<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
GUARTANTY BANCSHARES HOLDING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
PRELIMINARY COPY
1201 Brashear Ave.
Morgan City, LA 70380
P.O. Box 2208
Morgan City, LA 70381
(504) 384-2813
GUARANTY BANCSHARES HOLDING CORPORATION
Dear Guaranty Bancshares Holding Corporation Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Guaranty Bancshares Holding Corporation ("GBHC") to be held in the Board of
Directors Room located on the second floor of the Guaranty Bank & Trust
Building, 1201 Brashear Avenue, Morgan City, Louisiana, on ___________,
______________, 1997, at 1:00 p.m., local time, notice of which is enclosed.
At the Annual Meeting, you will be asked to consider and vote on a proposal to
approve an Acquisition Agreement entered into by GBHC and Guaranty Bank & Trust
Company of Morgan City ("Guaranty Bank") with MC Bank & Trust Company ("MC
Bank") and MC Bancshares, Inc. ("MC Bancshares") and a related Agreement of
Merger between GBHC and a newly-formed corporate subsidiary of MC Bank ("MC
Subsidiary") and joined in by MC Bancshares and MC Bank (the Acquisition
Agreement and Agreement of Merger being collectively referred to as the
"Agreement"). Pursuant to the Agreement, MC Subsidiary will merge (the
"Merger") with and into GBHC with GBHC becoming a wholly-owned subsidiary of MC
Bank. Upon consummation of the Merger, each outstanding share of GBHC $2.70
Preferred Stock and $0.50 Preferred Stock will be redeemed and will be
converted into the right to receive payment of accrued and unpaid dividends and
the redemption price thereof as described in the Agreement and each outstanding
share of GBHC Class A Common Stock and Class B Common Stock (except for shares
held by common stockholders who perfect their dissenters' rights of appraisal
with respect to their common stock) will be converted into the right to receive
cash in the amount described in the Agreement.
EVEN IF YOU APPROVE THE AGREEMENT BY THE REQUIRED VOTE, BEFORE THE MERGER CAN
TAKE PLACE, REGULATORY APPROVAL (WHICH AS OF THE DATE OF THE PROXY STATEMENT
ACCOMPANYING THIS LETTER HAS NOT YET
<PAGE> 3
BEEN OBTAINED) AND SATISFACTION OF CERTAIN OTHER CONDITIONS IS NECESSARY.
THUS, EVEN IF THE AGREEMENT IS APPROVED AT THE ANNUAL MEETING, THE MERGER MAY
NOT TAKE PLACE FOR SOME TIME (IF AT ALL).
You will also be asked at the Annual Meeting to elect twelve directors who
will hold office until the Merger becomes effective (the "Effective Time"), or,
if the Merger is not consummated, until the next annual meeting of stockholders
of GBHC and until their successors are elected and qualified. If the Agreement
is approved and all other conditions to the Merger are satisfied or waived, at
the Effective Time, the directors elected at the Annual Meeting will cease to
serve and the directors of MC Subsidiary immediately prior to the Effective
Time of the Merger will assume the positions as directors of GBHC.
The accompanying Proxy Statement includes a description of the proposed
Merger, information regarding the nominees for directors of the Board of
Directors, and provides other specific information concerning the Annual
Meeting. Please read these materials carefully.
The Agreement has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of GBHC has agreed to vote those GBHC shares over which such member
has voting authority (other than in a fiduciary capacity) in favor of the
Agreement. Consummation of the Merger is subject to certain conditions in
addition to approval of the Agreement by GBHC stockholders, including approval
of the Merger by various regulatory agencies (which approval has not been
obtained).
Common stockholders of GBHC who perfect their dissenters' rights of appraisal
prior to the proposed Merger and comply with applicable law will be entitled to
receive the fair value of their GBHC common shares in cash, as provided by
applicable law, if the Merger is effected upon approval by less than 80% of the
total voting power of GBHC. The fair cash value of the common shares could be
more or less than the cash consideration that will be paid in exchange for the
common shares as a result of the Merger.
Approval of the Agreement requires the affirmative vote of at least two-thirds
of the voting power present at the Annual Meeting in person or by proxy. Only
holders of common stock of GBHC are entitled to vote on the Agreement and each
share of common stock is entitled to one vote. A copy of these materials is
being provided to all stockholders of GBHC as of the record date set for the
Annual Meeting, even though holders of GBHC Preferred Stock will
<PAGE> 4
not have a vote with respect to their Preferred Stock on the matters to be
addressed at the meeting.
Whether or not you plan to attend the Annual Meeting, you are urged to
complete, sign, and return promptly the enclosed proxy card. If you attend the
Annual Meeting, you may vote in person if you wish, even if you previously have
returned your proxy card. The proposed Merger with MC Bank is a significant
step for GBHC, and your vote on this matter is of great importance. ON BEHALF
OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE MERGER BY
MARKING THE ENCLOSED PROXY CARD "FOR" ITEM ONE.
