<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
TRUSTMARK CORPORATION
(Exact name of Registrant as specified in charter)
<TABLE>
<S> <C> <C>
MISSISSIPPI 6712 64-0471500
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
248 East Capitol Street
Jackson, MS 39201
(601) 354-5111
(Address, including Zip Code,
and telephone, including area code, of
Registrant's principal executive offices)
GERARD R. HOST
TRUSTMARK CORPORATION
248 East Capitol Street
Jackson, Mississippi 39201
(601) 949-6651
(Name, address, including Zip Code, and telephone
number, including area code, of agent for service)
Copies of communications to:
ROBERT D. DRINKWATER
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
P. O. Drawer 119
Jackson, Mississippi 39205 -0119
(601) 948-3101
and
DON B. CANNADA
BUTLER SNOW O'MARA STEVENS & CANNADA PLLC
P.O. Box 22567
Jackson, Mississippi 39225-2567
(601) 948-5711
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after
the effective date of this Registration Statement
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE PROPOSED
OF EACH MAXIMUM PROPOSED
CLASS OF OFFERING MAXIMUM
SECURITIES AMOUNT PRICE AGGREGATE AMOUNT OF
TO BE TO BE PER OFFERING REGISTRATION
REGISTERED REGISTERED (1) UNIT (2) PRICE (2) FEE (2)
- ------------------ -------------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Common Stock 1,125,000 $4.08 $4,597,000.00 $1,277.97
</TABLE>
(1) Maximum number of shares issuable in connection with the Merger.
(2) Fee based on book value of Bottrell shares pursuant to Rule 457(f)(2).
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 said Section 8(a),
may determine.
<PAGE> 3
PROXY STATEMENT
OF
DAN BOTTRELL AGENCY, INC.
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________, 1999
PROSPECTUS
OF
TRUSTMARK CORPORATION
Relating to up to 1,125,000 shares of
COMMON STOCK
The board of directors of Trustmark Corporation ("Trustmark") and Dan
Bottrell Agency, Inc. ("Bottrell") have approved the acquisition of Bottrell by
Trustmark through a merger (the "Merger") of Bottrell with Trustmark Insurance
Agency, Inc. ("TIA"). Trustmark National Bank ("Trustmark Bank") is a wholly
owned subsidiary of Trustmark. TIA is a wholly owned subsidiary of Trustmark
Bank.
If the Merger is completed, each share of Bottrell common stock will be
converted into shares of the common stock of Trustmark, with cash being paid in
lieu of fractional shares. The number of Trustmark shares into which each
Bottrell share will be converted (the "Exchange Ratio") is calculated by
dividing $18 million by the average price of Trustmark shares over a specified
time period. This amount is then divided by the number of outstanding shares of
Bottrell. See the heading, "The Merger - The Merger Agreement - The Exchange
Ratio."
The Merger cannot be completed unless the shareholders of Bottrell
approve it. Bottrell has scheduled a special meeting of its shareholders (the
"Bottrell Special Meeting") on _____________, 1999, ___ P.M. at 700 North State
Street, Suite 400, Jackson, Mississippi 39202 to vote on the Merger.
This Proxy Statement also constitutes the prospectus of Trustmark
relating to the shares of Trustmark common stock to be issued to Bottrell's
shareholders pursuant to the Merger. Trustmark's common shares trade on the
NASDAQ National Market under the symbol "TRMK."
Trustmark's shares are not deposits, savings accounts, or other
obligations of a depository institution and, accordingly, are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of Trustmark's shares or passed upon the
accuracy or adequacy of this Proxy Statement. Any representation to the contrary
is a criminal offense.
------------------------
The date of this Proxy Statement is ______________, 1999.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INFORMATION INCORPORATED BY REFERENCE ................................ v
SUMMARY .............................................................. 1
THE PARTIES ................................................. 1
THE MERGER .................................................. 1
ESCROW AGREEMENT ............................................ 2
THE BOTTRELL SPECIAL MEETING ................................ 2
VOTES REQUIRED; INTERESTS OF CERTAIN PERSONS ................ 2
BOTTRELL BOARD OF DIRECTORS' RECOMMENDATION ................. 3
EFFECTIVE DATE .............................................. 3
FEDERAL INCOME TAX CONSEQUENCES ............................. 3
ACCOUNTING TREATMENT ........................................ 3
DISSENTERS' RIGHTS OF APPRAISAL ............................. 3
RESALES OF TRUSTMARK SHARES ................................. 4
REGULATORY AUTHORITY APPROVALS .............................. 4
MARKETS AND MARKET PRICES ................................... 4
EQUIVALENT PER SHARE DATA ................................... 4
COMPARATIVE PER SHARE DATA .................................. 5
THE BOTTRELL SPECIAL MEETING ......................................... 6
GENERAL ..................................................... 6
SPECIAL MEETING; VOTING; PROXIES; REVOCATION ................ 6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF ............. 7
SECURITIES OWNERSHIP OF MANAGEMENT .......................... 7
INTERESTS OF CERTAIN PERSONS ......................................... 8
THE MERGER ........................................................... 9
BACKGROUND OF THE MERGER .................................... 9
BOTTRELL'S REASONS FOR EFFECTING THE MERGER ................. 9
TRUSTMARK'S REASONS FOR EFFECTING THE MERGER ................ 10
THE MERGER AGREEMENT ........................................ 10
STRUCTURE OF THE TRANSACTION ....................... 10
THE EXCHANGE RATIO ................................. 10
REPRESENTATIONS, WARRANTIES AND COVENANTS .......... 11
Representations and Warranties ............ 11
Bottrell's Covenants ...................... 11
Trustmark's Covenants ..................... 13
SPECIAL AGREEMENTS ................................. 13
Dividends/Bonuses ......................... 13
Employee Benefits ......................... 14
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
THE ESCROW AGREEMENT ............................... 14
RECOMMENDATION OF BOTTRELL'S DIRECTORS ............. 16
SHAREHOLDERS'AGREEMENT ............................. 16
MERGER OF BOTTRELL SUBSIDIARY ...................... 17
INSURANCE COVERAGE ................................. 17
CONDITIONS TO CONSUMMATION OF THE MERGER ........... 17
Conditions to Trustmark's Obligations ..... 17
Conditions to Bottrell's Obligations ...... 18
TERMINATION ........................................ 19
TRUSTMARK CORPORATION, TRUSTMARK NATIONAL BANK AND
TRUSTMARK INSURANCE AGENCY .................................. 20
TRUSTMARK CORPORATION AND SUBSIDIARIES SELECTED
FINANCIAL DATA ..................................... 21
DAN BOTTRELL AGENCY, INC. ............................................ 22
BUSINESS .................................................... 22
PROPERTIES .................................................. 22
LEGAL PROCEEDINGS ........................................... 22
BOTTRELL SELECTED FINANCIAL DATA ............................ 23
MARKET PRICES OF AND DIVIDENDS PAID ON BOTTRELL STOCK ....... 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS .......................... 24
PROCEDURE FOR EXCHANGE OF BOTTRELL STOCK CERTIFICATES ................ 26
RIGHTS OF DISSENTING SHAREHOLDERS .................................... 26
FEDERAL INCOME TAX CONSEQUENCES ...................................... 29
ACCOUNTING TREATMENT ................................................. 30
RESALES OF TRUSTMARK COMMON SHARES ................................... 31
REGULATORY AUTHORITY APPROVALS ....................................... 31
COMPARISON OF RIGHTS OF SHAREHOLDERS ................................. 31
BOARD OF DIRECTORS; ELECTIONS ............................... 32
INDEMNIFICATION ............................................. 32
LEGAL OPINIONS ....................................................... 33
EXPERTS .............................................................. 33
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
ANNEX A
Merger Agreement and Escrow Agreement ........................... A-1
ANNEX B
Article 13 of the Mississippi Business Corporation
Act - Dissenters' Rights ................................... B-1
ANNEX C
Bottrell Financial Statements ................................... C-1
</TABLE>
iv
<PAGE> 7
INFORMATION INCORPORATED BY REFERENCE
This Proxy Statement incorporates important business and financial
information about Trustmark that is not included in or delivered with this
document. This information includes the following: (i) Trustmark's Annual Report
on Form 10-K for the year ended December 31, 1997; (ii) Trustmark's Proxy
Statement in connection with its 1998 Annual Shareholders' Meeting; (iii)
Trustmark's Quarterly Reports on Form 10-Q for the periods ended March 31, June
30, and September 30, 1998; and (iv) the description of Trustmark's common
shares contained in the registration of those shares on Form 10 (SEC File
No.0-3683) and all amendments thereto; and (v) all documents filed by Trustmark
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
subsequent to the date hereof and prior to the Bottrell Special Meeting.
This information is available without charge upon written or oral
request to Trustmark Corporation, 248 East Capitol Street, Jackson, Mississippi,
39201, Attn: Gerard R. Host, telephone number (601) 949-6651. TO OBTAIN TIMELY
DELIVERY, YOU MUST REQUEST THE INFORMATION NO LATER THAN _____________, 1999,
WHICH IS FIVE BUSINESS DAYS BEFORE THE BOTTRELL SPECIAL MEETING.
v
<PAGE> 8
SUMMARY
This summary highlights the information included in this Proxy
Statement. To fully understand the Merger you should read the entire Proxy
Statement and other documents referred to in this Proxy Statement before you
decide how to vote.
THE PARTIES
Trustmark Corporation, Trustmark National Bank, and Trustmark Insurance
Agency, Inc.
Trustmark, a Mississippi corporation, is a one-bank holding company
which owns 100 percent of the outstanding shares of Trustmark Bank. Through
Trustmark Bank, Trustmark conducts a general commercial banking and trust
business. Trustmark's principal executive offices are located at 248 East
Capitol Street, Jackson, Mississippi, 39201, Telephone Number (601) 354-5111.
See the heading "Trustmark Corporation, Trustmark National Bank and Trustmark
Insurance Agency, Inc."
Trustmark Insurance Agency, Inc. ("TIA") is a Mississippi corporation
which is a wholly owned subsidiary of Trustmark Bank. TIA was organized to
engage in insurance agency activities.
Dan Bottrell Agency, Inc.
Bottrell is a Mississippi corporation engaged in the business of
insurance sales and brokerage. Bottrell's principal executive offices are
located at 700 North State Street, Suite 400, Jackson, Mississippi 39202,
Telephone Number (601) 960-8200.
THE MERGER
If the Merger is approved, Bottrell will be merged into TIA. Each
outstanding share of the common stock of Bottrell will be converted into shares
of Trustmark. The number of Trustmark shares which will be issued for each share
of Bottrell (the "Exchange Ratio") will depend on the average closing bid/asked
price of Trustmark's shares over the 15 consecutive trading days ending five
trading days prior to the Bottrell Special Meeting (the "Average Trustmark
Price").
So long as the Average Trustmark Price is between $16 and $24, the
Exchange Ratio will be fixed so that the Trustmark shares issued will have an
aggregate average value of $18 million. For example, if the Average Trustmark
Price is $16, each of the 28,010 Bottrell shares will be converted into 40.1642
Trustmark shares and if the Average Trustmark Price is $24, each of the 28,010
Bottrell shares will be converted into 26.7762 Trustmark shares.
Since the Exchange Ratio is based on average prices prior to the
Bottrell Special Meeting the actual market value of the Trustmark shares which
will be issued at the time the Merger is consummated may be more or less than
$18 million. See the heading "The Merger-The Merger Agreement."
1
<PAGE> 9
Any fractional Trustmark shares which would otherwise be issued as a
result of the Merger will not be issued. Instead, cash will be paid to Bottrell
shareholders in lieu of fractional Trustmark shares. See the heading, "The
Merger-The Merger Agreement."
ESCROW AGREEMENT
Each shareholder of Bottrell will be required to execute an Escrow
Agreement. Under the terms of the Escrow Agreement, 20 percent of the Trustmark
shares otherwise issuable in connection with the Merger will be held in escrow
until December 31, 2001. These shares can be retained by Trustmark, in whole or
in part, under certain circumstances. Those circumstances include: (1)
Bottrell's failure to achieve certain performance thresholds for 1999, 2000 and
2001, (2) a material breach of any of Bottrell's representations and warranties
in the Merger Agreement, or (3) if Delphi Information Systems ceases to support
the Legacy Software System used by Bottrell prior to December 31, 2001.
Additionally, a former Bottrell shareholder will forfeit his right to the
escrowed shares if he ceases employment with TIA or is terminated by TIA for
cause prior to December 31, 2001. See the heading, "The Merger-The Escrow
Agreement."
THE BOTTRELL SPECIAL MEETING
The Bottrell Special Meeting to consider and vote on the Merger will be
held on _____________, 1999, at _____o'clock ____, local time, at Bottrell's
offices located at 700 North State Street, Suite 400, Jackson, Mississippi
39202. Only Bottrell shareholders of record at the close of business on February
2, 1999 (the "Bottrell Record Date") will be entitled to notice of and to vote
at the Bottrell Special Meeting. See the heading "The Bottrell Special Meeting."
VOTES REQUIRED; INTERESTS OF CERTAIN PERSONS
Approval of the Merger requires the affirmative vote of a majority of
the outstanding shares of TIA and Bottrell. Trustmark Bank, which owns 100
percent of the TIA shares, intends to vote its shares in favor of the Merger.
As of February 2, 1999, Bottrell's directors (consisting of Messrs.
French, Veazey Bates, Ferris and Smith) owned 20,000 (71.4 percent) of the
outstanding common shares of Bottrell. In the Merger Agreement, Bottrell's
directors agreed to vote their shares in favor of the Merger.
Following the Merger, Mr. French has agreed to serve as President of
TIA for a compensation of $250,000 per annum.
2
<PAGE> 10
BOTTRELL BOARD OF DIRECTORS' RECOMMENDATION
The board of directors of Bottrell, which is soliciting proxies in
connection with the Bottrell Special Meeting, unanimously voted to approve the
Merger and recommends that Bottrell's shareholders vote FOR adoption of the
Merger Agreement.
The board of directors of Bottrell believes that the Merger Agreement
is in the best interests of Bottrell's shareholders. Bottrell's board of
directors considered, among other things, that the terms of the Merger will
enable Bottrell's shareholders to convert their investment in Bottrell into a
marketable, liquid investment in a more diversified public company at an
attractive valuation of the Bottrell business and provide significant value to
Bottrell's shareholders.
EFFECTIVE DATE
The parties currently anticipate that the Merger will be completed
prior to March 31, 1999. Either party may terminate the Merger if it is not
completed by August 4, 1999. See the heading "Regulatory Authority Approvals."
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brunini, Grantham, Grower & Hewes, PLLC, counsel to
Trustmark, the Merger will constitute a "reorganization" within the meaning of
Section 368 of the Internal Revenue Code of 1986. Accordingly, Bottrell's
shareholders, except for shareholders exercising dissenters' rights of appraisal
and except with respect to cash received in lieu of fractional Trustmark shares,
will not recognize gain or loss for federal income tax purposes upon the
conversion of Bottrell common shares into Trustmark common shares. See the
heading "Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" for financial
reporting purposes. See the heading "Accounting Treatment."
DISSENTERS' RIGHTS OF APPRAISAL
Bottrell's shareholders will have dissenters' rights of appraisal as a
result of the Merger and will, accordingly, be entitled to be paid cash for the
value of their Bottrell shares. See the heading "Rights of Dissenting
Shareholders."
3
<PAGE> 11
RESALES OF TRUSTMARK SHARES
Except for Trustmark shares held by "affiliates" of Bottrell or
Trustmark, the Trustmark shares received as a consequence of the Merger will be
freely tradeable. Persons who are deemed affiliates of Bottrell can trade the
Trustmark shares acquired in the Merger, but, for a period of one year following
the Merger, must do so in "brokerage" transactions. See the heading "Resales of
Trustmark Common Shares."
REGULATORY AUTHORITY APPROVALS
The parties will require the approval of the Mississippi Department of
Insurance for transfer of Bottrell's insurance license(s) to TIA. Bottrell and
TIA expect that the Mississippi Department of Insurance will approve these
transfers on a routine basis in the ordinary course of business. No other state
or federal regulatory authorities are required to approve the Merger.
MARKETS AND MARKET PRICES
Trustmark's common shares are included for quotation on the NASDAQ
National Market System.
There is no market for the outstanding common shares of Bottrell and no
recent arm's length transactions which are indicative of the fair market value
of Bottrell's shares. See the heading "Dan Bottrell Agency, Inc. Market Prices
of and Dividends Paid on Bottrell Stock."
EQUIVALENT PER SHARE DATA
The following table sets forth certain equivalent per share data
concerning Bottrell's outstanding common shares. It computes the "value" of
Bottrell's shares on December 7, 1998, (the day prior to the public announcement
of the Merger) and on a recent date using the market value of Trustmark's shares
on that date and the Exchange Ratio that would have been in effect at that
market value. The actual Exchange Ratio will be based on the Average Trustmark
Price, which is explained under the heading "The Merger - The Merger Agreement -
The Exchange Ratio."
<TABLE>
<CAPTION>
BOTTRELL'S EQUIVALENT
DATE TRUSTMARK MARKET PRICE PER SHARE VALUE
---- ---------------------- ---------------
<S> <C> <C>
December 7, 1998 $ 22.125 $642.63
______________, 1999 $_____________ $642.63
</TABLE>
4
<PAGE> 12
COMPARATIVE PER SHARE DATA
The following table presents certain data concerning net income per share,
dividends per share and book value per share for Trustmark and Bottrell on a
historical and pro forma basis.
The pro forma data gives effect to the Merger accounted for as a purchase
using an exchange ratio of 30.6013 Trustmark common shares, based on the closing
market price of $21 per share on January 29, 1999, for each Bottrell common
share. Equivalent pro forma per share amounts for Bottrell are calculated by
multiplying the pro forma income per share, pro forma book value per share and
pro forma dividends per share of Trustmark by an exchange ratio of 30.6013. This
information is not necessarily indicative of the results of operations or
combined financial condition that would have resulted if the Merger had been
consummated at the beginning of the periods indicated.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31,
------------------------- ---------------------
1998 1997
------------------------- ---------------------
<S> <C> <C>
TRUSTMARK CORPORATION AND SUBSIDIARIES:
Earnings Per Share (Basic):
Historical $0.84 $0.98
Pro Forma 0.84 0.98
Cash Dividends Per Share:
Historical 0.25 0.29
Pro Forma 0.25 0.29
Book Value Per Share:
Historical 8.87 8.16
Pro Forma 9.01 8.31
THE DAN BOTTRELL AGENCY, INC.:
Earnings Per Share (Basic):
Historical 27.67 50.46
Equivalent Pro Forma 25.71 29.99
Cash Dividends Per Share:
Historical 0.00 0.00
Equivalent Pro Forma 7.65 8.87
Book Value Per Share:
Historical 164.12 138.74
Equivalent Pro Forma 275.72 254.30
</TABLE>
5
<PAGE> 13
THE BOTTRELL SPECIAL MEETING
GENERAL
This Proxy Statement provides the shareholders of Bottrell with
important information regarding the Merger and solicits their proxies for use at
the Bottrell Special Meeting being called to consider and vote on the Merger.
SPECIAL MEETING; VOTING; PROXIES; REVOCATION
The Bottrell Special Meeting is scheduled for _____ o'clock __.m.,
local time, on ________, 1999, at Bottrell's offices located at 700 North State
Street, Suite 400, Jackson, Mississippi 39202. Only shareholders of Bottrell on
the Bottrell Record Date will be entitled to notice of and to vote at the
Bottrell Special Meeting.
On the Bottrell Record Date there were 28,010 shares of Bottrell
common stock issued and outstanding. Each share is entitled to cast one vote on
the Merger. Approval of the Merger Agreement requires the vote of the holders of
a majority of the outstanding Bottrell common shares, or 14,006 shares. For
purposes of voting on the Merger, abstentions and nonvotes have the same effect
as "no" votes.
Bottrell's directors, who own 20,000 shares (71.4 percent), have
agreed to vote their shares in favor of the Merger.
PLEASE FILL OUT AND MAIL THE ENCLOSED PROXY. If you properly execute a
proxy and if it is received in time for the Bottrell Special Meeting the proxies
will be voted in accordance with the choice specified. If you do not specify a
choice, your shares will be voted FOR the Merger.
Even if you give a proxy you have the power to revoke it before your
shares are voted on the Merger. You may revoke your proxy by giving a later
dated proxy, by submitting a written revocation to Bottrell's corporate
secretary or by revoking the proxy in person at the Bottrell Special Meeting.
Bottrell is paying a portion of the expenses incurred in connection
with the preparation of this Proxy Statement. Representatives of Bottrell may
solicit proxies by mail, personal contact, telephone, telegram or other form of
communication. These persons will not receive any special or additional
compensation for soliciting proxies. If any Bottrell shares are held by
nominees, fiduciaries or other custodians, those persons will be asked to
forward soliciting materials to the beneficial owners of shares, and Bottrell
will pay such nominees, fiduciaries and other custodians their reasonable
out-of-pocket expenses.
6
<PAGE> 14
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Bottrell has 28,010 shares of common stock outstanding, owned by 12
shareholders. The following is certain information about shares of persons
beneficially owning more than five percent of Bottrell's outstanding shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ----------------------- -------------------- --------
<S> <C> <C>
William E. French 12,000 42.8
4328 Kings Court
Jackson, MS 39211
Jerry G. Veazey, Jr. 4,500 16.1
400 W. Wycombe Place
Flowood, MS 39208
S. Lyle Bates, Jr. 2,500 8.9
2377 Twin Lakes Circle
Jackson, MS 39211
Thomas Lee Joyner, III 2,000 7.1
4239 Berlin Drive
Jackson, MS 39211
Eric H. Donahoe 2,000 7.1
126 Sugaloch Cove
Jackson, MS 39211
</TABLE>
SECURITIES OWNERSHIP OF MANAGEMENT
The following is certain information about shares beneficially owned by
Bottrell's directors and executive officers. Unless otherwise indicated, the
named persons have sole voting and investment power with respect to these
shares.
7
<PAGE> 15
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
NAME AND ADDRESS OF BOTTRELL PERCENT
OF BENEFICIAL OWNER COMMON STOCK OF CLASS
------------------- ------------ --------
<S> <C> <C>
William E. French
4328 Kings Court 12,000 42.8
Jackson, MS 39211
Jerry G. Veazey, Jr. 4,500 16.1
400 W. Wycombe Place
Flowood, MS 39208
S. Lyle Bates, Jr. 2,500 8.9
2377 Twin Lakes Circle
Jackson, MS 39211
Douglas M. Ferris 1,000 3.6
1770 Douglas Drive
Jackson, MS 39211
J. Carlton Smith -- --
2208 Meadowbrook Road
Jackson, MS 39211
All directors and executive officers as a 20,000 71.4
group
</TABLE>
INTERESTS OF CERTAIN PERSONS
Pursuant to the Merger Agreement, TIA has agreed to amend its bylaws to
provide for the same indemnification as it made available to the officers and
directors of Trustmark and Trustmark Bank under the bylaws of those
corporations.
Following the Merger, Mr. French has agreed to serve as President of
TIA for a compensation of $250,000 per annum.
8
<PAGE> 16
THE MERGER
BACKGROUND OF THE MERGER
William E. French, the President of Bottrell, initially contacted
Trustmark during early 1998. In a meeting with Trustmark executive officers
Richard G. Hickson and Harry M. Walker to discuss bank acquisitions of
independent insurance agencies, Mr. French stated that Bottrell was open to an
acquisition discussion. Several informal conversations followed over the next
several months. In early September 1998, Mr. Hickson participated in a telephone
conference with Messrs. French and Veazey to further discuss a potential
acquisition.
Formal discussions and negotiations followed. The parties reached an
agreement in principle and signed a letter of intent on December 8, 1998. The
parties issued a joint press release later that day. The parties then began
formal negotiations of a definitive acquisition agreement.
While these discussions were taking place, Trustmark conducted a
detailed review of Bottrell's books and records. The Merger Agreement was
approved by Bottrell's board of directors on January 28, 1999 and signed by
Trustmark on February 4, 1999.
BOTTRELL'S REASONS FOR EFFECTING THE MERGER.
In reaching its determination that the Merger and Merger Agreement are
fair to, and in the best interests of, Bottrell and its shareholders, Bottrell's
board of directors considered a number of factors, including, without
limitation, the following:
(a) Bottrell's shares are not traded in any public market, and the
Merger provides Bottrell's shareholders with the opportunity to convert their
investment in Bottrell into a marketable, more liquid investment in a more
diversified public company;
(b) Trustmark is a well capitalized and well managed institution;
(c) The Merger presents an attractive valuation of Bottrell's business;
(d) The Merger generally will be a tax-free transaction to Bottrell and
its shareholders; and
(e) The Merger and the affiliation with Trustmark will provide enhanced
opportunities for growth in Bottrell's business.
The Bottrell board considered it a negative factor that certain
shareholders and employees of Bottrell would be required, as a condition to the
Merger, to enter into more restrictive confidentiality, noncompetition and
nonsolicitation agreements. Although the board considered
9
<PAGE> 17
this to be an adverse factor, the board ultimately determined that the reasons
favoring the Merger outweighed those against it.
TRUSTMARK'S REASONS FOR EFFECTING THE MERGER
The acquisition of Bottrell furthers Trustmark's objective to become a
diversified financial services organization. Trustmark views insurance products
as a natural extension of its existing line of financial services.
Trustmark believes the sale of commercial property and casualty
insurance will complement its existing product line and will provide additional
alternatives for its customers as well as additional revenues for the
organization. Bottrell is a profitable and well respected agency and is well
positioned to serve as the vehicle for developing Trustmark's commercial
insurance business.
THE MERGER AGREEMENT
STRUCTURE OF THE TRANSACTION
If the Merger is approved, Bottrell will be merged into TIA, which is a
subsidiary of Trustmark Bank. Following the Merger, Bottrell will cease to
exist, and TIA will succeed to the business formerly conducted by Bottrell.
THE EXCHANGE RATIO
As a consequence of the Merger, each outstanding share of Bottrell will
be converted into a number of shares of Trustmark equal to the Exchange Ratio.
The Exchange Ratio is calculated by dividing $18 million by the Average
Trustmark Price. This amount is then divided by the total number of Bottrell
shares issued and outstanding. The Average Trustmark Price is the average
closing bid/asked price of Trustmark shares as reported on the NASDAQ system
for the 15 consecutive trading days preceding five days prior to the date of the
Bottrell Special Meeting.
The following chart illustrates the Exchange Ratio at various Average
Trustmark Prices:
<TABLE>
<CAPTION>
AVERAGE TRUSTMARK TOTAL TRUSTMARK
PRICE CONSIDERATION SHARES ISSUED EXCHANGE RATIO
----- ------------- ------------- --------------
<S> <C> <C> <C>
$ 16.00 $ 18,000,000 1,125,000 40.1642
18.00 18,000,000 1,000,000 35.7015
20.00 18,000,000 900,000 32.1314
22.00 18,000,000 818,181 29.2103
24.00 18,000,000 750,000 26.7762
</TABLE>
10
<PAGE> 18
If the Average Trustmark Price is more than $24, the Exchange Ratio
will be the Exchange Ratio that would have been in effect had the Average
Trustmark Price been $24 per share. Conversely, if the Average Trustmark Price
is less than $16, the Exchange Ratio will be the Exchange Ratio that would have
been in effect had the Average Trustmark Price been $16 per share. However, if
the Average Trustmark Price is greater than $24 or less than $16, either party
has the right to terminate the Merger Agreement by doing so prior to 5:00 P.M.
on the second trading day after the date upon which the Average Trustmark Price
is determined.
As a consequence of the foregoing limitation, Trustmark will not be
required to issue more than 1,125,000 of its shares in connection with the
Merger and Bottrell's shareholders will not be required to receive less than
750,000 shares in connection with the Merger, regardless of the Average
Trustmark Price.
