First Alabama operates through two banks, First Security
Bank of Tennessee and Franklin County Bank, which collectively at December 31,
1993, had total combined assets of approximately $456 million, total combined
deposits of approximately $398 million, and total combined stockholders' equity
of approximately $36 million. Such banks operate 24 banking offices in middle
Tennessee.
First Alabama also has entered into letters of intent or definitive
agreements to acquire the following financial institutions in the States of
Alabama, Georgia, and Louisiana (collectively referred to in this Proxy
Statement/Prospectus as the "Other Pending Acquisitions"):
<TABLE>
<CAPTION>
Consideration
-----------------------------------
Asset Approximate
Institution Size Value Type
- -------------------------- --------- ----------- ------------------
(Dollar Amounts in Millions)
<S> <C> <C> <C>
First Fayette Bancshares, Inc. $74 undisclosed cash
and its subsidiary, First Bank
of Fayette, Fayette, Alabama
First Community Bancshares, Inc. $126 $24 First Alabama
and its subsidiary, First Common Stock
Bank of Rome, Rome, Georgia
BNR Bancshares, Inc. and its $137 $26 First Alabama
subsidiary, Bank of New Roads, Common Stock
New Roads, Louisiana
</TABLE>
Consummation of the Other Pending Acquisitions is subject to the approval
of certain regulatory agencies and of the stockholders of the institutions to
be acquired and, in instances where stock is to be issued as consideration, to
the effectiveness of the registration statement filed or to be filed with the
SEC. Moreover, closing of each transaction is subject to various contractual
conditions precedent.
First Alabama's other subsidiaries include Real Estate Financing, Inc.,
which offers real estate mortgages through 23 loan production offices in
Alabama, Florida, Georgia, Mississippi, South Carolina, and Tennessee.
First Alabama continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business
combinations involving cash, debt, or equity securities can be expected. Any
future business combination or series of business combinations that First
Alabama might undertake may be material, in terms of assets acquired or
liabilities assumed, to First Alabama's financial condition. Recent business
combinations in the banking industry have typically involved the payment of a
premium over book and market values. This practice could result in dilution of
book value and net income per share for the acquirers.
Additional information about First Alabama and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information" and "Documents Incorporated
by Reference."
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements of
the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to First Alabama.
GENERAL. First Alabama is a bank holding company, registered with the
Federal Reserve under the BHC Act. As such, First Alabama and its subsidiaries
are subject to the supervision, examination, and reporting requirements of the
BHC Act and the regulations of the Federal Reserve.
33
<PAGE> 38
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or
control more than 5% of the voting shares of the bank, (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of the bank, or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business
of banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to
consider the financial and managerial resources and future prospects of the
bank holding companies and banks concerned and the convenience and needs of the
community to be served. Consideration of financial resources generally focuses
on capital adequacy and consideration of convenience and needs issues includes
the parties' performance under the Community Reinvestment Act of 1977 (the
"CRA"), both of which are discussed below.
The BHC Act prohibits the Federal Reserve from approving a bank holding
company's application to acquire a bank or bank holding company located outside
the state in which the deposits of its banking subsidiaries were greatest on
the date the company became a bank holding company (Alabama in the case of
First Alabama), unless such acquisition is specifically authorized by statute
of the state in which the bank or bank holding company to be acquired is
located. Alabama has adopted reciprocal interstate banking legislation
permitting Alabama-based bank holding companies to acquire banks and bank
holding companies in other states and allowing bank holding companies located
in Arkansas, the District of Columbia, Florida, Georgia, Kentucky, Louisiana,
Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Texas,
Virginia, and West Virginia to acquire Alabama banks and bank holding
companies.
The BHC Act generally prohibits First Alabama from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, 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
unsound banking practices. For example, factoring accounts receivable,
acquiring or servicing loans, leasing personal property, conducting discount
securities brokerage activities, performing certain data processing services,
acting as agent or broker in selling credit life insurance and certain other
types of insurance in connection with credit transactions, and performing
certain insurance underwriting activities all have been determined by the
Federal Reserve to be permissible activities of bank holding companies. The
BHC Act does not place territorial limitations on permissible bank-related
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Each of the Subsidiary Institutions is a member of the Federal Deposit
Insurance Corporation ("FDIC"), and as such, their deposits are insured by the
FDIC to the extent provided by law. Each Subsidiary Institution is also
subject to numerous state and federal statutes and regulations that affect its
business, activities, and operations, and each is supervised and examined by
one or more state or federal bank regulatory agencies.
Because each of First Alabama's subsidiary banks is a state-chartered bank
that is not a member of the Federal Reserve System, such banks are subject to
supervision and examination by the FDIC. First Alabama's subsidiary savings
bank is a federally-chartered savings bank that is a member of the Federal Home
Loan Bank System and is subject to supervision and examination by the Office of
Thrift Supervision ("OTS") and to the back-up supervisory authority of the
FDIC. Such agencies regularly examine the operations of the Subsidiary
Institutions and are given authority to approve or disapprove mergers,
consolidations, the establishment of branches, and similar corporate actions.
Such agencies also have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law.
The Subsidiary Institutions are subject to the provisions of the CRA.
Under the terms of the CRA, the appropriate federal bank regulatory agency is
required, in connection with its examination of a Subsidiary Institution, to
assess such institution's record in meeting the credit needs of the community
served by that institution, including low and moderate-income neighborhoods.
The regulatory agency's assessment of the institution's record is made
available to the public. Further, such assessment is required of any
institution which has applied to (i) charter a national bank, (ii) obtain
deposit insurance coverage for a newly chartered institution, (iii) establish a
new branch office that will accept deposits, (iv) relocate an office, or (v)
merge or consolidate with, or acquire the assets or assume the liabilities of,
a federally regulated financial institution. In the case of a bank holding
company applying for approval to acquire a bank or other bank holding company,
the Federal Reserve will assess the records of each Subsidiary Institution of
the applicant bank holding company, and such records may be the basis for
denying the application.
In December 1993, the federal banking agencies proposed to revise their
CRA regulations in order to provide clearer guidance to depository institutions
on the nature and extent of their CRA obligations and the methods by which
those obligations will be assessed and enforced. The proposed regulations
substitute for the current process-based CRA assessment factors a new
evaluation system that would rate institutions based on their actual
performance in meeting community credit needs. Under the proposal, all
depository institutions would be subject to three CRA-related tests: a lending
test; an investment test; and a service test. The lending test, which would be
the primary test for all institutions other than wholesale and limited-purpose
banks, would evaluate an institution's lending activities by comparing the
institution's share of housing, small business, and consumer loans in low- and
moderate-income areas in its service area with its share of such loans in the
other parts of its service area. The agencies would also evaluate the
institution's performance independent of other lenders by examining the ratio
of such loans made by the institution to low- and moderate-income areas to all
such loans made by the institution. At the election of an institution, the
agencies would also consider "indirect" loans made by affiliates and
subsidiaries of the institution as well as lending consortia and other lenders
in which the institution had made lawful investments.
34
<PAGE> 39
The focus of the investment test, under which wholesale and
limited-purpose institutions would normally be evaluated, would be the amount
of assets (compared to its risk-based capital) that an institution has devoted
to "qualified investments" that benefit low- and moderate-income individuals
and areas in the institution's service area. The service test would evaluate
an institution based on the percentage of its branch offices that are located
in or are readily accessible to low- and moderate-income areas. Smaller
institutions, those having total assets of less than $250 million, would be
evaluated under more streamlined criteria.
The joint agency CRA proposal provides that an institution evaluated under
a given test would receive one of five ratings for that test: outstanding; high
satisfactory; low satisfactory; needs to improve; or substantial
non-compliance. The ratings for each test would then be combined to produce an
overall composite rating of either outstanding, satisfactory (including both
high and low satisfactory), needs to improve, or substantial non-compliance.
In the case of a retail-oriented institution, its lending test rating would
form the basis for its composite rating. That rating would then be increased
by up to two levels in the case of outstanding or high satisfactory investment
performance, increased by one level in the case of outstanding service, and
decreased by one level in the case of substantial non-compliance in service.
An institution found to have engaged in illegal lending discrimination would be
rebuttably presumed to have a less-than-satisfactory composite CRA rating.
Under the proposal, an institution's CRA rating will continue to be taken
into account by a regulator in considering various types of applications. In
addition, an institution receiving a rating of "substantial non-compliance"
would be subject to civil money penalties or a cease and desist order under
Section 8 of the Federal Deposit Insurance Act (the "FDIA").
It is uncertain at this time whether or when the CRA proposal will
ultimately be adopted by the federal banking agencies in its current form.
PAYMENT OF DIVIDENDS. First Alabama is a legal entity separate and
distinct from its banking and other subsidiaries. The principal source of cash
flow of First Alabama, including cash flow to pay dividends to its
stockholders, is dividends from the Subsidiary Institutions. There are
statutory and regulatory limitations on the payment of dividends by the
Subsidiary Institutions to First Alabama as well as First Alabama to its
stockholders.
As state nonmember banks, the subsidiary banks are subject to the
respective laws and regulations of the States of Alabama, Florida, Georgia, and
Tennessee and to the regulations of the FDIC as to the payment of dividends.
The subsidiary savings bank is subject to the regulations of the OTS and the
FDIC as to payment of dividends.
If, in the opinion of the federal regulatory agencies, an institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice. The Federal Reserve, the FDIC, and the OTS have indicated that
paying dividends that deplete an institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), an insured
institution may not pay any dividend if payment would cause it to become
undercapitalized or once it is undercapitalized. See "Prompt Corrective
Action." Moreover, the Federal Reserve and the FDIC have issued policy
statements which provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
At December 31, 1993, under dividend restrictions imposed under federal
and state laws, the Subsidiary Institutions, without obtaining governmental
approvals, could declare aggregate dividends to First Alabama of approximately
$172 million.
The payment of dividends by First Alabama and the Subsidiary Institutions
may also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES. There are various restrictions on the
extent to which First Alabama and it nonbank subsidiaries can borrow or
otherwise obtain credit from the Subsidiary Institutions. Each Subsidiary
Institution (and its subsidiaries) is limited in engaging in borrowing and
other "covered transactions" with nonbank or non-savings bank affiliates to the
following amounts: (i) in the case of any such affiliate, the aggregate amount
of covered transactions of the Subsidiary Institution and its subsidiaries may
not exceed 10% of the capital stock and surplus of such Subsidiary Institution;
and (ii) in the case of all affiliates, the aggregate amount of covered
transactions of the Subsidiary Institution and its subsidiaries may not exceed
20% of the capital stock and surplus of such Subsidiary Institution. "Covered
transactions" are defined by statute to include a loan or extension of credit,
as well as a purchase of securities issued by an affiliate, a purchase of
assets (unless otherwise exempted by the Federal Reserve), the acceptance of
securities issued by the affiliate as collateral for a loan and the issuance of
a guarantee, and the issuance of a guarantee, acceptance, or letter of credit
on behalf of an affiliate. Covered transactions are also subject to certain
collateralization requirements. Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease, or sale of property or
furnishing of services.
CAPITAL ADEQUACY. First Alabama and the Subsidiary Institutions are
required to comply with the capital adequacy standards established by the
Federal Reserve in the case of First Alabama, the FDIC in the case of the
subsidiary banks, and the OTS in the case of the subsidiary savings bank.
There are two basic measures of capital adequacy for bank holding companies
that have been promulgated by the Federal Reserve: a risk-based measure and a
leverage measure. All applicable capital standards must be satisfied for a
bank holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance sheet items
are assigned to broad risk categories, each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.
The minimum guideline for the ratio of total capital ("Total Capital") to
risk-weighted assets (including certain off-balance-sheet items, such as
standby letters of credit) is 8.0%. At least half of the Total Capital must be
composed of common stock, minority interests in the equity accounts of
consolidated subsidiaries, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist
of subordinated debt, other preferred stock, and a limited amount of loan loss
reserves. At December 31, 1993, First Alabama's consolidated Tier 1 Capital
and Total Capital ratios were 11.1% and 13.5%, respectively.
35
<PAGE> 40
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the "Leverage Ratio"), of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0% plus an additional cushion of 100 to 200 basis
points. First Alabama's Leverage Ratio at December 31, 1993 was 10.1%. The
guidelines also provide that bank holding companies experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, the Federal Reserve
has indicated that it will consider a "tangible Tier 1 Capital leverage ratio"
(deducting all intangibles) and other indicia of capital strength in evaluating
proposals for expansion or new activities.
Each of First Alabama's subsidiary banks is subject to risk-based and
leverage capital requirements adopted by the FDIC and First Alabama's
subsidiary savings bank is subject to tangible, risk-based, and core capital
requirements adopted by the OTS. Each of First Alabama's Subsidiary
Institutions was in compliance with applicable minimum capital requirements as
of December 31, 1993. Neither First Alabama nor any of the Subsidiary
Institutions has been advised by any federal banking agency of any specific
minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "Prompt Corrective
Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC, and the OTS have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
which would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures.
SUPPORT OF SUBSIDIARY INSTITUTIONS. Under Federal Reserve policy, First
Alabama is expected to act as a source of financial strength to, and to commit
resources to support, each of the Subsidiary Institutions. This support may be
required at times when, absent such Federal Reserve policy, First Alabama may
not be inclined to provide it. In addition, any capital loans by a bank
holding company to any of the Subsidiary Institutions are subordinate in right
of payment to deposits and to certain other indebtedness of such Subsidiary
Institution. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a Subsidiary Institution will be assumed by the
bankruptcy trustee and entitled to a priority of payment.
Under the FDIA, a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989 in connection with (i) the default of a commonly
controlled FDIC-insured depository institution or (ii) any assistance provided
by the FDIC to any commonly controlled FDIC-insured depository institution "in
danger of default." "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a default is likely to occur in
the absence of regulatory assistance.
PROMPT CORRECTIVE ACTION. FDICIA establishes a system of prompt
corrective action to resolve the problems of undercapitalized institutions.
Under this system, which became effective on December 19, 1992, the federal
banking regulators are required to establish five capital categories
("well-capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized") and to
take certain mandatory supervisory actions, and are authorized to take other
discretionary actions, with respect to institutions in the three
undercapitalized categories, the severity of which will depend upon the capital
category in which the institution is placed. Generally, subject to a narrow
exception, the FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The
federal banking agencies have specified by regulation the relevant capital
level for each category.
Under the final agency rule implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital ratio of 10.0% or
greater, a Tier I Capital ratio of 6.0% or greater, and a Leverage Ratio of
5.0% or greater, and (ii) is not subject to any written agreement, order,
capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency, is deemed to be "well-capitalized." An
institution with a Total Capital ratio of 8.0% or greater, a Tier I Capital
ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or greater is considered
to be "adequately capitalized." A depository institution that has a Total
Capital ratio of less than 8.0% or a Tier I Capital ratio of less than 4.0% or
a Leverage Ratio that is less than 4.0% is considered to be "undercapitalized."
A depository institution that has a Total Capital ratio of less than 6.0%, a
Tier I Capital ratio of less than 3.0%, or a Leverage Ratio that is less than
3.0% is considered to be "significantly undercapitalized" and an institution
that has a tangible equity capital to assets ratio equal to or less than 2.0%
is deemed to be "critically undercapitalized." For purposes of the regulation,
the term "tangible equity" includes core capital elements counted as Tier I
capital for purposes of the risk-based capital standards plus the amount of
outstanding cumulative perpetual preferred stock (including related surplus),
minus all intangible assets with certain exceptions. A depository institution
may be deemed to be in a capitalization category that is lower than is
indicated by its actual capital position if it receives an unsatisfactory
examination rating.
In the case of an institution that is categorized as undercapitalized,
significantly undercapitalized, or critically undercapitalized, the institution
is required to submit an acceptable capital restoration plan to its appropriate
federal banking agency. Under FDICIA, a bank holding company must guarantee
that a subsidiary depository institution meet its capital restoration plan,
subject to certain limitations. The obligation of a controlling bank holding
company under FDICIA to fund a capital restoration plan is limited to the
lesser of 5.0% of an undercapitalized subsidiary's assets or the amount
required to meet regulatory capital requirements. An undercapitalized
institution is also generally prohibited from increasing its average total
assets, making acquisitions, establishing any branches, or engaging in any new
line of business except in accordance with an accepted capital restoration plan
or with the approval of the FDIC. In addition, the appropriate federal banking
agency is given authority with respect to any undercapitalized depository
institution to take any of the actions it is required to or may take with
respect to a significantly undercapitalized institution as described below if
it determines "that those actions are necessary to carry out the purpose" of
FDICIA.
36
<PAGE> 41
For those institutions that are (i) significantly undercapitalized or (ii)
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the
appropriate federal banking agency must require the institution to take one or
more of the following actions: (i) sell enough shares, including voting
shares, to become adequately capitalized; (ii) merge with (or be sold to)
another institution (or holding company), but only if grounds exist for
appointing a conservator or receiver; (iii) restrict certain transactions with
banking affiliates as if the "sister bank" exception to the requirements of
Section 23A of the Federal Reserve Act did not exist; (iv) otherwise restrict
transactions with bank or nonbank affiliates; (v) restrict interest rates that
the institution pays on deposits to "prevailing rates" in the institution's
"region;" (vi) restrict asset growth or reduce total assets; (vii) alter,
reduce, or terminate activities; (viii) hold a new election of directors; (ix)
dismiss any director or senior executive officer who held office for more than
180 days immediately before the institution became undercapitalized; provided
that in requiring dismissal of a director or senior officer, the agency must
comply with certain procedural requirements, including the opportunity for an
appeal in which the director or officer will have the burden of proving his or
her value to the institution; (x) employ "qualified" senior executive officers;
(xi) cease accepting deposits from correspondent depository institutions; (xii)
divest certain nondepository affiliates which pose a danger to the institution;
or (xiii) be divested by a parent holding company. In addition, without the
prior approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer without
regulatory approval.