Sincerely,
Brooks Blakeman
Chairman of the Board
<PAGE> 5
PRELIMINARY COPY
GUARANTY BANCSHARES HOLDING CORPORATION
1201 BRASHEAR AVENUE, MORGAN CITY, LOUISIANA 70380
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ________, ___________, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Guaranty
Bancshares Holding Corporation ("GBHC"), a bank holding company, will be held
in the Board of Directors Room located on the second floor of the Guaranty Bank
& Trust Building, 1201 Brashear Avenue, Morgan City, Louisiana, 70380, on
___________, _____________, 1997, at 1:00 p.m., local time, for the following
purposes:
1. Merger. To consider and vote on the Acquisition Agreement dated as of June
24, 1997 by and between GBHC and Guaranty Bank & Trust Company of Morgan City
("Guaranty Bank") and MC Bank & Trust Company ("MC Bank") and MC Bancshares,
Inc. ("MC Bancshares") and a related Agreement of Merger by and between GBHC
and a newly-formed corporate subsidiary of MC Bank ("MC Subsidiary") (and
joined in by MC Bancshares and MC Bank) (the Acquisition Agreement and the
Agreement of Merger being collectively referred to as the "Agreement") pursuant
to which (i) each issued and outstanding share of common stock of MC Subsidiary
shall be converted into and become one share of common stock of GBHC through
the merger of MC Subsidiary with and into GBHC (the "Merger") and (ii) each
outstanding share of GBHC $2.70 Preferred Stock and $0.50 Preferred Stock will
be redeemed and will be converted into the right to receive accrued and unpaid
dividends and the redemption price thereof as described in the Agreement and
each outstanding share of GBHC Class A Common Stock and Class B Common Stock
(except for shares of common stock held by stockholders who perfect their
dissenters' rights of appraisal with respect to their common stock) will be
converted into the right to receive an amount of cash as described more fully
in the accompanying Proxy Statement and in the Agreement; and
2. Election of Directors. To elect twelve directors who will hold office
until the Merger becomes effective (the "Effective Time"), or, if the Agreement
is not approved by the required vote of the GBHC stockholders or the Merger is
otherwise not consummated, until the next annual meeting of stockholders of
GBHC and until their successors are elected and qualified; and
<PAGE> 6
3. Other Business. To transact such other business as may properly come
before the Annual Meeting.
A copy of this notice and accompanying materials is being sent to each
stockholder of record at the close of business on ___________, 1997. Only
holders of record of common stock on that date are entitled to vote with
respect to their common stock at the Annual Meeting or any adjournment or
postponement thereof.
GBHC stockholders who hold common stock have a right to dissent from the
Merger and obtain payment of the fair value of their shares of common stock in
cash by complying with the applicable provisions of applicable law, which are
attached to the accompanying Proxy Statement as Appendix C. DISSENTING
STOCKHOLDERS WHO COMPLY WITH THE PROCEDURAL REQUIREMENTS OF THE BUSINESS
CORPORATION LAW OF LOUISIANA WILL BE ENTITLED TO RECEIVE PAYMENT OF THE FAIR
CASH VALUE OF THEIR SHARES OF COMMON STOCK IF THE MERGER IS EFFECTED UPON
APPROVAL BY LESS THAN 80% OF THE TOTAL VOTING POWER OF GBHC. ONLY THE HOLDERS
OF COMMON STOCK OF GBHC ARE ENTITLED TO VOTE ON THE AGREEMENT AND EACH SHARE OF
COMMON STOCK SHALL BE ENTITLED TO ONE VOTE.
The Board of Directors of GBHC unanimously recommends that holders of GBHC
Common Stock vote to approve the Agreement.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Annual Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
GBHC an instrument of revocation or a duly executed proxy bearing a later date
or by electing to vote in person at the Annual Meeting.
By Order of the Board of Directors
Paul Ordogne
Secretary
__________, 1997
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Annual Meeting of GBHC Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
The Merger; Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
Reasons for the Merger; Recommendation of GBHC's
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Opinion of GBHC's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Surrender of Stock Certificates and Payment of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii
Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii
Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Selected Consolidated Historical Financial Data
of GBHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv
THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Payments to terminate employment contracts
and retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment banking fees and expenses of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Purchase of directors' and officers' tail policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Loan losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Cash Consideration to be Paid to GBHC's Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
GBHC's reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
MC Bank's reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Opinion of GBHC's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Surrender of GBHC Stock Certificates and Payment of
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
GBHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
MC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Statutory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
INFORMATION ABOUT GBHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Principal Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF GBHC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
CERTAIN LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Compliance with Section 16(a) of the Securities Exchange
Act of 1934 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Annual Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
<PAGE> 9
<TABLE>
<S> <C>
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
GBHC Consolidated Financial Statements for the Quarters Ended June 30, 1997 and
1996
Appendix A Selected Portions of Acquisition Agreement
Appendix B Fairness Opinion of Alex Sheshunoff & Co. Investment Banking
Appendix C Excerpt from Section 131 of the Louisiana Business Corporation Law
<PAGE> 10
PRELIMINARY COPY
GUARANTY BANCSHARES HOLDING CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD _________, _________, 1997
PROXY STATEMENT
This Proxy Statement is furnished to stockholders of Guaranty Bancshares
Holding Corporation ("GBHC"), a bank holding company organized and existing
under the laws of the State of Louisiana in connection with a solicitation of
proxies by the Board of Directors of GBHC (the "Board of Directors" or the
"Board") to be used at the Annual Meeting of stockholders, including any
adjournment or postponement thereof, to be held on __________, _____________,
1997, at 1:00 p.m. in the Board of Directors Room located on the second floor
of the Guaranty Bank & Trust Building, 1201 Brashear Avenue, Morgan City,
Louisiana for the purpose of electing directors and voting on the Acquisition
Agreement, dated as of June 24, 1997, by and between GBHC and its wholly-owned
subsidiary Guaranty Bank & Trust Company of Morgan City ("Guaranty Bank"), on
the one hand, and MC Bancshares, Inc. ("MC Bancshares") and its wholly-owned
subsidiary MC Bank & Trust Company ("MC Bank"), on the other hand, and a
related Agreement of Merger (the Acquisition Agreement and Agreement of Merger
are referred to herein collectively as the "Agreement"), by and between GBHC
and a subsidiary corporation ("MC Subsidiary") recently formed by MC Bank (and
joined in by MC Bancshares and MC Bank). Pursuant to the Agreement, MC
Subsidiary will be merged into GBHC (the "Merger") as described herein. Only
holders of common stock of GBHC will be entitled to vote with respect to their
common stock on the matters to be presented at the Annual Meeting.