The Exchange Ratio will be adjusted if the number of Trustmark's
outstanding shares is changed due to any reclassification, recapitalization,
stock split, stock dividend or similar transaction.
Trustmark will not issue fractional shares in connection with the
Merger. If you would otherwise have been entitled to receive a fractional share,
you will receive cash in an amount equal to that fractional share multiplied by
the Average Trustmark Price.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Representations and Warranties
Pursuant to Article 3 of the Merger Agreement, Bottrell made various
representations and warranties concerning its corporate and capital structure,
financial condition, liabilities, legal and regulatory compliance, litigation
and related matters. Similar representations and warranties were made by
Trustmark, Trustmark Bank and TIA in Article 4. The continued truth and accuracy
of these representations and warranties are conditions precedent to consummation
of the Merger.
Additionally, as described more fully below under the heading "The
Merger - Escrow Agreement," a material breach of any representation or warranty
relating to Bottrell will entitle Trustmark to withhold a portion of the
Trustmark shares held in escrow.
11
<PAGE> 19
Bottrell's Covenants
In Article 6 of the Merger Agreement, Bottrell undertook certain
obligations. These obligations include:
(a) To call a meeting of its shareholders for the purpose of approving
the Merger;
(b) To allow Trustmark access to its records and properties;
(c) Not to encourage or solicit any other "Acquisition Proposal" or to
enter into any negotiations concerning, furnish any nonpublic information
relating to Bottrell in connection with or agree to any Acquisition Proposal;
(d) To operate its business in substantially the same manner as such
business is currently being operated and to use its best efforts to maintain the
goodwill of its customers and suppliers;
(e) To use its reasonable best efforts to retain the services of its
officers, employees and agents;
(f) To maintain its properties in good repair and working order;
(g) To duly and timely file all reports, returns and similar documents
and, unless contesting same by appropriate proceedings, pay all taxes and
assessments;
(h) To notify Trustmark of any unusual or material problems or
developments with respect to its business, financial condition, operations or
assets;
(i) Not to incur any material obligation except in the ordinary course
of business and to consult with Trustmark prior to certain expenses;
(j) Not to increase the compensation of any director, officer or
employee or enter into or amend any contract of employment or enter into or
amend any insurance, profit-sharing, pension, severance pay, bonus, incentive,
deferred compensation or retirement plan or arrangement;
(k) Except as expressly permitted, not to pay any dividend or make any
distribution;
(l) Not to pledge or sell any of its assets other than in the ordinary
course of business;
(m) Not to make, advance, extend or renew any loan or extension of
credit to any officer, director or employee; and
(n) Not to issue or sell any capital stock or debt securities or
authorize a stock split or dividend, or otherwise affect its capital structure.
12
<PAGE> 20
Trustmark's Covenants
Trustmark, Trustmark Bank and TIA also undertook certain obligations in
the Merger Agreement which include:
(a) To cause the Merger Agreement to be approved by the board of
directors of Trustmark and Trustmark Bank and the board of directors and
shareholders of TIA;
(b) To use their reasonable efforts to operate their businesses in
substantially the same manner as currently being operated and to use their best
efforts to maintain the goodwill of their depositors, customers and suppliers;
(c) To duly and timely file all reports and returns and similar
documents and, unless contesting same by appropriate proceedings, pay all taxes
and assessments;
(d) To notify Bottrell of any unusual or material problems or
developments with respect to the business of either Trustmark or Trustmark Bank;
and
(e) Bottrell, Trustmark and Trustmark Bank are each obligated to use
their best efforts to bring about the transactions contemplated by the Merger
Agreement.
SPECIAL AGREEMENTS
Article 5 of the Merger Agreement sets out certain additional
obligations. These include:
Dividends/Bonuses
Pursuant to Sections 5.1 and 5.11 of the Merger Agreement, Bottrell is
permitted to pay (1) bonuses and similar payments to employees in the amount by
which Bottrell's tangible net worth exceeded $5,177,609 at December 31, 1998,
(2) if the Merger has not occurred by March 1, 1999, a dividend out of current
operating profits of up to $57,300, and (3) if the Merger has not occurred by
June 1, 1999, a dividend not to exceed $85,900 if Bottrell has earned $3,750,000
in net commission revenues from its operations through June 30, 1999. However,
at the time the Merger is consummated, Bottrell must have a tangible net worth
of at least $5,177,609 plus all earnings of Bottrell subsequent to January 1,
1999, less the dividends described above. Because of this limitation, Bottrell
cannot be certain that the above-described dividends will be paid.
Except for the foregoing, Bottrell is not allowed to declare or pay any
cash or other dividends to its shareholders prior to consummation of the Merger.
13
<PAGE> 21
Employee Benefits
Pursuant to Section 5.2 of the Merger Agreement, Trustmark stated its
intention to continue the employment of the employees of Bottrell. However, like
all other employees of Trustmark and its subsidiaries, Bottrell's employees are
subject to salary review, reassignment and termination.
Promptly following the Merger, TIA will make a one-time adjustment to
the salaries of Bottrell's employees to compensate them for the cost of
participating in the employee portion of Trustmark's standard medical, dental,
life and long-term disability benefit programs.
Pursuant to Section 5.3 of the Merger Agreement, after the Merger, the
employees of Bottrell will be entitled to the same employee benefits as are
presently being provided to employees of Trustmark Bank. Bottrell's existing
money purchase pension plan will be terminated, and the participants will be
entitled to elect to have their vested account balances (a) distributed, (b)
rolled over to Trustmark's 401(k) plan, or (c) rolled over to an IRA. Bottrell's
profit-sharing 401(k) plan will be merged into Trustmark's 401(k) plan.
Bottrell's employees will be enrolled in Trustmark Bank's pension plan and will
receive credit for years of service at Bottrell for purposes of eligibility and
vesting (but not for benefit accrual) in Trustmark's pension plan.
THE ESCROW AGREEMENT
At the time the Merger is consummated each Bottrell shareholder will be
required to sign the Escrow Agreement. Under the Escrow Agreement, 20 percent of
the Trustmark shares issuable in connection with the Merger will be held in
escrow until December 31, 2001, and released on such date, in whole or in part,
in accordance with the following terms and conditions:
Each year, up to one-third (1/3) of the escrow shares will be deemed
"vested" based on the ratio of TIA's net revenues (as defined below) arising out
of the Bottrell division of TIA to the following performance thresholds: $7.5
million in calendar year 1999, $8.4 million in calendar year 2000 and $9.4
million in calendar year 2001. The net revenues considered for purposes of the
Escrow Agreement include revenues from property, casualty, surety and, for so
long as the Bottrell division of TIA is responsible for such personal lines of
insurance, life and health insurance. If personal lines of insurance are removed
from the Bottrell division of TIA, TIA and the former Bottrell shareholders have
agreed to adjust the relevant performance thresholds accordingly.
In the event that one hundred percent (100%) of the eligible escrow
shares are not earned and vested in a particular calendar year, the shares which
were not vested will become vested, in whole or in part, at the end of each of
the next succeeding calendar years through 2001 by the percentage equal to (1)
the amount of net revenues in each succeeding calendar year in excess of the
performance threshold for such year, divided by (2) the shortfall in TIA's net
revenues for the preceding year.
14
<PAGE> 22
For example, if TIA's net revenues are $7.0 million in year one, the
vesting percentage is 7.0/7.5 (or 93.3333%) for year one. To earn any of the
unvested escrow shares, TIA's net revenues for the second year would have to
exceed $8.4 million. If TIA's net revenues for the second year of operations
were $8.75 million, then 70 percent ($350,000/$500,000) of the unvested escrow
shares would be earned and become vested, and the remaining unvested escrow
shares could be earned and become vested in year three if the performance
threshold for that year is exceeded.
In the event that TIA's net revenues exceed the performance threshold
for a particular calendar year, up to $500,000 of the excess is carried over and
applied to the next succeeding year.
As provided in the Merger Agreement, all representations, warranties
and covenants by Bottrell survive the effective date of the Merger for two (2)
years. In the event of a material breach by Bottrell of any representations,
warranties or covenants contained in the Merger Agreement, the number of shares
to which the Bottrell shareholders would otherwise be entitled at the end of the
escrow period will be reduced. The reduction will be equal to the amount of
damages resulting from such breach or breaches divided by the market price of a
share of Trustmark stock on the effective date of the Merger, rounded up to the
next higher whole number.
Trustmark's right to recover for a breach of Bottrell's
representations, warranties and covenants cannot exceed the value of the
escrowed shares. Each Bottrell shareholder is responsible only for his prorata
portion of those damages.
For purposes of the Escrow Agreement, a breach of any representation,
warranty, or covenant is "material" only if, separately or in the aggregate with
any other such breach, does or could result in a cost, loss, detriment or
obligation to TIA in excess of $50,000.
If a claim is made for breach of any representation, warranty, or
covenant, the Escrow Agreement will continue until the claim is finally
resolved.
If Delphi Information Systems, Inc. (a) announces that it will
discontinue before December 31, 2001, or (b) actually discontinues before
December 31, 2001 supporting the Delphi Legacy Software System presently used by
Bottrell, the cost and expense of replacing, converting or upgrading the Delphi
Legacy Software System shall be shared equally by TIA and the Bottrell
shareholders; provided, however, the aggregate cost to all Bottrell shareholders
shall not exceed $125,000.
In the event this contingency becomes applicable, the number of shares
that have vested, subject to the $125,000 ceiling, will be reduced based on the
value of a share of Trustmark Corporation stock on the date of the Merger,
rounded up to the next higher whole number, that represents one-half the value
necessary to offset the cost and expense of replacing the Delphi Legacy Software
System. Trustmark's right to recover for losses related to the Delphi Legacy
Software System cannot exceed the value of the escrowed shares.
15
<PAGE> 23
If a shareholder (a) voluntarily terminates his employment with TIA, or
(b) is terminated by TIA for just cause during the term of the Escrow Agreement,
then such terminated shareholder shall forfeit all vested and unvested escrow
shares.
If a former Bottrell shareholder dies or becomes disabled during the
term of the Escrow Agreement, then upon the expiration of the Escrow Agreement,
such disabled shareholder or the deceased shareholder's estate, as the case may
be, shall be entitled to receive the number of escrow shares that vested during
the escrow period, notwithstanding the death or disability of such shareholder,
provided the shareholder was employed by TIA on the date of death or disability.
TIA must provide the Bottrell shareholders with an annual written
accounting of TIA's net revenues during the year and an itemized calculation of
the number of escrow shares that vested during the preceding year. The final
annual accounting must set forth the number of escrow shares, if any, that are
to be returned to Trustmark.
During the term of the Escrow Agreement the escrow shares will be
deemed owned by the former Bottrell shareholders. The shareholder will be
entitled to exercise all voting rights associated with the escrow shares and
will receive all dividends payable thereon throughout the term of this
Agreement.
To secure Trustmark's rights to the escrow shares, each Bottrell
shareholder is required to grant TIA a security interest in the escrow shares.
If Trustmark or a majority of its outstanding shares or assets is
acquired during the years 1999 or 2000 then the performance threshold for 2000
shall be adjusted to $8 million and the performance threshold for 2001 shall be
adjusted to $9 million. If an acquisition occurs in 2001, the performance
threshold for 2001 shall be adjusted to $9 million.
RECOMMENDATION OF BOTTRELL'S DIRECTORS
Pursuant to Section 5.6 of the Merger Agreement, the board of directors
of Bottrell agreed to recommend that the shareholders of Bottrell approve the
Merger. However, the directors are not required to take any action which, in the
opinion of Bottrell's counsel, would constitute a breach of the directors'
fiduciary duties to Bottrell's shareholders. Each director also agreed to vote
his Bottrell shares in favor of the Merger.
SHAREHOLDERS' AGREEMENT
Pursuant to Section 5.8 of the Merger Agreement, prior to consummation
of the Merger Bottrell agreed to cause Bottrell's existing Shareholders'
Agreement to be cancelled.
16
<PAGE> 24
MERGER OF BOTTRELL SUBSIDIARY
Bottrell has a subsidiary, American Rural Housing Insurance Agency,
Inc. ("ARH"). Prior to the Merger, Bottrell has agreed to merge ARH into
Bottrell.
ARH has a Stock Appreciation Plan. This plan will be terminated, and
ARH will accrue all vested benefits on its books as of December 31, 1998 and pay
out these accrued benefits prior to the Merger.
INSURANCE COVERAGE
To provide insurance coverage to persons covered under Bottrell's
existing directors' and officers' policy for claims related to acts and events
which occurred prior to the Merger but which are asserted after the Merger,
Trustmark has agreed to maintain directors' and officers' liability insurance
for a period of three years after the Merger. TIA will also continue the errors
and omissions insurance currently maintained by Bottrell, subject to the right
to adjust coverages and limits in the future.
CONDITIONS TO CONSUMMATION OF THE MERGER
Conditions to Trustmark's Obligations
Pursuant to Article 8 of the Merger Agreement, Trustmark, Trustmark
Bank and TIA are not required to consummate the Merger unless:
(a) The representations and warranties of Bottrell remain true and
correct and Bottrell complies with its covenants, agreements and undertakings in
the Merger Agreement;
(b) The parties receive any required regulatory and governmental
authority approvals;
(c) The Merger is approved by the board of directors and shareholders
of Bottrell;
(d) There has not occurred any material adverse change in the financial
condition, tangible properties or prospects of Bottrell since the date of
Trustmark's review of Bottrell's books and records;
(e) Messrs. Armstrong, Bates, Dixon, Donahoe, Elliott, Ferris, French,
Horner, Joyner, Parker, Smith, Veazey and Young must have entered into
confidentiality, noncompetition and nonsolicitation agreements in the prescribed
form;
17
<PAGE> 25
(f) Each of Bottrell's nonshareholder producers shall have entered into
confidentiality, nonpiracy and nonsolicitation agreements in the prescribed
form, and all other employees shall have entered into confidentiality agreements
in the prescribed form;
(g) Each Bottrell shareholder executes the Escrow Agreement;
(h) Trustmark receives the opinion of Bottrell counsel required by the
Merger Agreement;
(i) Bottrell's tangible net worth is at least $5,177,609, plus all
earnings subsequent to January 1, 1999, less the dividends permitted pursuant to
Section 5.1 of the Merger Agreement and Bottrell's reserves for losses is
adequate;
(j) Bottrell's employees named above continue to be employed by
Bottrell; and
(k) Bottrell has obtained the consents required under certain contracts
to which it is a party.
Conditions to Bottrell's Obligations
Bottrell is not required to consummate the Merger unless:
(a) The representations and warranties of Trustmark, Trustmark Bank and
TIA are true and correct;
(b) Trustmark, Trustmark Bank and TIA have complied with their
covenants, agreements and undertakings in the Merger Agreement;
(c) The parties have received all required regulatory and governmental
authority approvals;
(d) The Merger has been approved by the boards of directors of
Trustmark and Trustmark Bank and the Directors and Shareholders of TIA;
(e) There has been no material adverse change in the financial
condition, tangible properties or prospects of Trustmark, Trustmark Bank or TIA
subsequent to September 30, 1998;
(f) TIA amends its bylaws to provide indemnification for TIA's officers
and directors to the same extent provided to officers and directors of Trustmark
and Trustmark Bank. Under Trustmark and Trustmark Bank's bylaws, certain
persons, including directors, officers and employees may be indemnified against
reasonable expenses incurred by them in connection with lawsuits and similar
proceedings to which they are made parties by reason of their serving or having
served in such capacities. These persons cannot be so indemnified if adjudged
guilty of or liable for negligence or willful misconduct in the performance of
their duties and in certain other circumstances; and
18
<PAGE> 26
(g) Bottrell receives the opinion of counsel to Trustmark required by
the Merger Agreement including an opinion that the Merger will qualify as
tax-free reorganization for federal income tax purposes.
Except for the requirement for regulatory authority approvals, any of
the conditions to closing can be waived by the parties; however, neither
Trustmark nor Bottrell intends to waive the requirement that it receive an
opinion of counsel that the Merger will qualify as a tax-free reorganization for
federal income tax purposes.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any
time prior to it being consummated without liability on the part of any party as
follows:
(a) By the mutual consents of the boards of directors of Bottrell and
Trustmark;
(b) By Trustmark, if a governmental authority shall, at any time, fail
to approve the transactions contemplated by the Merger Agreement or shall have
instituted and not dismissed court proceedings to restrain or prohibit such
transactions and such court proceedings shall not have been resolved within one
year of the date of the Merger Agreement;
(c) By either party, if the Merger has not been consummated by August
4, 1999, without the fault of such party;
(d) By Trustmark, if there shall have occurred a material adverse
change in the financial condition or tangible properties of Bottrell subsequent
to December 31, 1997 or the completion of Trustmark's review of Bottrell's
books, records, assets and liabilities in December 1998;
(e) By either Trustmark or Bottrell, if the shareholders of Bottrell
fail to approve the Merger at the Bottrell Special Meeting;
(f) By Trustmark, if there has been a material breach by Bottrell of
any representation, warranty or obligation set forth in the Merger Agreement
which has not been promptly cured after notice; or
(g) By Bottrell, if there has been a material breach by Trustmark,
Trustmark Bank or TIA of any representation, warranty or obligation set forth in
the Merger Agreement which has not been promptly cured after notice.
19
<PAGE> 27
TRUSTMARK CORPORATION, TRUSTMARK NATIONAL BANK AND
TRUSTMARK INSURANCE AGENCY
Trustmark is a one-bank holding company which owns 100 percent of the
outstanding common shares of Trustmark Bank. The principal executive offices of
Trustmark are located in the Trustmark National Bank Building, 248 East Capitol
Street, Jackson, MS 39201, Telephone No. (601) 354-5111.
Through Trustmark Bank, Trustmark conducts a full range of commercial
banking and trust activities. If you would like a more complete description of
the business of Trustmark, its historical financial condition and results of
operations, its summary of quarterly results of operations, and its management's
discussion and analysis of financial condition and results of operations, you
should, among other things, review the following information all of which is
incorporated by reference into this Proxy Statement: (i) Trustmark's annual
report on Form 10-K for the year ended December 31, 1997, (ii) Trustmark's
quarterly reports on Form 10-Q for the periods ended March 31, June 30, and
September 30, 1998, (iii) Trustmark's proxy statement in connection with its
1998 annual shareholders' meeting, and (iv) the information contained in the
registration of Trustmark's common shares filed under the Exchange Act,
including any amendments or reports filed for the purpose of updating this
information. Copies of any of these documents can be obtained from Trustmark by
written or oral request directed to Trustmark Corporation, 248 East Capitol
Street, Jackson, MS 39201, Attn: Gerard R. Host, phone number (601) 949-6651.
In November 1998, Trustmark announced a stock repurchase program for up
to 7.5 percent of its outstanding shares.
In February 1999, Frank R. Day announced his retirement from his
position as Chairman of Trustmark Bank.
TIA was formed in May, 1997, as a subsidiary of Trustmark Bank to
conduct insurance sales and brokerage. To date it has conducted limited
activities. Following consummation of the Merger, the directors and officers of
TIA will consist of the following persons. Directors: Richard G. Hickson,
Chairman, William E. French, T. Harris Collier, III, Gerard R. Host, Harry M.
Walker, Thomas W. Mullen and Jerry G. Veazey, Jr. Officers: William E. French,
President; T. Harris Collier, III, Secretary, and Melinda Fortenberry,
Treasurer. Trustmark anticipates that other TIA employees will serve as officers
with titles to be designated following consummation of the Merger.
On February 12, 1999, Trustmark was notified that Trustmark Insurance
Company, an Illinois based insurance company, intended to assert the position
that use of the name "Trustmark Insurance Agency" violated Trustmark Insurance
Company's trademark and trade name rights. Trustmark is in the process of
investigating this claim and is presently unable to predict the likely outcome
of this dispute.
20
<PAGE> 28
TRUSTMARK CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL DATA
The following table presents, on a historical basis, selected consolidated
financial data for Trustmark. This information is based upon the consolidated
financial statements of Trustmark incorporated herein by reference. Results for
the nine months ended September 30, 1998, are not necessarily indicative of
results to be expected for the entire year. All adjustments necessary to arrive
at a fair statement of results of interim operations of Trustmark, in the
opinion of management of Trustmark, have been made. All information is in
thousands except per share data.
<TABLE>
<CAPTION>
Nine months ended
September 30,
(unaudited)
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
CONSOLIDATED STATEMENTS OF INCOME
Total interest income $ 309,605 $ 279,747
Total interest expense 141,869 128,301
--------- ---------
Net interest income 167,736 151,446
Provision for loan losses 5,188 3,278
Noninterest income 65,160 55,353
Noninterest expense 132,228 124,442
--------- ---------
Income before income taxes 95,480 79,079
Income taxes 34,172 26,108
--------- ---------
Net income $ 61,308 $ 52,971
========= =========
PER SHARE DATA
Earnings per share
Basic and diluted $ 0.84 $ 0.73
========= =========
Cash dividends per share $ 0.25 $ 0.21
========= =========
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF INCOME
Total interest income $ 376,892 $ 358,063 $ 348,341 $ 315,449 $ 310,607
Total interest expense 172,887 164,006 162,741 125,968 117,658
--------- --------- --------- --------- ---------
Net interest income 204,005 194,057 185,600 189,481 192,949
Provision for loan losses 4,682 5,783 2,439 2,786 18,596
Noninterest income 75,555 66,974 59,467 48,670 47,898
Noninterest expense 167,915 157,818 151,288 151,123 149,893
--------- --------- --------- --------- ---------
Income before income taxes 106,963 97,430 91,340 84,242 72,358
Income taxes 35,899 32,291 31,582 29,237 20,106
--------- --------- --------- --------- ---------
Net income $ 71,064 $ 65,139 $ 59,758 $ 55,005 $ 52,252
========= ========= ========= ========= =========
PER SHARE DATA
Earnings per share
Basic and diluted $ 0.98 $ 0.93 $ 0.86 $ 0.79 $ 0.78
========= ========= ========= ========= =========
Cash dividends per share $ 0.29 $ 0.25 $ 0.22 $ 0.21 $ 0.19
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
September 30,
(unaudited)
-------------------------------
CONSOLIDATED BALANCE SHEETS 1998 1997
------------- --------------
<S> <C> <C>
Total assets $ 6,232,676 $ 5,371,852
Securities 1,879,602 2,017,475
Loans 3,579,321 2,848,772
Deposits 3,881,896 3,723,578
<CAPTION>
December 31,
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS 1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total assets $ 5,545,158 $ 5,193,684 $ 4,992,592 $ 4,763,365 $ 4,708,206
Securities 2,007,399 1,953,202 1,842,325 1,862,351 1,980,566
Loans 2,983,655 2,634,573 2,572,091 2,347,565 2,231,018
Deposits 3,818,949 3,597,436 3,530,045 3,449,229 3,428,781
</TABLE>
21
<PAGE> 29
DAN BOTTRELL AGENCY, INC.
BUSINESS
Bottrell is a closely held Mississippi corporation operating as an
independent insurance agency. Bottrell commenced operations in 1936 and was
incorporated in 1970. Although Bottrell offers surety bonds, commercial,
personal and employee benefits insurance products to customers throughout the
Southeastern United States, its customer base is concentrated primarily in
Mississippi. All of Bottrell's outstanding shares are held by twelve persons who
are active in the business. As of December 31, 1998, Bottrell had approximately
41 full time employees and 2 part time employees.
Bottrell's gross written premiums were $45 million in 1997 and $43
million in 1998. Gross revenue was $8.1 million in 1997 and $8.15 million in
1998.
Bottrell's management believes that its revenues rank among the top 200
independently owned agencies in the United States.
American Rural Housing Insurance Agency, Inc. ("ARH"), Bottrell's
wholly owned subsidiary, operates as a Florida insurance agency located at 1031
West Morse Boulevard, Suite 300, Winter Park, Florida 32789. ARH is a specialty
insurance operation concentrating primarily on FmHA 515 properties on a
nationwide basis.
PROPERTIES
Bottrell leases its offices in Jackson, Mississippi, and ARH leases its
offices in Winter Park, Florida. Bottrell's management believes these facilities
are adequate for its operations.
Applicable banking laws and regulations may require Bottrell to
relocate its offices to a smaller municipality in the Metropolitan Jackson,
Mississippi area.
LEGAL PROCEEDINGS
Bottrell's management is not aware of any legal proceedings currently
pending or threatened which, in its opinion, would have a material adverse
effect on Bottrell's business or financial condition.
22
<PAGE> 30
BOTTRELL SELECTED FINANCIAL DATA
The following table presents, on a historical basis, selected consolidated
financial data for Bottrell. This information is based upon the consolidated
financial statements of Bottrell. Results for the nine months ended September
30, 1998 are not necessarily indicative of results to be expected for the entire
year. All adjustments necessary to arrive at a fair statement of results of
interim operations of Bottrell, in the opinion of management of Bottrell, have
been made. All information is in thousands except per share data.
<TABLE>
<CAPTION>
Nine months ended
September 30,
(unaudited)
-------------------------
1998 1997
--------- ---------
<S> <C> <C>
CONSOLIDATED STATEMENTS OF EARNINGS
Net revenues $ 6,054 $ 6,411
Earnings before income taxes 1,269 2,065
PER SHARE DATA
Net earnings per share
Basic $ 27.67 $ 47.94
========= =========
Diluted $ 27.67 $ 46.27
========= =========
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------
1997 1996 1995 1994 1993
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF EARNINGS
Net revenues $ 8,104 $ 7,422 $ 6,733 $ 5,822 $ 4,932
Earnings before income taxes 2,209 1,665 1,499 1,041 802
PER SHARE DATA
Net earnings per share
Basic $ 50.46 $ 38.40 $ 35.13 $ 32.05 $ 20.69
========= ========== ========== ========== ==========
Diluted $ 48.71 $ 37.20 $ 33.91 $ 30.56 $ 19.82
========= ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
September 30,
(unaudited)
-----------------------
CONSOLIDATED BALANCE SHEETS 1998 1997
--------- ---------
<S> <C> <C>
Total assets $ 10,301 $ 10,425
Long term debt -- 11
Net stockholders' equity (deficit) 4,597 3,602
<CAPTION>
December 31,
------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS 1997 1996 1995 1994 1993
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Total assets $ 8,692 $ 7,155 $ 6,680 $ 5,390 $ 4,535
Long term debt -- 166 522 944 1,439
Net stockholders' equity (deficit) 3,886 2,377 1,253 269 (863)
</TABLE>
23
<PAGE> 31
MARKET PRICES OF AND DIVIDENDS PAID ON BOTTRELL STOCK
There are 28,010 shares of Bottrell common stock issued and outstanding
held by 12 shareholders. There is no market for these shares, and there have
been no recent arm's length sales of Bottrell shares which would provide a
reliable indication of the value of Bottrell or its shares. Bottrell's
Shareholders' Agreement requires the purchase of a shareholder's shares upon
death, retirement, and in certain other circumstances. At December 31, 1998, the
purchase price at death or retirement under the Shareholders' Agreement was
$464.43 per share.
Bottrell has paid no dividends on its shares during the last five
years.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations of Bottrell should be read in conjunction with the
consolidated financial statements, accompanying footnotes and other supplemental
financial information appearing as Annex C to this Proxy Statement.
1997 compared with 1996
Financial Condition
Total assets increased $1.53 million or 22% from December 31, 1996 to
December 31, 1997. Cash and cash equivalents increased $1.26 million from 1996
to 1997 due to Bottrell's reinvestment of net earnings into continuing
operations. Trade account receivables remained stable from December 31, 1996 to
December 31, 1997, at approximately $3.2 million. This correlates with
Bottrell's stable gross written premiums from 1996 to 1997. Total investments
increased by $291 thousand, from $633 thousand at December 31, 1996 to $924
thousand at December 31, 1997, due to an appreciation in fair value of corporate
stock available for sale of $157 thousand and an increase in cash surrender
value of life insurance of $134 thousand.