At December 31,1993, all of First Alabama's Subsidiary Institutions had
the requisite capital levels to qualify as well capitalized.
BROKERED DEPOSITS. The FDIC has adopted regulations governing the receipt
of brokered deposits. Under the regulations, a depository institution cannot
accept, rollover, or renew brokered deposits unless (i) it is well capitalized
or (ii) it is adequately capitalized and receives a waiver from the FDIC. A
depository institution that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts. Whether or not
it has obtained such a waiver, an adequately capitalized depository institution
may not pay an interest rate on any deposits in excess of 75 basis points over
certain prevailing market rates specified by regulation. There are no such
restrictions on a depository institution that is well capitalized. Because all
of the Subsidiary Institutions of First Alabama had at December 31, 1993, the
requisite capital levels to qualify as well capitalized, First Alabama believes
the brokered deposits regulation will have no material effect on the funding or
liquidity of any of the Subsidiary Institutions.
FDIC INSURANCE ASSESSMENTS. In July 1993, the FDIC adopted a new
risk-based assessment system for insured depository institutions that takes
into account the risks attributable to different categories and concentrations
of assets and liabilities. The new system, which went into effect on January
1, 1994 and replaces a transitional system that the FDIC had utilized for the
1993 calendar year, assigns an institution to one of three capital categories:
(i) well capitalized; (ii) adequately capitalized; and (iii) undercapitalized.
These three categories are substantially similar to the prompt corrective
action categories described above, with the "undercapitalized" category
including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. An institution is also assigned by the FDIC to one of three
supervisory subgroups within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the institution's primary federal regulator and information
which the FDIC determines to be relevant to the institution's financial
condition and the risk posed to the deposit insurance funds (which may include,
if applicable, information provided by the institution's state supervisor). An
institution's insurance assessment rate is then determined based on the capital
category and supervisory category to which it is assigned. Under the final
risk-based assessment system, as well as the prior transitional system, there
are nine assessment risk classifications (i.e., combinations of capital groups
and supervisory subgroups) to which different assessment rates are applied.
Assessment rates for 1994, as they had during 1993, will range from .23% of
deposits for an institution in the highest category (i.e., "well-capitalized"
and "healthy" to .31% of deposits for an institution in the lowest category
(i.e., "undercapitalized" and "substantial supervisory concern").
The FDIC is authorized to raise insurance premiums in certain
circumstances. Any increase in premiums would have an adverse effect on First
Alabama.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
NEW SAFETY AND SOUNDNESS STANDARDS. In November 1993, federal banking
agencies issued for comment proposed safety and soundness standards relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, fees, and benefits. With respect to internal controls,
information systems, and internal audit systems, the standards describe the
functions that adequate internal controls and information systems must be able
to perform, including (i) monitoring adherence to prescribed policies, (ii)
effective risk management, (iii) timely and accurate financial, operational,
and regulatory reporting, (iv) safeguarding and managing assets, and (v)
compliance with applicable laws and regulations. The standards also include
requirements that (i) those performing internal audits be qualified and
independent, (ii) internal controls and information systems be tested and
reviewed, (iii) corrective actions be adequately documented, and (iv) that
results of an audit be made available for review of management actions.
As in the case of internal controls and information systems, the proposal
establishes general principles and standards, rather than specific
requirements, that must be followed in other areas. For example, loan
documentation and credit underwriting practices must be such that they enable
the institution to make an informed lending decision and assess credit risk on
an ongoing basis. Similarly, an institution must manage interest rate risk "in
a manner that is appropriate to the size of [the institution] and the
complexity of its assets and liabilities" and must conduct any asset growth in
accordance with a plan that has taken a variety of factors such as deposit
volatility, capital, and interest rate risk into account. The proposal also
prohibits "excessive compensation," which is defined as amounts paid that are
unreasonable or disproportionate to the services performed by an officer,
employee, director, or principal stockholder in light of all circumstances. In
order to help alert institutions and their regulators to deteriorating
financial conditions, the proposed rule also would impose a maximum ratio of
classified assets to total capital of 1.0 and, in the case of an institution
that had incurred a net loss over the last four quarters, would require that
institution to have sufficient capital to absorb a similar loss over the next
four quarters and still remain in compliance with its minimum capital
requirements.
37
<PAGE> 42
DEPOSITOR PREFERENCE. Legislation recently enacted by Congress
establishes a nationwide depositor preference rule in the event of a bank
failure. Under this arrangement, all deposits and certain other claims against
a bank, including the claim of the FDIC as subrogee of insured depositors,
would receive payment in full before any general creditor of the bank would be
entitled to any payment in the event of an insolvency or liquidation of the
bank.
DESCRIPTION OF FIRST ALABAMA COMMON STOCK
First Alabama is authorized to issue 60,000,000 shares of First Alabama
Common Stock, of which 42,520,025 shares were issued, including 1,470,700
treasury shares, at December 31, 1993. No other class of stock is authorized.
At the 1994 Annual Meeting of Stockholders of First Alabama, First Alabama
is soliciting stockholder approval of a proposal to increase the number of
authorized shares of First Alabama Common Stock from 60 million to 120 million.
If such proposal is approved, such additional authorized shares of First
Alabama Common Stock will be available for issuance for various corporate
purposes without further approval of the stockholders of First Alabama.
Holders of First Alabama Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefore. Dividend payments are subject to certain limitations
imposed in First Alabama's debt instruments. Under the most restrictive of such
limitations, $724 million was available for payment of dividends as of December
31, 1993. However, the ability of First Alabama to pay dividends is further
affected by the ability of its Subsidiary Institutions to pay dividends, which
is limited by applicable regulatory requirements and capital guidelines. At
December 31, 1993, under such requirements and guidelines, the Subsidiary
Institutions had $172 million of undivided profits legally available for the
payment of dividends. See "Supervision and Regulation -- Dividends."
For a further description of First Alabama Common Stock, see "Effect of the
Merger on Rights of Stockholders."
STOCKHOLDER PROPOSALS
First Alabama expects to hold its next annual meeting of stockholders
after the Merger during April 1995. Under SEC rules proposals of First Alabama
stockholders intended to be presented at that meeting must be received by First
Alabama at its principal executive offices no later than November 16, 1994, for
consideration by First Alabama for possible inclusion in such proxy materials.
EXPERTS
The consolidated financial statements of Guaranty as of December 31, 1993
and 1992, and for each of the years in the three-year period ended December 31,
1993, have been included herein in reliance upon the report of Basil M. Lee and
Company, independent auditors, and on the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of First Alabama, incorporated by
reference in this Registration Statement, have been audited by Ernst & Young,
independent auditors, for the periods indicated in their report thereon which
is included in the Annual Report to Stockholders and the Annual Report on Form
10-K for the year ended December 31, 1993. The financial statements audited by
Ernst & Young have been incorporated herein by reference in reliance on their
report given on their authority as experts in accounting and auditing.
OPINIONS
The legality of the shares of First Alabama Common Stock to be issued in
the Merger will be passed upon by Lange, Simpson, Robinson & Somerville, 417
North 20th Street, Suite 1700, Birmingham, Alabama. Henry E. Simpson, partner
in the law firm of Lange, Simpson, Robinson & Somerville, is a member of the
Board of Directors of First Alabama. As of , 1994, attorneys in the law firm
of Lange, Simpson, Robinson & Somerville owned an aggregate of shares
of First Alabama Common Stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird, One Atlantic Center, 1201 West Peachtree Street, Atlanta,
Georgia.
38
<PAGE> 43
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Page
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS
Consolidated Balance Sheets for the Years Ended
December 31, 1993 and 1992 F-3
Consolidated Statements of Income for the Years
Ended December 31, 1993, 1992, and 1991 F-4
Consolidated Statements of Changes in Shareholders'
Equity for the Years Ended December 31, 1993,
1992, and 1991 F-5
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1993, 1992, and 1991 F-6
Notes to Consolidated Financial Statements F-7
</TABLE>
F-1
<PAGE> 44
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Guaranty Bancorp, Inc.
We have audited the accompanying consolidated balance sheets of Guaranty
Bancorp, Inc. and its subsidiary as of December 31, 1993 and 1992, and the
related consolidated statements of income, changes in shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1993. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Guaranty Bancorp,
Inc. and its subsidiary as of December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
/s/ Basil M. Lee and Company
- ----------------------------
Basil M. Lee and Company
Baton Rouge, Louisiana
January 28, 1994
F-2
<PAGE> 45
GUARANTY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
<TABLE>
<CAPTION>
1993 1992
---- ----
ASSETS
<S> <C> <C>
Cash and due from banks $ 4,237,048 $ 7,098,368
Federal funds sold 5,410,000 5,700,000
------------ ------------
Cash and cash equivalents 9,647,048 12,798,368
Interest-bearing deposits in other banks 100,000 100,000
Investment securities (Approximate market values
of $36,196,303 and $25,033,320) 36,089,671 24,811,587
Loans 130,725,166 126,536,922
Unearned income (2,757) (7,304)
Allowance for possible loan losses (1,955,299) (2,008,288)
------------ ------------
Loans, net 128,767,110 124,521,330
------------ ------------
Premises and equipment, net 3,376,674 3,530,235
Other real estate 867,443 1,263,319
Accrued interest receivable 1,156,113 1,085,565
Other assets 944,061 873,137
------------ ------------
Total assets $180,948,120 $168,983,541
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand $ 33,996,323 $ 30,275,030
Savings and NOW accounts 41,104,606 43,468,100
Certificates of deposit and other time
deposits $100,000 and more 30,830,734 33,566,990
Other time deposits 61,410,785 50,425,210
------------ ------------
167,342,448 157,735,330
Accrued interest payable 308,970 340,974
Other liabilities 204,885 230,140
Note payable 514,637 690,831
------------ ------------
Total liabilities 168,370,940 158,997,275
------------ ------------
Common stock, $1 par value, 1,250,000 shares
authorized, 766,025 and 761,025 shares issued
and outstanding 766,025 761,025
Capital surplus 2,670,669 2,606,973
Retained earnings 9,170,630 6,648,412
Treasury stock at cost, 8,220 shares (30,144) (30,144)
------------ ------------
Total shareholders' equity 12,577,180 9,986,266
------------ ------------
Total liabilities and shareholders' equity $180,948,120 $168,983,541
============ ============
Book value per share of common stock $ 16.60 $ 13.27
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 46
GUARANTY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest income
Interest and fees on loans $12,006,538 $11,331,251 $10,462,128
Interest on investment securities
U. S. Treasury securities 1,015,326 841,137 362,036
Obligations of other U. S. Government
agencies and corporations 90,817 537,066 887,369
Obligations of states and political
subdivisions 136,395 134,092 167,572
Other securities - - 14,044
Interest on federal funds sold 177,763 163,152 315,382
Interest on deposits in other banks 2,589 3,405 10,266
----------- ----------- -----------
13,429,428 13,010,103 12,218,797
----------- ----------- -----------
Interest expense
Interest on deposits
Savings and NOW accounts 920,766 1,235,203 1,423,846
Certificates and other time deposits
$100,000 and more 1,179,209 1,412,639 2,182,420
Other time deposits 2,765,668 2,408,440 2,547,903
Other interest expense 43,806 60,836 79,633
----------- ----------- -----------
4,909,449 5,117,118 6,233,802
----------- ----------- -----------
Net interest income 8,519,979 7,892,985 5,984,995
Provision for possible loan losses 680,000 961,704 806,000
----------- ----------- -----------
Net interest income after provision for
possible loan losses 7,839,979 6,931,281 5,178,995
----------- ----------- -----------
Other income
Service charges 1,149,597 938,866 853,002
Gain on sale of loans 221,486 159,277 240,293
Gain (loss) on sale of securities 52,115 105,279 (46,336)
Other income 23,207 48,450 2,241
----------- ----------- -----------
1,446,405 1,251,872 1,049,200
----------- ----------- -----------
Other expense
Salaries and employee benefits 2,616,779 2,256,703 1,801,497
Occupancy and equipment expense 1,062,531 951,966 652,224
Net cost of operation of other real
estate (6,450) 12,480 311,710
Other expense 1,841,128 1,642,733 1,313,207
----------- ----------- -----------
5,513,988 4,863,882 4,078,638
----------- ----------- -----------
Income before income taxes 3,772,396 3,319,271 2,149,557
Income tax expense 1,250,178 1,109,318 702,566
----------- ----------- -----------
Net income $ 2,522,218 $ 2,209,953 $ 1,446,991
=========== =========== ===========
Net income per share of common stock $ 3.21 $ 2.84 $ 1.95
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 47
GUARANTY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Securities Total
Common Capital Retained Treasury Valuation Shareholders'
Stock Surplus Earnings Stock Allowance Equity
------ ------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 $721,190 $2,338,458 $2,991,468 $(30,144) $(97,000) $ 5,923,972
Net income, 1991 - - 1,446,991 - - 1,446,991
Common stock issued 39,835 268,515 - - - 308,350
Valuation allowance for
securities - - - - 97,000 97,000
-------- ---------- ---------- -------- -------- -----------
Balance, December 31, 1991 761,025 2,606,973 4,438,459 (30,144) - 7,776,313
Net income, 1992 - - 2,209,953 - - 2,209,953
-------- ---------- ---------- -------- -------- -----------
Balance, December 31, 1992 761,025 2,606,973 6,648,412 (30,144) - 9,986,266
Net income, 1993 - - 2,522,218 - - 2,522,218
Common stock issued 5,000 15,000 - - - 20,000
Tax benefit from exercise
of stock options - 48,696 - - - 48,696
-------- ---------- ---------- -------- -------- -----------
Balance, December 31, 1993 $766,025 $2,670,669 $9,170,630 $(30,144) $ - $12,577,180
======== ========== ========== ======== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 48
GUARANTY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,522,218 $ 2,209,953 $ 1,446,991
Adjustments to reconcile net income to
net cash provided by operating
activities -
Deferred income tax expense
(benefit) 94,553 (83,458) (52,823)
Provision for possible loan losses 680,000 961,704 806,000
Provision for real estate losses 72,021 108,505 259,840
Depreciation 352,207 316,852 201,776
(Gain) loss on sale of investment
securities (52,115) (105,279) 46,336
Net amortization of investment
securities 463,217 244,033 30,238
(Gain) loss on sale of other real
estate (76,852) (142,131) 1,180
(Gain) on sale of loans (221,486) (159,277) (240,293)
(Increase) decrease in interest
receivable (70,548) 118,202 (47,006)
(Increase) in other assets (165,477) (127,572) (131,846)
Increase (decrease) in interest
payable (32,004) (61,895) 17,759
(Decrease) in other liabilities (25,255) (98,059) (129,218)
------------ ------------ ------------
Net cash provided by operating activities 3,540,479 3,181,578 2,208,934
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from maturities of investment
securities 22,402,000 14,175,000 10,600,000
Proceeds from sale of investment
securities 8,064,375 4,116,250 166,664
Purchase of investment securities (42,155,561) (18,287,970) (19,674,218)
Decrease in interest-bearing deposits
in other banks - - 100,000
Proceeds from sales of other real
estate 1,643,449 829,125 772,007
(Increase) in loans (5,947,036) (24,029,007) (21,982,383)
Purchase of premises and equipment (198,646) (1,675,640) (536,785)
------------ ------------ ------------
Net cash (used) by investing activities (16,191,419) (24,872,242) (30,554,715)
------------ ------------ ------------
Cash flows from financing activities:
Increase in deposits 9,607,118 19,748,193 33,807,672
Repayment of notes payable (176,194) (100,000) (80,488)
Common stock issued 20,000 - 308,350
Tax benefit from exercise of stock
options 48,696 - -
------------ ------------ ------------
Net cash provided by financing activities 9,499,620 19,648,193 34,035,534
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents (3,151,320) (2,042,471) 5,689,753
Cash and cash equivalents, beginning of
year 12,798,368 14,840,839 9,151,086
------------ ------------ ------------
Cash and cash equivalents, end of year $ 9,647,048 $ 12,798,368 $ 14,840,839
============ ============ ============
Cash paid for income taxes $ 1,144,866 $ 1,354,456 $ 908,555
============ ============ ============
Cash paid for interest expenses $ 4,941,453 $ 5,179,013 $ 6,216,043
============ ============ ============
Other real estate acquired in satisfac-
tion of loans $ 1,242,742 $ 682,207 $ 814,648
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 49
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Guaranty Bancorp, Inc. (the "Company")
and its subsidiary are based on generally accepted accounting principles and
conform to predominant banking industry practices. Guaranty Bank and Trust
Company, (the "Bank") is wholly owned by the Company. The following is a
summary of the significant accounting policies:
Principles of consolidation. The consolidated financial statements of the
Company include the accounts of the Company and its subsidiary. All material
intercompany transactions and accounts have been eliminated.
Investment securities. Investment securities are stated at cost, adjusted for
amortization of premiums and accretion of discounts, which are recognized as
adjustments to interest income. Gains or losses on disposition are based on
the net proceeds and the adjusted carrying amount of the securities sold, using
the specific identification method. All securities are held for investment and
the Bank does not actively trade for its own account.