When the Merger becomes effective (the "Effective Time"), except as otherwise
described here, each outstanding share of GBHC $2.70 Preferred Stock and $0.50
Preferred Stock will be redeemed and will be converted into the right to
receive accrued and unpaid dividends and the redemption price thereof as
described in the Agreement and each outstanding share of GBHC Class A Common
Stock and Class B Common Stock will be converted into the right to receive an
amount of cash as described in the Agreement. The redemption price of the GBHC
$2.70 Preferred Stock (as stated in the Articles of Incorporation of GBHC) for
redemptions taking place in 1997 is $27.60 per share (for an aggregate
redemption price for all outstanding shares of $2.70 Preferred Stock of
$4,002,028). The Articles set $5.00 per share for the redemption price of the
i
<PAGE> 11
GBHC $0.50 Preferred Stock (for an aggregate redemption price for all
outstanding shares of $0.50 Preferred Stock of $109,500). In addition, at
redemption, all accrued and unpaid dividends on the Preferred Stock must be
paid. At November 30, 1997, the accrued and unpaid dividends on the $2.70
Preferred Stock will be $2,792,648; the accrued and unpaid dividends on the
$0.50 Preferred Stock on that date will be $89,996. A copy of selected portions
of the Agreement is attached to this Proxy Statement as Appendix A.
The price to be paid to holders of Common Stock in the Merger will vary
depending on the timing of the Closing (as time goes by the accrued and unpaid
dividends on the GBHC Preferred Stock will increase and certain other
obligations of GBHC also increase) and the purchase price adjustments.
Management calculates that the purchase price to common shareholders may range
from $1.35 per share (assuming a November 30, 1997 Closing and no purchase
price adjustments) to $0.73 per share (assuming a December 31, 1997 Closing and
purchase price adjustments that cause the purchase price to be reduced to
$7,300,000). If the purchase price is adjusted to below $7,300,000, under
certain circumstances, the Board of GBHC would have the ability to terminate
the Agreement. If the purchase price is adjusted to below $7,300,000, the
Board would intend, to the extent permitted under the Agreement, either to
terminate the Agreement or to resolicit the stockholders with respect to the
Agreement.
As a result of the Merger, GBHC will continue as a subsidiary of MC Bank until
liquidated into MC Bank (which is expected to take place immediately following
the Effective Time of the Merger), at which time the separate existence of GBHC
will cease. Also as a result of the Merger, Guaranty Bank will continue as a
subsidiary of GBHC, which will be a subsidiary of MC Bank, until merged into MC
Bank (which is expected to take place immediately following the Effective Time
of the Merger), at which time the separate existence of Guaranty Bank will
cease.
The above described proxy and this Proxy Statement were mailed on or about
___________, 1997.
The date of this Proxy Statement is __________, 1997.
ii
<PAGE> 12
AVAILABLE INFORMATION
GBHC is subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements, and other information with the Securities and
Exchange Commission (the "SEC"). Copies of such reports, proxy statements, and
other information can be obtained, at prescribed rates, from the SEC by
addressing written requests for such copies to the Public Reference Section at
the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In
addition, such reports, proxy statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE INCLUDED IN THIS PROXY STATEMENT, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY GBHC. THE DELIVERY OF THIS PROXY STATEMENT SHALL UNDER NO
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF GBHC SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by GBHC pursuant to the
Exchange Act are hereby incorporated by reference herein:
1. GBHC's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 filed with the SEC on March 31, 1997 and the 10-K/A filed with the SEC
on April 1, 1997;
2. GBHC's Current Report on Form 8-K dated April 30, 1997 filed with the SEC
on May 2, 1997; and
3. GBHC's Current Report on Form 8-K dated July 2, 1997 and filed with the SEC
on July 2, 1997.
iii
<PAGE> 13
4. GBHC's Quarterly Reports on Form 10-Q for the first and second quarters of
1997 filed with the SEC on May 13, and August 14, 1997, respectively.
GBHC's Annual Report on Form 10-K for the year ended December 31, 1996,
incorporates by reference specific portions of GBHC's Annual Report to
Stockholders for that year (the "GBHC Annual Report to Stockholders"), but does
not incorporate other portions of the Annual Report to Stockholders. Only
those portions of the GBHC Annual Report to Stockholders captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Financial Statements" are incorporated herein. Other portions
of the GBHC Annual Report to Stockholders are not incorporated herein. The
GBHC Annual Report to Stockholders accompanies this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE UPON
REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO) TO EACH PERSON TO
WHOM A COPY OF THIS PROXY STATEMENT HAS BEEN DELIVERED, FROM LEE A. RINGEMAN,
EXECUTIVE VICE PRESIDENT, 1201 BRASHEAR AVENUE, MORGAN CITY, LOUISIANA 70380 OR
P.O. BOX 2208, MORGAN CITY, LOUISIANA 70381, (TELEPHONE (504) 384-2813). IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
___________, 1997.
iv
<PAGE> 14
SUMMARY
The following is a summary of certain information relating to the Annual
Meeting, the Agreement and the proposed Merger, the redemption of GBHC
Preferred Stock and the conversion of GBHC Common Stock into the right to
receive payment of an amount of cash all as described in the Agreement upon
consummation of the Merger, and the election of directors. This summary
contains material information with respect to those matters, but does not
purport to be complete and is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Proxy
Statement. Stockholders are urged to read carefully the entire Proxy
Statement, including the Appendices. As used in this Proxy Statement the terms
"GBHC" and "MC Bank" refer to those entities, respectively, and, where the
context requires, to those entities and their respective parent companies or
subsidiaries.