Total liabilities were flat at approximately $4.8 million from December
31, 1996 to December 31, 1997 although current liabilities increased by $194
thousand. The increase in current liabilities was primarily in accounts payable
to insurance companies and is a result of the timing of payments to insurance
companies.
Net stockholders' equity increased $1.51 million or 63% due to
Bottrell's reinvestment of net earnings of $1.36 million into continuing
operations and unrealized gains on corporate stock available for sale, net of
deferred taxes, of $97 thousand.
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Results of Operations
Bottrell's net income for the year ended December 31, 1997 increased
$348 thousand to $1.36 million in 1997 from $1.01 million in 1996. Insurance
commission income increased by $656 thousand to $7.92 million during 1997 from
$7.26 million in 1996 primarily due to a $ 612 thousand increase in new
commercial sales and renewal premium increases and a $44 thousand increase in
contingency revenues received in 1997. Contingency revenues are paid to Bottrell
by certain insurance companies when Bottrell meets premiums written and loss
ratio targets established by those companies. The increase in revenue was offset
somewhat by an increase in selling, general and administrative expenses of $138
thousand, or 2.4%, from 1996 to 1997 and an increase in income tax expense of
$196 thousand.
Funding Source
Premiums written by Bottrell are handled two ways. Certain premiums are
billed directly to the insured by the insurance company ("Direct Bill"). Direct
Bill commissions are then remitted monthly from the insurance company to
Bottrell. All other premiums (other than Direct Bill) are billed to the insured
through Bottrell ("Bottrell Bill"). Bottrell pays the insurance company net
premiums, retaining a percentage of the gross premiums as commission. During
1998, 31.3 % or $2.15 million was Direct Bill. The remaining 68.7% or $4.72
million of total gross written premiums was Bottrell Bill.
September 30, 1998 compared with December 31, 1997
Financial Condition
Total assets increased $1.61 million to $10.30 million at September 30,
1998 from $8.69 million at December 31, 1997. Cash and cash equivalents
increased $1.26 million primarily due to the reinvestment of earnings in
continuing operations of Bottrell but also due to the higher premium volume
during the summer and fall months. Trade accounts receivable increased $612
thousand to $3.78 million at September 30, 1998 also due to the higher premium
volume during the summer and fall months. Total investments decreased slightly
to $888 thousand at September 30, 1998 from $924 thousand at December 31, 1997
due to $103 thousand unrealized loss on corporate stock held for sale net of a
$67 thousand increase in cash surrender value of life insurance.
Liabilities increased $898 thousand to $5.70 million at September 30,
1998 from $4.81 million at December 31, 1997. Accounts payable to insurance
companies increased $436 from December 31, 1997 to September 30, 1998 also due
to the higher premium volume during the summer and fall months. Accrued expenses
increased $628 thousand due to accruals for production and performance bonuses
and profit sharing contributions which are generally paid out before the end of
the year. Current installments of long-term debt decreased by $166 thousand as
debt payments were made during 1998.
Net stockholders' equity increased $711 thousand or 18% from December
31, 1997 to $4.60 million at September 30, 1998 primarily due to the
reinvestment of earnings of $775
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thousand in continuing operations of Bottrell. Such increase was offset slightly
by unrealized losses on corporate stock available for sale, net of deferred
taxes, of $76 thousand.
September 30, 1998 compared with September 30, 1997.
Results of Operations
Bottrell's net income for the nine months ended September 30, 1998
decreased $518 thousand to $775 thousand compared with $1.29 million for the
nine months ended September 30, 1997. Insurance commission income decreased $430
thousand to $5.88 million for the nine months ended September 30, 1998 due to
the fact that two of Bottrell's largest customers were acquired during 1998 and
due to a $129 thousand decrease in contingency revenues received in 1998
compared with 1997. Contingency revenues are paid to Bottrell by certain
insurance companies when Bottrell meets premiums written and loss ratio targets
established by those companies. Selling, general and administrative expenses
increased $440 thousand, or 10.1%, for the nine months ended September 30, 1998
compared to the same period in 1997 due primarily to an increase in compensation
and benefits expenses of $348 thousand or 10.1% for that same period.
Compensation and benefits expense increased as a result of increases in accruals
made for expected production and performance bonuses and profit sharing
contributions for 1998. Net interest income increased by $61 thousand or 58% for
the nine months ended September 30, 1998 compared to the same period in 1997 due
to the significant reduction of debt during 1998. Income tax expense decreased
by $278 thousand for the first nine months of 1998 compared to the same period
in 1997 due to lower pre-tax earnings.
PROCEDURE FOR EXCHANGE OF BOTTRELL STOCK CERTIFICATES
Promptly after the Merger is accomplished, Trustmark will send you
instructions on how to exchange your Bottrell shares for Trustmark shares. DO
NOT SEND IN YOUR BOTTRELL STOCK CERTIFICATES UNTIL YOU RECEIVE THESE
INSTRUCTIONS.
If your Bottrell stock certificates have been lost or destroyed you
will be required to provide Trustmark with an affidavit certifying such loss or
destruction and an indemnity bond (such as a lost or stolen securities bond) to
protect Trustmark from the risk that the purportedly lost or destroyed
certificates have been validly transferred to a third party.
Until you surrender your certificates or provide an indemnity bond you
will not receive any cash due you for fractional shares or be issued the
Trustmark shares to which you are entitled. You will also not receive any
dividends or other distributions with respect to the Trustmark shares to which
you are entitled. The shares and the amounts due you will be sent to you,
without interest, once you have submitted your shares or the required indemnity
bond.
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RIGHTS OF DISSENTING SHAREHOLDERS
Under the Mississippi Business Corporation Act ("MBCA"), any Bottrell
shareholder who is dissatisfied with the terms of the Merger has the right to
dissent from the Merger and be paid the "fair value" of his Bottrell shares.
The following discussion is not a complete statement of the law
pertaining to appraisal rights under the MBCA and is qualified in its entirety
by reference to Article 13 of the MBCA which is reprinted as Annex B hereto.
If you wish to exercise dissenters rights' of appraisal ("Appraisal
Rights"), you must carefully follow the requirement of the MBCA. If you wish to
dissent from the proposed Merger, we urge you to consult with your counsel.
Pursuant to the MBCA Section 13.21(a), in order to be eligible to
exercise Appraisal Rights, you must (i) give notice in writing to TIA prior to
the vote on the Merger that you intend to demand payment for your Bottrell
shares, and (ii) not vote your Bottrell shares in favor of the Merger.
If the Merger is approved at the Bottrell Special Meeting, TIA must
deliver a written notice (the "Dissenters' Notice") to all Bottrell shareholders
who satisfied the requirements referred to in the immediately preceding
paragraph. This notice must (i) state where the payment demand ("Payment
Demand") described in the next paragraph must be sent and where and when
Bottrell stock certificates must be deposited, (ii) inform holders of any
uncertificated Bottrell shares to what extent transfer of those shares will be
restricted after the Payment Demand is received, (iii) supply a form for
demanding payment that includes the date of the first announcement to the news
media or to Bottrell's shareholders of the terms of the proposed Merger and
requires that any shareholder asserting Appraisal Rights certify whether he or
she acquired beneficial ownership of the Bottrell shares before that date, (iv)
set a date by which TIA must receive the Payment Demand, which date may not be
fewer than 30 nor more than 60 days after the date the Dissenters' Notice is
delivered, and (v) be accompanied by a copy of Article 13 of the MBCA.
If you are sent a Dissenters' Notice you must ( pursuant to MBCA
Section 13.23) demand payment, certify that you acquired beneficial ownership of
the Bottrell shares before the date required to be set forth in the Dissenters'
Notice, and deposit your certificates in accordance with the terms of the
Dissenters' Notice.
If you demand payment and deposit your Bottrell shares in accordance
with the immediately preceding paragraph, you still retain all other rights of a
shareholder until those rights are canceled or modified by the consummation of
the Merger or the taking of any other proposed corporate action.
If you do not demand payment or deposit your Bottrell stock
certificates where required, in each case by the date set forth in the
Dissenters' Notice, you will not be entitled to payment (under MBCA Article 13)
for your Bottrell shares.
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Pursuant to MBCA Section 13.25, as soon as the Merger is effective, if
you have properly made a Payment Demand and otherwise complied with your
obligations under the MBCA, TIA is required to pay you the amount TIA estimates
to be the fair value of your Bottrell shares, plus accrued interest. This
payment must be accompanied by (i) Bottrell's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in stockholders' equity for the
year, and Bottrell's latest available interim financial statements, if any; (ii)
a statement of TIA's estimate of the fair value of the Bottrell shares; (iii) an
explanation of how the interest was calculated; (iv) a statement of your right
to demand payment under MBCA Section 13.28; and (v) a copy of Article 13 of the
MBCA.
Pursuant to MBCA Section 13.27, TIA may elect to withhold payment from
you if you were not the beneficial owner of the Bottrell shares on the date set
forth in the Dissenters' Notice as the date of the first announcement to the
news media or to the Bottrell shareholders of the terms of the proposed Merger.
To the extent TIA elects to withhold payment as described in the
immediately preceding paragraph, after consummation of the Merger, TIA shall
estimate the fair value of the Bottrell shares, plus accrued interest, and shall
pay this amount to you if you agree to accept this amount in full satisfaction
of your demand. TIA must send with this offer a statement of TIA's estimate of
the fair value of the Bottrell shares, an explanation of how the interest was
calculated and a statement of your right to demand payment pursuant to MBCA
Section 13.28.
Pursuant to MBCA Section 13.28, you may notify TIA in writing of your
estimate of the fair value of your Bottrell shares and the amount of interest
due, and demand payment of such estimate (less any payments previously made) or
reject TIA's offer under MBCA Section 13.27 and demand payment of the fair value
of such shares and interest due, if: (i) you believe that the amount paid under
MBCA Section 13.25 or offered under MBCA Section 13.27 is less than the fair
value of your shares or that the interest due is incorrectly calculated; (ii)
TIA fails to make payment under MBCA Section 13.25 within 60 days after the date
set for demanding payment; or (iii) TIA, having failed to take the proposed
corporate action, does not return your Bottrell stock certificates within 60
days after the date set for demanding payment.
You will waive the right to demand payment under MBCA Section 13.28
unless you notify TIA of such demand in writing within 30 days after TIA makes
or offers payment for your Bottrell shares.
Pursuant to MBCA Section 13.30, if a demand for payment under MBCA
Section 13.28 remains unsettled, TIA must commence a proceeding within 60 days
after receiving the Payment Demand and petition the court to determine the fair
value of your Bottrell shares and accrued interest. If TIA does not commence
this proceeding within this 60 day period, TIA must pay you the amount demanded.
TIA must commence this proceeding in the chancery court of Hinds
County, Mississippi (the "Chancery Court"). TIA must make all dissenting
Bottrell shareholders whose demands
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remained unsettled parties to the proceeding and all parties must be served with
a copy of the petition. The Chancery Court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers shall have the powers described in the order appointing
them, or in any amendment to it. You are entitled to the same discovery rights
as parties to other civil litigation.
If you are a party to this proceeding, you are entitled to judgment (i)
for the amount, if any, by which the Chancery Court finds the fair value of your
Bottrell shares, plus interest, exceeds the amount paid by TIA, or (ii) for the
fair value, plus accrued interest, of your after-acquired shares for which TIA
elected to withhold payment under MBCA Section 13.27.
Pursuant to MBCA Section 13.31, the court in an appraisal proceeding
shall determine all costs of the proceeding including the reasonable
compensation and expense of appraisers appointed by the court. The court shall
assess these costs against TIA, except that the court may assess costs against
all or some of the dissenting shareholders, in amounts the court finds
equitable, to the extent the court finds the dissenting shareholders acted
arbitrarily, vexatiously or not in good faith in demanding payment.
The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable: (i) against
TIA and in favor of any and all dissenting shareholders if the court finds that
TIA did not substantially comply with the requirements of MBCA Sections 13.20
through 13.28, or (ii) against either TIA or a dissenting shareholder, in favor
of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by Article 13 of the MBCA.
If the court finds that the services of counsel for any dissenting
shareholder were of substantial benefit to other dissenting shareholders
similarly situated and that the fees for those services should not be assessed
against TIA, the Court may award to those counsel reasonable fees to be paid out
of the amounts awarded the dissenting shareholders who were benefitted.
Failure to follow the steps required by the MBCA for perfecting
appraisal rights may result in the loss of such rights in which event you will
be entitled to receive the consideration receivable with respect to your
Bottrell shares in accordance with the Merger Agreement.
FEDERAL INCOME TAX CONSEQUENCES
The following federal income tax discussion addresses certain of the
important federal income tax consequences of the Merger. This discussion does
not necessarily address all aspects of federal income taxation that may be
applicable to you and does not address the effect of any applicable state, local
or foreign tax laws.
You are urged to consult your own tax advisor as to the particular tax
consequences of the Merger to you.
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The following discussion is based on the Internal Revenue Code of 1986,
regulations and rulings now in effect or proposed thereunder, current
administrative rulings and practices, and judicial precedent. All of these are
subject to change. If any change occurs, it may be retroactive and could alter
the tax consequences of the Merger.
The discussion is also based on certain factual representations of
Bottrell, its shareholders, Trustmark, Trustmark Bank and TIA. If any of these
representations are inaccurate, the tax consequences of the Merger could differ
from those described below.
The Merger Agreement provides that as a condition to Trustmark's
obligation to consummate the Merger it must be satisfied that the Merger will
qualify as a tax-free reorganization under Section 368 of the Internal Revenue
Code. Bottrell's obligation to consummate the Merger is conditional upon it
receiving the opinion of Brunini, Grantham, Grower & Hewes, PLLC, counsel to
Trustmark, to that effect.
The substance of Brunini, Grantham, Grower & Hewes' opinion is that:
(i) no gain or loss will be recognized by Bottrell's shareholders upon the
receipt of Trustmark common shares in exchange for their Bottrell shares in
connection with the Merger (except as discussed below with respect to the cash
received in lieu of fractional shares), (ii) the tax basis of the Trustmark
shares to be received by Bottrell's shareholders in connection with the Merger
shall be the same as the basis in the Bottrell shares surrendered in exchange
for the Trustmark shares (reduced by the amount of cash received and increased
by the amount of cash received treated as a dividend), (iii) the holding period
of the Trustmark shares to be received by Bottrell's shareholders in connection
with the Merger will include the holding period of the Bottrell shares
surrendered in exchange therefor (provided that the Bottrell shares are held as
a capital asset), (iv) the payment of cash in lieu of fractional Trustmark
shares in connection with the Merger will be treated as if the fractional shares
were distributed as part of the exchange and then redeemed by Trustmark (with
cash payments being treated as distributions in full payment in exchange for the
shares redeemed, subject to the provisions of Section 302 of the Internal
Revenue Code), and (v) the cash received by Bottrell's shareholders exercising
dissenters' rights of appraisal will be treated as having been received by such
shareholders as a distribution in redemption of such shareholder's stock,
subject to the provisions and limitations of Section 302 of the Internal Revenue
Code.
Bottrell does not intend to waive receipt of a favorable tax opinion as
a condition to its obligation to consummate the Merger.
ACCOUNTING TREATMENT
Trustmark will account for the Merger under the purchase method of
accounting. Under this method, the total value of the consideration being given
to Bottrell's shareholders will be allocated to Bottrell's assets and
liabilities based upon their estimated fair values, and the results of
operations of Bottrell will be included in the results of operations of
Trustmark only for periods subsequent to the Merger.
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RESALES OF TRUSTMARK COMMON SHARES
The Trustmark common shares to be issued to Bottrell shareholders in
connection with the Merger have been registered under the Securities Act of
1933. Nevertheless, there are certain restrictions on resales of Bottrell shares
by persons who are "affiliates" of Bottrell.
Persons who may be deemed affiliates of Bottrell generally include
individuals or entities that control, are controlled by or are under common
control with Bottrell. These include certain officers, directors and principal
shareholders of Bottrell. In general, for a period of one year following the
Merger, persons who were affiliates of Bottrell at the time the Merger was voted
on and who do not become affiliates of Trustmark may trade the Trustmark shares
acquired in the Merger; however, during any three-month period these persons
cannot sell more than one percent of the number of Trustmark shares outstanding
and must make all sales in "brokerage" transactions. After this one-year period,
these persons may generally trade the Trustmark shares acquired in the Merger
without limitation.
One percent of Trustmark's outstanding shares will be approximately
730,000 shares following the Merger. For this reason, the foregoing limitation
on the quantity of shares which may be sold by affiliates should have no
practical effect.
Trustmark common shares issued pursuant to the Merger to persons who
are not affiliates of Bottrell should be freely tradeable without restriction.
REGULATORY AUTHORITY APPROVALS
The parties are required to obtain the approval of the Mississippi
Department of Insurance for transfer of Bottrell's insurance licenses to TIA.
Trustmark and Bottrell anticipate that this approval will be granted as a
routine matter in the ordinary course of business. Except for this approval,
consummation of the Merger does not require the approval or acquiescence of any
regulatory authority.
COMPARISON OF RIGHTS OF SHAREHOLDERS
Both Bottrell and Trustmark are Mississippi corporations subject to the
MBCA. The rights of shareholders of both entities are governed by these laws and
their articles of incorporation and bylaws.
Bottrell's shareholders have signed a Shareholders' Agreement which,
among other things, (a) gives Bottrell and its shareholders a right of first
refusal to purchase any shares proposed to be transferred, (b) grants Bottrell
and its shareholders the option to purchase the shares of an employee whose
employment is voluntarily or involuntarily terminated, (c) requires Bottrell to
purchase the shares of a deceased shareholder and grants the remaining
shareholders the option to purchase any shares of a deceased shareholder not
purchased by Bottrell, (d) grants
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Bottrell and its shareholders the option to purchase the shares of a shareholder
who becomes disabled, and (e) requires Bottrell to purchase the shares of a
shareholder reaching age 65.
Under the Shareholders' Agreement, if a shareholder had reached age 65
or died on December 31, 1998, the purchase price per share would have been
$464.43 per share.
Pursuant to Article XI of the Shareholders' Agreement, upon the death
of a shareholder, his estate or surviving spouse is entitled to be paid his
salary for the month of his death and for two additional months.
The Shareholders' Agreement will be terminated effective with the
consummation of the Merger.
The following is a summary of the material differences in the rights of
shareholders of Bottrell and Trustmark under their articles of incorporation and
bylaws.
BOARD OF DIRECTORS; ELECTIONS
Bottrell's bylaws provide for a board of directors of two to seven
persons which are elected annually at the annual meeting of shareholders for one
year terms. Vacancies are filled by the shareholders; however, until the
shareholders fill the vacancy, the vacancy may be filled by the remaining
directors. The number of directors may be established from time to time by the
shareholders.
Trustmark's bylaws provide for a board of directors of five to
twenty-six members fixed by board or shareholder resolution. Directors hold
office for one-year terms. Vacancies in the board may be filled by the remaining
directors.
INDEMNIFICATION
The MBCA provides for mandatory indemnification of directors and
officers in certain circumstances.
Subject to certain limitations, Bottrell's bylaws provide for mandatory
indemnification of directors and/or officers.
Trustmark's bylaws provide for permissive indemnification of directors
and officers, but prohibit indemnification if the director or officer has been
guilty of negligence or willful misconduct or in connection with an
administrative proceeding or action instituted by an appropriate bank regulatory
authority if the action or proceeding results in a final order assessing civil
monetary penalties or requiring payments to Trustmark.
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Except as described above, since Bottrell and Trustmark are both
Mississippi corporations governed by the MBCA, the rights of their shareholders
are similar on most matters including, but not limited to, voting, dividends,
extraordinary corporate actions, meetings and shareholder rights.
LEGAL OPINIONS
The validity of the Trustmark common shares to be issued in connection
with the Merger will be passed upon by Brunini, Grantham, Grower & Hewes, PLLC,
counsel to Trustmark. Brunini, Grantham, Grower & Hewes, PLLC will also issue
the opinion on behalf of Trustmark required by the Merger Agreement and an
opinion on the tax aspects of the Merger. Brunini, Grantham, Grower & Hewes,
PLLC, its pension plan and its current and former members have a substantial
direct and indirect stock ownership interest in Trustmark.
EXPERTS
The consolidated financial statements of Trustmark and subsidiaries as
of December 31, 1997 and 1996, and for each of the years in the three-year
period ended December 31, 1997, incorporated by reference in this Proxy
Statement and elsewhere in the Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The consolidated financial statements of Bottrell as of December 31,
1997 and 1996, and for each of the years in the two-year period ended December
31, 1997, have been included in this Proxy Statement and Registration Statement
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.
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ANNEX A
Merger Agreement and Escrow Agreement
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MERGER AGREEMENT
This Merger Agreement ("Agreement") is executed as of the ___ day of
February, 1999, between and among TRUSTMARK CORPORATION, a Mississippi
corporation ("Trustmark"), TRUSTMARK NATIONAL BANK, a national banking
association ("Trustmark Bank"), Trustmark Insurance Agency, Inc., a Mississippi
corporation ("TIA") (Trustmark, Trustmark Bank and TIA are hereinafter sometimes
collectively referred to as "Buyers") and DAN BOTTRELL AGENCY, INC., a
Mississippi corporation ("Company") (Company is hereinafter sometimes referred
to as "Seller").
The parties desire to merge the Company with and into TIA, with TIA as
the surviving corporation.
NOW, THEREFORE, for the considerations and mutual covenants and
conditions contained in this Agreement, Buyers and Seller do hereby agree as
follows:
1. THE MERGER.
Pursuant to this Agreement and the Plan and Agreement of Merger
attached as Exhibit "A", Company shall be merged with and into TIA (the
"Merger"). As a result of and as a part of the Merger, on the effective date of
the Merger ("Effective Time of the Merger"), each of the issued and outstanding
shares of common stock of the Company, shall, subject to the adjustments
provided for in Sections 2.2 and 2.3 of this Agreement, be converted into newly
issued shares of the common stock of Trustmark on the basis described in Section
2 herein.
As a consequence of the Merger, all assets of Company as they exist at
the Effective Time of the Merger, shall pass to and vest in TIA without any
conveyance or other transfer, and TIA shall be responsible for all of the
liabilities of every kind and description of Company as of the Effective Time of
the Merger.
2. CONVERSION OF COMPANY COMMON STOCK.
2.1 Conversion of Shares. Subject to Sections 2.2, 2.3, 2.4 and 2.5 of
this Agreement, as of the Effective Time of the Merger, by virtue of the Merger
and without any further action on the part of holders of any Company shares,
each outstanding common share of the Company shall be converted into a number of
shares of Trustmark common stock equal to the "Exchange Ratio". The "Exchange
Ratio" shall be equal to the quotient of $18,000,000 divided by the average
closing bid/asked market price ("Average Trustmark Price") (computed on the
basis of the last trade of the day) of Trustmark shares as reported in the
National Association of Securities' Dealers Automated Quotation System for
National Market Issues for the fifteen consecutive Trading Days preceding five
(5) Trading Days prior to the date of the Company's special shareholders'
meeting called to consider and vote upon the Merger (the "Measurement Date")
which amount shall then be divided by the total number of common shares of the
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Company that are issued and outstanding. For purposes of this Agreement, the
term "Trading Day" means any day on which the NASDAQ is open for trading.
As soon as practical after the Effective Time of the Merger, notice
will be given to all shareholders of Company as of the Effective Time of the
Merger, of the procedure for surrendering and exchanging their share
certificates representing Company common shares for share certificates
representing Trustmark shares. The notice will include instructions with respect
to the surrender of certificates representing the Company common shares and the
distribution of Trustmark shares in exchange therefor and a letter of
transmittal for use in surrendering Company common share certificates.
2.2 Market Price Fluctuations. If the Average Trustmark Price is more
than $24.00 on the Measurement Date, the Exchange Ratio shall be adjusted to the
ratio that would have been in effect had the Average Trustmark Price been $24.00
per share. If the Average Trustmark Price is less than $16.00 per share on the
Measurement Date, then the Exchange Ratio shall be adjusted to the ratio that
would have been in effect had the Average Trustmark Price been $16.00 per share.
If any adjustment is made to the Exchange Ratio pursuant to this Section 2.2,
then such adjusted Exchange Ratio shall be rounded to four decimal places,
rounding upward from 0.00005. Notwithstanding this Section 2.2 to the contrary,
in the event the Average Trustmark Price is less than $16.00 per share or
greater than $24.00 per share on the Measurement Date, either party will have
the right to terminate the Merger Agreement by giving written notice (the
"Termination Notice") of its election to do so to the other party prior to 5:00
p.m., local time, on the second Trading Day after the Measurement Date.
2.3 Adjustment of Merger Consideration. If, between the date of this
Agreement and the Effective Time of the Merger, Trustmark's shares shall be
changed into a different number of shares or shares of a different class by
reason of any reclassification, recapitalization, split up or stock dividend
with a record date within said period, the number of Trustmark shares to be
issued and delivered upon the Merger as provided in this Agreement will be
appropriately and proportionately adjusted so that the number of such shares
that will be issued and delivered upon the Merger will equal the number of
Trustmark shares that holders of Company common shares would have received had
the record date of such reclassification, recapitalization, split up or stock
dividend been immediately following the Effective Time of the Merger.
2.4 Lost or Destroyed Certificates. Any person whose certificates
representing Company common shares shall have been lost or destroyed may
nevertheless obtain the Trustmark shares to which such Company common
shareholder is entitled as a result of the Merger, provided such Company common
shareholder provides Trustmark with a statement certifying such loss or
destruction and an indemnity satisfactory to Trustmark sufficient to indemnify
Trustmark against any loss or expense that may occur as a result of such lost or
destroyed certificates being thereafter presented to Trustmark for exchange.
2.5 Rights Prior to Exchange. Until a former Company common shareholder
has surrendered the certificates representing his Company common shares or
provided indemnity as permitted in Section 2.4, such former Company common
shareholder shall not be entitled to
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receive cash or certificates representing the Trustmark shares to which such
shareholder is entitled by virtue of the Merger and no dividend or other
distribution with respect of Trustmark shares will be paid to such persons;
provided, however, that when such certificates shall have been surrendered or
indemnity provided, there shall be paid to such persons, without interest, all
dividends and other distributions payable in respect of a record date after the
Effective Time of the Merger on the Trustmark shares for which such Company
common shares shall have been exchanged.
2.6 Fractional Shares. No fractional Trustmark shares will be issued
upon the surrender for exchange of certificates representing Company common
shares. In lieu of any such fractional share, each holder of Company common
shares who would otherwise be entitled to a fractional share of Trustmark common
stock will be paid in cash upon surrender of all the stock certificates
representing Company common shares held by such holder in the amount equal to
the product of such fraction multiplied by the Average Trustmark Price.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller makes the following representations and warranties, each of
which is being relied upon by Buyers, which representations and warranties
shall, individually and in the aggregate, be true in all material respects upon
the date of this Agreement and on the Closing Date, (except that all
representations and warranties made as of a specific date shall be true and
correct as of such date).
3.1 Organization. Company is a Mississippi corporation, duly organized,
validly existing and in good standing under the laws of the State of Mississippi
and has all requisite corporate power and authority to carry on its business as
now being conducted and to own and lease its properties. The business activities
of the Company do not require it to be qualified to do business in any other
state.
3.2 Authority. This Agreement has been duly and validly approved by the
Board of Directors of Company. Upon approval by the shareholders of Company and
upon obtaining the approval of all governmental and regulatory agencies or
authorities whose approval is required (and such approvals are no longer subject
to judicial or administrative review, and all waiting periods required by law
have expired):
(a) This Agreement will be a valid and binding obligation of
Seller, enforceable in accordance with its terms, and
(b) Consummation of the transactions contemplated by this
Agreement will not: (1) result in a breach of or default under any material
agreement to which Seller is a party, (2) conflict with, or result in the breach
of, the charter or bylaws of Company, or (3) conflict with or result in the
breach of any law, rule or regulation, or any writ, injunction or decree of any
court or governmental agency, other than compliance with the applicable
requirements, if any, of the National Bank Act, as amended, and regulations
promulgated thereunder, and compliance with the applicable requirements of the
Mississippi Insurance Department.