The Bank will adopt the Financial Accounting Standards Board Statement Number
115, "Accounting for Certain Investments in Debt and Equity Securities" on
January 1, 1994. Although the analyses of the Bank's securities have not been
completed to determine their classification under Statement 115, it is
presently anticipated that most securities will continue to be considered as
"held-to- maturity" and carried at amortized cost.
Loans and allowance for loan losses. Loans are stated at the amount of unpaid
principal reduced by unearned income and the allowance for loan losses.
Unearned income on discounted loans is recognized as income over the terms of
the loans by the sum-of-the-months digits method, which is not materially
different from the interest method. Interest on other loans is calculated by
using the simple interest method on daily balances of the principal amount
outstanding. The allowance for loan losses is established through a provision
for loan losses charged to expenses. The allowance represents an amount which,
in management's judgment, will be adequate to absorb possible losses on
existing loans that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. These evaluations take
into consideration such factors as changes in the nature and volume of the loan
portfolio, current economic conditions that may affect the borrower's ability
to pay, overall portfolio quality, and review of specific problem loans.
Ultimate losses may vary from the current estimates. Accrual of interest is
discontinued on a loan when management believes that the borrower's financial
condition, after giving consideration to economic and business conditions and
collection efforts, is such that the collection of interest is doubtful. Loans
are charged against the allowance for loan losses when management believes that
the collectibility of the principal is unlikely.
Premises and equipment. Premises and equipment are stated at cost less
accumulated depreciation computed either on the straight- line or an
accelerated method over the estimated useful lives of the assets. Expenditures
for repairs and maintenance are charged to expense as incurred. Upon
retirement or disposal, the cost and related depreciation are removed from the
accounts and gain or loss, if any, is reflected in the income statement.
Other real estate. Properties acquired in satisfaction of indebtedness to the
Bank are carried at the lower of cost or estimated fair market value, based on
appraisals and other relevant factors. Estimated holding periods vary, but are
generally subject to a maximum of ten years. Subsequent write downs, revenues
and expenditures, except capital expenditures, are charged to operations.
(Continued)
F-7
<PAGE> 50
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Treasury stock. Treasury stock is accounted for by the cost method on an
average cost basis.
Income taxes. Provision for deferred income taxes is made as a result of
temporary differences between the financial and taxable bases of assets and
liabilities. The differences relate principally to accretion of discounts on
investments, depreciation of office buildings and equipment, the provision
for real estate losses, the provision for loan losses and contributions to the
pension plan.
In 1993, the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." The accounting change did not have a
material effect on the Company's financial position or results of operations.
Cash equivalents. For purposes of the statement of cash flows, the Company
considers due from bank accounts and federal funds sold to be cash equivalents.
Net income per share. Net income per share is calculated on the basis of the
weighted average number of shares outstanding, including the assumed exercise
of stock options. Under the treasury stock method, net income per share for
1993, 1992 and 1991 were computed based on 784,701, 777,097 and 743,445 shares
outstanding, respectively.
Dividends. Prior approval of the Commissioner of the Louisiana Office of
Financial Institutions is required for the Bank to pay dividends if the total
of all dividends declared and paid during any one year would exceed the total
of net profits of that year combined with the net profits from the immediately
preceding year.
Reclassifications. Certain reclassifications have been made to the prior year
financial statements, which have no effect on net income as previously
reported, to conform to current year reporting.
RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances by the Federal
Reserve Bank. The average amounts of these reserve balances for the years
ended December 31, 1993 and 1992 were approximately $846,000 and $702,000,
respectively.
INVESTMENT SECURITIES
The amortized cost and estimated market values of investments in debt
securities are as follows:
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Categories: Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U. S. Treasury securities $31,183,343 $ 5,499 $ 26,655 $31,162,187
Obligations of other U. S.
Government agencies and
corporations 2,000,000 - - 2,000,000
Obligations of states and
political subdivisions 2,906,328 132,308 4,520 3,034,116
----------- ----------- ----------- -----------
$36,089,671 $ 137,807 $ 31,175 $36,196,303
=========== =========== =========== ===========
</TABLE>
(Continued)
F-8
<PAGE> 51
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
INVESTMENT SECURITIES - CONTINUED
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------
Estimated
Amortized Market
Cost Value
--------- ---------
<S> <C> <C>
Debt securities pledged to
secure public funds and
for other purposes $ 4,513,101 $ 4,628,252
=========== ===========
Contractual maturities:
Due in one year or less $25,259,312 $25,249,700
Due after one year through
five years 9,440,596 9,470,657
Due after five years through
ten years 1,389,763 1,475,946
----------- -----------
$36,089,671 $36,196,303
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Categories: Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U. S. Treasury securities $18,165,037 $ 83,533 $ 10,463 $18,238,107
Obligations of other U. S.
Government agencies and
corporations 5,035,839 47,665 1,942 5,081,562
Obligations of states and
political subdivisions 1,610,711 102,940 - 1,713,651
----------- ----------- ----------- -----------
$24,811,587 $ 234,138 $ 12,405 $25,033,320
=========== =========== =========== ===========
Debt securities pledged to
secure public funds and
for other purposes $ 6,981,811 $ 7,136,329
=========== ===========
</TABLE>
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties. Debt securities totaling $1,000,000 and $2,000,000 were
called in 1992 and 1991 in which no gain or loss was realized. Debt securities
totaling $8,064,375 and $3,010,898 were sold in 1993 and 1992 in which gains of
$52,115 and $105,279 were realized. Marketable equity securities were sold in
1991 in which a $46,336 loss was realized.
(Continued)
F-9
<PAGE> 52
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
LOANS
Most of the Bank's loan customers are in East Baton Rouge Parish, Louisiana and
its adjacent parishes. Major classifications of loans are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1993 1992
---- ----
<S> <C> <C>
Commercial and industrial $ 18,856,547 $ 21,021,737
Real estate - construction 7,617,546 6,118,758
Real estate - other 85,042,482 78,284,055
Consumer 8,595,935 8,214,476
Other 10,612,656 12,897,896
------------ ------------
130,725,166 126,536,922
Unearned income (2,757) (7,304)
Allowance for possible loan losses (1,955,299) (2,008,288)
------------ ------------
Loans, net $128,767,110 $124,521,330
============ ============
</TABLE>
Changes in the allowance for possible loan losses for the years ended December
31 were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year $ 2,008,288 $ 1,656,603 $ 1,495,441
Provision charged to operations 680,000 961,704 806,000
Loans charged off (849,351) (816,887) (755,707)
Recoveries 116,362 206,868 110,869
------------ ------------ ------------
Balance, end of year $ 1,955,299 $ 2,008,288 $ 1,656,603
============ ============ ============
</TABLE>
Loans on which the accrual of interest has been discontinued amounted to
$922,000 and $1,690,400 at December 31, 1993 and 1992, respectively. If
interest on nonaccrual loans had been accrued, such income would have
approximated $278,000, $245,000 and $319,000 in 1993, 1992 and 1991,
respectively. Interest collections on nonaccrual loans in 1993, 1992 and 1991
were approximately $186,000, $183,000 and $176,000. Management may elect to
continue the accrual of interest on past due loans when the estimated net
realizable value of collateral is sufficient to cover the principal and accrued
interest balances. No loans were accruing interest that were 90 days or more
past due as to principal or interest at December 31, 1993 and 1992.
PREMISES AND EQUIPMENT
Major classifications of these assets at December 31 are as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Land $ 467,439 $ 467,439
Buildings 1,514,953 1,508,638
Furniture and equipment 2,747,792 2,555,461
Automobiles 102,210 102,210
Leasehold improvements 899,011 899,011
----------- -----------
5,731,405 5,532,759
Accumulated depreciation (2,354,731) (2,002,524)
----------- -----------
Premises and equipment, net $ 3,376,674 $ 3,530,235
=========== ===========
</TABLE>
(Continued)
F-10
<PAGE> 53
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank 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 standby letters
of credit, which involve credit risk in excess of the amounts recognized in the
balance sheets. The Bank's exposure to credit loss in the event of
nonperformance by the other party to these financial instruments is represented
by the contractual amounts of the instruments. The Bank uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance sheet instruments, including collateral or other security to support
the financial instruments.
At December 31, 1993 and 1992, commitments to extend credit totaled $20,653,000
and $18,578,000. These commitments are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments may expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements.
At December 31, 1993 and 1992, commitments under standby letters of credit
totaled $1,391,000 and $1,917,000. Standby letters of credit are conditional
commitments issued by the Bank to guarantee the performance of a customer to a
third party. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loans to customers.
PENSION PLAN
The Bank has a defined benefit pension plan covering substantially all of its
employees. Benefits are based on years of service and the employee's average
monthly compensation during the five highest consecutive calendar years of the
last ten years of employment. The Bank's funding policy is to contribute
annually between the minimum and maximum amounts that can be deducted for
federal income tax purposes. Contributions are intended to provide not only
for benefits attributed to service to date but also for those expected to be
earned in the future.
The following table sets forth the plan's funded status at the latest valuation
date of December 31, 1992 (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits of $601 $(683)
======
Projected benefit obligation for service rendered to date $(796)
Plan assets at fair value, primarily short-term investments 887
------
Plan assets in excess of projected benefit obligation 91
Unrecognized net loss from past experience different from that
assumed and effects of changes in assumptions 262
Unrecognized prior service cost (17)
Unrecognized net asset (43)
------
Prepaid pension cost included in other assets at December 31, 1992 $ 293
======
(Continued)
</TABLE>
F-11
<PAGE> 54
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
PENSION PLAN - CONTINUED
Prepaid pension cost at December 31, 1993 was $403,000. Net pension costs for
1993, 1992 and 1991 included the following components (in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 57 $ 45 $ 36
Interest cost on projected benefit obligation 66 58 48
Expected return on plan assets (53) (44) (44)
Net amortization and deferral 18 11 (15)
---- ---- ----
Net periodic pension cost $ 88 $ 70 $ 25
==== ==== ====
</TABLE>
The weighted-average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligation were 8.0 percent and 5.9 percent, respectively. The expected
long-term rate of return on assets was 5.5 percent in 1993 and 1992, and 6.5
percent in 1991.
NOTE PAYABLE
In July, 1986 the Company borrowed $1,000,000 from a bank, secured by 100,000
shares of stock (100%) of Guaranty Bank and Trust Company. These funds were
contributed to Guaranty Bank as additional capital. Interest is at "New York"
prime plus 0.75% and was payable quarterly for the first year, with a ten year
principal and interest amortization thereafter. Maturities are scheduled as
follows:
1987 - $ 4,289 1991 - $ 80,488 1995 - $158,536
1988 - $ 21,952 1992 - $100,000 1996 - $178,048
1989 - $ 41,464 1993 - $119,512 1997 - $ 39,029
1990 - $ 60,976 1994 - $139,024
The note was renewed on June 30, 1993 and contains a due date of June 30, 1994,
at which time the note can be repriced.
INCOME TAXES
The income tax expense included in the consolidated statements of income
consists of:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Current payable $1,155,625 $1,192,776 $ 755,389
Deferred expense (benefit) 94,553 (83,458) (52,823)
---------- ---------- ----------
$1,250,178 $1,109,318 $ 702,566
========== ========== ==========
</TABLE>
(Continued)
F-12
<PAGE> 55
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
INCOME TAXES - CONTINUED
The effective income tax rates were 33.1%, 33.4% and 32.7% for 1993, 1992 and
1991. The differences between the effective tax rates and the statutory
federal income tax rates were:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
Nontaxable income (1.3%) (1.2%) (3.1%)
Nondeductible expenses 0.4% 0.6% 1.1%
Net capital loss - - 0.7%
---- ---- ----
33.1% 33.4% 32.7%
==== ==== ====
</TABLE>
At December 31, 1993, a net deferred tax asset of $251,879 was recorded which
consisted of:
<TABLE>
<CAPTION>
Taxable
(Deductible) Deferred
Temporary Tax Asset
Difference (Liability)
------------ -----------
<S> <C> <C>
Provision for possible loan losses $(1,128,506) $ 383,692
Provision for real estate losses (187,441) 63,730
Depreciation expense 206,167 (70,097)
Pension plan expense 372,750 (126,735)
Other (8,140) 1,289
----------- ---------
$ (745,170) $ 251,879
=========== =========
</TABLE>
No valuation allowance was recorded to reduce the deferred tax asset.
The changes in the components of deferred income taxes were as follows:
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Provision for possible loan losses $(137,022) $ (12,837)
Discount accretion (7,377) (211)
Depreciation (76) (6,638)
Discount on installment loans (661) (529)
Provision for real estate losses 23,757 (58,991)
Pension plan expense 32,187 27,723
Other 5,734 (1,340)
--------- ---------
$ (83,458) $ (52,823)
========= =========
</TABLE>
RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company has loans, deposits and other
transactions with its executive officers, directors and organizations with
which such persons are associated. Such transactions are on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with others. The aggregate amounts of loans
to the aforementioned persons and companies in which they have a 10% or more
ownership interest as of December 31, 1993 and 1992 were $2,451,000 and
$5,754,000, respectively. At December 31, 1993, $66,000 of these loans were
unsecured.
(Continued)
F-13
<PAGE> 56
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
RELATED PARTY TRANSACTIONS - CONTINUED
The Florida Boulevard branch is owned by the second largest shareholder of the
Company, a limited liability company controlled by the Company's chairman and
largest shareholder. The lease is accounted for as an operating lease, and
rent expense was $112,800 for each of the years ended December 31, 1993, 1992
and 1991. The lease was for 36 months at $9,400 per month and became effective
on June 1, 1989. The lease was amended in 1992 to extend the term an
additional 36 months expiring on May 31, 1995, under the same provisions of the
original lease.
Amounts paid for goods and services to related parties and their affiliates
totaled approximately $22,000 in 1993 and $846,000 in 1992. Deposits held for
related parties by the Bank were approximately $7,753,000 and $5,156,000 at
December 31, 1993 and 1992.
OPERATING LEASES
The Bank entered into two separate lease agreements, both with effective dates
of June 30, 1992, for the rental of portions of office space located on two
different floors in the Essen Centre building. Both leases are for a primary
term of ten years, with three five-year renewal options containing rental
adjustments based on the consumer price index. Both leases provide an option
to cancel at the end of five years. Minimum rental payments total $144,749 per
year throughout the first five years of both leases. Thereafter, the leases
provide for increases in the rents based on the consumer price index, with a
floor of 3% and a ceiling of 4% annually. Total rent expense was $144,749 and
$73,471 for the years ended December 31, 1993 and 1992.
The Essen Mall branch lease had an original three year term from January 1,
1986 through December 31, 1988, with three consecutive options to renew at
three years each. The first option to renew was exercised and the minimum
rental payments were $21,754 per year. The lease was renegotiated to a
month-to-month rental effective January 1, 1992. On September 30, 1992, the
lease was terminated upon the relocation of the branch. Total rent expense
paid under the Essen Mall branch lease was $13,573 for the year ended December
31, 1992.
STOCK OPTION AGREEMENT
During 1985, the Board of Directors approved an agreement which provides for
stock options to a key employee of the Bank. Under the terms of the agreement,
the employee may purchase 50,000 shares of Guaranty Bancorp, Inc. stock at $4
per share, the market value at the date of grant. At December 31, 1992, 5,000
of these shares under option were outstanding, and were exercised in 1993. In
1989, additional stock options for another 50,000 shares were granted which are
exercisable 10,000 per year beginning in 1990 at the book value of $6.97 per
share as of December 31, 1989. These options are noncancelable during the five
year term, and all remain outstanding at December 31, 1993.
(Continued)
F-14
<PAGE> 57
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
STOCK OPTION AGREEMENT - CONTINUED
The following is a summary of transactions:
<TABLE>
<CAPTION>
December 31,
--------------------------
Shares under option 1993 1992 1991
- ------------------- ---- ---- ----
<S> <C> <C> <C>
Outstanding, beginning of year 55,000 55,000 70,000
Granted during the year - - -
Exercised during the year 5,000 - 15,000
Cancelled during the year - - -
Outstanding, end of year 50,000 55,000 55,000
Exercisable at end of year 40,000 35,000 25,000
</TABLE>
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments as required by FASB Statement 107 (SFAS
107), "Disclosures About Fair Value of Financial Instruments". In many cases,
the fair values estimated cannot be verified by comparison to independent
markets, and therefore may present amounts which would not be realized upon
sale of the instruments. Accordingly, the fair value amounts presented do not
represent the value of the Company.
Cash and short-term investments. The carrying amount is a reasonable estimate
of the fair market value.
Investment securities. The fair value equals a quoted market price, if
available. Otherwise, the fair value is estimated using quoted market prices
for similar securities.
Loans. The fair value is estimated by discounting the future cash flows using
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities.
Deposits. The fair value of demand deposits, savings and NOW accounts, and
money market accounts is the amount payable on demand. The fair value of
fixed-maturity certificates of deposit is estimated using the rates currently
offered for deposits of similar remaining maturities.
Note payable. The carrying amount is a reasonable estimate of the fair value.
Commitments to extend credit and standby letters of credit. The fair value is
estimated using the fees charged to enter into similar arrangements.
Stock options. The fair value is the difference between the average market
price for Company stock and the exercise price of the options.