THE PARTIES
GBHC. GBHC is a bank holding company organized and existing under the laws of
the State of Louisiana, with its principal executive office located in Morgan
City, Louisiana. GBHC operates principally through Guaranty Bank & Trust
Company ("Guaranty Bank"), which is a wholly-owned subsidiary of GBHC and a
Louisiana state-chartered commercial bank and which provides a range of retail
banking services through two full service offices in St. Mary Parish and one
full service office in Lafayette Parish, Louisiana. At June 30, 1997, GBHC had
total consolidated assets of approximately $62.5 million, total consolidated
deposits of approximately $51.1 million, total consolidated net loans of
approximately $36.2 million and total consolidated stockholders' equity of
approximately $5.8 million. GBHC's principal executive office is located at
1201 Brashear Avenue, Morgan City, Louisiana, its mailing address is P.O. Box
2208, Morgan City, Louisiana 70381, and its telephone number at such address is
(504) 384-2813.
MC Bank. MC Bank is a state-chartered bank organized and existing under the
laws of the State of Louisiana and headquartered in Morgan City, Louisiana. MC
Bank's principal executive office is located at 6413 Highway 90 East, Morgan
City, Louisiana, 70381 and its telephone number at such address is (504)
384-2100. Its mailing address is P.O. Box 2000, Morgan City, Louisiana 70381.
MC Bank is a wholly-owned subsidiary of MC Bancshares, Inc. ("MC Bancshares"),
a bank holding company organized and existing under the laws of the State of
Louisiana. MC Bank has four full service banking offices in St. Mary Parish,
Louisiana. At June 30, 1997, MC Bancshares had total consolidated assets of
approximately $108.6
v
<PAGE> 15
million, total consolidated deposits of approximately $92.3 million, total
consolidated loans of approximately $45.9 million, and total consolidated
stockholders' equity of approximately $13.8 million.
Additional information with respect to GBHC and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement. See "Available
Information" and "Documents Incorporated by Reference."
ANNUAL MEETING OF GBHC STOCKHOLDERS
The Annual Meeting will be held at 1:00 p.m. local time, on _________,
____________, 1997, in the Board of Directors Room located on the second floor
of the Guaranty Bank & Trust Building, 1201 Brashear Avenue, Morgan City,
Louisiana, 70380 for the purpose of (i) considering and voting on approval of
the Agreement, (ii) electing directors to hold office until the Merger becomes
effective (the "Effective Time") or in the event the Merger is not approved by
the stockholders or is otherwise not consummated, until the next annual meeting
of stockholders of GBHC and until their successors are elected and qualified
and (iii) transacting such other business as may properly come before the
meeting. See "The Annual Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of GBHC Class A Common Stock and Class B Common Stock
(collectively the "Common Stock" or "Common Shares") at the close of business
on ____________, 1997 (the "Record Date"), will be entitled to vote at the
Annual Meeting. Each share of Class A Common Stock and Class B Common Stock
entitles the holder thereof to vote on all matters presented at the Annual
Meeting, voting together as a single class. Each holder is entitled to one
vote for each share of Common Stock held. The holders of a majority of the
outstanding shares entitled to vote, present in person or represented by proxy,
shall constitute a quorum at the Annual Meeting.
If a quorum is present in person or by proxy, directors will be elected by
plurality vote. The affirmative vote of at least two-thirds of the Common
Shares present or represented by proxy will be required to approve the
Agreement. All other matters will be decided by majority vote of the Common
Shares present, in person or by proxy, at the Annual Meeting. As of the Record
Date, there were 206,524 shares of GBHC Class A Common Stock and 166,901 shares
of GBHC Class B Common Stock issued and outstanding for a total of 373,425
shares of Common Stock issued and outstanding.
vi
<PAGE> 16
The directors and executive officers of GBHC and their affiliates beneficially
owned, as of the Record Date, 157,130 shares (or approximately 42.08% of the
outstanding shares) of GBHC Common Stock. (This includes 33,870 shares held by
the Blakeman Trust over which Mr. Brooks Blakeman shares voting power and
16,556 shares held by the Estate of Murray P. Ordogne of which Mr. Paul
Ordogne is executor and a beneficiary.) Each director and executive officer of
GBHC (and each holder of 5% or more of the Common Stock of GBHC) has agreed to
vote those GBHC shares over which such person has voting authority (other than
in a fiduciary capacity) in favor of the Agreement. The directors and
executive officers of MC Bank and their affiliates beneficially owned, as of
the Record Date, 1,939 shares of GBHC Common Stock. As of that date, neither
GBHC nor MC Bank held any shares of GBHC Common Stock in a fiduciary capacity
for others. See "The Annual Meeting--Record Date; Vote Required."
The Agreement must also be approved by MC Bank as the sole stockholder of MC
Subsidiary.
THE MERGER; CONSIDERATION
The Agreement provides for the acquisition of GBHC by MC Bank pursuant to the
Merger of GBHC with and into a Louisiana business corporation recently formed
by MC Bank as a wholly-owned subsidiary. (Immediately after the Merger, MC
Bank intends to liquidate GBHC into MC Bank and then merge Guaranty Bank into
MC Bank. The result of this is that GBHC and Guaranty Bank will no longer
exist as separate entities.)