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3.3 Capitalization. The authorized capital stock of Company consists of
1,000,000 shares of common stock, $1.00 par value, of which 28,010 shares are
issued and outstanding. Each share of Company stock outstanding as of the date
hereof is duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights. Company does not have outstanding any other equity
securities or any subscriptions, options, warrants, rights, calls or other
commitments to issue any securities or to convert any presently outstanding
equity securities into securities of a different kind or class. Company does not
have any debt securities outstanding.
3.4 Financial Statements. Seller has delivered to Buyers the audited
financial statements of Company and its consolidated subsidiary for the years
ended December 31, 1995, December 31, 1996 and December 31, 1997 and the
unaudited financial statements through December 31, 1998. As promptly as they
are available, Seller shall deliver to Buyers copies of all interim monthly,
quarterly and annual financial statements of Company prepared subsequent to the
date hereof and prior to the Closing Date. Except for the interim financial
statements subsequent to December 31, 1998, the financial statements delivered
pursuant to this Section 3.4 do and will fairly present the financial condition
of Company in all material respects as of the dates thereof and have been or
will be prepared in conformity with generally accepted accounting principles,
consistently applied, for the periods involved. In addition to the interim
financial statements, Seller shall promptly notify Buyers of any unusual or
material problems or developments with respect to the business of Company.
3.5 Absence of Undisclosed Liabilities. Company does not have any known
liabilities of any nature whatsoever, whether absolute, accrued, contingent or
otherwise, due or to become due, as principal or guarantor, that is not recorded
or disclosed in the audited financial statements for the period ending December
31, 1997 and the unaudited financial statements for the period ending December
31, 1998, or otherwise disclosed in this Agreement or the documents, statements,
lists, and exhibits referred to herein, which could have a material adverse
effect on the financial condition, properties or prospects of Company, taken as
a whole.
3.6 Compliance with Laws; Agency Agreements and Permits. Company is not
in violation of any material federal, state or local law, rule, ordinance or
regulation. All existing products sold by or through Company were sold pursuant
to written agency agreements or written or oral brokerage agreements which were
in full force and effect. Except as noted on Exhibit B, the transactions
contemplated by this Agreement will not impair the validity of or cause a
default under any of such agreements. Seller and each licensed agent of the
Seller, possess all permits, licenses, franchises, and other governmental
authorizations, consents and approvals necessary to conduct the lines of
business currently conducted by them and such permits, licenses, authorizations,
etc. will be unaffected by the Merger, except for any limitations imposed on
Buyers under the National Bank Act, and any regulations or interpretations
adopted by applicable regulatory agencies.
3.7 Assets Employed. All of Company's significant tangible assets are
reflected in the financial statements delivered pursuant to Section 3.4 hereof,
and such assets constitute all of the significant tangible assets used or
employed in the business and operations of Company as currently conducted.
Company has good marketable title to all of its significant tangible owned
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assets free of significant liens, encumbrances and claims. Leases covering
material tangible assets in which Company has a leasehold interest only are
valid and enforceable in accordance with their terms and the Merger will not
result in a default thereunder.
3.8 Contracts and Commitments. As of the date of this Agreement, Seller
has supplied Buyers with copies of, or access to all significant contracts,
leases, licenses and all pension or profit sharing agreements ("Plans") and
other agreements to which Company is a party or is bound, such agreements being
described on the Schedule of Contracts attached as Exhibit B hereto. Except as
set forth on Exhibit B hereto, each significant contract, lease, license, Plan
or other contractual obligation is assignable and the Merger will not result in
a default thereunder. To the best of Company's knowledge, there have been no
material breaches or defaults under any of the provisions of any such contracts,
leases, licenses or Plans that have not been cured, waived or released. No
prohibited transaction (as defined in Section 406 of ERISA and Section 4975 of
the Internal Revenue Code (the "Code"), accumulated funding deficiency (as
defined in Section 412 of the Code) or reportable event (as defined in Section
4043 of ERISA) that is required to be reported to the Pension Benefit Guaranty
Corporation has occurred with respect to any Plan. The present value of all
benefits vested under all Plans does not exceed the value of the assets of such
Plans allocable to such vested benefits.
3.9 Litigation. Except as set forth in Exhibit C-1 ("Pending
Litigation"), neither the Company, or its officers, directors or agents is (i) a
party to any action, suit, or proceeding or (ii) subject to any pending or
threatened administrative, judicial or other action, suit, proceeding, inquiry
or investigation, nor is there any basis known to the Company therefor, in which
in the case of either clause (i) or (ii) above an unfavorable decision, ruling
or finding could have a material adverse effect on the financial condition or
operations of Company taken as a whole or on the consummation of the
transactions contemplated by this Agreement or which could result in the loss of
any license issued to any agent of the Company.
3.10 Brokers, Finders or Advisers. Company has not employed or incurred
any liability to any broker, finder or adviser in connection with the
transactions contemplated by this Agreement.
3.11 Taxes. Company has filed all federal, state, county, municipal and
other tax returns and all other material reports which are required to be filed
in respect of all such taxes and, to the extent its liabilities for taxes have
not been fully discharged, adequate reserves have been established in the
financial statements therefor in accordance with generally accepted accounting
principles. The federal income tax returns of Company have been audited by the
Internal Revenue Service through the year ending December 31, 1995. Company is
not in default in the payment of any taxes due or payable or of any assessments
of any kind, and has not received any notice of assessment or proposed
assessment of any tax.
3.12 Insurance. True and correct copies of all insurance policies
presently in force covering Company and its officers, directors, employees and
properties, together with a summary of the loss experience under each policy,
have been provided to Buyers, such policies being described in Exhibit "D"
hereto. All such insurance policies (i) provide reasonably adequate
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insurance coverage for the assets and the operations of the Company for the
risks normally insured against by businesses conducting comparable lines of
business as the Company, (ii) are sufficient for compliance with all contractual
requirements to which the Company is a party, (iii) will continue in full force
and effect following the consummation of the Merger and (iv) do not provide for
any retrospective premium adjustment or other experience-based liability on the
part of the Company.
3.13 Subsidiaries. American Rural Housing Insurance Agency,
Inc.("ARH"), a Florida corporation, is a subsidiary of Company. The authorized
capital stock of ARH consists of 1,000 shares of common stock, $1.00 par value,
of which 1,000 shares are issued and outstanding and owned by Company. Each
share of ARH stock outstanding as of the date hereof is duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. Except for
the Stock Appreciation Plan ("SAP") adopted by ARH on January 1, 1994, ARH does
not have outstanding any other equity securities or any subscriptions, options,
warrants, rights, calls or other commitments to issue any securities or to
convert any presently outstanding equity securities into securities of a
different kind or class. ARH does not have any debt securities outstanding.
Company has no other subsidiaries.
3.14 Intellectual Property.
(a) To its knowledge, the Company owns, or is licensed or otherwise
possesses legally enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights, technology, computer software programs,
applications and tangible and intangible proprietary information ("Intellectual
Property") that are used in the business of the Company as currently conducted.
Notwithstanding the foregoing, the Company has full and exclusive rights to the
name "Dan Bottrell Agency, Inc." in the State of Mississippi and Buyers shall be
entitled to preserve the use of such name following the Closing. The Company has
not received any notice of and does not have any knowledge of any potential
claim of any infringement on any copyright, patent, trademark, service marks or
trade secret of any other person and the transactions contemplated by this
Agreement will not impair any such patent, trademark, trade name, copyright or
other similar item of Intellectual Property. All items of Intellectual Property
will not be voided as a result of the Merger.
(b) Company has furnished Buyers a copy of its Year 2000 Compliance
Plan pursuant to which, to the Company's best knowledge, at the completion of
such plan none of the computer software, computer firmware, computer hardware
(whether general or special purpose) or other similar or related items of
automated, computerized or software systems that are used or relied on by the
Company in the conduct of its business will malfunction, will cease to function,
will generate incorrect data or will produce incorrect results when processing,
providing or receiving (i) date-related data from, onto and between the
twentieth and twenty-first centuries or (ii) date- related data in connection
with any valid date in the twentieth and twenty-first centuries, except where
any such malfunction or generation of incorrect data or results would not
reasonably be expected to have a material adverse effect on the Company.
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3.15 Absence of Certain Changes. Except as disclosed in writing or in
the report of Reagan & Associates dated November 3, 1998, since December 31,
1997, Company has in all material respects conducted its business in the
ordinary course and there has not been:
(a) any material adverse change with respect to the business, financial
condition results of operations or prospects of Company and its subsidiary,
(b) any amendment of any material term of any outstanding share of
Company stock;
(c) any material damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of Company or any of
its subsidiaries;
(d) any material change in any method of accounting or accounting
practice by Company or any of its subsidiaries, except for any such change that
is required by reason of a concurrent change in generally accepted accounting
principles;
(e) any receipt of notice or knowledge or reason to believe that any of
its substantial customers have terminated or intend to terminate its
relationship, which termination would have a material adverse effect on its
financial condition, results of operations, business or prospects;
(f) any failure to operate its business in the ordinary course so as to
preserve its business organization intact and the goodwill of its customers and
others with whom it has business relations;
(g) any material extraordinary loss incurred or any material right
waived in connection with any aspect of its business, whether or not in the
ordinary course of business;
(h) any agreement entered requiring the payment, conditionally or
otherwise, of any salary, bonus, extra compensation, pension or severance
payment to any of its present or former directors, officers or employees, except
such agreements as are terminable at will without any penalty or other payment;
or
(i) any receipt of notice or knowledge that any key employee, group of
employees or licensed agent of the Company who is or are responsible for a
material amount of the Company's business operations has or have delivered any
notice of termination or indicated that he or she is or they are considering
such an action.
3.16 Other Regulatory Filings. Seller has delivered to Buyers true and
correct copies of all reports filed by Company with the Mississippi Insurance
Department and all other applicable regulatory agencies since January 1, 1996,
such reports being listed on Exhibit E hereto. Each of such reports is true and
correct in all material respects.
3.17 Full Disclosure. To the best of Seller's knowledge, this Agreement
and all information provided to Buyers in writing pursuant to this Agreement
does not contain any
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untrue statements of material fact and Seller has not omitted to disclose to
Buyers any material fact known to Seller concerning the financial condition,
properties or prospects of Company.
3.18 Disclosure Documents. With respect to information supplied or to
be supplied by Seller for inclusion in the proxy statement relating to the
meeting of Company's stockholders for the approval of the Merger (the "Proxy
Statement") and the registration statement on Form S-4 (or other appropriate
registration form) to be filed with the Securities and Exchange Commission by
Trustmark for the registration of the shares of Trustmark common stock to be
offered and sold in the Merger (the "Registration Statement"), (i) the Proxy
Statement, at the time of the mailing thereof to stockholders of Company and at
the time of the meeting of Company's stockholders, will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading and (ii) the
Registration Statement, at the time it becomes effective under the Securities
Act, will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYERS.
In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Buyers jointly and severally,
make the following representations and warranties to Seller, each of which is
being relied on by Seller, which representations and warranties shall,
individually and in the aggregate, be true in all material respects upon the
date of this Agreement and on the Closing Date, (except that all representations
and warranties made as of a specific date shall be true and correct as of such
date).
4.1 Organization, Power and Authorization. Trustmark is a Mississippi
corporation, duly organized, validly existing and in good standing under the
laws of the state of Mississippi and has all requisite corporate power and
authority to carry on its business as it is now being conducted and to own and
lease its properties. The business activities of Trustmark do not require it to
be qualified to do business in any other state. The execution and performance of
this Agreement and the Merger have been duly authorized by the Board of
Directors of Trustmark and upon obtaining the approval of all governmental and
regulatory agencies or authorities whose approval is required as identified in
Section 4.11 (and such approvals are no longer subject to judicial or
administrative review, and all waiting periods required by law have expired),
this Agreement will be a valid, binding obligation of Trustmark, enforceable in
accordance with its terms.
Trustmark Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States and
has all requisite corporate power and authority to carry on its business as it
is now being conducted and to own and lease its properties. The business
activities of Trustmark Bank do not require it to be qualified to do business in
any other state. The execution and performance of this Agreement and the Merger
have been duly authorized by the Board of Directors of Trustmark Bank and upon
obtaining the approval of all governmental and regulatory agencies or
authorities whose approval is required as identified in
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Section 4.10 (and such approvals are no longer subject to judicial or
administrative review, and all waiting periods required by law have expired),
this Agreement will be a valid, binding obligation of Trustmark Bank,
enforceable in accordance with its terms.
TIA is a Mississippi corporation duly organized, validly existing and
in good standing under the laws of the United States and has all requisite
corporate power and authority to carry on its business as it is now being
conducted and to own and lease its properties. The business activities of TIA do
not require it to be qualified to do business in any other state. The execution
and performance of this Agreement and the Merger have been duly authorized by
the Board of Directors of TIA and upon obtaining the approval of all
governmental and regulatory agencies or authorities whose approval is required
as identified in Section 4.10 (and such approvals are no longer subject to
judicial or administrative review, and all waiting periods required by law have
expired), this Agreement will be a valid, binding obligation of TIA, enforceable
in accordance with its terms.
4.2 Absence of Conflict. The execution and delivery of this Agreement
and the performance and compliance with the terms hereof by Buyers will not: (1)
conflict with, or result in the breach of, the charter or bylaws of any of the
Buyers, (2) result in a breach of or default under any agreement which any of
the Buyers is presently a party, or (3) conflict with or result in a violation
or breach of any law, rule or regulation, or any writ, injunction or decree of
any court or governmental agency.
4.3 Capitalization. The authorized capital stock of Trustmark consists
of 250,000,000 shares of common stock, no par value, of which as of September
30, 1998, there were 72,773,616 shares issued and outstanding. Seller and Buyers
understand and agree that Trustmark may in the future issue additional shares of
its common stock or other securities, options, warrants, rights, calls or other
commitments at any time for the purpose of making acquisitions or for other
business purposes of Trustmark, Trustmark Bank or TIA.
The authorized capital stock of Trustmark Bank consists of 2,677,955
shares of common stock, $5.00 par value, of which 2,677,955 shares are presently
issued and outstanding and owned by Trustmark.
The authorized capital stock of TIA consists of 1,000 shares of common
stock, $250.00 par value, of which 1,000 shares are presently issued and
outstanding and owned by Trustmark Bank. Each share of Trustmark, Trustmark Bank
and TIA stock outstanding as of the date hereof is duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights. Neither
Trustmark Bank or TIA has outstanding any other securities or any options,
warrants, rights, calls or other commitments to issue any securities or to
convert any presently outstanding securities into securities of a different kind
or class.
4.4 Financial Statements. Buyers have delivered to Seller the audited
financial statements of Trustmark and its consolidated subsidiaries for the
years ended December 31, 1995, December 31, 1996 and December 31, 1997, and the
unaudited financial statements through September 30, 1998. As promptly as same
are available, Buyers shall deliver to Seller a copy of any subsequent quarterly
and annual financial statements of Trustmark and consolidated
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subsidiaries that are issued, together with any reports filed with the
Securities and Exchange Commission. The financial statements delivered pursuant
to this Section 4.4 (subject to audit adjustments to any unaudited financial
statements) do and will fairly present the financial condition of Trustmark and
consolidated subsidiaries in all material respects and have been or will be
prepared in conformity with generally accepted accounting principles,
consistently applied, for the periods involved.
4.5 Absence of Undisclosed Liabilities. Neither Trustmark, Trustmark
Bank nor TIA has any known liabilities or obligations of any nature whatsoever,
whether absolute, accrued, contingent or otherwise, due or to become due, as
principal or guarantor, not recorded or disclosed in the unaudited financial
statements for the period ending September 30, 1998, or otherwise disclosed in
this Agreement or the documents, statements, lists and schedules referred to
herein and delivered on the date hereof which could have a material adverse
effect on the financial condition, properties or prospects of Trustmark,
Trustmark Bank or TIA.
4.6 Assets Employed. All of Trustmark, Trustmark Bank and TIA's
significant tangible assets are reflected in the financial statements delivered
pursuant to Section 4.4 hereof, and such assets constitute all of the
significant tangible assets necessary to or used or employed in the business and
operations of Trustmark, Trustmark Bank and TIA as currently conducted.
Trustmark, Trustmark Bank and TIA have good, marketable title to all of their
significant tangible assets free of all significant liens, encumbrances and
claims, except as required by law for deposit of public funds. Leases covering
material tangible assets in which Trustmark, Trustmark Bank or TIA have a
leasehold interest only are valid and enforceable in accordance with their terms
and the Merger will not result in a default thereunder.
4.7 Taxes. The amounts provided for taxes on the audited financial
statements for the period ending December 31, 1997 are, and the audited
financial statements for the period ending December 31, 1998, will be sufficient
in all material respects for the payment of all accrued and unpaid federal,
state, county and municipal taxes and all levies, licenses, franchise and
registration fees, charges or withholdings of any nature whatsoever of
Trustmark, Trustmark Bank and TIA for the period ending on the date of such
financial statements and for all prior periods. Trustmark, Trustmark Bank and
TIA have filed all material federal, state, county, municipal and other tax
returns and all other material reports which are required to be filed in respect
of all such taxes and, to the extent that their liabilities for taxes have not
been fully discharged, full and adequate reserves have been established in the
financial statement therefor. Neither Trustmark, Trustmark Bank nor TIA is in
default in the payment of any taxes due or payable or of any assessments of any
kind, and neither has received any notice of material assessment or proposed
material assessment of any tax.
4.8 Exchange Act Filings. Trustmark has filed with or furnished to the
Securities and Exchange Commission, as applicable, all annual, quarterly and
other reports, all proxy statements and all annual reports to stockholders
required by the Exchange Act to be so filed or furnished. Such reports and proxy
statements are true and correct in all material respects and do not omit to
state a material fact required to be stated therein or necessary to make the
statement contained therein, in light of the circumstances under which they were
made, not misleading. The financial statements and schedules included in such
reports and proxy statements, together with
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the notes thereto, represent fairly, in all material respects, the financial
position of Trustmark and its consolidated subsidiaries, as of their respective
dates and the results of operations and changes in financial position for the
periods indicated therein, in each case in conformity with generally accepted
accounting principles, consistently applied.
4.9 Full Disclosure. To the best of Buyers' knowledge, this Agreement,
including all information provided to Seller pursuant to this Agreement, does
not contain any untrue statement of material fact and Buyers have not omitted to
disclose to Seller any material fact concerning the financial condition,
properties or prospects of Trustmark, Trustmark Bank or TIA.
4.10 Governmental and Judicial Consents and Approvals. The execution,
delivery and performance by Buyers of this Agreement, and the consummation of
the transactions contemplated by this Agreement, require no action by or in
respect of, or filing with, any governmental or judicial body, agency, official
or authority other than:
(a) the filing of Articles of Merger in accordance with Mississippi
law;
(b) compliance with the applicable requirements, if any, of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;
(c) compliance with the applicable requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and the rules and regulations promulgated
thereunder;
(d) compliance with the applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder;
(e) compliance with applicable foreign or state securities or "blue
sky" laws;
(f) compliance with the applicable requirements, if any, of the
National Bank Act, as amended, and regulations promulgated thereunder;
(g) compliance with the applicable requirements of the Mississippi
Insurance Department; and
(h) such other filings or registrations with, or authorizations,
consents or approvals of, governmental bodies, agencies, officials or
authorities, the failure of which to make or obtain would not materially and
adversely affect the ability of Buyers to consummate the Merger.
4.11 Litigation. Except as disclosed in the reports referred to in
Section 4.8 or as set forth in Exhibit C-2, none of Buyers is a party to any
action, suit or proceeding, or is subject to any pending or threatened
administrative, judicial or other action, suit, proceeding, inquiry or
investigation, individually or when taken together, in which an unfavorable
decision, ruling or finding could have a material adverse effect on the
financial condition or operations of Trustmark and its consolidated subsidiaries
taken as a whole or on the consummation of the transactions contemplated by this
Agreement, and to the knowledge of Buyers there is no basis for any such action,
suit, proceeding, inquiry or investigation.
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4.12 Disclosure Documents. With respect to information supplied or to
be supplied by Buyers for inclusion in the proxy statement relating to the
meeting of Company's stockholders for the approval of the Merger (the "Proxy
Statement") and the registration statement on Form S-4 (or other appropriate
registration form) to be filed with the Securities and Exchange Commission by
Trustmark for the registration of the shares of Trustmark common stock to be
offered and sold in the Merger (the "Registration Statement"), (i) the Proxy
Statement, at the time of the mailing thereof to stockholders of Company and at
the time of the meeting of Company's stockholders to be held in connection with
the Merger, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading and (ii) the Registration Statement, at the time it becomes
effective under the Securities Act, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act and Exchange Act, respectively, and the rules and regulations
thereunder.
4.13 Absence of Certain Changes. Since December 31, 1997, Trustmark and
its subsidiaries have in all material respects conducted their businesses in the
ordinary course and there has not been:
(a) any material adverse change with respect to the business, financial
condition or prospects of Trustmark and its subsidiaries;
(b) except for (i) regular dividends declared in the ordinary course of
business, (ii) the Stock Repurchase Program announced contemporaneously with
Trustmark's merger transaction with Smith County Bank and (iii) Trustmark's
Stock Repurchase Program announced on November 10, 1998, any declaration,
setting aside or payments of any dividend or other distribution in respect of
any shares of capital stock of Trustmark, or any other repurchase, redemption or
other acquisition by Trustmark of any outstanding shares of capital stock;
(c) any amendment of any material term of any outstanding Trustmark
capital stock;
(d) any material damage, destruction or other casualty loss (whether or
not covered by insurance) affecting the business or assets of Trustmark or any
of its subsidiaries; or
(e) any material change in any method of accounting or accounting
practice by Trustmark or any of its subsidiaries, except for any such change
that is required by reason of a concurrent change in generally accepted
accounting principles.
4.14 Compliance with Laws. Neither Trustmark, Trustmark Bank nor TIA
has, in its best judgment, any material uncorrected deficiencies noted in any
examination report by federal or state regulatory authorities or is in violation
of any material federal, state or local law, rule, ordinance or regulation.
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5. SPECIAL AGREEMENTS.
5.1 Dividends. If the consummation of the Merger has not occurred by
March 1, 1999, Company shall be permitted to declare and pay to its shareholders
a cash dividend out of current operating profits in an amount not to exceed
$57,300.00. If the consummation of the Merger has not occurred by June 1, 1999,
Company shall be permitted to declare and pay to its shareholders a cash
dividend in an amount not to exceed $85,900.00 if the Company has earned
$3,750,000.00 in net commission revenues from its operations through June 30,
1999. These dividends shall be paid by Company immediately prior to the Closing
Date. Except as set forth in this Section 5.1, Company shall not declare or pay
to its shareholders any cash or other dividends prior to the Closing Date.
5.2 Employment. TIA shall continue the employment of the employees of
Company after the Closing Date. However, as employees of TIA, such persons are
subject to salary review, reassignment and termination in the same manner as
other employees of Trustmark Bank or TIA. Promptly following the Effective Time
of the Merger, Trustmark agrees to cause TIA to make a one time salary
adjustment, payable in accordance with Trustmark's normal payroll procedures, to
all of the employees of the Company. The amount of the adjustment shall be the
actual cost to such employee of participating in the employee portion of
Trustmark's standard medical, dental, life and long term disability benefits
program. Company's employees shall not be required to participate in these
benefits programs in order to be entitled to the salary adjustment.
5.3 Employee Benefit Plans. Following the Closing Date, the employees
of Company will be entitled to the same employee benefits as are presently being
provided to employees of Trustmark Bank. As soon as administratively feasible
after the Closing Date, the Company's Money Purchase Pension Plan shall be
terminated and, subject to the terms and provisions of such plan, the
participants and beneficiaries shall be entitled to exercise one of the
following options regarding the disposition of their vested accounts:
distribution; direct rollover to Trustmark Bank's 401(k) plan; direct rollover
to an individual retirement account. The Company's Profit Sharing 401(k) Plan
shall be merged into Trustmark Bank's 401(k) plan. All protected benefits under
the Company's Profit Sharing 401-k Plan, as described in Section 411(d)(6) of
the Internal Revenue Code and the regulations thereunder, shall be preserved
notwithstanding the Merger. All employees of Company will be enrolled in
Trustmark Bank's retirement plan and will receive credit for years of service
with Company for purposes of eligibility and vesting under all of Trustmark
Bank's qualified retirement plans, but will not receive such prior service
credit for benefit accrual purposes under Trustmark Bank's pension plan.
5.4 Confidentiality. Buyers and Seller represent and agree that any
confidential information received concerning the other in connection with the
transactions contemplated by this Agreement shall be maintained as confidential,
and in the event the Closing does not occur without the default of either party,
Buyers and Seller agree to return all materials concerning the other to the
party from which obtained. Such party will return to the other party all
confidential materials and shall use such confidential information solely for
consideration of this transaction and for no other purpose. Notwithstanding this
Section 5.4, either party may disclose any such information to the extent
required by federal securities laws or otherwise required by any governmental
agency or authority.
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5.5 Payment of Expenses. Company shall accrue the estimated legal and
accounting expenses anticipated to be incurred on its behalf in connection with
this Agreement as of December 31, 1998. In the event this transaction is not
consummated, each party shall bear its own expenses incurred in connection with
the negotiation and consummation of the transactions contemplated by this
Agreement.
5.6 Recommendation of Directors; Voting of Shares. The Board of
Directors of Company hereby agrees to recommend that the shareholders of Company
approve the Merger, provided, nothing herein shall require the Board of
Directors of Company to take any action which, in the legal opinion of Butler,
Snow, O'Mara, Stevens and Cannada, PLLC, would constitute a breach of any
fiduciary duties that are owed to the shareholders of Company under applicable
law. Each of the Directors of the Company agree to vote his Company shares in
favor of the Merger.
5.7 Public Announcements. The parties will consult with each other as
to the timing, form and content of all public announcements regarding any aspect
of this Agreement or the Merger, provided that no party hereto shall be
prohibited from making any press release or other public statement which its
legal counsel deems necessary.
5.8 Shareholders' Agreement. Immediately prior to the Effective Time of
the Merger, Seller shall cause those certain Shareholders' Agreement between and
among Seller and the shareholder's of Seller described on Exhibit F hereto to be
terminated.
5.9 American Rural Housing Insurance Agency, Inc. Prior to the Closing
Date, Company shall merge ARH with and into Company under the charter and bylaws
of Company.
5.10 Termination of Stock Appreciation Plan. On or before the Closing
Date, the Company shall cause ARH to terminate and pay to the participants
thereunder all of the vested benefits arising out of ARH's Stock Appreciation
Plan adopted on January 1, 1994. The amount of all payments necessary to fulfill
the termination of the SAP shall be accrued by Company as of December 31, 1998.
5.11 Permitted Distributions. Promptly upon finalization of the
Company's unaudited financial statements for the period ending December 31,
1998, subject to any reduction required so that the payments contemplated in
this Section 5.11 shall not cause the special financial covenants contained in
Section 8.11 to be untrue, the Company shall be authorized to make salary, bonus
and similar payments to its employees in such amount that will cause the Company
to have a minimum tangible net worth equal to $5,177,609 as of December 31,
1998.