(Continued)
F-15
<PAGE> 58
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED
The estimated fair values of the Company's financial instruments are as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
------------------------------------------
1993 1992
------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Assets
Cash and short-term investments $ 9,747 $ 9,747 $ 12,898 $ 12,898
Investment securities 36,090 36,196 24,812 25,033
Loans 128,767 129,169 124,521 125,402
Liabilities
Deposits due on demand 75,101 75,101 73,743 73,743
Time deposits 92,242 94,920 83,992 85,375
Note payable 515 515 691 691
Off-balance sheet items
Loan commitments and standby
letters of credit - (175) - (151)
Stock options - (490) - (292)
</TABLE>
PARENT COMPANY STATEMENTS
The December 31, 1993 and 1992 financial statements of Guaranty Bancorp, Inc.
(parent company only) follow:
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
December 31,
-------------------
1993 1992
---- ----
ASSETS
<S> <C> <C>
Investment in subsidiary at equity in underlying
net assets - Guaranty Bank and Trust Company $13,026,027 $10,653,798
Cash 1,634 2,510
Other assets 64,156 20,789
----------- -----------
Total assets $13,091,817 $10,677,097
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Note payable $ 514,637 $ 690,831
----------- -----------
Total liabilities 514,637 690,831
----------- -----------
Common stock 766,025 761,025
Capital surplus 2,670,669 2,606,973
Retained earnings 9,170,630 6,648,412
Treasury stock, at cost (30,144) (30,144)
----------- -----------
Total shareholders' equity 12,577,180 9,986,266
----------- -----------
Total liabilities and shareholders' equity $13,091,817 $10,677,097
=========== ===========
</TABLE>
(Continued)
F-16
<PAGE> 59
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
PARENT COMPANY STATEMENTS - CONTINUED
STATEMENTS OF INCOME
- --------------------
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Dividends from bank subsidiary $ 200,000 $ 130,000 $ 130,000
Equity in undistributed net income of
bank subsidiary 2,352,229 2,120,308 1,370,000
----------- ----------- -----------
Total income 2,552,229 2,250,308 1,500,000
----------- ----------- -----------
Interest expense 43,806 60,469 79,097
Income tax (benefit) (15,460) (20,789) (27,308)
Other expenses 1,665 675 1,220
----------- ----------- -----------
Total expenses 30,011 40,355 53,009
----------- ----------- -----------
Net income $ 2,522,218 $ 2,209,953 $ 1,446,991
=========== =========== ===========
</TABLE>
STATEMENTS OF CASH FLOWS
- ------------------------
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,522,218 $ 2,209,953 $ 1,446,991
Adjustments to reconcile net income to
net cash provided by operating
activities -
Equity in undistributed net income
of bank (2,352,229) (2,120,308) (1,370,000)
Changes in operating assets and
liabilities -
(Increase) decrease in other assets (43,367) 6,519 6,763
----------- ----------- -----------
Net cash provided by operating
activities 126,622 96,164 83,754
----------- ----------- -----------
Cash flows from investing activities:
Capital contribution to bank subsidiary (20,000) - (308,350)
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on note payable (176,194) (100,000) (80,488)
Common stock sold 20,000 - 308,350
Tax benefit from exercise of stock
options 48,696 - -
----------- ----------- -----------
Net cash provided (used) by financing
activities (107,498) (100,000) 227,862
----------- ----------- -----------
Net increase (decrease) in cash (876) (3,836) 3,266
Cash, beginning of year 2,510 6,346 3,080
----------- ----------- -----------
Cash, end of year $ 1,634 $ 2,510 $ 6,346
=========== =========== ===========
</TABLE>
(Continued)
F-17
<PAGE> 60
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
BANK FINANCIAL STATEMENTS
The balance sheets and statements of income for Guaranty Bank and Trust Company
(bank only) follow:
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
December 31,
--------------------
1993 1992
---- ----
ASSETS
<S> <C> <C>
Cash and due from banks $ 4,237,048 $ 7,098,368
Federal funds sold 5,410,000 5,700,000
Interest-bearing deposits in other banks 100,000 100,000
Investment securities 36,089,671 24,811,587
Loans, net of unearned discount 130,722,409 126,529,618
Allowance for possible loan losses (1,955,299) (2,008,288)
Premises and equipment, net 3,376,674 3,530,235
Other real estate 867,443 1,263,319
Accrued interest receivable 1,156,113 1,085,565
Other assets 922,565 873,137
------------ ------------
Total assets $180,926,624 $168,983,541
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
<S> <C> <C>
Demand deposits $ 33,997,959 $ 30,277,540
Savings and NOW deposits 41,104,606 43,468,100
Certificates and other time deposits 92,241,519 83,992,200
Accrued interest payable 308,970 340,974
Other liabilities 247,543 250,929
Common stock 500,000 500,000
Capital surplus 2,904,770 2,884,770
Retained earnings 9,621,257 7,269,028
------------ ------------
Total liabilities and shareholder's equity $180,926,624 $168,983,541
============ ============
</TABLE>
(Continued)
F-18
<PAGE> 61
GUARANTY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1993
BANK FINANCIAL STATEMENTS - CONTINUED
STATEMENTS OF INCOME
- --------------------
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Interest income
Loans $12,006,538 $11,331,251 $10,462,128
Investment securities 1,242,538 1,512,295 1,431,021
Federal funds sold 177,763 163,152 315,382
Deposits in other banks 2,589 3,405 10,266
----------- ----------- -----------
13,429,428 13,010,103 12,218,797
----------- ----------- -----------
Interest expense
Deposits 4,865,643 5,056,282 6,154,169
Other - 367 536
----------- ----------- -----------
4,865,643 5,056,649 6,154,705
----------- ----------- -----------
Net interest income 8,563,785 7,953,454 6,064,092
Provision for possible loan losses 680,000 961,704 806,000
----------- ----------- -----------
Net interest income after provision for
possible loan losses 7,883,785 6,991,750 5,258,092
Other income 1,446,406 1,251,873 1,103,323
Other expense 5,512,324 4,863,208 4,131,540
----------- ----------- -----------
Income before income taxes 3,817,867 3,380,415 2,229,875
Income tax expense 1,265,638 1,130,107 729,875
----------- ----------- -----------
Net income $ 2,552,229 $ 2,250,308 $ 1,500,000
=========== =========== ===========
</TABLE>
MERGER AGREEMENT
On December 27, 1993, the Company's Board of Directors approved a merger
agreement in which the Company will be merged into First Alabama Bancshares,
Inc. (the "Acquiror"). The Bank will become a 100% subsidiary of the Acquiror,
and all shareholders of the Company will receive 1.09375 shares of the
Acquiror's common stock in exchange for each share of their Company common
stock, subject to adjustment. The exchange ratio would be adjusted only if the
trading price (as defined in the agreement) of the Acquiror's stock is equal
to or less than $31.00 per share, or is equal to or greater than $36.00 per
share. At $31.00 per share or less, the exchange ratio will be $33.91 divided
by the trading price. At $36.00 per share or more, the exchange ratio will be
$39.37 divided by the trading price. The agreement is subject to the
approval of the Company's shareholders and appropriate regulatory authorities.
Such approval is expected by May, 1994.
F-19
<PAGE> 62
Appendix A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
GUARANTY BANCORP, INC.
AND
FIRST ALABAMA BANCSHARES, INC.
Dated as of December 27, 1993
A-1
<PAGE> 63
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of December 27, 1993, by and between GUARANTY BANCORP, INC. ("GBI"), a
corporation organized and existing under the laws of the State of Louisiana,
with its principal office located in Baton Rouge, Louisiana; and First Alabama
Bancshares, Inc. ("FAB"), a corporation organized and existing under the laws
of the State of Delaware, with its principal office located in Birmingham,
Alabama.
Preamble
The Boards of Directors of GBI and FAB are of the opinion that the
transactions described herein are in the best interests of the parties and
their respective shareholders. This Agreement provides for the acquisition of
GBI by FAB pursuant to the merger of GBI into and with FAB. At the effective
time of such merger, the outstanding shares of the capital stock of GBI shall
be converted into shares of the common stock of FAB (except as provided
herein). As a result, shareholders of GBI shall become shareholders of FAB and
each of the subsidiaries of GBI shall continue to conduct its business and
operations as a wholly owned subsidiary of FAB. The transactions described in
this Agreement are subject to the approvals of the shareholders of GBI, the
Board of Governors of the Federal Reserve System, and the appropriate state
regulatory authorities and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, GBI shall be merged into and with FAB in accordance with the
provisions of Sections 12:111 and 112 of the LBCL and with the effect provided
in Section 12:115 of the LBCL and of Section 258 of the DGCL and with the
effect provided in Section 259 of the DGCL (the "Merger"). FAB shall be the
Surviving Corporation of the Merger and shall continue to be governed by the
Laws of the State of Delaware. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the Board of
Directors of GBI and will be approved and adopted by the Board of Directors of
FAB at the first meeting of such Board after the date of this Agreement.
1.2 Time and Place of Closing. The Closing will take place at 9:00 A.M.
on the date that the Effective Time occurs (or the immediately preceding day if
the Effective Time is earlier than 9:00 A.M.), or at such other time as the
Parties, acting through their chief executive officers or chief financial
officers, may mutually agree. The place of Closing shall be at the offices of
FAB, in Birmingham, Alabama, or such other place as may be mutually agreed upon
by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time the
Louisiana Certificate of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Louisiana and the Delaware
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Delaware (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officers or chief financial officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur on the last business day of the month in which occurs the last to
occur of (i) the effective date (including expiration of any applicable waiting
period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on
which the shareholders of GBI approve this Agreement to the extent such
approval is required by applicable Law; or such later date within 30 days
thereof as may be specified by FAB.
ARTICLE 2
TERMS OF MERGER
2.1 Articles of Incorporation. The Certificate of Incorporation of FAB
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Time until
otherwise amended or repealed.
2.2 Bylaws. The Bylaws of FAB in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 Directors and Officers. The directors of FAB in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of FAB in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES.
3.1 Conversion of Shares. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of the constituent corporations shall
be converted as follows:
A-2
<PAGE> 64
(a) Each share of FAB Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and after
the Effective Time.
(b) Each share of GBI Common Stock (excluding shares held by GBI or
any of its Subsidiaries or by FAB or any of its Subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, and excluding shares held by shareholders who perfect their
dissenters' rights of appraisal as provided in Section 3.4 of this Agreement)
issued and outstanding at the Effective Time shall be converted into 1.09375
shares of FAB Common Stock (subject to adjustment as provided below, the
"Exchange Ratio"); provided, however, that in the event the Base Period Trading
Price (defined to mean the average of the daily last sale prices for the shares
of FAB Common Stock for the ten consecutive trading days on which such shares
are actually traded as over-the-counter securities and quoted on the NASDAQ/NMS
(or in the event shares of FAB Common Stock are traded on the NYSE, the Base
Period Trading Price shall mean the average of the daily closing sales prices
for the shares of FAB Common Stock for the ten consecutive trading days on
which such shares are traded on the NYSE) (in either case, as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source) ending at the close of trading on the fifth trading day immediately
preceding the Determination Date) (i) is equal to or less than $31.00, each
share of GBI Common Stock (subject to the exclusions set forth above) issued
and outstanding at the Effective Time shall be converted into that multiple of
a share of FAB Common Stock (rounded to the nearest one-thousandth) obtained by
dividing (x) $33.91 by (y) the Base Period Trading Price and (ii) is equal to
or greater than $36.00, each share of GBI Common Stock (subject to the
exclusions set forth above) issued and outstanding at the Effective Time shall
be converted into that multiple of a share of FAB Common Stock (rounded to the
nearest one-thousandth) obtained by dividing (x) $39.37 by (y) the Base Period
Trading Price ($31.00 and $36.00 are collectively referred to as the "Base
Period Trading Price Limitations").
3.2 Anti-Dilution Provisions. In the event GBI changes the number of
shares of GBI Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted. In the event FAB changes the number of shares of FAB Common Stock
issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with respect to such stock
and the record date therefor (in the case of a stock dividend) or the effective
date thereof (in the case of a stock split or similar recapitalization for
which a record date is not established) shall be prior to the Effective Time,
the Exchange Ratio and the Base Period Trading Price Limitations shall be
proportionately adjusted and, if necessary, the anticipated Effective Time
shall be postponed for an appropriate period of time agreed upon by the parties
in order for the Base Period Trading Price to reflect the market effect of such
stock split, stock dividend, or similar recapitalization.
3.3 Shares Held by GBI or FAB. Each of the shares of GBI Common Stock
held by any GBI Company or by any FAB Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of GBI Common Stock
who perfects his dissenters' rights of appraisal in accordance with and as
contemplated by Section 12:131 of the LBCL shall be entitled to receive the
value of such shares in cash as determined pursuant to such provision of Law;
provided, that no such payment shall be made to any dissenting shareholder
unless and until such dissenting shareholder has complied with the applicable
provisions of the LBCL and surrendered to GBI the certificate or certificates
representing the shares for which payment is being made. In the event that
after the Effective Time a dissenting shareholder of GBI fails to perfect, or
effectively withdraws or loses, his right to appraisal and of payment for his
shares, FAB shall issue and deliver the consideration to which such holder of
shares of GBI Common Stock is entitled under this Article 3 (without interest)
upon surrender by such holder of the certificate or certificates representing
shares of GBI Common Stock held by him.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of GBI Common Stock exchanged pursuant to the
Merger, or of options to purchase shares of GBI Common Stock, who would
otherwise have been entitled to receive a fraction of a share of FAB Common
Stock (after taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of FAB Common Stock multiplied by the market
value of one share of FAB Common Stock at the Effective Time, in the case of
shares exchanged pursuant to the Merger, or the date of exercise, in the case
of options. The market value of one share of FAB Common Stock at the Effective
Time shall be the Base Period Trading Price and at the date of exercise shall
be the last sale price of such common stock on the NASDAQ/NMS (or in the event
shares of FAB Common Stock are traded on the NYSE, the market value of one
share of FAB Common Stock at the date of exercise shall be the closing sale
price of such common stock on the NYSE) (in either case, as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source) on the last trading day preceding the date of exercise. No such holder
will be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
3.6 Conversion of Stock Options; Restricted Stock.
(a) At the Effective Time, all rights with respect to GBI Common
Stock pursuant to stock options or stock appreciation rights ("GBI Options")
granted by GBI under the GBI Stock Plan, which are outstanding at the Effective
Time, whether or not exercisable, shall be converted into and become rights
with respect to FAB Common Stock, and FAB shall assume each GBI Option, in
accordance with the terms of the GBI Stock Plan and stock option agreement by
which it is evidenced. From and after the Effective Time, (i) each GBI Option
assumed by FAB may be exercised solely for shares of FAB Common Stock (or cash
in the case of stock appreciation rights), (ii) the number of shares of FAB
Common Stock subject to such GBI Option shall be equal to the number of shares
of GBI Common Stock subject to such GBI Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such GBI Option shall be adjusted by dividing the per
share exercise price under each such GBI Option by the Exchange Ratio and
rounding down to the nearest cent. It is intended that the foregoing
assumption shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 424 of the Internal Revenue Code, as to
any stock option which is an "incentive stock option." GBI agrees to take all
necessary steps to effectuate the foregoing provisions of this Section 3.6.
(b) All restrictions or limitations on transfer with respect to
GBI Common Stock awarded under the GBI Stock Plan or
A-3
<PAGE> 65
any other plan, program, or arrangement of any GBI Company, to the extent that
such restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall
remain in full force and effect with respect to shares of FAB Common Stock into
which such restricted stock is converted pursuant to Section 3.1 of this
Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, FAB and
GBI shall cause the exchange agent selected by FAB (the "Exchange Agent") to
mail to the former shareholders of GBI appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to
the certificates theretofore representing shares of GBI Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of GBI Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement or as to which
dissenters' rights of appraisal have been perfected as provided in Section 3.4
of this Agreement) issued and outstanding at the Effective Time shall surrender
the certificate or certificates representing such shares to the Exchange Agent
and shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.5 of this Agreement, each holder of shares of GBI Common
Stock issued and outstanding at the Effective Time also shall receive, upon
surrender of the certificate or certificates representing such shares, cash in
lieu of any fractional share of FAB Common Stock to which such holder may be
otherwise entitled (without interest). FAB shall not be obligated to deliver
the consideration to which any former holder of GBI Common Stock is entitled as
a result of the Merger until such holder surrenders his certificate or
certificates representing the shares of GBI Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of GBI Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Agreement notwithstanding, neither FAB, GBI, nor
the Exchange Agent shall be liable to a holder of GBI Common Stock for any
amounts paid or property delivered in good faith to a public official pursuant
to any applicable abandoned property Law.
4.2 Rights of Former GBI Shareholders. At the Effective Time, the
stock transfer books of GBI shall be closed as to holders of GBI Common Stock
immediately prior to the Effective Time and no transfer of GBI Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of GBI Common Stock (other
than shares to be canceled pursuant to Sections 3.3 and 3.4 of this Agreement)
shall from and after the Effective Time represent for all purposes only the
right to receive the consideration provided in Sections 3.1 and 3.5 of this
Agreement in exchange therefor. To the extent permitted by Law, former
shareholders of record of GBI shall be entitled to vote after the Effective
Time at any meeting of FAB shareholders the number of whole shares of FAB
Common Stock into which their respective shares of GBI Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing GBI Common Stock for certificates representing FAB Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by FAB on the FAB Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of FAB Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any certificate representing shares of GBI
Common Stock issued and outstanding at the Effective Time until such holder
surrenders such certificate for exchange as provided in Section 4.1 of this
Agreement. However, upon surrender of such GBI Common Stock certificate, both
the FAB Common Stock certificate (together with all such undelivered dividends
or other distributions without interest) and any undelivered cash payments to
be paid for fractional share interests (without interest) shall be delivered
and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF GBI
GBI hereby represents and warrants to FAB as follows:
5.1 Organization, Standing, and Power. GBI is a corporation duly
organized and validly existing, and in good standing under the Laws of the
State of Louisiana, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its material Assets.