At the Effective Time of the Merger, each share of GBHC $2.70 Preferred Stock
then issued and outstanding will be redeemed and converted into the right to
receive an amount of cash equal to $27.60 plus all accrued and unpaid cash
dividends due thereon; each share of GBHC $0.50 Preferred Stock then issued and
outstanding will be redeemed and converted into the right to receive an amount
of cash equal to $5.00 plus all accrued and unpaid cash dividends due thereon;
and each share of GBHC Common Stock then issued and outstanding (except for
shares held by stockholders who perfect their dissenters' rights of appraisal)
will be converted into the right to receive cash in the amount equal to the
quotient of (a) $7,500,000 (subject to certain purchase price adjustments)
minus the total amount due to the holders of all of the issued and outstanding
shares of GBHC $2.70 Preferred Stock and GBHC $0.50 Preferred Stock, divided by
(b) the total number of shares of GBHC Common Stock outstanding at the
Effective Time. See "Description of the Transaction--General" and "Description
of the Transaction--Adjustment of Purchase Price."
vii
<PAGE> 17
The following table sets forth examples of the cash price into which the
Common Stock will be converted assuming (i) an Effective Date of November 30,
1997 and December 31, 1997 (the actual Effective Date will depend on when
approvals are received and other conditions are satisfied or waived; the later
the Effective Date the larger the payment owed with respect to the Preferred
Stock will be and, as a result, the smaller the payment with respect to the
Common Stock will be) and (ii) purchase price adjustments of various levels
(the various matters that may result in purchase price adjustments are
discussed elsewhere in this Proxy Statement and in the Agreement):
CASH CONSIDERATION WITH RESPECT TO COMMON STOCK
<TABLE>
<CAPTION>
Assumed Closing Date
------------------------------------------------------------------------
Assumed 11/30/97 12/31/97
Purchase Price --------- --------
(As Adjusted) Aggregate Per Share Aggregate Per Share
- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$7,500,000 $505,828 $1.35 $471,926 $1.26
$7,450,000 455,828 1.22 421,926 1.13
$7,400,000 405,828 1.09 371,926 1.00
$7,350,000 355,828 0.95 321,926 0.86
$7,300,000 305,828 0.82 271,926 0.73
</TABLE>
The exact Closing Date and the final purchase price (after taking into
account the adjustments required by the Agreement) cannot be finally determined
at this time. The foregoing table is for illustration purposes only. There is
no assurance that the cash consideration that holders of GBHC Common Stock will
receive with respect to their shares of Common Stock will be fixed at any of
the levels shown in the foregoing table.
DISSENTING STOCKHOLDERS
Holders of GBHC Common Stock entitled to vote on approval of the
Agreement have the right to dissent from the Merger and, upon consummation of
the Merger and the satisfaction of certain specified procedures and conditions,
to receive the fair value of such holders' shares of GBHC Common Stock in cash
in accordance with the applicable provisions of the Louisiana Business
viii
<PAGE> 18
Corporation Law (the "Louisiana Act"). Such "fair cash value" could be more or
less than the cash amount being paid for the Common Stock pursuant to the
Merger. The procedures to be followed by dissenting stockholders are
summarized under "Description of the Transaction--Dissenting Stockholders" and
the applicable provisions of the Louisiana Act are reproduced as Appendix C.
REASONS FOR THE MERGER; RECOMMENDATION OF GBHC'S BOARD OF DIRECTORS
GBHC's Board of Directors has unanimously approved the Agreement and
has determined that the Merger is fair to, and in the best interests of, GBHC
and its stockholders. Accordingly, GBHC's Board unanimously recommends that
GBHC's stockholders vote FOR approval of the Agreement. Each member of the
Board of Directors of GBHC has agreed to vote those shares of GBHC Common Stock
over which such member has voting control, other than in a fiduciary capacity,
in favor of the Agreement. In approving the Agreement, GBHC's directors
considered GBHC's financial condition, the financial terms of the Merger, the
likelihood of the Merger being approved by regulatory authorities without undue
conditions or delay, legal advice concerning the proposed Merger, and the
opinion of Alex Sheshunoff & Co. Investment Banking ("Sheshunoff") that, as of
the date of its opinion, the consideration to be received in the Merger was
fair, from a financial point of view, to the stockholders of GBHC. See
"Description of the Transaction--Background of and Reasons for the Merger."
OPINION OF GBHC'S FINANCIAL ADVISOR
Sheshunoff has rendered an opinion to GBHC that, based on and subject
to the procedures, matters, and limitations described in its opinion and such
other matters as it considered relevant, as of the date of its opinion, the
consideration to be received in the Merger was fair, from a financial point of
view, to the stockholders of GBHC. Sheshunoff was selected because of its
experience and expertise in the financial services industry. The opinion of
Sheshunoff is attached as Appendix B to this Proxy Statement. GBHC
stockholders are urged to read the opinion in its entirety for a description of
the procedures followed, matters considered, and limitations on the reviews
undertaken in connection therewith. Sheshunoff's opinion is directed only to
the fairness of the transaction from a financial point of view and does not
constitute a recommendation to any stockholder on how to vote at the Annual
Meeting. See "Description of the Transaction--Opinion of GBHC's Financial
Advisor."
ix
<PAGE> 19
EFFECTIVE TIME
Subject to the conditions described in the Agreement to the
obligations of the parties to effect the Merger, the Effective Time will occur
on the date and at the time specified in a certificate or other written record
issued by the Louisiana Secretary of State. Unless otherwise agreed upon by
GBHC and MC Bank, and subject to the conditions to the obligations of the
parties to effect the Merger, the parties will use their reasonable efforts to
cause the Effective Time to occur on the last day of the month in which the
last of the following events occurs: (i) the effective date (including the
expiration of any applicable waiting period) of the last required consent of
any regulatory authority having authority over approving or exempting the
Merger and (ii) the date on which the Agreement is approved by the requisite
vote of GBHC stockholders. The parties expect that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the fourth quarter of 1997, although there can be no
assurance as to whether or when the Merger will occur. See "Description of the
Transaction--Effective Date of the Merger," "-- Conditions to Consummation of
the Merger," and "--Waiver, Amendment Termination of the Agreement."
SURRENDER OF STOCK CERTIFICATES AND PAYMENT OF CASH
As soon as practicable after the Annual Meeting if the Agreement is
approved by the stockholders, it is anticipated that MC Bank will mail to each
record holder of an outstanding certificate or certificates of GBHC Preferred
Stock or GBHC Common Stock, as applicable, a notice of redemption and/or a
letter of transmittal, together with instructions for the surrender of such
stockholders' certificates representing shares of GBHC Preferred Stock or
Common Stock in exchange for cash. GBHC stockholders should not send in their
stock certificates until they receive the form letter of transmittal and
instructions. GBHC stockholders who cannot locate their certificate(s) will be
given instructions on how they may replace those certificates. See
"Description of the Transaction--Surrender of GBHC Stock Certificates and
Payment of Cash."