5.12 Further Assurance. If, at any time after the Effective Time of the
Merger, Trustmark, Trustmark Bank or TIA shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
that are necessary or desirable to vest, perfect or confirm, of record or
otherwise, in the surviving corporation its right, title or interest in, to or
under any of the rights, properties or assets of Company acquired or to be
acquired as a result of the Merger or to otherwise carry out this Agreement, the
officers and directors of Trustmark, Trustmark Bank and TIA shall, and will be
authorized to, execute and deliver, in the
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name and on behalf of Company all such deeds, bills of sale, assignments and
assurances and take and do, in the name of and on behalf of Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in Trustmark, Trustmark Bank and TIA or to otherwise carry
out this Agreement.
5.13 Tax Representations. Prior to the Closing Date, Buyers, Seller and
each of Seller's shareholders shall execute and deliver to Brunini, Grantham,
Grower and Hewes, PLLC such representations and warranties as are reasonably
deemed necessary by Buyers' counsel for purposes of the tax opinion that will be
delivered pursuant to Section 9.4 hereof.
5.14 Insurance. For not less than three (3) years after the Effective
Time of the Merger, Buyers shall purchase and maintain in effect directors' and
officers' liability insurance coverage, with prior acts coverage covering those
persons who are presently covered by the Company's existing directors' and
officers' liability insurance policy. Seller shall continue its existing errors
and omissions policy following the Effective Time of the Merger, with similar
limits of coverage in force as are in place on the Closing Date, with such
adjustments to be made by TIA from time to time thereafter as the business of
TIA shall evolve following the Merger.
6. COVENANTS OF SELLER PENDING CLOSING.
6.1 Shareholder's Meeting. As promptly as practical after the effective
date of the Registration Statement for the Trustmark shares to be issued in
connection with the Merger, the Company shall cause to be convened a special
meeting of its shareholders for the purpose of considering and voting on the
Merger. Such meeting shall be properly called and held in accordance with
applicable law and the articles of incorporation and bylaws of the Company.
6.2 Documents of Title. Seller agrees to allow Buyers to examine all
documents relating to any real or personal property owned by Seller.
6.3 Access to Properties and Records. Seller will provide Buyers and
their authorized representatives full access during normal business hours and
under reasonable circumstances to any and all of its premises, properties,
contracts, commitments, books, records and other information and will cause its
officers to furnish any and all financial, technical and operating data and
other information pertaining to its businesses as Buyers shall from time to time
reasonably request.
6.4 Solicitation of Further Offers. From the date hereof until the
termination of this Agreement, Seller and its Board of Directors will not,
directly or indirectly, take any action to solicit, initiate or encourage the
making of any Acquisition Proposal (as hereinafter defined); nor will they enter
into any negotiations concerning, furnish any non-public information relating to
Seller in connection with, or agree to any Acquisition Proposal. The term
"Acquisition Proposal" as used herein means any offer or proposal for, or any
indication of interest in, a merger or other business combination involving
Seller or the acquisition of a majority of the outstanding shares of Company's
common stock or a majority of the assets of Seller, other than the transactions
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contemplated by this Agreement. Seller shall notify Buyers within 24 hours of
its receipt of any Acquisition Proposal received during the term of this
Agreement.
6.5 Other Affirmative Covenants. Seller covenants with Buyers that at
all times prior to the Closing Date, Seller will and will cause Company to:
(a) Operate its business in substantially the manner in which
such business is now being operated and use its best efforts to maintain the
goodwill of the customers and suppliers of Company;
(b) Use its reasonable best efforts to retain the services of
the officers and employees of Company and all of the Company's licensed agents;
(c) Maintain its properties in good repair and working order,
reasonable wear and tear excepted;
(d) Duly and timely file all reports, tax returns and other
documents required to be filed with federal, state and local tax and regulatory
authorities;
(e) Unless contesting same in good faith by appropriate
proceedings and having established reasonable reserves therefor, pay, when
required to be paid, all taxes indicated by tax returns as filed or otherwise
levied or assessed upon them or any of its properties and to withhold or collect
and pay to the proper governmental authorities or hold in separate bank accounts
for such payments all taxes and other assessments either of them is required by
law to withhold or collect;
(f) Promptly notify Buyers of any unusual or material problems
or developments with respect to the business, financial conditions, operations
or assets of Company; and
(g) Use its best efforts to cooperate with Buyers and bring
about the transactions contemplated by this Agreement.
6.6 Negative Covenants of Seller. From the date hereof until the
Closing Date, without the prior written consent of Trustmark, Company will not:
(a) Incur any material obligation except in the ordinary
course of business; provided, however, Company agrees to notify and consult with
Buyers before (i) incurring any expense or obligation above $10,000 or (ii)
incurring any expense over $1000 in the aggregate to replace any
computer-related equipment or software before the Closing Date.
(b) Increase the compensation of any director, officer or
employee or enter into or amend any contract of employment or enter into or
amend any insurance, profit-sharing, pension, severance pay, bonus, incentive,
deferred compensation or retirement plan or arrangement;
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(c) Amend its articles of incorporation; or
(d) Sell, transfer or convey any of its investment securities;
(e) Sell, assign or transfer any of its assets other than in
the ordinary course of business;
(f) Mortgage, pledge or subject to any lien, charge or
encumbrance any of its assets, except in the ordinary course of business;
(g) Intentionally waive any material right, contractual or
otherwise, or cancel or release any material debts or claims whether or not in
the ordinary course of business;
(h) Intentionally suffer any material uninsured damage,
destruction or loss to its tangible properties;
(i) Declare or pay any dividend or make any other distribution
with respect to its stock, except as otherwise permitted by Sections 5.1 and
5.11;
(j) Make, extend or renew any loan or other extension of
credit to any of its officers, directors, or employees;
(k) Issue or sell any of its capital stock, or any of its debt
securities, authorize a stock split or dividend, or otherwise affect its capital
structure except as otherwise permitted by Sections 5.1, 5.9, 5.10 and 5.11;
(l) Fail to comply with any representation, warranty or
covenant contained herein; and
(m) Enter into any agreement to do any of the foregoing
matters.
7. COVENANTS OF BUYERS PENDING CLOSING.
7.1 Corporate Action. As promptly as practical after the execution of
this Agreement, Buyers shall cause the Merger to be approved by the directors of
Trustmark, the directors of Trustmark Bank and the directors and shareholders of
TIA.
7.2 Other Affirmative Covenants. Buyers covenant with Seller that at
all times prior to the Closing Date, Buyers will and will cause Trustmark,
Trustmark Bank and TIA to:
(a) Operate their businesses in substantially the manner in
which such businesses are now being operated and use their best efforts to
maintain the goodwill of the depositors, customers and suppliers of Trustmark,
Trustmark Bank and TIA;
(b) Duly and timely file all reports, tax returns and other
documents required to be filed with federal, state and local tax and regulatory
authorities;
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(c) Unless contesting same in good faith by appropriate
proceedings and having established reasonable reserves therefor, pay, when
required to be paid, all taxes indicated by tax returns as filed or otherwise
levied or assessed upon them or any of their properties and to withhold or
collect and pay to the proper governmental authorities or hold in separate bank
accounts for such payments all taxes and other assessments either of them is
required by law to withhold or collect;
(d) Use their best efforts to bring about the transactions
contemplated by this Agreement; and
(e) Notify Seller of any unusual or material problems or
developments with respect to the business, financial conditions, operations or
assets of Trustmark, Trustmark Bank or TIA.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyers obligations to consummate the transactions contemplated by this
Agreement are subject to each of the following conditions precedent, any of
which may be waived by Buyers in writing.
8.1 Warranties and Representations at Closing. All warranties and
representations contained in this Agreement by or concerning Seller shall be
true and correct on the Closing Date in all material respects.
8.2 Governmental Authority Approval. The consummation of the Merger
shall have been approved by all governmental and regulatory agencies or
authorities whose approval is required, such approvals shall be in full force
and effect and no longer subject to judicial or administrative review and all
waiting periods required by law shall have expired.
8.3 Corporate Approval. The Merger shall have been authorized by the
Board of Directors and shareholders of Company, in accordance with the
provisions of applicable law and the articles and bylaws of Company, and Seller
shall have furnished Buyers with certified copies of resolutions duly adopted by
the Board of Directors and shareholders, respectively, of Company approving this
Agreement and authorizing the Merger.
8.4 Compliance with Undertakings. Each of the acts, covenants,
agreements and undertakings of Seller to be performed or caused to be complied
with on or before the Closing Date pursuant to the terms hereof shall have been
duly performed and caused to be complied with in all material respects.
8.5 No Material Adverse Change. There shall have been no material
adverse change in the financial condition, tangible properties or prospects of
Company since the completion of Buyers' due diligence examination of Seller,
other than as a result of the transactions contemplated hereby.
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8.6 American Rural Housing Insurance Agency, Inc. Prior to the Closing
Date, Company shall have (i) consummated the merger of ARH with and into
Company, (ii) terminated the SAP, and (iii) paid in full all of the vested
benefits to participants arising under the SAP.
8.7 Covenant Not to Compete. The producers listed on Exhibit G hereto
shall have entered a confidentiality, noncompetition and nonsolicitation
agreement with TIA in substantially the form attached as Exhibit H hereto
pursuant to which, among other items, such person will agree that for so long as
such person is employed by TIA and for a period of two years after such person's
employment with TIA terminates, they will not become directly, indirectly or
beneficially an employee, five percent or more stockholder or director of any
business engaged in the insurance or reinsurance brokerage business or the
benefit consulting business or engage in other similar business enterprise or
activity which competes with TIA within the State of Mississippi. The producers
listed on Exhibit G will further agree not to initiate any action to induce any
employee of TIA (as successor to Company) to leave TIA's employment or directly
or indirectly assist any other person or entity in requesting or inducing any
such other employee to leave such employment with TIA. Each of the Company's
remaining non-shareholder producers shall have entered a confidentiality,
nonpiracy and nonsolicitation agreement in the form attached as Exhibit I
hereto. Each of Company's remaining employees shall have entered a
confidentiality agreement in the form attached as Exhibit J hereto.
8.8 Escrow Agreement. Each shareholder of the Company shall have
entered into an escrow agreement substantially in the form attached hereto as
Exhibit K. Under the escrow agreements, 20% of the shares of Trustmark to which
each shareholder of Company is entitled by virtue of the Merger shall be placed
into escrow with the Trustmark National Bank Trust Department in accordance with
the terms of the escrow agreements to secure certain obligations of Seller and
its shareholders for a period of three years following the Closing.
8.9 Federal Income Taxation. Buyers shall be satisfied that the Merger
will qualify as a tax-free reorganization pursuant to Section 368 of the Code.
8.10 Opinion of Counsel. Seller shall cause to be delivered to Buyers
the legal opinion of Butler, Snow, O'Mara, Stevens and Cannada, PLLC to the
effect that:
(a) Company is a duly organized, validly existing corporation
in good standing under the laws of the State of Mississippi. The 28,010 issued
and outstanding shares of Company's common stock are duly authorized, validly
issued, fully paid and nonassessable. Such stock represents all of the issued
and outstanding equity securities of Company.
(b) This Agreement is valid, binding and enforceable against
Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally.
(c) The Merger has been duly authorized by all requisite
corporate and shareholder action of Company.
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(d) To the best of such counsel's knowledge, following
diligent inquiry, but without independent verification of facts presented or
represented by Company to such counsel and with the ability to rely upon
certificates of officers and other legal opinions, Seller has not made any
material misrepresentation, breached any material warranty or breached any
material covenant or condition in this Agreement or in any document, statement,
list or schedule referred to herein.
8.11 Special Financial Covenants. On the Closing Date, the reserve for
losses then maintained by Company shall adequately provide for the anticipated
losses of Company as of such date in accordance with accepted audit and
examination standards consistently applied. The Company will possess a minimum
tangible net worth of $5,177,609 as of December 31, 1998 and, at the Effective
Time of the Merger will have a minimum tangible net worth equal to $5,177,609,
plus (minus) all of Company's earnings (losses) from January 1, 1999 through the
Effective Time of the Merger and reduced by the dividends described in Section
5.1.
8.12 Employment of Producers. Each of the Company's producers listed on
Exhibit G hereto shall be employed by the Company on the Closing Date.
8.13 Consents to Assignments. On the Closing Date, appropriate consents
shall have been obtained for each of the contracts described on Exhibit B that
require consents for assignment to TIA as a result of the Merger.
8.14 Closing Certificate. On the Closing Date, the Chairman of the
Board and Chief Executive Officer of Company shall execute and deliver a closing
certificate to the effect that all representations and warranties by or
concerning Company are true and correct in all material respects as of the
Closing Date and that all other conditions precedent to Buyers' obligation to
Close have been performed and complied with in all material respects.
9. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligations to consummate the transactions contemplated by
this Agreement are subject to each of the following conditions precedent, any of
which may be waived by Seller in writing.
9.1 Warranties and Representations at Closing. All warranties and
representations contained in this Agreement by or concerning Buyers shall be
materially true and correct on the Closing Date.
9.2 Governmental Authority Approval. The consummation of the Merger
shall have been approved by all governmental and regulatory agencies or
authorities whose approval is required, such approvals shall be in full force
and effect and no longer subject to judicial or administrative review and all
waiting periods required by law shall have expired.
9.3 Corporate Approval. The Merger shall have been authorized by the
Board of Directors of Trustmark, the Board of Directors of Trustmark Bank and
the Board of Directors
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and shareholders of TIA in accordance with the provisions of applicable law and
the charters and bylaws of Trustmark, Trustmark Bank and TIA.
9.4 Federal Income Taxation. Seller shall have received an opinion from
Brunini, Grantham, Grower and Hewes, PLLC that the Merger will qualify as a
tax-free reorganization pursuant to section 368 of the Code, and that for
federal income tax purposes: (i) no gain or loss will be recognized by Seller or
Buyers as a result of the Merger; (ii) no gain or loss will be recognized by
Seller's shareholders who exchange Company common stock for Trustmark common
stock; and (iii) the aggregate tax basis of the Trustmark common stock received
by the Company shareholders will be the same as the aggregate tax basis of the
Company common stock surrendered in exchange.
9.5 Compliance with Undertakings. Each of the acts, covenants,
agreements and undertakings of Buyers to be performed or caused to be complied
with on or before the Closing Date pursuant to the terms hereof shall have been
duly performed and caused to be complied with in all material respects.
9.6 No Material Adverse Change. There shall have been no material
adverse change in the condition, financial or otherwise, of Trustmark, Trustmark
Bank or TIA since September 30, 1998, other than as a result of the transactions
contemplated hereby.
9.7 Officer/Director Indemnification. On or before the Closing Date,
TIA shall have amended its Bylaws to provide indemnification for TIA's officers
and directors to the same extent provided to officers and directors of Trustmark
and Trustmark Bank.
9.8 Opinion of Counsel. Buyers shall cause to be delivered to Seller
the legal opinion of Brunini, Grantham, Grower & Hewes, PLLC to the effect that:
(a) Trustmark Bank is duly organized, validly existing and in
good standing as a national banking association.
(b) TIA is a duly organized, validly existing corporation in
good standing under the laws of the State of Mississippi.
(c) Trustmark is a duly organized, validly existing
corporation in good standing under the laws of the State of Mississippi. The
outstanding shares of Trustmark's common stock are, and the shares of Trustmark
common stock to be issued as a result of the Merger, upon execution and
delivery, will be, in each case duly authorized, validly issued, fully paid, and
nonassessable. The shares of Trustmark common stock are validly registered under
the Securities Act of 1933.
(d) This Agreement is valid, binding and enforceable against
Buyers in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally.
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(e) The Merger has been duly authorized by all requisite
corporate and shareholder action of Trustmark, Trustmark Bank and TIA.
(f) To the best of such counsel's knowledge, following
diligent inquiry, but without independent verification of facts certified by
appropriate officials of Trustmark, Trustmark Bank and/or TIA and relied upon by
such counsel, Buyers have not made any material misrepresentation, materially
breached any warranty or materially breached any covenant or condition in this
Agreement or in any document, statement, list or schedule referred to herein.
9.9 Closing Certificate. On the Closing Date, the Chairman of the Board
and President of Trustmark shall execute and deliver a closing certificate to
the effect that all representations and warranties by or concerning Trustmark,
Trustmark Bank and TIA are true and correct in all material respects as of the
Closing Date and that all other conditions precedent to Seller's obligation to
Close have been performed and complied with in all material respects.
10. CLOSING.
On the Closing Date, subject to the terms and conditions set forth in
this Agreement, Company shall merge with and into TIA pursuant to the Plan and
Agreement of Merger attached as Exhibit "A". The Merger will be effective (the
"Effective Time of the Merger") upon the filing of Articles of Merger with the
Secretary of State of the State of Mississippi.
At the Effective Time of the Merger, the separate corporate existence
of Company shall cease. TIA shall be the surviving corporation of the Merger.
Closing will take place at the main office of Company on a date
selected by Buyers within 30 days after all conditions to Closing have been
satisfied or waived (the "Closing Date"). At the Closing, the certificates,
letters and opinions required by Articles 8 and 9 hereof shall be delivered and
the appropriate officers of Company, Trustmark, Trustmark Bank and TIA shall
execute, deliver, acknowledge and file such documents, instruments and
certificates required by this Agreement or otherwise necessary to accomplish the
Merger.
11. TERMINATION.
This Agreement may be terminated and the Merger may be abandoned
without liability on the part of Seller or Buyers, as follows:
(a) By the mutual consents of the boards of directors of
Company and Trustmark;
(b) By Buyers if a state or federal governmental agency or
authority shall at any time disapprove the transactions contemplated by this
Agreement or shall have instituted and not dismissed court proceedings to
restrain or prohibit such transactions and such court proceedings have not been
resolved prior to one year after the date of this Agreement.
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(c) By any party if the Closing Date shall not have occurred
on or prior to the day that is six months after the date of this Agreement
without the fault of such party;
(d) By Buyers, if at the time of such termination there shall
be a material adverse change in the financial condition or tangible properties
of Seller arising subsequent to December 31, 1997 or the completion of Buyer's
due diligence examination of Seller.
(e) By any party in accordance with and subject to the
provisions of Section 2.2 hereof.
(f) By any party, if the stockholders of the Company fail to
approve the Merger at the meeting of stockholders called for such purposes
(including any adjournment or postponement thereof);
(g) By Buyers if there has been a material breach by Seller
(A) of any of its representations and warranties set forth herein, or (B) of any
of its obligations herein which has not been promptly cured after notice thereof
from Buyers;
(h) By Seller if there has been a material breach by either of
the Buyers (A) of any of its representations and warranties set forth herein or
(B) of any of its obligations hereunder which has not been promptly cured after
notice thereof by Seller.
12. MISCELLANEOUS.
12.1 Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Mississippi, except to the extent that federal law
is applicable.
12.2 Notices and Communications. Any and all notices or other
communications required or permitted under this Agreement shall be in writing
and shall be deemed given when delivered in person or upon receipt when
delivered by an overnight courier delivery service that maintains proof of
delivery or three days after being mailed by United States Certified or
Registered Mail, Return Receipt Requested, postage prepaid and addressed:
To Company: Mr. William E. French, Chairman of the Board
Dan Bottrell Agency, Inc.
700 North State Street, Suite 400
Jackson, MS 39202
with a copy to: Don B. Cannada, Esq.
Butler, Snow, O'Mara, Stevens
& Cannada, PLLC
Suite 1700
Deposit Guaranty Plaza
210 East Capitol Street
Jackson, MS 39201
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To Trustmark: Mr. Richard G. Hickson
Trustmark Corporation
248 East Capitol Street, Suite 200
Jackson, MS 39201
with a copy to: Granville Tate, Jr., Esq.
Brunini, Grantham, Grower & Hewes, PLLC
248 East Capitol Street, Suite 1400
Jackson, MS 39201
Any party may change the address to which notice or other communication
to him or it is sent by delivery of written notice of the change to the other
parties to this Agreement.
12.3 Headings and Exhibits. Any section headings in this Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provisions hereof. All documents, statements, lists and schedules referred to
herein shall be initialed for identification or may be physically annexed
hereto, but in either event such documents, statements, lists and schedules
shall be deemed a part hereof.
12.4 Benefit. This Agreement shall be binding upon and shall inure to
the exclusive benefit of the parties hereto, their heirs, successors or assigns.
This Agreement is not intended to nor shall it create any rights in any other
party.
12.5 Partial Invalidity. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
12.6 Waiver. Neither the failure nor any delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, or of any other right, power or remedy nor shall any single or
partial exercise of any right, power or remedy preclude any further or other
exercise thereof or the exercise of any other right, power or remedy.
12.7 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
12.8 Interpretation. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or entity or the context may require. Further, it is
acknowledged by the parties that this Agreement has been drafted and negotiated
by both parties hereto and, therefore, no presumptions shall arise favoring
either party by virtue of the authorship of any of its provisions.
12.9 Entire Agreement. This Agreement and the documents, statements,
lists and schedules referred to herein constitute the entire Agreement between
the parties hereto, and it is understood and agreed that all undertakings,
negotiations and agreements heretofore had between the parties are merged herein
and therein. This Agreement may not be modified orally, but only
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by an agreement in writing signed by either Trustmark, Trustmark Bank or TIA, on
the one hand, and Company, on the other.
12.10 Time of the Essence. With respect to any act called for by any
party to this Agreement, including regulatory authority approvals and
registration of the Trustmark shares with appropriate state and federal
agencies, time is of the essence.
12.11 Definition of Material. With reference to the representations,
warranties and covenants of Seller contained in this Agreement, such
representations, warranties and covenants shall be strictly satisfied and
complied with. Accordingly, when used with reference to Seller "material" and
"materially" shall be understood to mean a breach of any representation,
warranty or covenant contained in this Agreement which, separately or in the
aggregate with any other such breach, results in a cost, loss, detriment or
obligation to Buyers in excess of $50,000. In the event of a material breach of
any representations, warranties or covenants by the Company or its shareholders,
Buyers' recovery for such breach shall not exceed the value of the shares held
in escrow under the escrow agreements described in Section 8.8 herein, and shall
otherwise be nonrecourse to the former shareholders of Company. With reference
to the representations, warranties and covenants of Buyers contained in this
Agreement, "material" and " materially" shall have the meaning normally accorded
such terms considering the relative importance of such representation, warranty
or covenant in the context of a business of the type and size of Buyers.
12.12 Survival of Representations and Warranties. All representations
and warranties set forth in Sections 3 and 4 of this Agreement shall survive the
Merger for a term of two (2) years.
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WITNESS the signatures of the undersigned parties as of the date first
above written.
TRUSTMARK CORPORATION
By: /s/ Richard G. Hickson
-----------------------------------------
Richard G. Hickson, President
and Chief Executive Officer
(SEAL)
TRUSTMARK NATIONAL BANK
By: /s/ Richard G. Hickson
-----------------------------------------
Richard G. Hickson, Vice Chairman of the
Board and Chief Executive Officer
(SEAL)
TRUSTMARK INSURANCE AGENCY, INC.
By: /s/ Richard G. Hickson
-----------------------------------------
Richard G. Hickson, Chairman of the Board
and Chief Executive Officer
(SEAL)
DAN BOTTRELL AGENCY, INC.
By: /s/ William E. French
-----------------------------------------
William E. French, President
(SEAL)
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<PAGE> 68
Board of Directors of Dan Bottrell Agency, Inc.
/s/ S. Lyle Bates, Jr.
---------------------------------------------------
S. Lyle Bates, Jr.
/s/ Douglas M. Ferris
---------------------------------------------------
Douglas M. Ferris
/s/ William E. French
---------------------------------------------------
William E. French
/s/ Carlton Smith
---------------------------------------------------
J. Carlton Smith
/s/ Jerry G. Veazey, Jr.
---------------------------------------------------
Jerry G. Veazey, Jr.
A-28
<PAGE> 69
EXHIBIT INDEX
Exhibit A: Plan and Agreement of Merger. (Omitted)
<TABLE>
<S> <C> <C>
Exhibit B: Schedule of Contracts. (Omitted)
Exhibit C-1: Schedule of Pending Litigation -- Seller. (Omitted)
Exhibit C-2: Schedule of Pending Litigation -- Buyers. (Omitted)
Exhibit D: Schedule of Insurance Policies. (Omitted)
Exhibit E: Schedule of Regulatory Reports. (Omitted)
Exhibit F: Schedule of Shareholders' Agreements. (Omitted)
Exhibit G: Schedule of Producers. (Omitted)
Exhibit H: Form of Confidentiality, Noncompetition and Nonsolicitation Agreements
Exhibit I: Form of Confidentiality, Nonpiracy and Nonsolicitation Agreement
Exhibit J: Form of Confidentiality Agreement.
Exhibit K: Form of Escrow Agreement. (See Separate Document)
</TABLE>
A-29
<PAGE> 70
Exhibit H
Form of Confidentiality, Noncompetition and Nonsolicitation Agreements
A-30
<PAGE> 71
CONFIDENTIALITY, NONCOMPETITION
AND NONSOLICITATION AGREEMENT
THIS AGREEMENT ("Agreement") is dated as of ___________, 1999 by and
between __________________ ("Employee") and Trustmark Insurance Agency, Inc., a
Mississippi corporation ("TIA" or the "Company").
WHEREAS, Employee is an employee of Dan Bottrell Agency, Inc.
("Bottrell") and desires to be an employee of the Company; and
WHEREAS, the Company is engaged in a personal service business
involving confidential information and personal relationships with insureds, the
success of which business is in large part due to the exclusive retention of
confidential information and continuation of such personal relationships with
insureds, and Employee will have access to certain books, records, documents and
customer information of Company, which includes books, records, documents and
customer information of Bottrell which merged with TIA (hereinafter, TIA and
Bottrell shall be collectively referred to as "Company"), as well as information
concerning Company's trade secrets, business methods and procedures and other
materials and matters which are the property of the Company and which enable the
Company to compete successfully in its business; and
WHEREAS, as an express condition of Company's acquisition of Bottrell
and employment of Employee by the Company, both of which are to the benefit of
Employee, the Company has requested that Employee enter, and Employee has agreed
to enter, into this Agreement.
NOW, THEREFORE, for and in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in further consideration of future compensation to be paid to
Employee, the parties hereby agree as follows:
A-31
<PAGE> 72
1. CONFIDENTIAL INFORMATION. Employee agrees that he will treat all
materials, books, records, documents, customer information, trade secrets,
business methods and procedures and other materials and matters reflecting or
relating to Company's business as confidential information and he will not
disclose, divulge, copy or transmit such information in any way to any person
outside of Company's employ during or after Employee's employment by Company.
Employee agrees that the confidential information includes, without limitation,
the Company's accounting books and records, contracts to which Company is a
party, tax returns, customer account information, customer lists, policy
expiration information, employee handbooks and procedures, billing information,
customer names, computer software and data stored in any computer or on any
computer disk or on tape or by any other means relating to the Company's
business operations, data and information about or relating to the Company's
customers, insurance policies and related documents, surety bonds and related
documents, customer files and other information reflecting or relating to
Company's business.
2. OWNERSHIP OF CONFIDENTIAL INFORMATION; PROHIBITED USE. In the event
of termination of Employee's employment with Company for any reason, Employee
agrees to return all confidential information as herein described to Company and
agrees that he will not, under any circumstances, retain, disclose, divulge,
copy, transmit or use in any way this information memorized, printed, written or
otherwise acquired concerning active or inactive accounts of the Company, its
methods of operation, business accounts or names of policy holders or other
information. Employee understands that all business and customer accounts shall
be and remain the property of Company and that he shall have no vested interest
or right in any such business or
A-32
<PAGE> 73
customer accounts. Employee further agrees that he will not, directly or
indirectly, make use of any such information concerning Company's business for
his own benefit, or the benefit of any other person or entity or divulge or
disclose such information to any other person or entity.