GBI is duly qualified or licensed to transact business as a foreign corporation
in good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on GBI.
5.2 Authority; No Breach By Agreement.
(a) GBI has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
GBI, subject to the approval of this Agreement by the holders of a majority of
the outstanding GBI Common Stock, which is the only shareholder vote required
for approval of this Agreement and consummation of the Merger by GBI. Subject
to such requisite shareholder approval, this Agreement represents a legal,
valid, and binding obligation of GBI, enforceable against GBI in accordance
with its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought).
(b) Neither the execution and delivery of this Agreement by GBI,
nor the consummation by GBI of the transactions contemplated hereby, nor
compliance by GBI with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of GBI's Charter or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result
A-4
<PAGE> 66
in the creation of any Lien on any Asset of any GBI Company under, any Contract
or Permit of any GBI Company, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBI, or, (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any GBI Company or any of their
respective material Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on GBI, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by GBI of the Merger and the other transactions
contemplated in this Agreement.
5.3 Capital Stock. The authorized capital stock of GBI consists of
1,250,000 shares of GBI Common Stock, of which 757,805 shares are issued and
outstanding and 8,220 shares are held as treasury shares as of the date of this
Agreement and not more than 807,805 shares will be issued and outstanding at
the Effective Time. All of the issued and outstanding shares of capital stock
of GBI are duly and validly issued and outstanding and are fully paid and
nonassessable under the LBCL. None of the outstanding shares of capital stock
of GBI has been issued in violation of any preemptive rights of the current or
past shareholders of GBI. GBI has reserved 50,000 shares of GBI Common Stock
for issuance under the GBI Stock Plan, pursuant to which options to purchase
not more than 50,000 shares of GBI Common Stock are outstanding. Except as set
forth above or as disclosed in Section 5.3 of the GBI Disclosure Memorandum,
there are no shares of capital stock or other equity securities of GBI
outstanding and no outstanding Rights relating to the capital stock of GBI.
5.4 GBI Subsidiaries. GBI has disclosed in Section 5.4 of the GBI
Disclosure Memorandum all of the GBI Subsidiaries as of the date of this
Agreement. Except as disclosed in Section 5.4 of the GBI Disclosure
Memorandum, GBI or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each GBI Subsidiary. No equity
securities of any GBI Subsidiary are or may become required to be issued (other
than to another GBI Company) by reason of any Rights, and there are no
Contracts by which any GBI Subsidiary is bound to issue (other than to another
GBI Company) additional shares of its capital stock or Rights or by which any
GBI Company is or may be bound to transfer any shares of the capital stock of
any GBI Subsidiary (other than to another GBI Company). There are no Contracts
relating to the rights of any GBI Company to vote or to dispose of any shares
of the capital stock of any GBI Subsidiary. All of the shares of capital stock
of each GBI Subsidiary held by a GBI Company are fully paid and (except
pursuant to 12 USC Section 55 in the case of national banks and comparable,
applicable state Law, if any, in the case of state depository institutions)
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the GBI Company
free and clear of any Lien. Each GBI Subsidiary is either a bank, a savings
association, or a corporation, and is duly organized, validly existing, and (as
to corporations) in good standing under the Laws of the jurisdiction in which
it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each GBI Subsidiary is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on GBI. Each GBI Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or the Savings Association Insurance
Fund, as appropriate.
5.5 Financial Statements. GBI has included in Section 5.5 of the GBI
Disclosure Memorandum copies of all GBI Financial Statements for periods ended
prior to the date hereof and will deliver to FAB copies of all GBI Financial
Statements prepared subsequent to the date hereof. The GBI Financial
Statements (as of the dates thereof and for the periods covered thereby) (i)
are or, if dated after the date of this Agreement, will be in accordance with
the books and records of the GBI Companies, which are or will be, as the case
may be, complete and correct and which have been or will have been, as the case
may be, maintained in accordance with good business practices, and (ii) present
or will present, as the case may be, fairly the consolidated financial position
of the GBI Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the GBI
Companies for the periods indicated, in accordance with GAAP (subject to any
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material in amount of effect).
5.6 Absence of Undisclosed Liabilities. No GBI Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBI, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of GBI as of
December 31, 1992 and September 30, 1993, included in the GBI Financial
Statements or reflected in the notes thereto. No GBI Company has incurred or
paid any Liability since September 30, 1993, except for such Liabilities
incurred or paid in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on GBI.
5.7 Absence of Certain Changes or Events. Since December 31, 1992,
except as disclosed in Section 5.7 of the GBI Disclosure Memorandum, (i) there
have been no events, changes, or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
GBI, and (ii) the GBI Companies have not taken any action, or failed to take
any action, prior to the date of this Agreement, which action or failure, if
taken after the date of this Agreement, would represent or result in a material
breach or violation of any of the covenants and agreements of GBI provided in
Article 7 of this Agreement.
5.8 Tax Matters.
(a) All Tax returns required to be filed by or on behalf of any
of the GBI Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1992, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and all returns filed are complete
and accurate to the Knowledge of GBI. All Taxes shown on filed returns have
been paid. There is no audit examination, deficiency, or refund Litigation
with respect to any Taxes, except as reserved against in the GBI Financial
Statements delivered
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prior to the date of this Agreement or as disclosed in Section 5.8 of the GBI
Disclosure Memorandum. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) None of the GBI Companies has executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any
of the GBI Companies for the period or periods through and including the date
of the respective GBI Financial Statements has been made and is reflected on
such GBI Financial Statements.
(d) Deferred Taxes of the GBI Companies have been provided for in
accordance with GAAP.
(e) Each of the GBI Companies is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code.
5.9 Environmental Matters.
(a) To the Knowledge of GBI, each GBI Company, its Participation
Facilities, and its Loan Properties are, and have been, in compliance with all
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 GBI.
(b) To the Knowledge of GBI, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other forum
in which any GBI Company or any of its Loan Properties or Participation
Facilities has been or, with respect to threatened Litigation, may be named as
a defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by any
GBI Company or any of its Loan Properties or Participation Facilities, except
for such Litigation pending or threatened that is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on GBI, and
to the Knowledge of GBI, there is no reasonable basis for any such Litigation.
(c) To the Knowledge of GBI, there have been no releases of
Hazardous Material in, on, under, or affecting any Participation Facility, or
Loan Property, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on GBI.
5.10. Compliance with Laws. GBI is duly registered as a bank holding
company under the BHC Act. Each GBI Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Except as disclosed in Section 5.10 of the GBI Disclosure Memorandum,
none of the GBI Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on GBI; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any GBI Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on GBI, (ii)
threatening to revoke any Permits, or (iii) requiring any GBI Company to enter
into or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
5.11 Employee Benefit Plans.
(a) GBI has disclosed in Section 5.11 of the GBI Disclosure
Memorandum, and has delivered or made available to FAB prior to the execution
of this Agreement copies in each case of, all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs, arrangements, or agreements, all medical, vision, dental, or
other health plans, all life insurance plans, and all other employee benefit
plans or fringe benefit plans, including "employee benefit plans" as that term
is defined in Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to, by any GBI Company or
Affiliate thereof for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries are eligible to participate (collectively, the "GBI
Benefit Plans"). Any of the GBI Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "GBI ERISA Plan." Each GBI ERISA Plan which is also a "defined
benefit plan" (as defined in Section 414(j) of the Internal Revenue Code) is
referred to herein as a "GBI Pension Plan." No GBI Pension Plan is or has been
a multiemployer plan within the meaning of Section 3(37) of ERISA. No GBI
ERISA Plan is also a "defined benefit plan" (as defined in Section 414(j) of
the Internal Revenue Code).
(b) All GBI Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on GBI. Each GBI ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service,
and GBI is not aware of any circumstances likely to result in revocation of any
such favorable determination letter. No GBI Company has engaged in a
transaction with respect to any GBI Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any GBI
Company
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to a tax or penalty imposed by either Section 4975 of the Internal Revenue Code
or Section 502(i) of ERISA.
(c) No GBI Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, and the fair market
value of the assets of any such plan exceeds the plan's "benefit liabilities,"
as that term is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if the plan terminated in accordance with
all applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any GBI Pension Plan, (ii) no change in the actuarial assumptions with respect
to any GBI Pension Plan, and (iii) no increase in benefits under any GBI
Pension Plan as a result of plan amendments or changes in applicable Law which
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on GBI or materially adversely affect the funding status of any
such plan. Neither any GBI Pension Plan nor any "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained
by any GBI Company, or the single-employer plan of any entity which is
considered one employer with GBI under Section 4001 of ERISA or Section 414 of
the Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an
"ERISA Affiliate") has an "accumulated funding deficiency" within the meaning
of Section 412 of the Internal Revenue Code or Section 302 of ERISA. No GBI
Company has provided, or is required to provide, security to a GBI Pension Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any GBI Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate. No GBI Company has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required
to be filed for any GBI Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.11 of the GBI Disclosure
Memorandum, no GBI Company has any Liability for retiree health and life
benefits under any of the GBI Benefit Plans and there are no restrictions on
the rights of such GBI Company to amend or terminate any such Plan without
incurring any Liability thereunder.
(f) Except as disclosed in Section 5.11 of the GBI Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any GBI Company from
any GBI Company under any GBI Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any GBI Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any GBI Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the GBI Financial Statements to the extent
required by and in accordance with GAAP.
5.12 Material Contracts. Except as disclosed in Section 5.12 of the
GBI Disclosure Memorandum or otherwise reflected in the GBI Financial
Statements, none of the GBI Companies, nor any of their respective Assets,
businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination,
consulting, or retirement Contract providing for aggregate payments to any
Person in any calendar year in excess of $50,000, (ii) any Contract relating to
the borrowing of money by any GBI Company or the guarantee by any GBI Company
of any such obligation (other than Contracts evidencing deposit liabilities,
purchases of federal funds, fully-secured repurchase agreements, and Federal
Home Loan Bank advances of depository institution Subsidiaries, trade payables,
and Contracts relating to borrowings or guarantees made in the ordinary course
of business), (iii) any Contracts between or among GBI Companies, and (iv) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by GBI with the SEC as of the date of this
Agreement if GBI were subject to the reporting requirements of the 1934 Act
(together with all Contracts referred to in Section 5.11(a) of this Agreement,
the "GBI Contracts"). None of the GBI Companies is in Default under any GBI
Contract. All of the indebtedness of any GBI Company for money borrowed is
prepayable at any time by such GBI Company without penalty or premium.
5.13 Legal Proceedings. Except as disclosed in Section 5.13 of the
GBI Disclosure Memorandum, there is no Litigation instituted or pending, or, to
the Knowledge of GBI, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any GBI Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on GBI, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any GBI Company. Section 5.13 of the GBI
Disclosure Memorandum includes a summary report of all Litigation as of the
date of this Agreement to which any GBI Company is a party and which names a
GBI Company as a defendant or cross-defendant.
5.14 Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by any GBI Company or
any Affiliate thereof to FAB pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. As of their respective dates, each report and other
document, including financial statements, exhibits, and schedules thereto,
filed by a GBI Company with any Regulatory Authority complied in all material
respects with all applicable Laws, and as of its respective date, each such
report and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. All documents
that any GBI Company or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable Law.
5.15 Tax and Regulatory Matters. No GBI Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii) materially impede receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition
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or restriction of the type referred to in the last sentence of such Section.
5.16 State Takeover Laws. To the extent applicable, each GBI Company
has taken all necessary action to exempt the transactions contemplated by this
Agreement from any applicable state takeover Law, including Chapter 35 of the
LBCL.
5.17 Directors' Agreements. Each of the directors of GBI has executed
and delivered to FAB an agreement in substantially the form of Exhibit 1.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF FAB
FAB hereby represents and warrants to GBI as follows:
6.1 Organization, Standing, and Power. FAB is a corporation duly
organized, validly existing, and in good standing under the Laws of the State
of Delaware, and has the corporate power and authority to carry on its business
as now conducted and to own, lease, and operate its material Assets. FAB is
duly qualified or licensed to transact business as a foreign corporation in
good standing in the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of its business
requires it to be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FAB.
6.2 Authority; No Breach By Agreement.
(a) FAB has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, will be duly and validly authorized
by all necessary corporate action in respect thereof on the part of FAB at the
first meeting of the Board of Directors of FAB after the date of this
Agreement. Upon adoption by the Board of Directors of FAB, this Agreement will
represent a legal, valid, and binding obligation of FAB, enforceable against
FAB in accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by FAB,
nor the consummation by FAB of the transactions contemplated hereby, nor
compliance by FAB with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of FAB's Certificate of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any FAB
Company under, any Contract or Permit of any FAB Company, where such Default or
Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB, or, (iii)
subject to receipt of the requisite approvals referred to in Section 9.1(b) of
this Agreement, violate any Law or Order applicable to any FAB Company or any
of their respective material Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NYSE and the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FAB, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by FAB of the Merger and the other transactions
contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of FAB consists of
60,000,000 shares of FAB Common Stock, of which 37,162,772 shares were issued
and outstanding and 1,924,700 shares were held as treasury shares as of
September 30, 1993. All of the issued and outstanding shares of FAB Common
Stock are, and all of the shares of FAB Common Stock to be issued in exchange
for shares of GBI Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding, and fully paid and nonassessable under the DGCL. None of the
outstanding shares of FAB Common Stock has been, and none of the shares of FAB
Common Stock to be issued in exchange for shares of GBI Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past shareholders of FAB.
6.4 Financial Statements. FAB has disclosed in Section 6.4 of the FAB
Disclosure Memorandum all FAB Financial Statements for periods ended prior to
the date hereof and will deliver to GBI copies of all FAB Financial Statements
prepared subsequent to the date hereof. The FAB Financial Statements (as of
the dates thereof and for the periods covered thereby) (i) are or, if dated
after the date of this Agreement, will be in accordance with the books and
records of the FAB Companies, which are or will be, as the case may be,
complete and correct and which have been or will have been, as the case may be,
maintained in accordance with good business practices, and (ii) present or will
present, as the case may be, fairly the consolidated financial position of the
FAB Companies as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows of the FAB
Companies for the periods indicated, in accordance with GAAP (subject to
exceptions as to consistency specified therein or as may be indicated in the
notes thereto or, in the case of interim financial statements, to normal
recurring year-end adjustments that are not material in amount or effect).
6.5 Absence of Undisclosed Liabilities. No FAB Company has any
Liabilities (including Liabilities relating to matters contemplated by Sections
5.8, 5.9, and 5.11 of this Agreement applying such sections to FAB) that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FAB, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of FAB as of December 31, 1992, and September 30,
1993, included in the FAB Financial Statements or reflected in the notes
thereto. No FAB Company has incurred or paid any Liability since September 30,
1993, except for such Liabilities incurred or paid in the ordinary course of
business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FAB.
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6.6 Absence of Certain Changes or Events. Since December 31, 1992,
except as disclosed in the FAB Financial Statements delivered prior to the date
of this Agreement or as disclosed in Section 6.6 of the FAB Disclosure
Memorandum, (i) there have been no events, changes, or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FAB, and (ii) the FAB Companies have not taken any
action, or failed to take any action, prior to the date of this Agreement,
which action or failure, if taken after the date of this Agreement would
represent or result in a material breach or violation of any of the covenants
and agreements of FAB provided in Article 7 of this Agreement..
6.7 Compliance with Laws. FAB is duly registered as a bank holding
company under the BHC Act. Each FAB Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB. No FAB
Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FAB; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority
or the staff thereof (i) asserting that any FAB Company is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB, (ii)
threatening to revoke any Permits, or (iii) requiring any FAB Company to enter
into or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
6.8 Legal Proceedings. There is no Litigation instituted or pending,
or, to the Knowledge of FAB, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any FAB Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FAB, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any FAB Company, that is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on FAB.