REGULATORY APPROVALS AND OTHER CONDITIONS
The transaction (which is designed ultimately to result in the merger
of Guaranty Bank into MC Bank) is subject to approval by the Federal Deposit
Insurance Corporation ("FDIC") and the Commissioner of Financial Institutions
of the State of Louisiana (the "Louisiana Commissioner"). Approval of the
Louisiana Commissioner is also required for MC Bank to capitalize MC
Subsidiary. Applications for the requisite approvals have been filed with
these agencies, each of which has yet to issue its approval. A waiver has been
x
<PAGE> 20
sought from the Board of Governors of the Federal Reserve System (the "Federal
Reserve") requesting that no approval be required from the Federal Reserve in
connection with the Merger or the transaction. The Federal Reserve has
informed MC Bank that if the FDIC approves the transaction under the Bank
Merger Act, no Federal Reserve approval will be required. There can be no
assurance that the approvals of the Louisiana Commissioner and the FDIC will
be given or as to the timing or conditions of such approvals.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of GBHC stockholders, receipt of
opinions of counsel for GBHC and MC Bank and certain other customary
conditions. See "Description of the Transaction--Conditions to Consummation of
the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Time by mutual consent of the Boards of Directors of
GBHC, Guaranty Bank, MC Bank, MC Bancshares and MC Subsidiary or by action of
the Board of Directors of either GBHC or MC Bank under certain circumstances,
including if the Merger is not consummated by December 31, 1997, unless the
failure to consummate by such time is due to certain specific breaches of the
Agreement by the party seeking to terminate. If for any reason the Merger is
not consummated, GBHC will continue to operate as a bank holding company under
the management of the directors elected at the Annual Meeting. See
"Description of the Transaction--Waiver, Amendment, and Termination of the
Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of GBHC's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of GBHC
generally. Those interests relate to, among other things, provisions in the
Agreement regarding indemnification and certain retirement, severance and
employment benefits. Certain officers have contracts that provide for severance
and retirement benefits, which contracts are required by the Agreement to be
terminated. In order to terminate those contracts, the Board of Directors and
the individual officers have agreed that the payments that would be required
under the contracts in the event the individuals were terminated without good
cause following the Merger will be paid to the officers at or prior to the
Closing. If the Closing takes place on November 30, 1997, Mr. Cullom would
receive
xi
<PAGE> 21
$365,247 pursuant to the termination of his retirement agreement and $100,000
pursuant to the termination of his employment contract; Mr. Broussard would
receive $87,552 pursuant to the termination of his retirement agreement and
$99,688 pursuant to the termination of his employment contract; and Mr. Dutreix
and Mr. Ringeman would receive $182,558 and $253,749, respectively, pursuant to
the termination of their retirement agreements. Also as a condition to the
Merger, certain directors have agreed to purchase at the Closing a last out
participation in a specific loan held by Guaranty Bank (in the event the loan
is not moved out of Guaranty Bank prior to Closing). Such a participation
would provide that the director/participants would be paid last (and only after
MC Bank had been paid in full) in the event of a default on the loan. Guaranty
Bank does not expect to move the loan prior to the Closing. See "Description
of the Transaction--Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Merger will constitute a taxable event for shareholders of GBHC.
Subject to the provisions and limitations of Section 302(a) of the Internal
Revenue Code, gain or loss (depending upon the shareholder's basis in the
stock) will be recognized upon the receipt of cash (other than the portion
attributable to accrued dividends) in exchange for GBHC shares. Amounts
attributable to the payment of accrued dividends will be treated as ordinary
income. Because tax consequences of the Merger may vary depending upon the
particular circumstances of each stockholder and other circumstances, each GBHC
stockholder is urged to consult with such holder's own tax advisor to determine
the particular tax consequences to such holder of the Merger (including the
application and effect of state, local and foreign income and other tax laws).
See "Description of the Transaction -- Certain Federal Income Tax Consequences
of the Merger."
MARKET PRICES OF COMMON STOCK
GBHC Common Stock is not traded on any exchange and there is no
established public trading market for the stock. There are no bid or asked
prices available for the Common Stock. There is very limited and sporadic
trading of GBHC Common Stock in its local area and, based on the limited
information available to management, it is believed that such trades have
involved combinations of Common and Preferred Stock. Management does not have
information on the allocation of such purchase prices. See "Information About
GBHC."
xii
<PAGE> 22
PER SHARE DATA
The following table sets forth certain per share data relating to net
income, cash dividends, and book value on an historical basis for GBHC. This
information should be read in conjunction with, and is qualified in its
entirety by, the historical financial statements of GBHC, including the
respective notes thereto. See "Documents Incorporated by Reference" and
"Selected Financial Data."
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net Income (Loss) per Common Share $(0.32) $ 0.20 $ 0.28
Dividends Declared per Common Share 0 0 0
Book Value per Common Share
(Period End) (2.91) (2.71) (2.92)
</TABLE>
As of June 30, 1997, the accrued and unpaid dividends on GBHC's $2.70
Preferred Stock totaled $2,629,665.24 and the accrued and unpaid dividends on
GBHC's $0.50 Preferred Stock totaled $85,437.02 (for a total amount owed in
dividends as of that date with respect to GBHC Preferred Stock of
$2,715,102.26). No dividends can be paid on the Common Shares while there are
arrearages on the Preferred Shares.