3. NON-COMPETITION COVENANT.
A. The Employee covenants that while he is in the employment of the
Company and, after he ceases to render services to the Company, for the period
specified in paragraph 3(B), he shall not, without the written consent of the
Company, directly or indirectly, within the geographical area defined in
paragraph 3(C):
(1) Perform sales, customer service, consulting, management or
administrative services for any person or entity whose business is
directly or indirectly competitive with any business engaged in the
insurance or reinsurance brokerage business or the benefit consulting
business or any other similar business carried on by the Company, as an
employee or otherwise, including, but not limited to, services relating
to the sale of insurance policies, insurance related products or bonds
of the kind that (a) he was selling or attempting to sell for the
Company at the time his employment terminates, (b) he has sold for the
Company at any time within the two years prior to the termination of
his employment, or (c) are otherwise being sold by the Company;
(2) Engage or in any manner be interested in any business,
either directly or indirectly, for himself or for others, as an owner,
partner, limited partner, shareholder or director, of the same or like
kind or character of business being conducted by the Company; or
(3) Interfere with the persons employed by or associated as
independent contractors with the Company or induce any person employed
by or associated as an independent contractor with the Company to leave
his employment or terminate his association.
A-33
<PAGE> 74
For purposes of paragraphs 3(A)(1) and 3(A)(2) hereof, the
insurance policies, insurance related products or bonds being sold by the
Company and the kind or character of business conducted by the Company shall be
determined as of the date of any alleged infraction of such covenants by the
Employee. Nothing contained in this paragraph 3(A), however, shall be deemed to
prohibit the Employee from owning stock in public companies or otherwise acting
in pursuance of his passive investment program.
B. The parties agree that the term of the covenants of the Employee set
forth in paragraph 3(A) shall continue after the termination of his employment
with the Company for a period of twenty-four (24) months plus any period of time
that the Employee is in breach of any of the terms or provisions of this
Agreement (hereinafter called the "Non-Competition Period").
C. The geographical area applicable to the covenants of the Employee
contained in paragraph 3(A) shall be any location within the State of
Mississippi.
D. In addition to the covenant specified in paragraph 3(A), the
Employee agrees that commencing with the termination of the Employee's
employment with the Company, and continuing for the Non-Competition Period, he
shall not, directly or indirectly, solicit, sell, or accept business relating to
the sale of insurance policies, related insurance products or bonds of the kind
that (a) he was selling or attempting to sell for the Company at the time his
employment terminated; (b) he has sold for the Company at any time within the
two years prior to the termination of his employment; or (c) are otherwise being
sold by the Company from:(i) any existing customer of the Company located within
the State of Mississippi or located outside of Mississippi, which was being
serviced or solicited by the Employee, or by other Company
A-34
<PAGE> 75
personnel for the benefit of the Company, immediately prior to the time of
termination; (ii) any customer located within the State of Mississippi, or
located outside of Mississippi, which is not a current customer at the time of
the Employee's termination but which, within the two years prior to termination
of Employee's employment, was served by the Employee or other Company personnel
on behalf of the Company or which, within said period, maintained an insurance
policy, insurance related product or bond placed by the Employee or such other
Company personnel on behalf of the Company; and (iii) any active prospect of the
Company located within the State of Mississippi or located outside of
Mississippi. For purposes of this paragraph 3(D), an active prospect shall be
deemed to be a potential customer which actually has been solicited by the
Company prior to the time of the Employee's termination or one which, at the
time of such termination, holds, but has not accepted, a proposal prepared by
the Company, or one which is contained on any list or compilation of customers
provided or made available, directly or indirectly, in writing from time to time
by the Company to the Employee on or before such termination of employment and
who is a specific prospect for insurance products or bonds; provided that such
prospective prospect or prospects are not independently developed by the
Employee after the termination of employment of the Employee.
E. The Employee agrees that the consideration he has directly or
indirectly received for the covenants in this Paragraph 3 includes but is not
necessarily limited to the consideration that the Employee received upon the
exchange of his stock in Bottrell for stock in the Company.
[NOTE: 1 EMPLOYEE IS NOT A STOCKHOLDER.]
4. REMEDIES. Employee and Company agree that:
A. The remedy at law for any breach of the provisions of this Agreement
is inadequate;
A-35
<PAGE> 76
B. Company will be irreparably damaged in the event this Agreement is
not specifically enforced during the three (3) year period commencing on the
date that Bottrell merges with and into TIA; and
C. In the event of any breach or threatened breach of this Agreement
within three (3) years of the date that Bottrell merges with and into TIA,
Company shall be entitled to injunctive relief against any breach or threatened
breach of any provision of this Agreement in addition to damages and other
remedies that may be available at law or in equity. Employee specifically agrees
that an injunction may be issued requiring Employee to comply with the
prohibitions contained in this Agreement. Employee further agrees that any
remedy provided by this Agreement shall be cumulative and non-exclusive, and
shall be in addition to any other remedy which Company may have at law or in
equity. Specifically, the granting of injunctive relief shall not preclude the
recovery of damages arising or resulting from the breach of this Agreement. In
addition, the defaulting party shall be liable for and agrees to pay the
reasonable attorneys' fees of the non-defaulting party incurred in enforcing
this Agreement including any appeals.
5. DAMAGE CALCULATION. Employee and Company agree that in the event
Employee shall violate any prohibition contained in this Agreement and/or shall
procure, obtain, accept or in any manner transact insurance business directly or
indirectly, with any Company customer, policy holder, insured or other person
holding or having held a policy or bond issued through Company as agent
(collectively referred to in this paragraph 5 as a "customer") during the period
in which such activity is prohibited under this Agreement then, in that event,
Employee shall pay unto Company an amount equal to two hundred percent (200%) of
the average annual commissions
A-36
<PAGE> 77
payable with respect to all policies and bonds issued to or for the benefit of
such customer through Company as agent, such average to be determined based on
commissions payable for (i) the calendar year in which Employee first violates
the prohibitions contained in this Agreement (the "Violation Year") and (ii) the
calendar year preceding the Violation Year. Provided, however, that where no
commissions shall have been payable in the calendar year preceding the Violation
Year then the amount payable shall be two hundred percent (200%) of commissions
payable in the Violation Year, and vice versa where no commissions shall have
been payable in the Violation Year. Such commissions are to be determined on an
annualized basis, and all commissions payable with respect to policies and bonds
issued to or for the benefit of such customer shall be taken into account,
without regard to whom such commissions shall be paid or payable. Employee's
payment to Company shall be made in cash at the time the customer is issued any
policy or bond or made the beneficiary of any policy or bond in violation of
this Agreement. The monetary damages provided for in this paragraph shall be the
exclusive remedy available to Company for any breach or violation of this
Agreement occurring on or after three (3) years from the date that Bottrell
merges into Company.
6. REASONABLENESS. Employee agrees that the provisions of this
Agreement are reasonable and necessary to protect the legitimate business
interests of the Company, are reasonable with respect to time, manner and
geographic territory, and, if enforced, will not interfere with the public's
interest in free and sufficient access to insurance policies, insurance related
products and bonds.
7. INVALIDITY, ILLEGALITY OR UNENFORCEABILITY. The invalidity,
illegality or unenforceability of any particular provision of this Agreement
shall not affect the other provisions. If any court is called upon to construe
the provisions of this Agreement and such court finds any particular provision
to be invalid, illegal or unenforceable as written then, in that event, such
provision may be judicially modified so as to effectuate the intentions of the
parties
A-37
<PAGE> 78
as closely as possible or if such provision cannot be judicially modified, then
it shall be deemed to be omitted and, in either case, all the other provisions
of this Agreement shall remain in full force and effect and shall be enforceable
in accordance with their terms.
8. NO EMPLOYMENT CONTRACT. This Agreement shall not be construed to
create an employment contract whereby Employee is guaranteed employment for any
specified period of time or to in any way alter the rights of Company as the
employer of Employee.
9. SURVIVAL. The provisions of this Agreement shall survive the
employment relationship between the parties.
10. BINDING. This Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
11. WAIVERS AND MODIFICATIONS. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by written instrument signed by the parties or, in the case
of the waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or right, power or privilege hereunder preclude any other or further
exercise of any other right, power or privilege hereunder.
12. GOVERNING LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Mississippi without regard to its
conflict of law provisions, and any legal action brought by the parties related
to this Agreement shall be brought in Hinds County, Mississippi.
13. ENTIRE AGREEMENT This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
discussions, agreements, commitments or understandings of every kind relating
thereto, whether oral or written, between Employee and the Company.
A-38
<PAGE> 79
14. TERMINATION OF PREVIOUS AGREEMENT. Effective as of the date of this
Agreement, the Company and Employee hereby terminate that certain
Confidentiality, Nonpiracy and Nonsolicitation Agreement by and between Employee
and Bottrell dated _______________, 199__ and all obligations and duties each to
the other thereunder.
15. HEADINGS. The headings in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TRUSTMARK INSURANCE AGENCY, INC.
By:
------------------------------------------------
Richard G. Hickson, Chairman and Chief
Executive Officer
EMPLOYEE
---------------------------------------------------
(Name)
A-39
<PAGE> 80
Exhibit I
Form of Confidentiality, Nonpiracy and Nonsolicitation Agreement
A-40
<PAGE> 81
CONFIDENTIALITY, NONPIRACY AND
NONSOLICITATION AGREEMENT
THIS AGREEMENT is hereby made and entered into by and between
________________ ("Employee") and TRUSTMARK INSURANCE AGENCY, INC., a
Mississippi corporation ("Corporation").
WHEREAS, Employee is an Employee of Dan Bottrell Agency, Inc. ("Bottrell")
and desires to be an employee of the Corporation; and
WHEREAS, the Corporation is engaged in a personal service business
involving confidential information and personal relationships with insureds, the
success of which business is in large part due to the exclusive retention of
confidential information and continuation of such personal relationships with
insureds, and Employee will have access to certain books, records, documents and
customer information of Bottrell which merged with TIA (hereinafter, TIA and
Bottrell shall be collectively referred to as "Corporation"), as well as
information concerning its trade secrets, business methods and procedures and
other materials and matters which are the property of the Corporation and which
enable the Corporation to compete successfully in its business; and
WHEREAS, as an express condition of Corporation's acquisition of Bottrell
and continued employment of Employee by Corporation, both of which are to the
benefit of "Employee", Corporation has requested that Employee enter, and
Employee has agreed to enter, into this Confidentiality, Nonpiracy and
Nonsolicitation Agreement.
NOW, THEREFORE, for and in consideration of the premises, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in further consideration of the future compensation to be paid
to Employee, Employee agrees that he will treat all materials, and matter
reflecting or relating to Corporation's business as confidential information and
he will not disclose, divulge, copy or transmit such information in any way to
any person outside of Corporation's employ during or after Employee's employment
by Corporation. Employee agrees that the confidential information includes,
without limitation, the Corporation's accounting books and records, contracts to
which Corporation is a party, tax returns, customer account information,
customer lists, policy expiration information, employee handbook and procedures,
billing information, customer names, computer software and data stored in any
computer or on any computer disk or on tape or by any other means relating to
the Corporation's business operations, data and information about or relating to
the Corporation's customers, insurance policies and related documents, surety
bonds and related documents, customer files and other information reflecting or
relating to Corporation's business.
In the event of termination of Employee's employment or relationship
with Corporation for any reason, Employee agrees to return all confidential
information as herein described to Corporation and agrees that he will not,
under any circumstances, retain, disclose, divulge, copy, transmit or use in any
way this information memorized, printed, written or otherwise acquired
A-41
<PAGE> 82
concerning active or inactive accounts of the Corporation, its method of
operation, business accounts or names of policy holders or other information.
Employee understands that all business and customer accounts shall be and remain
the property of Corporation and that he shall have no vested interest or right
in any such business or customer accounts. Employee further agrees that he will
not, directly or indirectly, make use of any such information concerning
Corporation's business for his own benefit, or the benefit of any other person,
firm or entity or divulge or disclose such information to any other person, firm
or entity.
Employee further agrees that for a period of twenty-four (24) months
from the date of termination of the employment or relationship of Employee with
Corporation for any reason he will not, directly or indirectly:
(1) Contact any Corporation customer, policy holder, insured or
other person for the purpose of inducing or attempting to
induce such customer, policy holder, surety account, insured
or other person to cancel, lapse or fail to renew an insurance
policy, bond or other contract issued through Corporation;
(2) Induce or attempt to induce any agent or employee of
Corporation to terminate employment with the Corporation or to
solicit or sell life, health or accident, property, casualty
or other insurance or fidelity or surety bonds for any other
entity;
(3) Call on, solicit, attempt to obtain, accept, or in any way
transact insurance or bond business with any of the customers
of Corporation having a policy or bond issued through
Corporation, nor, directly or indirectly, aid or assist any
other person or entity in the solicitation of such customer,
nor shall he serve as an insurance advisor, consultant or risk
manager for any such insured or customer; or
(4) Take any other action which shall be directly or indirectly
competitive with Corporation with respect to customers of
Corporation at the time of Employee's termination of his
employment or other relationship with Corporation.
Employee and Corporation agree that:
(1) The remedy at law for any breach of the provisions of this
Agreement is inadequate;
(2) Corporation will be irreparably damaged in the event this
Agreement is not specifically enforced; and
(3) Corporation shall be entitled to injunctive relief against any
breach or threatened breach of any provision of this Agreement
in addition to damages and other remedies that may be
available at law or in equity.
A-42
<PAGE> 83
Employee specifically agrees that an injunction may be issued requiring
Employee to comply with the prohibitions contained in this Agreement. Employee
further agrees that any remedy provided by this Agreement shall be cumulative
and non-exclusive, and shall be in addition to any other remedy which
Corporation may have at law or in equity. Specifically, the granting of
injunctive relief shall not preclude the recovery of damages arising or
resulting from the breach of this Agreement.
Employee and Corporation agree that in the event Employee shall violate
any prohibition contained in this Agreement and/or shall procure, obtain, accept
or in any manner transact insurance business directly or indirectly, with any
Corporation customer, policy holder, insured or other person holding or having
held a policy or bond issued through Corporation as agent (collectively a
"customer") during the twenty-four (24) month period in which such activity is
prohibited under this Agreement then, in that event, Employee shall pay unto
Corporation an amount equal to one hundred fifty percent (150%) of the average
annual commissions payable with respect to all policies and bonds issued to or
for the benefit of such customer through Corporation as agent, such average to
be determined based on commissions payable for (i) the calendar year in which
Employee first violates the prohibitions contained in this Agreement (the
"Violation Year") and (ii) the calendar year preceding the Violation Year.
Provided, however, that where no commissions shall have been payable in the
calendar year preceding the Violation Year then the amount payable shall be one
hundred fifty percent (150 %) of commissions payable in the Violation Year, and
vice versa where no commissions shall have been payable in the Violation Year.
Such commissions are to be determined on an annualized basis, and all
commissions payable with respect to policies and bonds issued to or for the
benefit of such customer shall be taken into account, without regard to whom
such commissions shall be paid or payable. Employee's payment to Corporation
shall be made in cash at the time the customer of Corporation is issued any
policy or bond or made the beneficiary of any policy or bond in violation of
this Agreement. The monetary damages provided for in this paragraph shall be
available in addition to all other remedies available under this Agreement and
all other remedies available at law or in equity.
The invalidity, illegality or unenforceability of any particular
provision of this Agreement shall not affect the other provisions. If any Court
is called upon to construe the provisions of this Agreement and such Court finds
any particular provision to be invalid, illegal or unenforceable as written
then, in that event, such provision may be judicially modified so as to
effectuate the intentions of the parties as closely as possible or if such
provision cannot be judicially modified then it shall be deemed to be omitted
and, in either case, all other provisions of this Agreement shall remain in full
force and effect and shall be enforceable in accordance with their terms.
This Agreement shall be effective when fully executed and shall remain
in full force and effect through December 31 of the calendar year in which it
was executed and shall continue in force from year to year thereafter so long as
Employee is employed by or associated with Corporation or until this Agreement
is replaced and superseded by a subsequent agreement. This Agreement shall not
be construed to create an employment contract whereby Employee is guaranteed
employment for any specified period of time or to in any way alter the rights of
Corporation as the employer of Employee.
A-43
<PAGE> 84
WITNESS THE SIGNATURES of the parties this the ____ day of
_______________, 1999.
TRUSTMARK INSURANCE AGENCY, INC.
By:
-----------------------------------------------
Title:
---------------------------------------------
ATTEST:
- ---------------------------
EMPLOYEE:
By:
------------------------------------------------
WITNESS TO THE SIGNATURE
OF EMPLOYEE:
- ---------------------------
A-44
<PAGE> 85
Exhibit J
Form of Confidentiality Agreement
A-45
<PAGE> 86
CONFIDENTIALITY AGREEMENT
Trustmark Insurance Agency, Inc., the successor by merger with Dan
Bottrell Agency, Inc. (hereinafter referred to as the "Agency"), is engaged in a
personal service business involving confidential information and personal
relationships with insureds, the success of which business is in large part due
to exclusive retention of confidential information and continuation of such
personal relationships with insureds, and the undersigned agent or employee
(hereinafter referred to as the "Employee") will have access to certain books,
records, and customer lists of Agency, as well as information concerning its
trade secrets, business methods and procedures and other materials and matters
which are the property of the Agency and which enable the Agency to compete
successfully in its business; and
Employee agrees that he will treat all materials, books, records, and
customer lists, trade secrets, business methods and procedures and other
materials and matters relating to Agency's business as confidential information
entrusted to him solely for his use as an employee of the Agency, and he will
not divulge, copy, facsimile or otherwise reproduce such information in any way
to persons outside of Agency's employ during or after Employee's employment.
In the event of termination of Employee's employment or relationship
with Agency for any reason, Employee agrees to return all customer lists, office
procedures, educational materials, and other items to Agency and agrees that he
will not, under any circumstances, retain, divulge, copy, facsimile or use in
any way this information memorized, printed, written or otherwise acquired
concerning active or inactive accounts of Agency, its methods of operation,
business accounts or names of policy holders or other information. Employee
understands that all business and policies shall be and remain the property of
Agency and that he shall have no vested interest or right in any such business,
policy or policies. Employee further agrees that he will not, directly or
indirectly, make use of any such information concerning Agency's business for
his own benefit, or the benefit of anyone else, nor divulge such information to
anyone.
Employee further agrees that for a period of twelve (12) months from
the date of termination of the employment or relationship of Employee with
Agency for any reason, he will not, directly or indirectly:
(1) Contact any Agency policy owner, insured or other person for
the purpose of inducing or attempting to induce such policy
owner, insured or other person to cancel, lapse or fail to
renew an insurance policy or other contract issued through
Agency;
(2) Induce or attempt to induce any agent or employee of Agency to
terminate employment with Agency or to solicit or sell life,
health or accident, property, casualty or other insurance for
any other person or entity;
(3) Call on, solicit, attempt to obtain, accept, or in any way
transact insurance business from any of the customers of
Agency having a policy issued through Agency, nor, directly or
indirectly, aid or assist any other person or entity in the
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<PAGE> 87
solicitation of such customer, nor shall he serve as an
insurance advisor, consultant or risk manager for any such
insured or customer; and
(4) Take any other action which shall be directly or indirectly
competitive with Agency with respect to customers of Agency at
the time of termination of the employment or other
relationship with Agency of the Employee.
DATE:
----------------------------------------
EMPLOYEE:
-------------------------------------
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<PAGE> 88
ESCROW AGREEMENT
This ESCROW AGREEMENT (THE "AGREEMENT") dated as of ______________,
1999, is made by and among TRUSTMARK INSURANCE AGENCY, INC., a Mississippi
corporation ("TIA"), and the individuals set forth on the signature pages
hereto, (EACH, A "SHAREHOLDER"), and TRUSTMARK NATIONAL BANK, a national banking
association (THE "ESCROW AGENT").
RECITALS
A. TIA and Dan Bottrell Agency, Inc., a Mississippi, corporation
("Bottrell") have entered into that certain Merger Agreement
dated as of February 4, 1999 ("Merger Agreement"), pursuant to
which Bottrell will be merged with and into TIA (the
"Merger").
B. Because of the difficulty in valuing the Bottrell shares and
the fact that the agreed upon value of those shares is
premised upon the prospects for future growth and the
continued employment of the Shareholder after the consummation
of the Merger, pursuant to Section 8.8 of the Merger
Agreement, the closing of the Merger is conditioned on the
Shareholder's deposit of twenty percent (20%) of the shares of
Trustmark Corporation common stock (the "Shares") to which the
Shareholder is entitled pursuant to the Merger into escrow to
be held and applied pursuant to this Agreement.
C. Shareholder is willing and desires to enter the escrow
arrangement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT OF ESCROW AGENT. TIA and Shareholder do hereby
appoint and designate Escrow Agent as escrow agent for the
purposes set forth herein, and Escrow Agent does hereby accept
such appointment under the terms and conditions set forth
herein.
2. ESTABLISHMENT OF THE ESCROW. Simultaneously with the execution
and delivery hereof, Shareholder shall deposit the number of
shares of Trustmark Corporation, a Mississippi corporation,
set forth opposite such Shareholder's name on Exhibit A hereto
into an account (the "Escrow Account") designated by Escrow
Agent. Escrow Agent shall maintain the Escrow Account and the
Shares deposited therein (the "Escrow Shares") in separate
subaccounts for each Shareholder, subject to the terms and
conditions of this Agreement. Upon receipt and deposit in the
Escrow Account of the Escrow Shares, Escrow Agent shall
immediately notify TIA and Shareholder in writing that such
Shares have been received, deposited into the Escrow Account,
and held by Escrow Agent pursuant to this Agreement.
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<PAGE> 89
3. ESCROW SHARES. Subject to Section 3(b)(i), the Escrow Shares
will be held in escrow until December 31, 2001, and released
on such date, in full or in part, in accordance with the
following terms and conditions:
(a) Performance Conditions.
(i) Each year, up to one-third (1/3) of the
Escrow Shares will be deemed "vested" based
on the ratio of TIA's net commission
revenues arising out of its commercial
operating division ("TIA's Commercial
Revenues") to the following performance
thresholds: $7.5 million in calendar year
1999, $8.4 million in calendar year 2000 and
$9.4 million in calendar year 2001. For
purposes of this Agreement, the term
"Commercial Revenues" shall include
property, casualty, surety and for so long
as the Bottrell division of TIA is
responsible for such personal lines of
insurance, life and health insurance. In the
event personal lines of insurance, life and
health insurance are ever removed from the
Bottrell division of TIA, TIA and
Shareholder do hereby agree to adjust the
performance thresholds set forth in this
Section 3(a)(i) accordingly.
(ii) In the event that one hundred percent (100%)
of the eligible Escrow Shares are not earned
and vested in a particular calendar year,
the Escrow Shares which were not vested will
become vested, in whole or in part, at the
end of each of the next succeeding calendar
years through 2001 by the percentage equal
to (1) the amount of TIA's Commercial
Revenues in each succeeding calendar year in
excess of the performance threshold for such
year, divided by (2) the shortfall in TIA's
Commercial Revenues for the preceding year.
For example, if TIA's Commercial Revenues
are $7.0 million in year one, the vesting
percentage is 7.0/7.5 (or 93.3333%) for year
one. To earn any of the unvested Escrow
Shares, TIA's Commercial Revenues for the
second year would have to exceed $8.4
million. If TIA's Commercial Revenues for
the second year of operations were $8.75
million, then seventy percent
($350,000/$500,000) of the unvested Escrow
Shares would be earned and become vested,
and the remaining unvested Escrow Shares
could be earned and become vested in year
three if the performance threshold for that
year is exceeded.
(iii) In the event that TIA's Commercial Revenues
exceed the performance threshold for a
particular calendar year, Shareholder shall
be permitted to carryover and apply such
overages to the next succeeding performance
threshold in an amount not to exceed an
aggregate of $500,000 for that particular
year.
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(b) Warranty Conditions.
(i) As provided in the Merger Agreement, all
representations, warranties and covenants by
the Company shall survive the effective date
of the Merger for two (2) years. In the
event of a material breach by the Company of
any representations, warranties or covenants
contained in the Merger Agreement, the
number of shares to which all Shareholders
would otherwise be entitled at the end of
the escrow period shall be reduced by a
number of Shares equal to the amount of
damages resulting from such breach or
breaches divided by the market price value
of a share of Trustmark Corporation stock on
the date of the Merger, rounded up to the
next higher whole number. Provided,
Trustmark's recovery for such breach shall
not exceed the value of the Escrow Shares
and shall otherwise be nonrecourse to the
Shareholder. Each Shareholder will be
responsible only for its prorata portion of
any liabilities under this Agreement. For
purposes of this Escrow Agreement, a breach
of any representation, warranty, or covenant
contained in the Merger Agreement shall be
"material" if separately or in the aggregate
with any other such breach, results in a
cost, loss, detriment or obligation to TIA
in excess of $50,000. Escrow Agent shall be
entitled to withhold disbursements of the
Escrow Shares, and this Escrow Agreement
shall continue until such time as any claim
asserted hereunder is fully, finally and
completely resolved.
(ii) If at any time during the term of this
Agreement, Delphi Information Systems, Inc.
(a) announces that it will discontinue
before December 31, 2001 or (b) actually
discontinues before December 31, 2001
supporting the Delphi Legacy Software System
presently used by Bottrell, then TIA and
Shareholders agree that the cost and expense
of replacing, converting or upgrading the
Delphi Legacy Software System shall be
shared equally; provided, however, the
aggregate cost to all Shareholders shall not
exceed $125,000. In the event this paragraph
3 (b)(ii) becomes applicable, the number of
Escrow Shares that have vested to
Shareholders shall, subject to the $125,000
ceiling, be reduced by the number of Escrow
Shares, calculated on the basis of the value
of a share of Trustmark Corporation stock on
the date of the Merger, rounded up to the
next higher whole number, that represents
one-half the value necessary to offset the
cost and expense of replacing the Delphi
Legacy Software System as of the date that
Delphi Information Systems, Inc. either (a)
announces that it will discontinue before
December 31, 2001 or (b) actually
discontinues before December 31, 2001
support for the Delphi Legacy Software
System.
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(c) Employment Conditions. In the event a Shareholder (a)
voluntarily terminates his employment with TIA or (b)
is terminated by TIA for just cause during the term
of this Agreement, then such terminated Shareholder
shall forfeit all vested and unvested Escrow Shares.
(d) Death or Disability. In the event of the death or
disability of Shareholder during the term of this
Agreement, then upon the expiration of this
Agreement, such disabled Shareholder or the deceased
Shareholder's estate, as the case may be, shall be
entitled to receive the number of Escrow Shares that
vested during the escrow period, notwithstanding the
death or disability of such Shareholder, provided the
Shareholder was employed by TIA on the date of death
or disability.
(e) Annual Accounting. Annually, TIA shall provide
Shareholder a written accounting of TIA's Commercial
Revenues during the period, together with an itemized
calculation setting forth the number of Escrow Shares
that vested to the Shareholder during the preceding
year. The final accounting shall also set forth the
number of Escrow Shares, if any, that shall be
returned to Trustmark.
(f) Ownership of Escrow Shares. The Escrow Shares will be
owned by the Shareholder. As such, the Shareholder
will be entitled to exercise all voting rights
associated with the Escrow Shares and to receive all
dividends payable thereon throughout the term of this
Agreement. For purposes of Federal and other taxes
based on income, Shareholder will report all income,
if any, that is earned on, or derived from, the
Escrow Shares in the taxable year or years in which
such income is properly includible and will pay any
taxes attributable thereto. Notwithstanding the
foregoing, each Shareholder hereby grants to TIA and
Escrow Agent a security interest in the Escrow Shares
to secure TIA's and Escrow Agent's rights hereunder.
(g) Change of Control. In the event of a merger,
consolidation, or other business combination in a
transaction where Trustmark Corporation is being
acquired or the acquisition of a majority of the
outstanding shares of common stock or acquisition of
a majority of the assets of Trustmark Corporation;
then the performance thresholds solely for the
calendar years 2000 and 2001 set forth in Section
3(a) herein shall be adjusted to the following
performance thresholds: $8.0 million for the calendar
year 2000 and $9 million for the calendar year 2001
if the change of control occurs in calendar years
1999 or 2000 and $9.0 million for the calendar year
2001 if the change of control occurs in calendar year
2001.