6.9 Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by any FAB Company or
any Affiliate thereof to GBI pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. As of their respective dates, each report and other
document, including financial statements, exhibits, and schedules thereto,
filed by a FAB Company with any Regulatory Authority complied in all material
respects with all applicable Laws, and as of its respective date, each such
report and document did not, in all material respects, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
6.10 Tax and Regulatory Matters. No FAB Company or any Affiliate
thereof has taken any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or (ii) materially impede receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of GBI. Unless the prior written consent of
FAB shall have been obtained, and except as otherwise expressly contemplated
herein, GBI shall and shall cause each of its Subsidiaries to, from the date of
this Agreement until the Effective Time or termination of this Agreement, (a)
operate its business only in the usual, regular, and ordinary course, (b)
preserve intact its business organization and Assets and maintain its rights
and franchises, and (c) take no action which would (i) adversely affect the
ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the
type referred to in the last sentences of Section 9.1(b) or 9.1(c) of this
Agreement, or (ii) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 Negative Covenants of GBI. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, GBI
covenants and agrees that it will not do or agree or commit to do, or permit
any of its Subsidiaries to do or agree or commit to do, any of the following
without the prior written consent of the chief executive officer, president, or
chief financial officer of FAB, which consent shall not be unreasonably
withheld:
(a) amend the Charter, Bylaws, or other governing instruments of any
GBI Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a GBI Company to another GBI
Company) in excess of an aggregate of $50,000 (for the GBI Companies on a
consolidated basis) except in the ordinary course of the business of GBI
Subsidiaries consistent with past practices (which shall include, for GBI
Subsidiaries that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or Federal
Home Loan Bank, and entry into repurchase agreements fully secured by U.S.
government or agency securities), or impose, or suffer the imposition, on any
Asset of any GBI Company of any Lien or permit any such Lien to exist (other
than in connection with deposits, repurchase agreements, bankers acceptances,
"treasury tax and loan" accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise of trust
powers, and Liens in effect as of the date hereof that are disclosed in the GBI
Disclosure Memorandum); or
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(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any GBI Company, or declare or pay any dividend or make any
other distribution in respect of GBI's capital stock; provided, however, that
in the event the Effective Time occurs at a date subsequent to the record date
for the payment of the second quarter 1994 dividend by FAB, then GBI may (to
the extent legally and contractually permitted to do so), but shall not be
obligated to, declare a cash dividend with a record date subsequent to the
determination of the Base Period Trading Price but prior to the Effective Time
equal to the product of (i) the per share dividend declared by FAB for the
second quarter 1994 dividend and (ii) the Exchange Ratio; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, or as disclosed in Section 7.2(d) of the GBI
Disclosure Memorandum, issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares
of GBI Common Stock or any other capital stock of any GBI Company, or any
Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any GBI
Company or issue or authorize the issuance of any other securities in respect
of or in substitution for shares of GBI Common Stock, or sell, lease, mortgage,
or otherwise dispose of or otherwise encumber any shares of capital stock of
any GBI Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another GBI Company) or any Asset having a book value in excess
of $100,000 other than in the ordinary course of business for reasonable and
adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment, either
by purchase of stock or securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person other than a wholly owned GBI
Subsidiary, or otherwise acquire direct or indirect control over any Person,
other than in connection with (i) foreclosures in the ordinary course of
business, or (ii) acquisitions of control by a depository institution
Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any GBI Company, except in accordance with past practice or
previously approved by the Board of Directors of GBI, in each case as disclosed
in Section 7.2(g) of the GBI Disclosure Memorandum or as required by Law; pay
any severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and
disclosed in Section 7.2(g) of the GBI Disclosure Memorandum; and enter into or
amend any severance agreements with officers of any GBI Company; grant any
increase in fees or other increases in compensation or other benefits to
directors of any GBI Company except in accordance with past practice disclosed
in Section 7.2(g) of the GBI Disclosure Memorandum; or voluntarily accelerate
the vesting of any stock options or other stock-based compensation or employee
benefits; or
(h) enter into or amend any employment Contract between any GBI
Company and any Person (unless such amendment is required by Law) that the GBI
Company does not have the unconditional right to terminate without Liability
(other than Liability for services already rendered), at any time on or after
the Effective Time; or
(i) adopt any new employee benefit plan of any GBI Company or make any
material change in or to any existing employee benefit plans of any GBI Company
other than any such change that is required by Law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified status of any
such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any GBI Company for
material money damages or restrictions upon the operations of any GBI Company;
or
(l) modify, amend, or terminate any material Contract (including any
loan Contract with an unpaid balance exceeding $50,000) or waive, release,
compromise, or assign any material rights or claims.
7.3 Covenants of FAB. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, FAB
covenants and agrees that, except as disclosed in Section 7.3 of the FAB
Disclosure Memorandum, it shall (x) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment,
to enhance the long-term value of the FAB Common Stock and the business
prospects of the FAB Companies and to the extent consistent therewith use all
reasonable efforts to preserve intact the FAB Companies' core businesses and
goodwill with their respective employees and the communities they serve, and
(y) take no action which would (i) materially adversely affect the ability of
any Party to obtain any Consents required for the transactions contemplated
hereby without imposition of a condition or restriction of the type referred to
in the last sentences of Section 9.1(b) or 9.1(c) of this Agreement, or (ii)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement; provided, that the foregoing shall not
prevent any FAB Company from discontinuing or disposing of any of its Assets or
business if such action is, in the judgment of FAB, desirable in the conduct of
the business of FAB and its Subsidiaries.
7.4 Adverse Changes in Condition. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of it's representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. At
a date determined by FAB in its sole discretion after execution of this
Agreement, FAB shall file the Registration Statement with the SEC, and shall
use its reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of FAB Common Stock upon consummation of the Merger. GBI shall
furnish all information concerning it and the holders of its capital stock as
FAB may reasonably request in connection with such action. GBI shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. In connection with the Shareholders' Meeting, (i) GBI shall
mail the Proxy Statement to its shareholders, (ii) the Parties shall furnish to
each other all information concerning them that they may reasonably request in
connection with such Proxy Statement, (iii) the Board of Directors of GBI shall
recommend (subject to compliance with their fiduciary duties as advised by
counsel) to its shareholders the approval of this Agreement, and (iv) the Board
of Directors and officers of GBI shall (subject to compliance with their
fiduciary duties as advised by counsel) use their reasonable efforts to obtain
such shareholders' approval.
8.2 Exchange Listing. FAB shall use its reasonable efforts to list,
prior to the Effective Time, on the NASDAQ/NMS (or the NYSE, if at the
Effective Time shares of FAB Common Stock are then listed for trading on the
NYSE) the shares of FAB Common Stock to be issued to the holders of GBI Common
Stock pursuant to the Merger.
8.3 Applications. FAB shall promptly prepare and file, and GBI shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. FAB shall permit
GBI reasonable opportunity to review and comment upon such applications prior
to the filing thereof with the Regulatory Authorities.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, FAB shall execute and file the Louisiana
Certificate of Merger with the Secretary of State of the State of Louisiana and
FAB shall execute and file the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable 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 to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 9 of this Agreement; provided, that nothing herein shall preclude
either Party from exercising its rights under this Agreement. Each Party shall
use, and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the
other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. GBI shall cooperate with FAB
in obtaining, at FAB's election and expense, environmental audits of any or all
of the properties owned or occupied by GBI. No investigation by a Party shall
affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to it by
the other Party concerning its and its Subsidiaries' businesses, operations,
and financial positions and shall not use such information for any purpose
except in furtherance of the transactions contemplated by this Agreement. If
this Agreement is terminated prior to the Effective Time, each Party shall
promptly return all documents and copies thereof, and all work papers
containing confidential information received from the other Party.
8.7 Press Releases. Prior to the Effective Time, GBI and FAB shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, no GBI Company nor any Affiliate thereof nor
any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any GBI Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the
extent necessary to comply with the fiduciary duties of GBI's Board of
Directors, no GBI Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but GBI may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations. GBI shall
promptly notify FAB orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. GBI shall (i)
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable efforts to
cause all of its Representatives not to engage in any of the foregoing.
8.9 Tax Treatment. Each of the Parties undertakes and agrees to use
its reasonable efforts to cause the Merger, and to take no action which would
cause the Merger not, to qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 Agreement of Affiliates. GBI has disclosed in Section 8.10 of
the GBI Disclosure Memorandum all Persons whom it
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reasonably believes is an "affiliate" of GBI for purposes of Rule 145 under the
1933 Act. GBI shall use its reasonable efforts to cause each such Person to
deliver to FAB not later than 30 days prior to the Effective Time, a written
agreement, substantially in the form of Exhibit 2, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of GBI
Common Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of FAB Common Stock to be received by such Person upon consummation of
the Merger except in compliance with applicable provisions of the 1933 Act and
the rules and regulations thereunder. FAB shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of FAB Common Stock by such affiliates.
8.11 Employee Benefits and Contracts. Following the Effective Time,
FAB shall provide generally to officers and employees of the GBI Companies
employee benefits under employee benefit plans (other than stock option or
other plans involving the potential issuance of FAB Common Stock except as set
forth in Section 8.11 of this Agreement), on terms and conditions which when
taken as a whole are substantially similar to those currently provided by the
FAB Companies to their similarly situated officers and employees. For purposes
of participation and vesting (but not accrual of benefits) under such employee
benefit plans, the service of the employees of the GBI Companies prior to the
Effective Time shall be treated as service with a FAB Company participating in
such employee benefit plans. FAB also shall cause GBI and its Subsidiaries to
honor in accordance with their terms all employment, severance, consulting, and
other compensation Contracts disclosed in Section 8.11 of the GBI Disclosure
Memorandum to FAB between any GBI Company and any current or former director,
officer, or employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under the GBI
Benefit Plans.
8.12 Indemnification.
(a) For a period of six years after the Effective Time, FAB
shall, and shall cause GBI to, indemnify, defend, and hold harmless the present
and former directors, officers, employees, and agents of the GBI Companies
(each, an "Indemnified Party") against all Liabilities arising out of actions
or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement) to the full extent permitted under
Louisiana Law and by GBI's Charter and Bylaws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense
of any Litigation. Without limiting the foregoing, in any case in which
approval by GBI is required to effectuate any indemnification, FAB shall cause
GBI to direct, at the election of the Indemnified Party, that the determination
of any such approval shall be made by independent counsel mutually agreed upon
between FAB and the Indemnified Party.
(b) For a period of one year after the Effective Time, FAB shall
use its reasonable efforts (and GBI shall cooperate prior to the Effective Time
in these efforts) to maintain in effect GBI's existing directors' and officers'
liability insurance policy (provided that FAB may substitute therefor (i)
policies of at least the same coverage and amounts containing terms and
conditions which are substantially no less advantageous or (ii) with the
consent of GBI given prior to the Effective Time, any other policy) with
respect to claims arising from facts or events which occurred prior to the
Effective Time and covering persons who are currently covered by such
insurance; provided, that neither FAB nor GBI shall be obligated to make
premium payments for such one-year period in respect of such policy (or
coverage replacing such policy) which exceed, for the portion related to GBI's
directors and officers, 150% of the annual premium payments on GBI's current
policy in effect as of the date of this Agreement (the "Maximum Amount").
(c) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.12, upon learning of any such Liability or
Litigation, shall promptly notify FAB thereof. In the event of any such
Litigation (whether arising before or after the Effective Time), (i) FAB or GBI
shall have the right to assume the defense thereof and FAB shall not be liable
to such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if FAB or GBI elects not to assume such
defense or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between FAB or GBI and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and FAB or GBI shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received;
provided, that FAB shall be obligated pursuant to this paragraph (c) to pay for
only one firm of counsel for all Indemnified Parties in any jurisdiction, (ii)
the Indemnified Parties will cooperate in the defense of any such Litigation,
and (iii) FAB shall not be liable for any settlement effected without its prior
written consent; and provided further that GBI shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATION
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(a) Shareholder Approval. The shareholders of GBI shall have approved
this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger, as and to the extent required by Law or by the provisions
of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary
to consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) which in the reasonable
judgment of the Board of Directors of FAB would so materially adversely impact
the economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger. No
Consent obtained from any Regulatory Authority which is necessary to consummate
the transactions contemplated hereby shall condition or restrict the operations
of GBI after the Effective Time in a manner which in the reasonable judgment of
the Board of Directors of GBI would so materially adversely impact the economic
or
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business benefits of the transactions contemplated by this Agreement so as to
render inadvisable the consummation of the Merger.
(c) Consents and Approvals. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those referred
to in Section 9.1(b) of this Agreement) or for the preventing of any Default
under any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. No Consent so obtained which is necessary to consummate
the transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of FAB would
so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced, or entered any Law or Order (whether temporary, preliminary, or
permanent) or taken any other action which prohibits, restricts, or makes
illegal consummation of the transactions contemplated by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness of
the Registration Statement shall have been issued, no action, suit, proceeding,
or investigation by the SEC to suspend the effectiveness thereof shall have
been initiated and be continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the issuance or trading
of the shares of FAB Common Stock issuable pursuant to the Merger shall have
been received.
(f) Exchange Listing. The shares of FAB Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NASDAQ/NMS
(or the NYSE, if at the Effective Time shares of FAB Common Stock are then
listed for trading on the NYSE) .
(g) Tax Matters. Each Party shall have received a written opinion of
Alston & Bird, special counsel to FAB, in form reasonably satisfactory to it
(the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger of GBI Common Stock for FAB Common Stock
will not give rise to gain or loss to the shareholders of GBI with respect to
such exchange (except to the extent of any cash received), and (iii) neither
GBI nor FAB will recognize gain or loss as a consequence of the Merger (except
for the inclusion in income of the amount of the bad-debt reserve maintained by
CFSB and any other amounts resulting from any required change in accounting
methods and any income and deferred gain recognized pursuant to Treasury
regulations issued under Section 1502 of the Internal Revenue Code). In
rendering such Tax Opinion, counsel for FAB shall be entitled to rely upon
representations of officers of GBI and FAB reasonably satisfactory in form and
substance to such counsel.
9.2 Conditions to Obligations of FAB. The obligations of FAB to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by FAB pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of GBI set forth or referred to in this Agreement shall be true and
correct in all respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.3 of this Agreement,
which shall be true in all material respects) the inaccuracies of which relate
to matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBI. The results of any environmental
assessments performed by FAB shall be reasonably satisfactory to FAB in its
good faith judgment.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of GBI to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. GBI shall have delivered to FAB (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief executive
officer and its chief financial officer, to the effect that the conditions of
its obligations set forth in Sections 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by GBI's
Board of Directors and shareholders evidencing the taking of all corporate
action necessary to authorize the execution, delivery, and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as FAB and its counsel shall request.
(d) Opinion of Counsel. FAB shall have received an opinion of
Breazeale, Sachse & Wilson, counsel to GBI, dated as of the Effective Time, in
form reasonably satisfactory to FAB, as to the matters set forth in Exhibit 3.
(e) Accountant's Letters. FAB shall have received from Basil Lee &
Company letters dated not more than five days prior to (i) the date of the
Proxy Statement and (ii) the Effective Time, with respect to certain financial
information regarding GBI, in form and substance reasonably satisfactory to
FAB, which letters shall be based upon customary specified procedures
undertaken by such firm.
(f) Affiliates Agreements. FAB shall have received from each
affiliate of GBI the affiliates letter referred to in Section 8.10 of this
Agreement.
(g) Claims Letters. Each of the directors and officers of GBI shall
have executed and delivered to FAB letters in substantially the form of Exhibit
4.
9.3 Conditions to Obligations of GBI. The obligations of GBI to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following
conditions, unless waived by GBI pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. The representations and
warranties of FAB set forth or referred to in this Agreement
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shall be true and correct in all respects as of the date of this Agreement and
as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date), except (i) as expressly contemplated by
this Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 6.3 of this Agreement,
which shall be true in all material respects) the inaccuracies of which relate
to matters that are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FAB.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of FAB to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) Certificates. FAB shall have delivered to GBI (i) a certificate,
dated as of the Effective Time and signed on its behalf by its chief executive
officer and its chief financial officer, to the effect that the conditions of
its obligations set forth in Sections 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by FAB's
Board of Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such reasonable
detail as GBI and its counsel shall request.
(d) Opinion of Counsel. GBI shall have received an opinion of Alston
& Bird, special counsel to FAB, dated as of the Effective Time, in form
reasonably acceptable to GBI, as to the matters set forth in Exhibit 5.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of GBI, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of FAB and the Board of
Directors of GBI; or
(b) By the Board of Directors of either Party in the event of a
material breach by the other Party of any representation or warranty contained
in this Agreement which cannot be or has not been cured within 30 days after
the giving of written notice to the breaching Party of such breach and which
breach would provide the non-breaching Party the ability to refuse to
consummate the Merger under the standard set forth in Section 10.1(a) of this
Agreement in the case of FAB and Section 9.3(a) of this Agreement in the case
of GBI; or
(c) By the Board of Directors of either Party in the event of a
material breach by the other Party of any covenant or agreement contained in
this Agreement which cannot be or has not been cured within 30 days after the
giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger and
the other transactions contemplated hereby shall have been denied by final
nonappealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal, or (ii) the shareholders of
GBI fail to vote their approval of this Agreement and the transactions
contemplated hereby as required by the LBCL at the Shareholders' Meeting where
the transactions were presented to such shareholders for approval and voted
upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by July 31, 1994, if the failure to
consummate the transactions contemplated hereby on or before such date is not
caused by any breach of this Agreement by the Party electing to terminate
pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party in the event that any of
the conditions precedent to the obligations of such Party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section
10.1(e) of this Agreement; or
(g) By the Board of Directors of FAB in the event that the Base Period
Trading Price is equal to or less than $25.00.
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant
to Section 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided herein, the
capitalized terms set forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any tender offer
or exchange offer or any proposal for a merger, acquisition of all of the stock
or assets of, or other business combination involving such Party or any of its
Subsidiaries or the acquisition of a substantial equity interest in, or a
substantial portion of the assets of, such Party or any of its Subsidiaries.
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"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by, or
under common control with such Person; (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity
or voting interest of such Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including the
Exhibits delivered pursuant hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties, businesses,
and rights of such Person of every kind, nature, character, and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and
records of such Person, and whether or not owned in the name of such Person or
any Affiliate of such Person and wherever located.
"Base Period Trading Price" shall have the meaning provided in Section
3.1(b) of this Agreement.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing" shall mean the closing of the transactions contemplated hereby,
as described in Section 1.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
or undertaking of any kind or character, or other document to which any Person
is a party or that is binding on any Person or its capital stock, Assets, or
business.