SELECTED FINANCIAL DATA
The following table presents certain selected historical financial
information for GBHC. The data should be read in conjunction with the
historical financial statements, related notes, and other financial information
concerning GBHC incorporated by reference or included herein. See "Documents
Incorporated by Reference."
xiii
<PAGE> 23
Selected Consolidated Historical Financial Data of GBHC
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income................... $ 4,644 $ 4,539 $ 4,110 $ 3,871 $ 4,082
Total interest expense.................. 1,997 1,963 1,647 1,491 1,990
Net interest income..................... 2,647 2,576 2,463 2,380 2,092
(Provision) recovery for loan losses -- 100 180 -- (20)
Net interest income after
loan loss provision................... 2,647 2,676 2,643 2,380 2,072
Total noninterest income excluding
security gains (losses).............. 283 343 364 408 325
Security gains (losses)................. -- -- -- 37 19
Total noninterest expense............... 2,496 2,279 2,213 2,236 2,275
Income tax expense...................... 150 263 286 184 34
Change to accounting principle ......... -- -- -- 674 --
Extraordinary item ..................... -- -- -- -- 490
Net Income.............................. 284 477 508 1,079 597
PER SHARE DATA:
Net income.............................. $ (.32) .20 .28 1.80 0.51
Cash dividends declared on $2.70
Preferred Stock........................ 2.70 -- .675 2.70 --
Book value.............................. (2.91) (2.71) (2.92) (3.24) (5.04)
OTHER INFORMATION:
Number of common shares outstanding 373,425 373,025 374,375 374,375 374,375
Average number of shares outstanding 372,958 373,728 374,375 374,375 376,504
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets............................ $ 66,430 60,245 60,687 54,952 58,419
Securities.............................. 17,466 16,160 16,684 16,902 21,932
Loans, net of unearned income........... 38,142 34,546 34,775 31,888 27,665
Total deposits.......................... 56,793 50,770 51,498 47,053 52,251
Notes payable........................... 1,480 1,681 1,854 581 --
Stockholders' equity.................... 5,566 5,662 5,179 4,780 4,094
Average Assets 62,707 59,407 56,850 56.109 56,673
Average Equity 5,794 5,426 4,998 4,663 3,988
PERFORMANCE RATIOS:
Return on average assets ............... .45% .80% .89% 1.92% 1.05%
Return on average stockholders'
equity ............................... 4.90% 8.79% 10.16% 23.14% 14.97%
Net interest margin..................... 4.59% 4.75% 4.78% 4.68% 4.10%
Efficiency (1).......................... 85.19% 75.49% 73.59% 80.20% 94.91%
Dividend payout......................... 137.66% -- 19.35% 36.45% --
ASSET QUALITY RATIOS:
Net charge-offs (recoveries) to average
loans, net of unearned income.......... -- (.29)% (.18)% (.25)% .39%
Problem assets to net loans and
other real estate (2)................. .38% .43% .45% .21% .40%
Nonperforming assets to net loans
and other real estate (3)............. .38% .43% .93% .44% 3.09%
Allowance for loan losses to loans,
net of unearned income................ 1.33% 1.46% 1.44% 1.95% 1.97%
Allowance for loan losses to
nonperforming assets (3).............. 348.93% 338.14% 154.98% 437.18% 63.76%
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets........................ 9.24% 9.13% 8.79% 8.31% 7.04%
Average loans to average deposits....... 69.12% 70.14% 70.64% 61.96% 59.41%
Tier 1 risk-based capital (4)........... 9.81% 10.71% 9.94% 9.91% 9.42%
Total risk-based capital (4)............ 10.67% 11.66% 10.91% 11.16% 10.67%
Tier 1 leverage (4)..................... 8.83% 9.53% 9.11% 8.52% 7.16%
</TABLE>
- ------------------------------
(1) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
xiv
<PAGE> 24
(2) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(3) Nonperforming assets include loans on nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(4) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%, depending on the
risk profile of the institution and other factors.
xv
<PAGE> 25
THE ANNUAL MEETING
GENERAL
This Proxy Statement is being furnished to the holders of GBHC Common
Stock in connection with the solicitation by the GBHC Board of Directors of
proxies for use at the Annual Meeting, at which GBHC stockholders will be asked
to vote upon a proposal to approve the Agreement and to vote for directors who
will hold office until the Merger becomes effective or, in the event the Merger
is not approved or is otherwise not consummated, until the next Annual Meeting
of GBHC stockholders and until their successors are elected and qualified. The
Annual Meeting will be held at 1:00 p.m., local time, on _________,
____________, 1997, in the Board of Directors Room located on the second floor
of the Guaranty Bank & Trust Building, 1201 Brashear Avenue, Morgan City,
Louisiana 70380.
GBHC stockholders are requested promptly to sign, date, and return the
accompanying proxy card to GBHC in the enclosed postage-paid, addressed
envelope.
Any GBHC stockholder who has delivered a proxy may revoke it at any
time before it is voted by giving notice of revocation in writing to the
Secretary of GBHC or submitting to GBHC a signed proxy card bearing a later
date, provided that such notice or proxy card is actually received by the
Secretary of GBHC before the vote of stockholders or in open meeting prior to
the taking of the stockholder vote at the Annual Meeting. Any notice of
revocation should be sent to Guaranty Bancshares Holding Corporation, P.O. Box
2208, Morgan City, Louisiana 70381 (or delivered to 1201 Brashear Avenue,
Morgan City, Louisiana 70380), Attention: Paul Ordogne, Secretary. A proxy
will not be revoked by the death of the stockholder executing the proxy unless,
before the vote, notice of such death is filed with the Secretary. The shares
of GBHC Common Stock represented by properly executed proxies received at or
prior to the Annual Meeting and not subsequently revoked will be voted as
directed in such proxies. If instructions are not given, shares represented by
proxies received will be voted FOR approval of the Agreement, FOR the directors
nominated by the Board of Directors and in the discretion of the proxy holder
as to any other matters that may properly come before the Annual Meeting. If
necessary, and except as provided in the next sentence, unless contrary
instructions are given, the proxy holder also may vote in favor of a proposal
to adjourn the Annual Meeting to permit further solicitation of proxies in
order to obtain sufficient votes to constitute a quorum. (A proxy which
specifically designates a vote
<PAGE> 26
against the Agreement will not be voted to adjourn the Annual Meeting to permit
further solicitation of proxies in order to obtain a quorum.) As of the date
of this Proxy Statement, GBHC is unaware of any other matter to be presented at
the Annual Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
GBHC and/or Guaranty Bank, who will receive no additional compensation for such
solicitation but may be reimbursed for out-of-pocket expenses. Nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of- pocket expenses. The cost of solicitation will be borne by GBHC.