4. DISBURSEMENT OF THE ESCROW SHARES. Escrow Agent shall retain
control over the Escrow Shares and shall not disburse any
Escrow Shares unless and until it receives either (i) a
written notice (a "Joint Disbursement Notice") jointly
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executed by TIA and Shareholder instructing it to make such
disbursement or other written instrument signed by TIA and
Shareholder, except in the event of the death of disability of
a Shareholder in which case the signature of all of the
remaining Shareholders will be sufficient, or (ii) a final and
non-appealable judgment, decree or order of a court of
competent jurisdiction, whereupon Escrow Agent shall promptly
deliver the Escrow Shares specified in such Joint Disbursement
Notice, other written instrument or order in accordance with
the instructions therein.
5. ESCROW AGENT'S UNDERTAKINGS AND LIMITATION OF LIABILITY.
(A) Escrow Agent undertakes to perform only such duties
as are expressly set forth herein. It is understood
and agreed that the duties of the Escrow Agent are
purely ministerial in nature. Escrow Agent shall not
have any liability under, nor duty to inquire into
the terms and provisions of, any agreement or
instructions other than as set forth in this
Agreement (whether or not the Escrow Agent has
knowledge thereof).
(B) Escrow Agent may rely and shall be protected in
acting or refraining from acting upon any written
notice, instruction or request furnished to it and
reasonably believed by it to be genuine and to have
been executed and presented by the proper party or
parties as provided pursuant to this Agreement.
Escrow Agent shall be under no duty to inquire into
or investigate the validity, accuracy or content of
any such document. Escrow Agent shall have no duty to
solicit any payments that may be due to it hereunder.
(C) Escrow Agent shall not be liable for any action taken
or omitted by it in good faith. Escrow Agent may
consult with counsel of its choice and shall have
full and complete authorization and protection for
any action taken or omitted by it hereunder in good
faith and in accordance with the opinion of such
counsel.
(D) Escrow Agent may resign and be discharged from its
duties or obligations hereunder by giving notice in
writing of such resignation specifying a date when
such resignation shall take effect; provided that no
resignation by Escrow Agent shall be effective until
a bank of comparable standing designated by TIA, or
by Escrow Agent if TIA has not designated a
replacement escrow agent within five (5) business
days after the date of Escrow Agent's notice of
resignation, has agreed to serve as escrow agent in
accordance with the terms of this Agreement, and
provided further that from the date of said
resignation until the delivery of the Escrow Shares
to the successor escrow agent, Escrow Agent's sole
duty hereunder shall be to retain and hold the Escrow
Shares.
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<PAGE> 93
(E) Escrow Agent shall not be responsible for the
performance of TIA or Shareholder under this Escrow
Agreement or any other agreement.
(F) Escrow Agent shall not assume any responsibility or
liability for the completeness, correctness or
accuracy of any transactions between TIA and
Shareholder or for the sufficiency of the Escrow
Shares in connection therewith.
6. COMPLETENESS OF ESCROW AGENT COMPENSATION. Escrow Agent agrees
to serve as Escrow Agent without compensation, however TIA and
Shareholder hereby agree that each party will pay or reimburse
Escrow Agent upon receipt of a written request from Escrow
Agent (including relevant supporting documentation) for
one-half of all reasonable out-of-pocket expenses,
disbursements and advances, including reasonable attorneys
fees, incurred or made by it in connection with the
performance or termination of this Agreement. In the event
Escrow Agent resigns from its duties hereunder, TIA and
Shareholder shall each be responsible for one- half of the
fees due and payable to any successor escrow agent designated
hereunder.
7. INDEMNIFICATION. TIA and Shareholder agree jointly and
severally to indemnify Escrow Agent for, and to hold it
harmless against, any loss, cost, damage, liability or expense
arising out of or in connection with this Agreement and the
carrying out of its duties hereunder, including, without
limitation, costs of investigation and the reasonable costs
and expenses of defending itself against any claim or
liability, except in those cases where Escrow Agent has been
guilty of gross negligence or willful misconduct.
Notwithstanding any provision of this Agreement to the
contrary, Escrow Agent shall not be liable for any special,
indirect or consequential loss or damage of any kind
whatsoever (including, but not limited to, lost profits), even
if Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action. The
provisions of this Section 7 shall survive the termination of
this Agreement.
8. CONFLICT WITH TERMS OF AGREEMENT. In the event that Escrow
Agent receives instructions, claims or demands from TIA or
Shareholder that, in its opinion, conflict with any provision
of this Agreement, or is otherwise uncertain of its rights and
duties hereunder, it shall without liability of any kind be
entitled to refrain from taking any action, and its sole
obligation in such instances shall be to keep safely the
Escrow Shares until it shall be directed otherwise in writing
by all of the other parties hereto or by a final and
non-appealable judgment, decree or order of a court of
competent jurisdiction. Escrow Agent may deposit the Escrow
Shares into a court of competent jurisdiction and upon such
deposit, Escrow Agent shall be relieved of any further
liability or responsibility with respect thereto.
A-53
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9. TERMINATION. This Agreement shall be terminated (a) upon
disbursement or release of all of the Escrow Shares by Escrow
Agent, (b) by written consent signed by all parties, except in
the event of the death or disability of a Shareholder, in
which case the signature of all of the remaining Shareholders
will be sufficient; (c) by Escrow Agent, pursuant to Section
6(D) hereof; (d) by TIA and Shareholder upon written notice to
Escrow Agent; or (e) by payment of the Escrow Shares into a
court of competent jurisdiction in accordance with Section 4
hereof. This Agreement shall not be otherwise terminated.
10. NOTICES.
(A) All notices and communications hereunder shall be in
writing and shall be deemed to have been given (i)
when delivered if delivered in person, (ii) the next
business day after being sent via a nationally
recognized overnight courier service or telecopier,
provided that the notifying party receives electronic
confirmation of the notified party's receipt of the
telecopied notice, or (iii) upon receipt if sent by
certified or registered mail, postage prepaid and
return receipt requested, to the appropriate party at
the address specified below:
If to Escrow Agent:
Trustmark National Bank
248 East Capitol Street (zip 39201)
Post Office Box 291
Jackson, Mississippi 39205
Attention: Gerard R. Host
If to TIA:
Trustmark Insurance Agency, Inc.
Attention: Richard G. Hickson
1675 Highway 80 East (39208)
Post Office Box 22822
Flowood, Mississippi 39225-2822
With a copy to:
Granville Tate, Jr.
Brunini, Grantham, Grower & Hewes, PLLC
1400 Trustmark Building (39201)
Post Office Drawer 119
Jackson, Mississippi 39205-0119
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<PAGE> 95
If to Shareholder:
at the address designated
on Exhibit A hereto
With a copy to:
Don B. Cannada, Esq.
Butler, Snow, O'Mara, Stevens
& Cannada, PLLC
Post Office Box 22567
Suite 1700
Deposit Guaranty Plaza
210 East Capitol Street
Jackson, MS 39225-2567
or at such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested. In the event
that Escrow Agent, in its sole discretion, determines that an emergency exists,
Escrow Agent may use such other means of communicating with Shareholder and/or
TIA as Escrow Agent reasonably deems advisable.
(B) All notices sent by Escrow Agent to TIA shall be
copied to Shareholder and all notices sent by Escrow
Agent to Shareholder shall be copied to TIA. All
notices sent by Shareholder to Escrow Agent shall be
copied to TIA and all notices sent by TIA to Escrow
Agent shall be copied to Shareholder. In each case,
all copied notices shall be sent to the addresses
described in Section 10(A) above and delivered in the
same manner as the notice.
11. WAIVER OR AMENDMENT. The provisions of this Agreement may be
waived, altered, amended or supplemented, in whole or in part,
only by a writing signed by all of the parties hereto, except
in the event of the death or disability of a Shareholder in
which case the signature of all of the remaining Shareholders
will be sufficient.
12. ASSIGNMENT. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their
respective successors and assigns. Neither this Agreement nor
any right or interest hereunder may be assigned in whole or in
part by any party without the prior consent of the other
parties.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
14. MERGER OR CONSOLIDATION OF ESCROW AGENT. Any corporation into
which Escrow Agent in its individual capacity may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
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<PAGE> 96
consolidation to which Escrow Agent in its individual capacity
shall be a party, or any corporation to which substantially
all of the corporate trust business of Escrow Agent in its
individual capacity may be transferred, shall be Escrow Agent
under this Agreement without further act.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
Mississippi, without regard to its policies and principles of
conflicts or laws, and any action brought hereunder shall be
brought in the courts of the State of Mississippi, located in
the County of Hinds. Each party hereto irrevocably waives any
objection on the grounds of venue, forum non conveniens or any
similar grounds and irrevocably consents to the jurisdiction
of said courts and the service of process from such courts by
mail or by any other means permitted by applicable law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
TIA:
TRUSTMARK INSURANCE AGENCY, INC.
By:
------------------------------------------
Richard G. Hickson, its Chairman of the
Board and Chief Executive Officer
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<PAGE> 97
SHAREHOLDER:
----------------------------------------------
William E. French
----------------------------------------------
Jerry G. Veazey, Jr.
----------------------------------------------
S. Lyle Bates, Jr.
----------------------------------------------
Thomas Lee Joyner, III
----------------------------------------------
Eric H. Donahoe
----------------------------------------------
Jimmy A. Armstrong
----------------------------------------------
Douglas M. Ferris
----------------------------------------------
Robert L. Elliott
----------------------------------------------
Jerry Eugene Horner, Jr.
----------------------------------------------
C. Ray Dixon, Jr.
----------------------------------------------
Guy M. Parker, Jr.
----------------------------------------------
Jason J. Young
A-57
<PAGE> 98
ESCROW AGENT:
TRUSTMARK NATIONAL BANK
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
A-58
<PAGE> 99
EXHIBIT A
<TABLE>
<CAPTION>
Number of Shares
Shareholder Deposited into Escrow % Total
- ----------- --------------------- -------
<S> <C> <C>
William E. French 42.8%
Jerry G. Veazey, Jr. 16.1%
S. Lyle Bates, Jr. 8.9%
Thomas Lee Joyner, III 7.1%
Eric H. Donahoe 7.1%
Jimmy A. Armstrong 3.6%
Douglas M. Ferris 3.6%
Robert L. Elliott 3.6%
Jerry Eugene Horner, Jr. 2.5%
C. Ray Dixon, Jr. 2.2%
Guy M. Parker, Jr. 1.8%
Jason J. Young 0.7%
------
TOTALS 100.0%
-------- ======
========
</TABLE>
A-59
<PAGE> 100
ANNEX B
B-1
<PAGE> 101
Article 13 of the Mississippi Business Corporation Act - Dissenters' Rights
ARTICLE 13. DISSENTERS' RIGHTS
SUBARTICLE A. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SECTION 79-4-13.01. DEFINITIONS.
In this article:
(1) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under Section 79-4-13.02 and who exercises that right when and in the
manner required by Sections 79-4-13.20 through 79-4-13.28.
(3) "Fair value," with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at a rate that is fair and equitable
under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares to the extent of
the rights granted by a nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
SECTION 79-4-13.02. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and obtain payment of the fair
value of his shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by Section
79-4-11.03 or the articles of incorporation and the shareholder is
entitled to vote on the merger, or (ii) if the corporation is a
subsidiary that is merged with its parent under Section 79-4-11.04;
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(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale
or exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one (1) year after the date of
sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters or abolishes a right in respect of
redemption, including a provision respecting a sinking fund
for the redemption or repurchase, of the shares;
(iii) Alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities;
(iv) Excludes or limits the right of the shares to vote on
any matter, or to cumulate votes, other than a limitation by
dilution through issuance of shares or other securities with
similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to
a fraction of a share if the fraction share so created is to
be acquired for cash under Section 79-4-6.04; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting shareholders are
entitled to dissent and obtain payment for their shares.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a corporation to
dissent and obtain payment for his shares as a result of an amendment of the
articles of incorporation exclusively for the purpose of either (i) making such
corporation subject to application of the Mississippi Control Share Act, or (ii)
making such act inapplicable to a control share acquisition of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his shares under
this article may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the shareholder or
the corporation.
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SECTION 79-4-13.03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
SECTION 79-4-13.20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Section 79-4-13.02 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in Section 79-4-13.22.
SECTION 79-4-13.21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) must deliver to the corporation before
the vote is taken written notice of his intent to demand payment for his shares
if the proposed action is effectuated, and (2) must not vote his shares in favor
of the proposed action.
(b) A shareholder who does not satisfy the requirement of subsection (a) is not
entitled to payment for his shares under this article.
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SECTION 79-4-13.22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10) days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial
ownership of the shares before that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30) nor more that
sixty (60) days after the date the subsection (a) notice is delivered;
and
(5) Be accompanied by a copy of this article.
SECTION 79-4-13.23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in Section 79-4-13.22 must
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice pursuant to
Section 79-4-13.22(b)(3), and deposit his certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits his shares under subsection
(a) retains all other rights of a shareholder until these rights are cancelled
or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share certificates
where required, each by the date set in the dissenters' notice, is not entitled
to payment for his shares under this article.
SECTION 79-4-13.24. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from the
date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Section 79-4-13.26.
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(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
SECTION 79-4-13.25. PAYMENT.
(a) Except as provided in Section 79-4-13.27, as soon as the proposed corporate
action is taken, or upon receipt of a payment demand, the corporation shall pay
each dissenter who complied with Section 79-4-13.23 the amount the corporation
estimates to be the fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenters' right to demand payment under
Section 79-4-13.28; and
(5) A copy of this article.
SECTION 79-4-13.27. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by Section 79-4-13.25
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under subsection
(a), after taking the proposed corporate action, it shall estimate the fair
value of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated and a
statement of the dissenter's right to demand payment under Section 79-4-13.28.
SECTION 79-4-13.28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due, and demand payment of his
estimate (less any payment
B-6
<PAGE> 106
under Section 79-4-13.25), or reject the corporation's offer under Section
79-4-13.27 and demand payment of the fair value of his shares and interest due,
if:
(1) The dissenter believes that the amount paid under Section
79-4-13.25 or offered under Section 79-4-13.27 is less than the fair
value of his shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section 79-4-13.25
within sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within sixty (60) days
after the date set for demanding payment.
(b) A dissenter waives his right to demand payment under this section unless he
notifies the corporation of his demand in writing under subsection (a) within
thirty (30) days after the corporation made or offered payment for his shares.
SECTION 79-4-13.30. COURT ACTION.
(a) If a demand for payment under Section 79-4-13.28 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the 60-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the chancery court of the
county where a corporation's principal office (or, if none in this state, its
registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters (whether or not residents of this
state) whose demands remain unsettled parties to the proceeding as in an action
against their shares and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
B-7
<PAGE> 107
(e) Each dissenter made a party to the proceeding is entitled to judgment (1)
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation, or (2) for the fair
value, plus accrued interest, of his after-acquired shares for which the
corporation elected to withhold payment under Section 79-4-13.27.
SECTION 79-4-13.31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Section 79-4-13.30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 79-4-13.20 through 79-4-13.28; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to the rights provided by this article.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefitted.
B-8
<PAGE> 108
ANNEX C
Bottrell Financial Statements
C-1
<PAGE> 109
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Independent Auditors' Report C-3
Consolidated Balance Sheets as of September 30, 1998 (unaudited)
and December 31, 1997 and 1996 C-4
Consolidated Statements of Earnings for the nine month periods ended
September 30, 1998 and 1997 (unaudited) and the
years ended December 31, 1997 and 1996 C-5
Consolidated Statements of Stockholders' Equity for the nine month period
ended September 30, 1998 (unaudited) and
the years ended December 31, 1997 and 1996 C-6
Consolidated Statements of Cash Flows for the nine month periods ended
September 30, 1998 and 1997 (unaudited) and the years
ended December 31, 1997 and 1996 C-7
Notes to Consolidated Financial Statements C-8
</TABLE>
C-2
<PAGE> 110
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Dan Bottrell Agency, Inc.:
We have audited the consolidated balance sheets of Dan Bottrell Agency, Inc. and
subsidiary as of December 31, 1997 and 1996 and the related consolidated
statements of earnings, stockholders' equity and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Agency'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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dan Bottrell Agency,
Inc. and subsidiary at December 31, 1997 and 1996 and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Jackson, Mississippi
January 23, 1998, except for
note 8 which is as of
January 28, 1999
C-3
<PAGE> 111
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1998 and December 31, 1997 and 1996
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
--------------- -------------------------------
Assets 1998 1997 1996
--------------- ------------ ------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 5,185,623 3,922,903 2,659,702
Trade accounts receivable, less allowance for doubtful
receivables of $192,000, $115,000 and $145,000 3,778,514 3,166,937 3,260,837
Income taxes receivable 20,466 240,166 --
Deferred income taxes 78,000 63,000 76,000
Other current assets 62,955 119,570 69,833
------------ ---------- ----------
Total current assets 9,125,558 7,512,576 6,066,372
------------ ---------- ----------
Investments:
Corporate stock available for sale 257,395 360,335 202,842
Cash surrender value of life insurance 630,307 563,236 429,889
------------ ---------- ----------
Total investments 887,702 923,571 632,731
------------ ---------- ----------
Property and equipment, at cost 918,279 884,830 911,684
Less accumulated depreciation 798,298 803,022 812,027
------------ ---------- ----------
Net property and equipment 119,981 81,808 99,657
------------ ---------- ----------
Deferred income taxes 87,000 34,000 106,000
Intangible assets, net of accumulated amortization
of $671,073, $611,311 and $501,115 80,402 140,165 250,361
------------ ---------- ----------
Total assets $ 10,300,643 8,692,120 7,155,121
============ ========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable to insurance companies $ 3,659,780 3,223,504 2,743,913
Accrued expenses and other current liabilities 1,985,549 1,357,864 1,456,436
Income taxes payable -- -- 9,057
Current installments of long-term debt 9,077 175,454 353,654
Accrual for self-funded health insurance 49,228 49,228 49,228
------------ ---------- ----------
Total current liabilities 5,703,634 4,806,050 4,612,288
------------ ---------- ----------
Long-term debt, excluding current installments -- -- 165,733
Stockholders' equity:
Common stock of $1 par value. Authorized 1,000,000
shares; issued 28,010, 28,010 and 26,910 28,010 28,010 26,910
Additional paid-in capital 2,006,656 2,006,656 1,835,370
Retained earnings 2,693,069 1,917,965 556,071
Stock purchase notes receivable (250,938) (263,227) (141,382)
Accumulated other comprehensive income, net of
deferred taxes of $73,000, $118,000 and $60,000 120,212 196,666 100,131
------------ ---------- ----------
Net stockholders' equity 4,597,009 3,886,070 2,377,100
------------ ---------- ----------
Total liabilities and stockholders' equity $ 10,300,643 8,692,120 7,155,121
============ ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
C-4
<PAGE> 112
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Consolidated Statements of Earnings
For the Nine Month Periods Ended September 30, 1998 and 1997
and the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
------------------------------ --------------------------------
1998 1997 1997 1996
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Insurance commission income, net $ 5,877,686 6,307,468 7,916,581 7,260,840
Selling, general and administrative expenses:
Compensation and benefits 3,777,868 3,430,821 4,681,005 4,463,962
Office occupancy and office supplies 367,886 350,179 464,824 467,920
Travel, meals and entertainment 265,412 244,775 319,673 267,485
Amortization of intangible assets 59,762 83,897 110,196 157,048
Advertising and public relations 26,521 59,481 81,841 72,712
Dues, licenses and fees 36,197 38,510 62,287 50,606
Bad debts 66,945 24,808 45,831 108,738
Professional fees 47,684 40,209 52,936 38,018
Other 136,933 72,750 76,129 130,602
----------- ----------- ----------- -----------
4,785,208 4,345,430 5,894,722 5,757,091
----------- ----------- ----------- -----------
Operating income 1,092,478 1,962,038 2,021,859 1,503,749
----------- ----------- ----------- -----------
Other income (expense):
Interest, net 166,971 105,803 188,391 144,689
Other 9,715 (2,491) (1,356) 16,474
----------- ----------- ----------- -----------
176,686 103,312 187,035 161,163
----------- ----------- ----------- -----------
Earnings before income taxes 1,269,164 2,065,350 2,208,894 1,664,912
Income tax expense 494,060 772,000 847,000 651,400
----------- ----------- ----------- -----------
Net earnings $ 775,104 1,293,350 1,361,894 1,013,512
=========== =========== =========== ===========
Basic per share data:
Net earnings available to common
shareholders $ 27.67 47.94 50.46 38.40
=========== =========== =========== ===========
Weighted average shares outstanding 28,010 26,977 26,988 26,395
=========== =========== =========== ===========
Diluted per share data:
Net earnings available to common
shareholders $ 27.67 46.27 48.71 37.20
=========== =========== =========== ===========
Weighted average shares outstanding 28,010 27,953 27,958 27,243
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
C-5
<PAGE> 113
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For the Nine Month Period Ended September 30, 1998 and the
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Stock Accumulated
Additional purchase other Net
Common paid-in Retained notes comprehensive stockholders'
stock capital earnings receivable income equity
--------- ----------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Audited:
Balance at December 31, 1995 $ 26,310 1,747,340 (457,441) (63,104) -- 1,253,105
Sale of 600 shares of common stock 600 88,030 -- -- -- 88,630
Receivables from stockholders, net of
collections of $7,852 -- -- -- (78,278) -- (78,278)
Unrealized gain on corporate stock, net
of deferred taxes of $60,000 -- -- -- -- 100,131 100,131
Net earnings -- -- 1,013,512 -- -- 1,013,512
-------- --------- ---------- -------- -------- ----------
Balance at December 31, 1996 26,910 1,835,370 556,071 (141,382) 100,131 2,377,100
Sale of 1,100 shares of common stock 1,100 171,286 -- -- -- 172,386
Receivables from stockholders, net of
collections of $50,541 -- -- -- (121,845) -- (121,845)
Unrealized gain on corporate stock, net
of deferred taxes of $58,000 -- -- -- -- 96,535 96,535
Net earnings -- -- 1,361,894 -- -- 1,361,894
-------- --------- ---------- -------- -------- ----------
Balance at December 31, 1997 28,010 2,006,656 1,917,965 (263,227) 196,666 3,886,070
Unaudited:
Collections from stockholders -- -- -- 12,289 -- 12,289
Unrealized loss on corporate stock, net
of deferred taxes of $45,000 -- -- -- -- (76,454) (76,454)
Net earnings -- -- 775,104 -- -- 775,104
-------- --------- ---------- -------- -------- ----------
Balance at September 30, 1998 $ 28,010 2,006,656 2,693,069 (250,938) 120,212 4,597,009
======== ========= ========== ======== ======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
C-6
<PAGE> 114
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Nine Month Periods Ended September 30, 1998 and 1997
and the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
(Unaudited)
September 30 December 31
------------------------------ ------------------------------
1998 1997 1997 1996
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 775,104 1,293,350 1,361,894 1,013,512
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 83,747 114,935 145,681 196,974
Loss on disposal of property and equipment -- 495 495 1,163
Compensation expense for transfer of assets
to employees -- -- 6,000 --
Provision for bad debts 66,945 24,808 45,831 108,738
Deferred income taxes (23,000) (1,000) 27,000 (13,000)
Officers' life insurance 24,814 (18,279) (38,293) 18,572
Income recognized on receipt of stock (18,514) (2,958) (2,958) --
Changes in operating assets and liabilities:
Trade accounts receivable (678,522) (748,890) 48,069 (482,699)
Income taxes receivable 219,700 -- (240,166) --
Other current assets 56,615 27,791 (49,737) 5,795
Accounts payable to insurance companies 436,276 2,002,357 479,591 (588,392)
Accrued expenses and other current
liabilities 627,685 189,679 (98,572) 537,521
Income taxes payable -- 66,295 (9,057) (178,416)
Accrual for self-funded health insurance -- -- -- 12,822
----------- ---------- ---------- ----------
Net cash provided by
operating activities 1,570,850 2,948,583 1,675,778 632,590
----------- ---------- ---------- ----------
Cash flows from investing activities:
Increase in cash surrender value of life insurance (91,885) (81,732) (95,054) (133,542)
Additions to property, plant and equipment (62,157) (12,815) (24,131) (43,916)
Purchase of corporate stock available for sale -- -- -- (20,836)
Proceeds from sale of equipment -- -- -- 75
----------- ---------- ---------- ----------
Net cash used by investing activities (154,042) (94,547) (119,185) (198,219)
----------- ---------- ---------- ----------
Cash flows from financing activities:
Principal repayments of long-term debt (166,377) (276,942) (343,933) (432,035)
Sale of common stock 12,289 31,380 50,541 10,352
----------- ---------- ---------- ----------
Net cash used by financing activities (154,088) (245,562) (293,392) (421,683)
----------- ---------- ---------- ----------
Net increase in cash and cash equivalents 1,262,720 2,608,474 1,263,201 12,688
Cash and cash equivalents at beginning of period 3,922,903 2,659,702 2,659,702 2,647,014
----------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 5,185,623 5,268,176 3,922,903 2,659,702
=========== ========== ========== ==========
Supplemental disclosures:
Income taxes paid $ 396,000 697,188 1,055,650 851,928
=========== ========== ========== ==========
Interest paid $ 3,791 16,906 20,068 50,824
=========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
C-7
<PAGE> 115
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION AND ORGANIZATION
The consolidated financial statements include the accounts of Dan
Bottrell Agency, Inc. (the Agency) and its wholly-owned
subsidiary, American Rural Housing Insurance Agency, Inc.
(American). All significant intercompany transactions and balances
have been eliminated in consolidation. The Agency and American are
independent agencies which provide insurance to their customers
through major insurance companies.
(b) INVESTMENT IN CORPORATE STOCK
In 1996, the Agency adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Under this
Statement, the Agency's investment in corporate stock is
classified as available for sale and is reported at fair value
with unrealized gains and losses excluded from earnings and
reported as a separate component of stockholders' equity, net of
related deferred income taxes.
(c) AMORTIZATION
Goodwill and organizational costs are amortized over five years
using the straight-line method. Covenants not-to-compete are
amortized over the original terms of the agreements on a
straight-line basis. Insurance renewal rights are amortized using
the sum-of-the-months digit method over the estimated useful
lives.
(d) DEPRECIATION
Depreciation is provided over the estimated useful lives of the
respective assets using accelerated methods.
(e) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized as
income or expense in the period that includes the enactment date.
C-8
<PAGE> 116
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(f) BUSINESS AND CREDIT CONCENTRATIONS
The Agency's trade receivables are primarily concentrated with
construction and other companies and individuals. The Agency
performs on-going credit evaluations of its customers and
generally does not require collateral on trade receivables. The
Agency believes that trade receivables are well diversified,
thereby reducing potential credit risk, and that an adequate
allowance is maintained for any uncollectible trade receivables.
At December 31, 1997 and 1996, the Agency did not have a
significant concentration of premiums written or accounts
receivable with any single customer.
(g) CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Agency considers
all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
(h) NET EARNINGS PER SHARE
Basic net earnings per share is based on net earnings available to
common shareholders divided by the weighted average number of
shares outstanding during each year. Diluted net earnings per
share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised
or converted into common stock or resulted in the issuance of
common stock that then shared in the Agency's earnings. The
dilutive effect of securities and contracts potentially
convertible to common stock is calculated using the treasury stock
method.
(i) USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires that management
make estimates and assumptions affecting the reported amounts of
assets, liabilities, revenues and expenses, as well as disclosures
regarding contingent assets and liabilities. Actual results could
differ from those estimates.