"Default" shall mean (i) any breach or violation of or default under any
Contract, Order, or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of control or both would constitute a breach or
violation of or default under any Contract, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order, or Permit.
"Delaware Certificate of Merger" shall mean the Delaware Certificate of
Merger to be executed by FAB and filed with the Secretary of State of the State
of Delaware relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"Determination Date" shall mean the date the Board of Governors of the
Federal Reserve System issues its consent to the Merger.
"DGCL" shall mean the General Corporation Law of Delaware.
"Effective Time" shall mean the date and time at which the Merger becomes
effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws pertaining to pollution or
protection of the environment and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over pollution or protection of the
environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning provided in Section 5.11 of this
Agreement.
"ERISA Plan" shall have the meaning provided in Section 5.11 of this
Agreement.
"Exchange Agent" shall have the meaning provided in Section 4.1 of this
Agreement.
"Exchange Ratio" shall have the meaning provided in Section 3.1(b) of this
Agreement.
"Exhibits" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"FAB Common Stock" shall mean the $0.625 par value common stock of FAB.
"FAB Companies" shall mean, collectively, FAB and all FAB Subsidiaries.
"FAB Disclosure Memorandum" shall mean the written information entitled
"First Alabama Bancshares, Inc. Disclosure Memorandum" delivered prior to the
date of this Agreement to GBI describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"FAB Financial Statements" shall mean (i) the consolidated statements of
condition (including related notes and schedules, if any) of FAB as of
September 30, 1993, and as of December 31, 1992 and 1991, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the nine months ended
September 30, 1993, and for each of the three years ended December 31, 1992,
1991, and 1990, as filed by FAB in SEC Documents and (ii) the consolidated
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statements of condition of FAB (including related notes and schedules, if any)
and related statements of income, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to September 30, 1993.
"FAB Subsidiaries" shall mean the Subsidiaries of FAB at the Effective
Time.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"GB&T" shall mean Guaranty Bank and Trust Company, a state bank and a GBI
Subsidiary.
"GBI Benefit Plans" shall have the meaning set forth in Section 5.11 of
this Agreement.
"GBI Common Stock" shall mean the $1.00 par value common stock of GBI.
"GBI Companies" shall mean, collectively, GBI and all GBI Subsidiaries.
"GBI Disclosure Memorandum" shall mean the written information entitled
"Guaranty Bancorp, Inc. Disclosure Memorandum" delivered prior to the date of
this Agreement to FAB describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is being
made. Information disclosed with respect to one Section shall not be deemed to
be disclosed for purposes of any other Section not specifically referenced with
respect thereto.
"GBI Financial Statements" shall mean (i) the consolidated balance sheets
(including related notes and schedules, if any) of GBI as of September 30,
1993, and as of December 31, 1992 and 1991, and the related statements of
income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) for the nine months ended September 30, 1993, and
for each of the three fiscal years ended December 31, 1992, 1991, and 1990, as
filed by GBI in SEC Documents, and (ii) the consolidated balance sheets of GBI
(including related notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to September 30, 1993.
"GBI Stock Plan" shall mean the existing stock option and other
stock-based compensation plans of GBI disclosed in Section 11.1 of the GBI
Disclosure Memorandum.
"GBI Subsidiaries" shall mean the Subsidiaries of GBI, which shall include
the GBI Subsidiaries described in Section 5.4 of this Agreement and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of GBI in the future and owned by GBI at the Effective Time.
"Hazardous Material" shall mean any pollutant, contaminant, or toxic or
hazardous substance, pollutant, chemical, or waste within the meaning of the
Comprehensive Environment Response, Compensation, and Liability Act, 42 U.S.C.
o 9601 et seq., or any similar federal, state, or local Law (and specifically
shall include asbestos requiring abatement, removal, or encapsulation pursuant
to the requirements of governmental authorities, polychlorinated biphenyls, and
petroleum and petroleum products).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR Act" shall mean Section 7A of the Clayton Act, as added by Title II
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the knowledge of
the chairman, president, chief financial officer, chief accounting officer,
chief credit officer, general counsel, any assistant or deputy general counsel,
or any senior or executive vice president of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, or business, including those promulgated, interpreted, or enforced
by any of the Regulatory Authorities.
"LBCL" shall mean the Louisiana Business Corporation Law.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including costs
of investigation, collection, and defense), claim, deficiency, guaranty, or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course
of business) of any type, whether accrued, absolute, or contingent, liquidated
or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, and (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits, and other Liens incurred in the ordinary course of
the banking business.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative, or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information about a potential claim relating to or
affecting a Party, its business, its Assets (including Contracts related to
it), or the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their Affiliates
by Regulatory Authorities.
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"Loan Property" shall mean any property owned by the Party in question or
by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"Louisiana Certificate of Merger" shall mean the Louisiana Certificate of
Merger to be executed by FAB and filed with the Secretary of State of the State
of Louisiana relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"Material" for purposes of this Agreement shall be determined in light of
the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality
in that instance.
"Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, together with any other event, change, or occurrence, has a
material adverse impact on (i) the financial position, business, or results of
operations of such Party and its Subsidiaries, taken as a whole, or (ii) the
ability of such Party to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this Agreement,
provided that "material adverse impact" shall not be deemed to include the
impact of (x) changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, or (y) changes
in GAAP or regulatory accounting principles generally applicable to banks and
savings associations and their holding companies.
"Merger" shall mean the merger of GBI into and with FAB referred to in
Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers' Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local, or foreign or other court, arbitrator, mediator,
tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property in which the
Party in question or any of its Subsidiaries participates in the management
and, where required by the context, said term means the owner or operator of
such facility or property, but only with respect to such facility or property.
"Party" shall mean either GBI or FAB, and "Parties" shall mean both GBI
and FAB.
"Permit" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets,
or business.
"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Proxy Statement" shall mean the proxy statement used by GBI to solicit
the approval of its shareholders of the transactions contemplated by this
Agreement, which shall include the prospectus of FAB relating to the issuance
of the FAB Common Stock to holders of GBI Common Stock.
"Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by FAB under the 1933 Act
with respect to the shares of FAB Common Stock to be issued to the shareholders
of GBI in connection with the transactions contemplated by this Agreement and
which shall include the Proxy Statement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of Thrift Supervision (including its
predecessor, the Federal Home Loan Bank Board), the Office of the Comptroller
of the Currency, Federal Deposit Insurance Corporation, all state regulatory
agencies having jurisdiction over the Parties and their respective
Subsidiaries, the NYSE, the NASD, and the SEC.
"Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of
its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
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"Shareholders' Meeting" shall mean the meeting of the shareholders of GBI
to be held pursuant to Section 8.1 of this Agreement, including any adjournment
or adjournments thereof.
"Subsidiaries" shall mean all those corporations, banks, associations, or
other entities of which the entity in question owns or controls 50% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
"Surviving Corporation" shall mean FAB as the surviving corporation
resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local, or foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise, occupancy, and other taxes, assessments,
charges, fares, or impositions, including interest, penalties, and additions
imposed thereon or with respect thereto.
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that FAB shall bear and pay the filing fees
payable in connection with the Registration Statement and the Proxy Statement
and printing costs incurred in connection with the printing of the Registration
Statement and the Proxy Statement.
(b) In addition to the foregoing, if, after the date of this
Agreement and within 12 months following
(i) any termination of this Agreement
(1) by FAB pursuant to Section 10.1(b), 10.1(c), 10.1(f) (but only on
the basis of the failure of GBI to satisfy any of the conditions enumerated in
Section 9.2., other than Section 9.2.(d) or 9.2(e)) of this Agreement, or
(2) by either Party pursuant to Section 10.1(d)(ii) (with respect to
approval of the shareholders of GBI), or
(ii) failure to consummate the Merger by reason of any failure of GBI
to satisfy the conditions enumerated in Section 9.1(a) or Section 9.2., other
than Section 9.2.(d) or 9.2(e),
any third-party shall acquire, merge with, combine with, purchase a significant
amount of Assets of, or engage in any other business combination with, or
purchase any equity securities involving an acquisition of 20% or more of the
voting stock of, any GBI Company, or enter into any binding or nonbinding
agreement, letter of intent, memorandum of understanding, or similar instrument
to do any of the foregoing (collectively, a "Business Combination"), such
third-party that is a party to the Business Combination shall pay to FAB, prior
to the earlier of consummation of the Business Combination or execution of any
binding or nonbinding agreement, letter of intent, memorandum of understanding,
or similar instrument with GBI relating to such Business Combination, an amount
in cash equal to the sum of
(x) the direct costs and expenses or portion thereof referred to in
subsection (a) above incurred by or on behalf of FAB in connection with the
transactions contemplated by this Agreement, plus
(y) 2% of the aggregate fair market value of the consideration
received by GBI or the shareholders of GBI in such Business Combination,
which sum represents additional compensation for FAB's loss as the result of
the transactions contemplated by this Agreement not being consummated. In the
event such third-party shall refuse to pay such amounts, the amounts shall be
an obligation of GBI and shall be paid by GBI promptly upon notice to GBI by
FAB.
(c) Nothing contained in this Section shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a Party of
the terms of this Agreement or otherwise limit the rights of the nonbreaching
Party.
11.3 Brokers and Finders. Except as to The Robinson-Humphrey Company,
Inc. as to GBI, each of the Parties represents and warrants that neither it nor
any of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby. In the
event of a claim by any broker or finder based upon his or its representing or
being retained by or allegedly representing or being retained by GBI or FAB,
each of GBI and FAB, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this
Agreement expressed or implied, is intended to confer upon any Person, other
than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided, that
after any such approval by the holders of GBI Common Stock, there shall be made
no amendment that pursuant to Section 12:112 of the LBCL requires further
approval
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by such shareholders without the further approval of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, FAB, acting through its
Board of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by GBI, to waive or extend the time for the compliance or fulfillment
by GBI of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of FAB under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of FAB.
(b) Prior to or at the Effective Time, GBI, acting through its
Board of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by FAB, to waive or extend the time for the compliance or fulfillment
by FAB of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of GBI under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of GBI.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be or construed
as a further or continuing waiver of such condition or breach or a waiver of
any other condition or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid,
or by courier or overnight carrier, to the persons at the addresses set forth
below (or at such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:
GBI: Guaranty Bancorp, Inc.
5353 Essen Lane
Baton Rouge, Louisiana 70809
Telecopy Number: (504) 767-9317
Attention: Mr. C. C. Dabadie
President and Chief Executive Officer
Copy to Counsel: Breazeale, Sachse & Wilson
One American Place, 23rd Floor
Baton Rouge, Louisiana 70825
Telecopy Number: (504) 387-5397
Attention: Van R. Mayhall, Jr.
FAB: First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial Officer
Copy to Counsel: First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: L. Burton Barnes, III
Corporate Secretary and General Counsel
11.9 Governing Law. Except to the extent the laws of the State of
Louisiana apply to the Merger, this Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without regard
to any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Enforcement of Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce
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specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
11.13 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: GUARANTY BANCORP, INC.
/s/ David K. Kneipp By: /s/ C. C. Dabadie
- ------------------- -------------------------------------
David K. Kneipp C. C. Dabadie
Corporate Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: First Alabama Bancshares, Inc.
/s/ L. Burton Barnes, III By: /s/ Carl L. Jones, Jr.
- ------------------------- -----------------------
L. Burton Barnes, III Carl L. Jones, Jr.
Corporate Secretary Regional President
[CORPORATE SEAL]
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Appendix B
April 11, 1994
Board of Directors
Guaranty Bancorp, Inc.
5353 Essen Lane
Suite 500
Baton Rouge, Louisiana 70809-3587
Gentlemen:
In connection with the proposed acquisition of Guaranty Bancorp, Inc.
("GBTC") by First Alabama Bancshares, Inc. ("FABC") (the "Merger"), you have
asked us to render an opinion as to whether the financial terms of the Merger,
as provided in the Agreement and Plan of Merger dated as of December 27, 1993
among such parties (the "Merger Agreement"), are fair, from a financial point
of view, to the stockholders of GBTC. Under the terms of the Merger, holders
of all outstanding shares of GBTC stock will receive consideration per GBTC
share equal to 1.090 multiplied by the Closing Price for FABC as defined in the
Merger Agreement, subject to adjustment under certain circumstances.
Our firm, as part of its investment banking business, is frequently
involved in the valuation of securities as related to public underwritings,
private placements, mergers, acquisitions, recapitalizations and other
purposes.
In connection with our study for rendering this opinion, we have
reviewed the Merger Agreement, GBTC's financial results for fiscal years 1988,
1989, 1990, 1991 and 1992 and the first three quarters of 1993, and certain
documents and information we deem relevant to our analysis. We have also held
discussions with senior management of GBTC for the purpose of reviewing the
historical and current operations of, and outlook for GBTC, industry trends,
the terms of the proposed Merger, and related matters.
We have also studied published financial data concerning certain other
publicly traded banks which we deem comparable to GBTC as well as certain
financial data relating to acquisitions of other banks that we deem relevant or
comparable. In addition, we have reviewed other published information,
performed certain financial analyses and considered other factors and
information which we deem relevant.
As the proposed Merger Agreement entails the issuance of shares of
FABC as the consideration to be paid to GBTC stockholders, we have reviewed
similar information and data relating to FABC including its historical
financial statements, from 1988 up through and including the third quarter
ended December 27, 1993.
In rendering this opinion, we have relied upon the accuracy of the
Merger Agreement, the financial information listed above, and other information
furnished to us by GBTC and FABC. We have not separately verified this
information nor have we made an independent evaluation of any of the assets or
liabilities of GBTC and FABC.
Based upon the foregoing and upon current market and economic
conditions, we are of the opinion that, from a financial point of view, the
terms of the Merger as provided in the Merger Agreement are fair to the
stockholders of GBTC.
Very truly yours,
THE ROBINSON-HUMPHREY COMPANY, INC.
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Appendix C
Louisiana Statutes Annotated-Revised Statutes 12:131
s 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 per cent 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, 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 per
cent 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 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
C-1
<PAGE> 84
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.
C-2
<PAGE> 85
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 10 of the Certificate of Incorporation of the Registrant provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith which
involved intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Company to
indemnify its officers and directors under certain circumstances. The pertinent
provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
<PAGE> 86
subsections (a) and (b) of this section. Such determination shall be
made (1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil or criminal action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person."
The Company has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to
a director or officer whose actions in his capacity result in liability, or to
the Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on
inside information, illegal payments, dishonesty, accounting of securities
profits in violation of Section 16(b) of the Securities Exchange Act of 1934
and acts within the scope of the Pension Reform Act of 1974.
<PAGE> 87
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -------------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of December 27, 1993 by
and between Guaranty Bancorp, Inc. and First Alabama Bancshares,
Inc. -- included as Appendix A to the Proxy Statement/
Prospectus.
4.1 -- Certificate of Incorporation of First Alabama Bancshares, Inc.
-- incorporated by reference from registration statement on Form
S-4, registration number 33-50577.
4.2 -- By-laws of First Alabama Bancshares, Inc. -- incorporated by
reference from registration statement on Form S-4, registration
number 33-50577.
5. -- Form of Opinion re: legality
8. -- Form of Opinion re: tax matters.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Basil M. Lee and Company
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- to be
included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- to be included in Exhibit 8.
23.6 -- Consent of The Robinson-Humphrey Company, Inc.
24. -- Power of Attorney -- the manually signed power of attorney is
set forth in the signature page of the original registration
statement.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, 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.
C.(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as
<PAGE> 88
a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
D. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on this the 8th day of April, 1994.
REGISTRANT:
FIRST ALABAMA BANCSHARES, INC.
BY: /s/ RICHARD D. HORSLEY
-------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard D. Horsley and L. Burton Barnes,
III, and each of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, or their substitutes, may lawfully do or
cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------------- -------------------------------- ----------------
<S> <C> <C>
/s/ J. STANLEY MACKIN Chairman of the Board and April 8, 1994
------------------------------- Chief Executive Officer and
J. Stanley Mackin Director
/s/ RICHARD D. HORSLEY Vice Chairman of the Board and April 8, 1994
------------------------------- Executive Financial Officer
Richard D. Horsley and Director
/s/ ROBERT P. HOUSTON Executive Vice President and April 8, 1994
------------------------------- Comptroller
Robert P. Houston
/s/ SHEILA S. BLAIR Director April 8, 1994
-------------------------------
Sheila S. Blair
/s/ JAMES B. BOONE, JR. Director April 8, 1994
-------------------------------
James B. Boone, Jr.
/s/ ALBERT P. BREWER Director April 8, 1994
-------------------------------
Albert P. Brewer
Director
-------------------------------
James S.M. French
Director
-------------------------------
Catesby ap C. Jones
/s/ OLIN B. KING Director April 8, 1994
-------------------------------
Olin B. King
/s/ N. FLOYD MCGOWIN, JR. Director April 8, 1994
-------------------------------
N. Floyd McGowin, Jr.
/s/ H. MANNING MCPHILLIPS, JR. Director April 8, 1994
-------------------------------
H. Manning McPhillips, Jr.
/s/ W. WYATT SHORTER Director April 8, 1994
-------------------------------
W. Wyatt Shorter
</TABLE>
<PAGE> 90
<TABLE>
<S> <C> <C>
/s/ HENRY E. SIMPSON Director April 8, 1994
----------------------------
Henry E. Simpson
/s/ ROBERT E. STEINER, III Director April 8, 1994
----------------------------
Robert E. Steiner, III
/s/ LEE J. STYSLINGER, JR. Director April 8, 1994
----------------------------
Lee J. Styslinger, Jr.
</TABLE>
<PAGE> 91
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- --------------------------------------------------------------------------------- ----------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of December 27, 1993 by and between
Guaranty Bancorp, Inc. and First Alabama Bancshares, Inc. -- included as
Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of First Alabama Bancshares, Inc. -- incorporated
by reference from registration statement on Form S-4, registration number 33-
50577.
4.2 -- By-laws of First Alabama Bancshares, Inc. -- incorporated by reference from
registration statement on Form S-4, registration number 33-50577.
5. -- Form of Opinion re: legality.
8. -- Form of Opinion re: tax matters.
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Basil M. Lee and Company.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- to be included in Exhibit 8.
23.6 -- Consent of The Robinson-Humphrey Company, Inc.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the
signature page of the original registration statement.
</TABLE>
<PAGE> 1
EXHIBIT 5
LANGE, SIMPSON, ROBINSON & SOMERVILLE
ATTORNEYS & COUNSELORS
417 20TH STREET NORTH, SUITE 1700
BIRMINGHAM, ALABAMA 35203-3272
TELEPHONE (205) 250-5000
FACSIMILE (205) 250-5034
April , 1993
First Alabama Bancshares, Inc.
P.O. Box 1448
Montgomery, Alabama 36102
Re: First Alabama Bancshares, Inc. -- S-4 Registration
Statement, No. 33-
Ladies and Gentlemen:
We have acted as counsel for First Alabama Bancshares, Inc., a Delaware
corporation, ("First Alabama") in connection with the merger between Guaranty
Bancorp, Inc. ("Guaranty") and First Alabama (the "Merger") and in connection
with the registration of common stock of First Alabama on Form S-4 under the
Securities Act of 1933. The Merger provides for issuance of shares of common
stock of First Alabama, par value $.625 per share, issuable to the stockholders
of Guaranty upon consummation of the Merger. The number of shares of First
Alabama to be issued in the Merger depends on the exchange ratio, which is
defined in the Agreement and Plan of Reorganization between First Alabama and
Guaranty, dated as of December 27, 1993.
We have examined and are familiar with the registration statement on
Form S-4 (33- ) filed with the Securities and Exchange Commission, as such
registration statement has been amended to date. We have examined and are
familiar with the records relating to the organization of First Alabama and the
proceedings taken by its directors to date, and we have examined
<PAGE> 2
First Alabama Bancshares, Inc.
April , 1994
Page 2
such other documents and records as we have deemed relevant for purposes of
rendering this opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of stock of First Alabama issued pursuant to the Merger will be duly
authorized, validly issued and outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Legal Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
<PAGE> 1
EXHIBIT 8
ALSTON & BIRD
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777 Telex: 54-2996
Terence J. Greene Direct Dial (404) 881-7493
April __, 1994
First Alabama Bancshares, Inc.
417 North 20th Street
Birmingham, Alabama 35203
Guaranty Bancorp, Inc.
5353 Essen Lane
Baton Rouge, Louisiana 70809
Re: PROPOSED MERGER INVOLVING GUARANTY BANCORP, INC. AND FIRST
ALABAMA BANCSHARES, INC.
Ladies and Gentlemen:
We have acted as counsel to First Alabama Bancshares, Inc. ("FAB"), a
Delaware corporation, in connection with the proposed merger of Guaranty
Bancorp, Inc. ("GBI") with and into FAB. The Merger will be effected pursuant
to the Agreement and Plan of Merger, dated as of December 27, 1993, by and
between GBI and FAB (the "Merger Agreement"). In our capacity as counsel to
FAB, our opinion has been requested with respect to certain of the federal
income tax consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury Regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Merger Agreement, and unless otherwise specified, all
section references herein are to the Code.
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:
(1) the Merger Agreement;
(2) the proxy statement/prospectus included in FAB's
Registration Statement on Form S-4, being filed with the Securities and
Exchange Commission with respect to the proposed transaction; and
(3) such additional documents as we have considered
relevant.
<PAGE> 2
First Alabama Bancshares, Inc.
Guaranty Bancshares, Inc.
____________ __, 1994
Page 2
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate.
We have also obtained such additional information and representations
as we have deemed relevant and necessary through consultation with various
officers and representatives of FAB and GBI and through the Certificate dated
_______________, 199_, provided by the management of FAB and the Certificate
dated _______________, 199_, provided by the management of GBI.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale, yield a wider
array of banking and banking related services to consumers and businesses, and
provide for a stronger market position and for greater financial resources to
meet competitive challenges within the Baton Rouge, Louisiana market area. To
achieve these goals, the following will occur pursuant to the Merger Agreement:
(1) GBI will merge with and into FAB pursuant to the
General Corporation Law of Delaware and the Louisiana Business Corporation Law.
FAB will acquire all the assets and assume all the liabilities of GBI. GBI's
separate corporate existence will cease to exist, and FAB will be the surviving
corporation. Thereafter, FAB will continue to conduct its business and will
continue to operate the businesses of GBI conducted prior to the Merger.
(2) Each share of GBI Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares as to which
dissenters' rights are duly exercised and except as provided below) shall, as
of the Effective Time, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive certificates
representing 1.09375 shares of FAB Common Stock, subject to adjustment as
provided in the Merger Agreement. At the Effective Time, any and all shares of
GBI Common Stock held by any GBI Company or any FAB Company (in each case other
than in a fiduciary capacity or as a result of debts previously contracted)
shall be canceled and retired, and no consideration shall be paid in exchange
therefor. In the event FAB or GBI changes the number of shares of FAB Common
Stock or GBI Common Stock, respectively, issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization, the number of shares of FAB Common Stock into which shares of
GBI Common Stock shall be converted shall be equitably adjusted to reflect the
effect of such stock split, stock dividend, or similar recapitalization.
(3) No fractional shares of FAB Common Stock will be issued
as a result of the Merger. In lieu of the issuance of fractional shares, cash
adjustments (without interest) based upon the average of the closing bid and
ask quotations of such common stock on the last business day preceding the
Effective Time will be paid to the holders of GBI Common Stock in respect of
any fraction of a share of FAB Common Stock that would otherwise be issuable.
No such holder shall be entitled to dividends, voting rights, or any other
stockholder right in respect of any fractional share.
(4) Any holder of shares of GBI Common Stock who objects to
the Merger and who exercises his statutory dissenters' rights of appraisal will
be entitled to receive the value of such shares in cash calculated and
determined pursuant to the applicable provisions of the Louisiana Business
Corporation Law and shall not be entitled to receive the consideration
otherwise provided by the Merger Agreement.
With your consent, we have also assumed that the following statements
are true on the date hereof and will be true on the date the proposed
transaction is consummated:
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First Alabama Bancshares, Inc.
Guaranty Bancshares, Inc.
____________ __, 1994
Page 3
(1) The fair market value of the FAB Common Stock and other
consideration received by the stockholders of GBI will be, in each instance,
approximately equal to the fair market value of the GBI Common Stock
surrendered in exchange therefor.
(2) There is no plan or intention on the part of the
stockholders of GBI who own one percent (1%) or more of the GBI stock, and to
the best of the knowledge of the management of GBI, there is no plan or
intention on the part of the remaining stockholders of GBI to sell, exchange, or
otherwise dispose of a number of shares of FAB Common Stock to be received in
the proposed transaction that would reduce their holdings in FAB Common Stock
received to a number of shares having, in the aggregate a value as of the
Effective Time of less than fifty percent (50%) of the total value of all of
the stock of GBI outstanding immediately prior to the Effective Time. For
purposes of this representation, shares of GBI stock exchanged for cash or
other property, surrendered by dissenters or exchanged for cash in lieu of
fractional shares of FAB stock will be treated as outstanding GBI stock as of
the Effective Time. Moreover, shares of GBI stock and shares of FAB stock held
by GBI stockholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the transaction will be considered in making this representation.
(3) FAB has no plan or intention to reacquire any of its
stock issued in the transaction.
(4) FAB has no plan or intention to sell or otherwise
dispose of any of the assets of GBI acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers described in
section 368(a)(2)(C).
(5) The liabilities of GBI assumed by FAB and the
liabilities to which the transferred assets of GBI are subject were incurred by
GBI in the ordinary course of its business.
(6) Following the transaction, FAB will continue the
historic business of GBI or use a significant portion of GBI's historic
business assets in a business.
(7) FAB, GBI, and the stockholders of GBI will pay their
respective expenses, if any, incurred in connection with the transaction.
(8) There is no intercorporate indebtedness existing
between GBI and FAB that was issued, acquired, or will be settled at a
discount.
(9) Neither of the parties to the Merger is an "investment
company" as defined in section 368(a)(2)(F)(iii) and (iv).
(10) GBI is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of section 368(a)(3)(A).
(11) The fair market value and the total adjusted basis of
the assets of GBI transferred to FAB will each equal or exceed the sum of the
liabilities assumed by FAB plus the amount of the liabilities, if any, to which
the transferred assets are subject.
(12) The payment of cash in lieu of fractional shares of FAB
stock is solely for the purpose of avoiding the expense and inconvenience to
FAB of issuing fractional shares and does not represent separately bargained
for consideration. The total cash consideration that will be paid in the
transaction to the GBI stockholders instead of issuing fractional shares of FAB
stock will not exceed one percent (1%) of the total consideration that will be
issued in the transaction to the GBI stockholders in exchange for their shares
of GBI stock. The fractional share interests of each GBI stockholder will be
aggregated, and no GBI stockholder will receive cash in an amount equal to or
greater than the value of one full share of FAB stock.
(13) None of the compensation received by any
stockholder-employees of GBI will be separate consideration for, or allocable
to, any of their shares of GBI stock; none of the shares of FAB stock received
by any stockholder-employees will be separate consideration for, or
<PAGE> 4
First Alabama Bancshares, Inc.
Guaranty Bancshares, Inc.
____________ __, 1994
Page 4
allocable to, any employment agreement; and the compensation paid to any
stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(14) At all times during the five-year period ending on the
effective date of the Merger, the fair market value of all of GBI's United
States real property interests was and will have been less than fifty percent
(50%) of the total fair market value of (a) its United States real property
interests, (b) its interests in real property located outside the United
States, and (c) its other assets used or held for use in a trade or business.
For purposes of the preceding sentence, (x) United States real property
interests include all interests (other than an interest solely as a creditor)
in real property and associated personal property (such as movable walls and
furnishings) located in the United States or the Virgin Islands and interests
in any corporation (other than a controlled corporation) owning any United
States real property interest, (y) GBI is treated as owning its proportionate
share (based on the relative fair market value of its ownership interest to all
ownership interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which GBI is a partner or beneficiary, and (z)
any such entity in turn is treated as owning its proportionate share of the
assets owned by any controlled corporation or any partnership, trust, or estate
in which the entity is a partner or beneficiary. As used in this paragraph,
"controlled corporation" means any corporation at least fifty percent (50%) of
the fair market value of the stock of which is owned by GBI, in the case of a
first-tier subsidiary of GBI, or by a controlled corporation, in the case of a
lower-tier subsidiary.
(15) For each of FAB and GBI, not more than twenty-five
percent (25%) of the fair market value of its adjusted total assets consists of
stock and securities of any one issuer, and not more than fifty percent (50%)
of the fair market value of its adjusted total assets consists of stock and
securities of five or fewer issuers. For purposes of the preceding sentence,
(a) a corporation's adjusted total assets exclude cash, cash items (including
accounts receivable and cash equivalents), and United States government
securities, (b) a corporation's adjusted total assets exclude stock and
securities issued by any subsidiary at least fifty percent (50%) of the voting
power or fifty percent (50%) of the total fair market value of the stock of
which is owned by the corporation, but the corporation is treated as owning
directly a ratable share (based on the percentage of the fair market value of
the subsidiary's stock owned by the corporation) of the assets owned by any
such subsidiary, and (c) all corporations that are members of the same
"controlled group" within the meaning of section 1563(a) of the Code are
treated as a single issuer.
(16) GBI has not filed, and holds no assets subject to, a
consent under section 341(f) of the Code and the regulations thereunder.
(17) GBI is not a party to, and holds no assets subject to, a
"safe harbor lease" under former section 168(f)(8) of the Code and the
regulations thereunder.
(18) The Merger Agreement represents the entire
understanding of GBI and FAB with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Merger Agreement and that the representations made by FAB and GBI (including
the representation that GBI stockholders will maintain sufficient equity
ownership interests in FAB after the Merger) are true and correct at the time
of the consummation of the Merger, we are of the opinion that:
<PAGE> 5
First Alabama Bancshares, Inc.
Guaranty Bancshares, Inc.
____________ __, 1994
Page 5
(1) Provided the Merger qualifies as a statutory merger
under the General Corporation Law of Delaware and the Louisiana Business
Corporation Law, the Merger will be a reorganization within the meaning of
section 368(a)(1)(A). GBI and FAB will each be "a party to a reorganization"
within the meaning of section 368(b).
(2) GBI will recognize no gain or loss upon the transfer of
its assets to FAB in exchange solely for FAB Common Stock and the assumption by
FAB of the liabilities of GBI. Sections 361(a) and 357(a).
(3) No gain or loss will be recognized by FAB on receipt of
GBI's assets in exchange for FAB Common Stock. Section 1032(a).
(4) The basis of GBI's assets in the hands of FAB will, in
each case, be the same as the basis of those assets in the hands of GBI
immediately prior to the transaction. Section 362(b).
(5) The holding period of the assets of GBI in the hands of
FAB will, in each case, include the period during which such assets were held
by GBI. Section 1223(2).
(6) The stockholders of GBI will recognize no gain or loss
upon the exchange of their GBI Common Stock solely for shares of FAB Common
Stock. Section 354(a)(1).
(7) The basis of the FAB Common Stock received by the GBI
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the GBI Common Stock surrendered in exchange therefor. Section
358(a)(1).
(8) The holding period of the FAB Common Stock received by
the GBI stockholders will, in each instance, include the period during which
the GBI Common Stock surrendered in exchange therefor was held, provided that
the GBI Common Stock was held as a capital asset on the date of the exchange.
Section 1223(1).
(9) The payment of cash to GBI stockholders in lieu of
fractional share interests of FAB Common Stock will be treated for federal
income tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by FAB. These cash payments will be treated as
having been received as distributions in full payment in exchange for the stock
redeemed as provided in section 302(a). Rev. Rul. 66-365, 1966-2 C.B. 116 and
Rev. Proc. 77-41, 1977-2 C.B. 574.
(10) Where solely cash is received by a GBI stockholder in
exchange for his GBI Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of such
holder's GBI Common Stock, subject to the provisions and limitations of section
302.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinions are based solely on the
documents that we have examined, the additional information that we have
obtained, and the statements set out herein, which we have assumed and you have
confirmed to be true on the date hereof and will be true on the date on which
the proposed transaction is consummated. Our opinions cannot be relied upon if
any of the facts contained in such documents or if such additional information
is, or later becomes, inaccurate, or if any of the statements set out herein
is, or later becomes, inaccurate. Finally, our opinions are limited to the tax
matters specifically covered thereby, and we have not been asked to address,
nor have we addressed, any other tax consequences of the proposed transaction.
<PAGE> 6
First Alabama Bancshares, Inc.
Guaranty Bancshares, Inc.
____________ __, 1994
Page 6
We consent to this opinion as an exhibit to the Registration Statement
filed by FAB relating to the proposed Merger and to the references to our firm
in the proxy statement/prospectus included in the Registration Statement. This
opinion is being provided solely for the use of FAB, GBI, and the stockholders
of GBI. No other person or party shall be entitled to rely on this opinion.
Very truly yours,
ALSTON & BIRD
By:
----------------
Terence J. Greene
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of First Alabama
Bancshares, Inc. for the registration of up to 1,027,584 shares of its common
stock and to the incorporation by reference therein of our report dated
February 4, 1994, with respect to the consolidated financial statements of
First Alabama Bancshares, Inc. included in its Annual Report to Stockholders
which is incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1993, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young
- -----------------
Ernst & Young
Birmingham, Alabama
April 7, 1994
<PAGE> 1
EXHIBIT 23.2
Basil M. Lee and Company
Certified Public Accountants
ALVIN J. OURBO, JR., CPA
LEONARD M. BLANCHARD, CPA BASIL M. LEE CPA, RET.
ROY P. CHENEVERT, JR., CPA CONSULTANT
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 28, 1994, and to all references to our Firm under the caption
"Experts" in the Proxy Statement/Prospectus included in this Registration
Statement (Form S-4) of First Alabama Bancshares, Inc.
/s/ Basil M. Lee and Company
- ------------------------------
Basil M. Lee and Company
Baton Rouge, Louisiana
April 8, 1994
<PAGE> 1
EXHIBIT 23.6
THE ROBINSON-HUMPHREY COMPANY, INC.
CORPORATE FINANCE INVESTMENT BANKERS
DEPARTMENT SINCE 1894
CONSENT OF THE ROBINSON-HUMPHREY COMPANY, INC.
We consent to the inclusion in this Registration Statement on Form S-4 of
our opinion, dated December 27, 1993, set forth as Appendix B to the Proxy
Statement/Prospectus and to the summarization thereof in the Proxy
Statement/Prospectus under the caption "Description of the Transaction". In
giving such consent, we do not thereby admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
THE ROBINSON-HUMPHREY COMPANY, INC.
Atlanta, Georgia
April 11, 1994