(j) NEW ACCOUNTING PRONOUNCEMENT (UNAUDITED)
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income," which establishes
standards for reporting comprehensive income. SFAS No. 130 defines
comprehensive income as all changes in equity of an enterprise
during a period except those resulting from stockholder
transactions. Components of comprehensive income are required to
be reported in a financial statement that is displayed with the
same prominence as existing financial statements. The Agency
adopted this standard during 1998.
C-9
<PAGE> 117
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Following is a comparison of comprehensive income for the nine
months ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
--------- ----------
<S> <C> <C>
Net income $ 775,104 1,293,350
Other comprehensive income:
Unrealized loss on corporate stock available for
sale, net of tax (76,454) (36,663)
--------- ----------
Comprehensive income $ 698,650 1,256,687
========= ==========
</TABLE>
(k) RECLASSIFICATIONS
Certain 1996 amounts have been reclassified to conform with the
1997 presentation.
(2) INTERIM UNAUDITED FINANCIAL INFORMATION
The accompanying interim unaudited financial information for the nine
month periods ended September 30, 1998 and 1997 has been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments and
eliminations, consisting only of normal recurring adjustments, necessary
to present fairly the results of the Agency's operations and cash flows
for the nine month periods ended September 30, 1998 and 1997 have been
included. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
(3) PROPERTY AND EQUIPMENT
A summary of property and equipment follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1997 1996
--------- ---------
<S> <C> <C>
Leasehold improvements $ 119,557 119,557
Furniture and equipment 754,590 730,458
Automobiles 10,683 61,669
--------- ---------
$ 884,830 911,684
========= =========
</TABLE>
C-10
<PAGE> 118
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(4) LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
1997 1996
---------- -----------
<S> <C> <C>
Note payable to Aetna Casualty and Surety Company,
repaid in May 1997 $ -- 81,813
Note payable to Aetna Casualty and Surety Company, collateralized by
property and equipment and accounts receivable, payable in monthly
installments of $11,346 through July 1998, interest at a variable
rate 77,856 205,160
Note payable to Aetna Casualty and Surety Company, collateralized by
property and equipment and accounts receivable, payable in monthly
installments of $9,116 through October 1998, interest at a variable
rate 89,006 190,794
Note payable to commercial bank, collateralized by all property and
equipment, payable in monthly installments of $2,922 through March
1998, interest at 7.75% 8,592 41,620
--------- --------
175,454 519,387
Less current installments of long-term debt 175,454 353,654
--------- --------
Long-term debt, excluding current
installments $ -- 165,733
========= ========
</TABLE>
In May 1990, July 1991 and October 1993, the Agency borrowed $1,150,000,
$785,470 and $483,000 from Aetna Casualty and Surety Company (Aetna) for
the purchase of 14,000, 7,000 and 10,000 shares, respectively, of the
Agency's common stock. The interest rate on these notes varies depending
on the premiums written by the Agency with Aetna and the losses incurred
on such policies. Under terms of the debt agreements, the Agency is
required to meet certain financial covenants relating to current ratio,
fixed charges, debt to equity and accounts receivable to accounts
payable. At December 31, 1997, the Agency was in compliance with the
financial covenants.
(5) INCOME TAXES
Total income tax expense was allocated as follows:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Earnings before income taxes $ 847,000 651,400
Stockholders' equity, for unrealized gain on corporate
stock, including impact of adopting SFAS No. 115 58,000 60,000
--------- ---------
$ 905,000 711,400
========= =========
</TABLE>
C-11
<PAGE> 119
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------ ------------------------------------
Current Deferred Total Current Deferred Total
------- -------- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Federal $ 712,000 24,000 736,000 576,700 (11,700) 565,000
State 108,000 3,000 111,000 87,700 (1,300) 86,400
---------- ------ ------- ------- ------- -------
$ 820,000 27,000 847,000 664,400 (13,000) 651,400
========== ====== ======= ======= ======= =======
</TABLE>
Actual tax expense differs from the "expected" tax expense using the
Federal corporate rate of 34% as follows:
<TABLE>
<CAPTION>
1997 1996
---------- -------
<S> <C> <C>
Computed "expected" tax expense $ 751,024 566,070
Increase (reduction) resulting from:
State income taxes, net of Federal
income tax benefit 73,483 56,996
Officers' life insurance (13,020) 6,314
Meals and entertainment expense 14,530 13,394
Other 20,983 8,626
---------- -------
$ 847,000 651,400
========== =======
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
1997 1996
--------- ------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful receivables $ 43,053 54,085
Depreciation of property and equipment 20,162 23,731
Covenants not-to-compete 30,449 59,431
Purchased renewal rights 98,740 80,893
Group health plan 18,429 18,362
Other 4,167 5,498
--------- ------
Total gross deferred tax assets 215,000 242,000
Deferred tax liability
Unrealized gain on corporate stock 118,000 60,000
--------- ------
Net deferred tax asset $ 97,000 182,000
========= =======
</TABLE>
Based upon the level of historical taxable income and anticipated future
taxable income over the periods in which the deferred tax assets are
deductible, management believes it is more likely than not the Agency
will realize the benefits of these deductible differences and that a
valuation allowance is not necessary at December 31, 1997.
C-12
<PAGE> 120
DAN BOTTRELL AGENCY, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(6) LEASES
The Agency leases office space under a noncancelable operating lease
expiring in 2002. Rent expense for 1997 and 1996 was $224,588 and
$207,984, respectively. Management expects that in the normal course of
business this lease will be renewed or replaced by a similar lease.
Future minimum payments under this lease at December 31, 1997 follow:
<TABLE>
<S> <C>
1998 $ 218,038
1999 218,038
2000 218,038
2001 218,038
2002 146,025
------------
$ 1,022,177
============
</TABLE>
(7) PROFIT SHARING AND STOCK OPTION PLANS
The Agency has a profit sharing plan covering substantially all of its
employees. The amount of the annual contribution to the profit sharing
plan is determined by the Board of Directors and is not more than the
maximum allowable under the Internal Revenue Code. Profit sharing expense
was $401,083 and $391,513 in 1997 and 1996, respectively.
The Agency has an incentive stock option plan for key employees. Options
were exercised for 1,000 shares ($138.18 per share) during 1997 and for
500 shares ($123.11 per share) during 1996. No options were granted
during 1996 or 1997 and no options were outstanding at December 31, 1997.
(8) SUBSEQUENT EVENT
On January 28, 1999, the Agency's Board of Directors approved a
resolution to enter into an agreement and plan of merger (the Merger
Agreement) with Trustmark Corporation, a Mississippi corporation, and its
wholly-owned subsidiary, Trustmark Insurance Agency, which is expected to
close in the first quarter of 1999. In accordance with the terms of the
Merger Agreement, each of the issued and outstanding shares of the
Agency's common stock will be converted into a number of shares of
Trustmark Corporation newly issued common stock as determined pursuant to
the Merger Agreement. Consummation of the merger is subject to the
approval of the shareholders of the Agency and the Mississippi Department
of Insurance.
C-13
<PAGE> 121
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Article VI, Section 2 of the bylaws of Trustmark
Corporation, the corporation may indemnify or reimburse the expenses of any
person against all reasonable expenses incurred in connection with any
litigation or proceeding in which such person may have been involved because he
is or was a director (including honorary or advisory directors) officer or
employee of the corporation or of any other firm, corporation or organization
which he served in any such capacity at the request of the corporation.
Provided, such person shall have no right to indemnification or reimbursement in
relation to any matters in which he is finally adjudged to have been guilty of
or liable for negligence or willful misconduct in the performance of his duties;
and, provided further, that no person shall be so indemnified or reimbursed in
relation to any administrative proceeding or action instituted by any
appropriate bank regulatory agency which proceeding or action results in a final
order assessing civil monetary penalties or requiring affirmative action by an
individual or individuals in the form of payments to the corporation.
In addition, pursuant to the Mississippi Business Corporation Act
("MBCA"), directors and officers are entitled to indemnification in certain
events as summarized below:
The MBCA provides for indemnification of directors and officers in
certain events. Directors and officers are entitled to indemnification if they
are wholly successful, on the merits or otherwise, in the defense of any
proceeding to which such person is a party because he was a director or officer
of the corporation against reasonable expenses incurred by him in connection
with the proceeding. A corporation may indemnify an individual who is a party to
a proceeding because he is or was a director or officer against a liability
incurred in the proceeding if the person conducted himself in good faith and he
reasonably believed, in the case of conduct in his official capacity, that his
conduct was in the best interests of the corporation, and, in all other cases,
that his conduct was not opposed to the best interests of the corporation, and,
in the case of any criminal proceeding, that he had no reasonable cause to
believe his conduct was unlawful or, he engaged in conduct for which broader
indemnification has been made permissible or obligatory under a provision of the
corporation's articles of incorporation. Unless ordered by a court, a
corporation may not indemnify a director or officer in connection with a
proceeding by or in the right of the corporation, except for reasonable expenses
incurred in connection with the proceeding if it is determined that the director
has met the relevant standard of conduct specified above, or, in connection with
any proceeding with respect to conduct for which he was adjudged liable on the
basis that he received a financial benefit to which he was not entitled, whether
or not involving action in his official capacity.
A corporation may, additionally, before final disposition of a
proceeding, advance funds to pay for or reimburse the reasonable expenses
incurred by the director or officer who is a party to a proceeding under certain
circumstances.
<PAGE> 122
ITEM 21.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<S> <C> <C>
2. Merger Agreement and Escrow Agreement **
3. Articles of Incorporation of
Trustmark Corporation *
3.1 Bylaws of Trustmark Corporation *
5. Proposed Opinion of Brunini,
Grantham, Grower, & Hewes, PLLC Exhibit 5
8. Proposed Tax Opinion of Brunini,
Grantham, Grower, & Hewes, PLLC Exhibit 8
10. Material Contracts *
13. Annual Report to Security Holders *
13.1 Quarterly Report to Security Holders *
21. Subsidiaries of Registrant *
23.1 Consent of Arthur Andersen LLP Exhibit 23.1
23.2 Consent of KPMG Peat Marwick LLP Exhibit 23.2
23.3 Consent of Brunini, Grantham,
Grower, & Hewes, PLLC Exhibit 23.3
27 Financial Data Schedule *
99 Form of Letter to Shareholders, Notice of Special Exhibit 99
Meeting and Proxy to be used
in connection with the Bottrell Special Meeting
</TABLE>
(*) Included in documents incorporated by reference
(**) Shown as Annex A
<PAGE> 123
ITEM 22. UNDERTAKINGS
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 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.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy Statement pursuant
to Items 4, 10(b), 11 or 13 of the Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
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.
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 becomes effective.
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.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, 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 (Section 230.415 of this chapter),
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
<PAGE> 124
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (Section 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Trustmark pursuant to Trustmark's bylaws, or otherwise, Trustmark 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 Trustmark of expenses incurred or
paid by a director, officer or controlling person of Trustmark 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,
Trustmark will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE> 125
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of Jackson, State of
Mississippi on February 18, 1999.
TRUSTMARK CORPORATION
BY: /s/ RICHARD G. HICKSON
-------------------------------------
RICHARD G. HICKSON, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GERARD R. HOST Principal Financial & February 18, 1999
- ------------------------------- Accounting Officer of
Gerard R. Host Trustmark
Chairman ___________, 1999
- -------------------------------
Frank R. Day
/s/ RICHARD G. HICKSON Director & Chief February 18, 1999
- ------------------------------- Executive Officer
Richard G. Hickson
Director ___________, 1999
- -------------------------------
J. Kelly Allgood
/s/ REUBEN V. ANDERSON Director February 18, 1999
- -------------------------------
Reuben V. Anderson
/s/ JOHN L. BLACK, JR. Director February 18, 1999
- -------------------------------
John L. Black, Jr.
Director ___________, 1999
- -------------------------------
Robert P. Cooke, III
Director ___________, 1999
- -------------------------------
William C. Deviney, Jr.
/s/ D. G. FOUNTAIN, JR. Director February 18, 1999
- -------------------------------
D. G. Fountain, Jr.
</TABLE>
<PAGE> 126
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GERALD GARNETT Director FEBRUARY 18, 1999
- -------------------------------
Gerald Garnett
/s/ MATTHEW L. HOLLEMAN, III Director FEBRUARY 18, 1999
- -------------------------------
Matthew L. Holleman, III
Director _________, 1999
- -------------------------------
Fred A. Jones
/s/ T. H. KENDALL, III Director FEBRUARY 18, 1999
- -------------------------------
T. H. Kendall, III
Director _________, 1999
- -------------------------------
Larry L. Lambiotte
Director _________, 1999
- -------------------------------
Robert V. Massengill
/s/ DONALD E. MEINERS Director FEBRUARY 18, 1999
- -------------------------------
Donald E. Meiners
/s/ WILLIAM NEVILLE, III Director FEBRUARY 18, 1999
- -------------------------------
William Neville, III
/s/ RICHARD H. PUCKETT Director FEBRUARY 18, 1999
- -------------------------------
Richard H. Puckett
Director _________, 1999
- -------------------------------
William K. Ray
Director _________, 1999
- -------------------------------
Charles W. Renfrow
/s/ HARRY M. WALKER Director FEBRUARY 18, 1999
- -------------------------------
Harry M. Walker
</TABLE>
<PAGE> 127
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LEROY G. WALKER, JR. Director FEBRUARY 18, 1999
- -------------------------------
LeRoy G. Walker, Jr.
Director _________, 1999
- -------------------------------
Paul H. Watson, Jr.
Director _________, 1999
- -------------------------------
John C. Wheeless, Jr.
Director _________, 1999
- -------------------------------
Kenneth W. Williams
/s/ ALLEN WOOD Director FEBRUARY 18, 1999
- -------------------------------
Allen Wood
</TABLE>
<PAGE> 128
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
--- -----------
<S> <C> <C>
2. Merger Agreement and Escrow Agreement **
3. Articles of Incorporation of
Trustmark Corporation *
3.1 Bylaws of Trustmark Corporation *
5. Proposed Opinion of Brunini,
Grantham, Grower, & Hewes, PLLC Exhibit 5
8. Proposed Tax Opinion of Brunini,
Grantham, Grower, & Hewes, PLLC Exhibit 8
10. Material Contracts *
13. Annual Report to Security Holders *
13.1 Quarterly Report to Security Holders *
21. Subsidiaries of Registrant *
23.1 Consent of Arthur Andersen LLP Exhibit 23.1
23.2 Consent of KPMG Peat Marwick LLP Exhibit 23.2
23.3 Consent of Brunini, Grantham,
Grower, & Hewes, PLLC Exhibit 23.3
27 Financial Data Schedule *
99 Form of Letter to Shareholders, Notice of Special Exhibit 99
Meeting and Proxy to be used
in connection with the Bottrell Special Meeting
</TABLE>
(*) Included in documents incorporated by reference
(**) Shown as Annex A
<PAGE> 1
Exhibit 5
[BRUNINI, GRANTHAM, GROWER & HEWES, PLLC LETTERHEAD]
______________, 1999
Board of Directors and Shareholders
Dan Bottrell Agency, Inc.
We have acted as counsel to Trustmark Corporation, a Mississippi
corporation ("Trustmark"), Trustmark National Bank, a national banking
association ("Trustmark Bank") and Trustmark Insurance Agency, Inc. ("TIA") in
connection with a Merger Agreement dated as of February 4, 1999 (the "Merger
Agreement") by and among Trustmark, Trustmark Bank, TIA and Dan Bottrell Agency,
Inc. ("Bottrell"), a Mississippi corporation. In connection with this
representation, we have examined the charter and bylaws of Trustmark Bank, the
articles of incorporation and bylaws of Trustmark and TIA, the corporate
proceedings of Trustmark, Trustmark Bank and TIA in connection with the
transactions contemplated by the Merger Agreement and such other documents and
instruments as we deemed necessary to render the following opinions.
Based upon the foregoing, we are of the opinion that:
1. Trustmark Bank is duly organized, validly existing and in good
standing as a national banking association.
2. Trustmark and TIA are duly organized, validly existing and in
good standing as a business corporations under the laws of the
State of Mississippi.
3. The shares of Trustmark's common stock to be issued as a
result of the Merger will be, upon execution and delivery,
duly authorized, validly issued, fully paid and nonassessable
shares of the common stock of Trustmark and are registered on
Form S-4 pursuant to the Securities Act of 1933.
4. The Merger Agreement is valid, binding and enforceable against
Trustmark, Trustmark Bank and TIA in accordance with its
terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization and other laws of general
application relating to or affecting the enforcement of
creditors' rights generally.
5. The Merger has been duly authorized by all requisite corporate
and shareholder action of Trustmark, Trustmark Bank and TIA.
<PAGE> 2
6. To the best of our knowledge, following diligent inquiry, but
without independent verification of facts certified by
appropriate officials of Trustmark, Trustmark Bank and TIA and
relied upon by us, none of Trustmark, Trustmark Bank or TIA
has made any material misrepresentation, materially breached
any warranty or materially breached any covenant or condition
in the Merger Agreement or in any document, statement, list or
schedule referred to therein.
Very truly yours,
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
Robert D. Drinkwater
<PAGE> 1
Exhibit 8
[BRUNINI, GRANTHAM, GROWER & HEWES, PLLC LETTERHEAD]
______________, 1999
Board of Directors
Trustmark Corporation
248 East Capitol Street, Suite 300
Jackson, Mississippi 39201
Board of Directors and Shareholders
Dan Bottrell Agency, Inc.
Re: Merger Agreement by and among Trustmark Corporation, Trustmark
National Bank, Trustmark Insurance Agency, Inc. and Dan
Bottrell Agency, Inc.
Gentlemen:
We have acted as counsel to Trustmark Corporation, a Mississippi
corporation and registered bank holding company ("Trustmark"), Trustmark
National Bank, a national banking association ("Trustmark Bank") and Trustmark
Insurance Agency, Inc. ("TIA"), in connection with the proposed Merger (the
"Merger") of Dan Bottrell Agency, Inc. ("Bottrell"), a Mississippi corporation,
with TIA under the existing charter of TIA pursuant to the terms of the Merger
Agreement dated as of February 4, 1999 (the "Merger Agreement"), by and among
Trustmark, Trustmark Bank, TIA and Bottrell, each as described in the
Registration Statement on Form S-4 filed by Trustmark with the Securities and
Exchange Commission (the "Registration Statement"). All capitalized terms,
unless otherwise specified, have the meanings assigned to them in the
Registration Statement.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Merger Agreement, (ii) the Registration Statement, and (iii) such other
documents as we have deemed necessary or appropriate in order to enable us to
render the opinions below. In our examination, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such copies. In
rendering the opinions set forth below, we have relied upon certain written
representations and covenants of Trustmark, Trustmark Bank, TIA, Bottrell and
Bottrell's shareholders.
In rendering our opinion, we have considered the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed Treasury Regulations, pertinent judicial authorities, interpretive
rulings of the Internal Revenue Service and such other
<PAGE> 2
authorities as we have considered relevant. The following opinion is based upon
the foregoing authorities as existing on the date of this opinion. In addition,
any change in the facts and assumptions upon which this opinion is based could
modify the conclusions reached herein.
Our opinion covers only the matters expressly set forth herein, and no
opinions should be inferred as to any other matters or as to any other tax
aspects of the above-described transactions that are not specifically addressed.
Based upon and subject to the foregoing, we are of the opinion that the
Merger will, under current law, constitute a tax-free reorganization under
Section 368(a)(1)(c) of the Code. It is further our opinion that Trustmark,
Trustmark Bank, TIA and Bottrell will each be a party to the Merger.
As a tax-free reorganization, the Merger will have the following
Federal income tax consequences for Bottrell and its shareholders and Trustmark,
Trustmark Bank and TIA:
1. No gain or loss will be recognized by the holders of the common
stock of Bottrell as a result of the exchange of such shares for shares of
Trustmark common stock ("Trustmark Common Stock") pursuant to the Merger. Cash
received by any Bottrell shareholder or as a consequence of perfecting
dissenters' rights of appraisal with respect to their Bottrell shares will be
treated as having been received by such shareholders as a distribution in
redemption of his or her stock, subject to the provisions and limitations of
Code Section 302. The payment of cash in lieu of fractional share interests will
be treated as if the shares were distributed as part of the exchange and then
were redeemed by Trustmark. These cash payments will be treated as distributions
in full payment in exchange for the stock redeemed, subject to the provisions
and limitations of Code Section 302.
2. The tax basis of the shares of Trustmark Common Stock received by
each shareholder of Bottrell will equal the tax basis of such shareholder's
shares of Bottrell (reduced by any amount allocable to fractional share
interests for which cash is received) exchanged in the Merger.
3. The holding period for the shares of Trustmark Common Stock received
by each shareholder of Bottrell will include the holding period for the shares
of Bottrell exchanged in the Merger.
4. Trustmark, Trustmark Bank and TIA will not recognize gain or loss as
a result of the Merger.
5. Bottrell will not recognize gain or loss as a result of the Merger.
Except as set forth above, we express no opinion as to the tax
consequences to any party, whether Federal, state, local or foreign, of the
Merger, or of any transactions related to the Merger, or contemplated by the
Merger Agreement. This opinion is being furnished only to you in connection with
the Merger and solely for your benefit in connection therewith and may not be
<PAGE> 3
used or relied upon for any other purpose and may not be circulated, quoted or
otherwise referred to for any other purpose without our express written consent.
Very truly yours,
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
Louis G. Fuller
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated January 22, 1998 on the
consolidated financial statements of Trustmark Corporation and to all references
to our Firm included in or made a part of this Registration Statement on Form
S-4.
/s/ Arthur Andersen LLP
------------------------------
ARTHUR ANDERSEN LLP
Jackson, Mississippi,
February 18, 1999.
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report included herein and to the
reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
------------------------------
KPMG Peat Marwick LLP
Jackson, Mississippi
February 19, 1999
<PAGE> 1
Exhibit 23.3
CONSENT OF BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
We hereby consent to the references to this firm under the heading
"Legal Opinions" and "Federal Income Tax Consequences" in the Registration
Statement on Form S-4 of Trustmark Corporation filed in connection with the
proposed Merger of Dan Bottrell Agency, Inc. into Trustmark Insurance Agency,
Inc. and to the filing of our legal (Exhibit 5) and tax (Exhibit 8) opinions as
Exhibits to such Registration Statement.
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
/s/ Robert D. Drinkwater
-------------------------------------------------
Robert D. Drinkwater
Jackson, Mississippi
February 18, 1999
<PAGE> 1
Exhibit 99
DAN BOTTRELL AGENCY, INC.
---------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON __________________, 1999
TO THE SHAREHOLDERS:
Notice is hereby given that a Special Meeting of the shareholders of
Dan Bottrell Agency, Inc. ("Bottrell") will be held at 700 North State Street,
Suite 400, Jackson, Mississippi 39202, on _____________, 1999, at _____ o'clock
__.m., local time, for the purpose of considering and voting on the following
matters, all as more fully described in the accompanying Proxy Statement:
(1) Approval of the Merger Agreement dated February 4,1999, among
Bottrell, Trustmark Corporation, Trustmark National Bank and Trustmark Insurance
Agency, Inc. ("TIA") which provides for the Merger of Bottrell with and into
TIA.
(2) Transaction of such other business as may properly come before the
Special Meeting or any adjournments thereof.
Only those shareholders of record at the close of business on February
2, 1999, shall be entitled to notice of and to vote at the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
<PAGE> 2
DAN BOTTRELL AGENCY, INC.
_____________, 1999
Dear Shareholders:
You are cordially invited to attend a Special Meeting (the "Special
Meeting") of Shareholders of Dan Bottrell Agency, Inc. ("Bottrell"), a
Mississippi corporation, to be held at 700 North State Street, Suite 400,
Jackson, Mississippi 39202 on ____________, 1999, at ______ __.m., local time.
At the Special Meeting, you will be asked to consider and vote upon the
approval of the Merger Agreement dated February 4, 1999, (the "Merger
Agreement"), among Bottrell, Trustmark Corporation ("Trustmark"), Trustmark
National Bank ("Trustmark Bank") and Trustmark Insurance Agency, Inc. ("TIA")
pursuant to which, among other things (a) Bottrell will merge with and into TIA
(the "Merger"), and (b) upon consummation of the Merger each share of Bottrell
will be converted into shares of the common stock of Trustmark.
The number of shares of Trustmark which you will receive for each
Bottrell share will be determined on _____________, 1999. You can obtain that
information by contacting William E. French, Bottrell's President, after that
date.
Unless you exercise your dissenters' rights of appraisal, on the
effective date of the Merger your Bottrell shares will be converted into
Trustmark common shares on a tax-free basis, except to the extent you receive
cash in lieu of fractional shares.
Only those shareholders of record at the close of business on February
2, 1999, will be entitled to notice of and to vote at the Special Meeting.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
The Board believes, based on its own analysis, that the proposed Merger
is in the best interests of Bottrell's shareholders.
Accompanying this letter, you will find a Notice of Special Meeting of
Shareholders, a Proxy Statement relating to the Special Meeting and a Proxy. The
Proxy Statement more fully describes the Merger and includes information about
Bottrell, Trustmark, Trustmark Bank and TIA.
If you wish to vote in favor of the Merger please sign, date and return
the enclosed proxy whether or not you plan to attend the Special Meeting. The
prompt return of your signed proxy will assist Bottrell in minimizing the
expense of soliciting proxies. Your proxy may be revoked at any time prior to
the vote at the Special Meeting by notice to the Secretary of Bottrell, by
execution and delivery of a later dated proxy or by revoking the proxy in person
at the Special Meeting.
Very truly yours,
William E. French, President
<PAGE> 3
PROXY
Dan Bottrell Agency, Inc.
Jackson, Mississippi
SPECIAL MEETING OF STOCKHOLDERS
____________, 1999
The undersigned hereby appoint(s) William E. French or Jerry G. Veazey,
Jr. the true and lawful attorneys-in-fact for the undersigned, with full power
of substitution, to vote as proxies for the undersigned at a Special Meeting of
shareholders of Dan Bottrell Agency, Inc. ("Bottrell") to be held at 700 North
State Street, Suite 400, Jackson, Mississippi 39202, at _____ o'clock __.m.,
local time, on ______________, 1999, and at any and all adjournments thereof,
the number of shares of Bottrell held by the undersigned on February 2, 1999,
(the "Record Date") which the undersigned would be entitled to vote if then
personally present, for the following purposes:
1. Approval of the Merger Agreement which provides for the Merger of
Bottrell with and into Trustmark Insurance Agency, Inc..
[ ] Approve [ ] Disapprove [ ] Abstain
2. In their discretion the proxies are authorized to vote on such other
business as may properly come before the Special Meeting or any adjournments
thereof.
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BOTTRELL, WILL BE VOTED FOR PROPOSAL 1 UNLESS A CONTRARY DIRECTION IS INDICATED,
IN WHICH CASE IT WILL BE VOTED AS DIRECTED. THE PROXIES INTEND TO VOTE ON ANY
OTHER BUSINESS COMING BEFORE THE SPECIAL MEETING PURSUANT TO THE AUTHORITY
GRANTED IN PARAGRAPH 2 IN ACCORDANCE WITH THE DIRECTION OF A MAJORITY OF THE
BOARD OF DIRECTORS OF BOTTRELL.
Your vote is important. Accordingly, even if you plan to attend the
Special Meeting, please date the Proxy and sign your name exactly as it appears
on the stock records of Bottrell and return this Proxy to Bottrell in the
enclosed envelope. When shares are held by joint tenants, both are requested to
sign. This Proxy may be revoked prior to its exercise by following the
procedures set out in the attached Proxy Statement. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
signed as a corporation, please sign full corporate name by authorized officer.
---------------------------------
Signature
---------------------------------
Date
---------------------------------
Signature if held jointly
---------------------------------
Date
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING
THE ENCLOSED ENVELOPE.