GBHC stockholders should not forward any stock certificates with their
proxy cards.
Record Date; Vote Required
GBHC's Board of Directors has established the close of business on
__________, 1997, as the Record Date for determining the GBHC stockholders
entitled to notice of and to vote at the Annual Meeting. Only holders of
record of GBHC Common Stock as of the Record Date will be entitled to vote at
the Annual Meeting. As of the Record Date, there were approximately 743
holders of GBHC Common Stock outstanding and entitled to vote at the Annual
Meeting, consisting of 736 holders of 206,524 shares of GBHC Class A Common
Stock and 533 holders of 166,901 shares of GBHC Class B Common Stock, with
each share of Common Stock entitled to cast one vote. For information as to
persons known by GBHC to own beneficially more than 5.0% of the outstanding
shares of GBHC Common Stock as of the Record Date, see "Voting Securities and
Principal Stockholders of GBHC."
The presence, in person or by proxy, of a majority of the outstanding
shares of GBHC Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Annual Meeting. For purposes of
determining a quorum, shares of GBHC Common Stock that are present, or
represented by proxy, at the Annual Meeting will be counted regardless whether
the holder of the shares or proxy votes on the Agreement or for directors.
Once a quorum is established, approval of the Agreement requires the
affirmative vote of the holders of at least two-thirds of the Common Shares
present, in person or by proxy, at the Annual Meeting. Directors will be
elected by a plurality vote of the Common Shares present, in person or by
proxy, at the Annual Meeting.
-2-
<PAGE> 27
The directors and executive officers of GBHC and their affiliates
beneficially owned, as of the Record Date, 157,130 shares (or approximately
42.08% of the outstanding shares) of GBHC Common Stock. The directors and
executive officers of MC Bank and their affiliates beneficially owned, as of
the Record Date, 1,939 shares of GBHC Common Stock. As of that date, neither
Guaranty Bank nor MC Bank held any shares of GBHC Common Stock in a fiduciary
capacity for others.
As of the Record Date, the directors and executive officers of GBHC
and their affiliates beneficially owned 49,407 shares of GBHC $2.70 Preferred
Stock and 16,146 shares of GBHC $0.50 Preferred Stock. As of such date, the
directors and executive officers of MC Bank and their affiliates beneficially
owned 1,028 shares of GBHC $2.70 Preferred Stock and no shares of GBHC $0.50
Preferred Stock. None of the shares of Preferred Stock have a vote on the
matters to be addressed at the Annual Meeting.
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the Agreement and
the Merger. This description, while it describes the material aspects of the
Agreement and the Merger, does not purport to be complete and is qualified in
its entirety by reference to the Appendices hereto, including the Agreement,
selected portions of which are attached as Appendix A to this Proxy Statement
and incorporated herein by reference. All stockholders are urged to read the
Appendices in their entirety.
GENERAL
At the Effective Time, each share of GBHC $2.70 Preferred Stock then
issued and outstanding will be redeemed and converted into the right to receive
an amount of cash equal to $27.60 plus all accrued and unpaid cash dividends
due thereon; each share of GBHC $0.50 Preferred Stock then issued and
outstanding will be redeemed and converted into the right to receive an amount
of cash equal to $5.00 plus all accrued and unpaid cash dividends due thereon;
and each share of GBHC Common Stock then issued and outstanding (except for
shares held by stockholders who perfect their dissenters' rights of appraisal)
will be converted into the right to receive cash in the amount equal to the
quotient of (a) $7,500,000 (subject to certain purchase price adjustments)
minus the total amount due to the holders of all of the issued and outstanding
shares of GBHC $2.70 Preferred Stock and GBHC $0.50 Preferred Stock described
above, divided by (b) the
-3-
<PAGE> 28
total number of shares of GBHC Common Stock outstanding at the Effective Time.
See "--Adjustment of Purchase Price."
The total amount due on each share of $2.70 Preferred Stock and $0.50
Preferred Stock will depend on the amount of dividends accrued and unpaid at
the Effective Time of the Merger. Depending upon the timing of the requisite
regulatory approvals and satisfaction of other required conditions to the
Merger, it is anticipated that the Effective Time will be sometime during the
fourth quarter of 1997. The total amount that will be paid on each share of
$2.70 Preferred Stock and $0.50 Preferred Stock if the Effective Date is the
last day of November or December 1997 is described below. See "--Cash
Consideration to be Paid to GBHC's Stockholders" and "--Regulatory Approvals."
ADJUSTMENT OF PURCHASE PRICE
The aggregate consideration of $7,500,000 due to the shareholders of
GBHC is subject to being reduced by the amount that the "Adjusted Shareholders'
Equity" of GBHC (calculated in accordance with the Agreement) is less than
$5,284,000, provided, however, that if the total consideration due to the
shareholders of GBHC at the Effective Time is less than $7,300,000, GBHC (by
action of its Board), with certain limited exceptions, has the right to
terminate the Agreement. If the purchase price is adjusted to below
$7,300,000, the Board would intend, to the extent permitted under the
Agreement, either to terminate the Agreement or to resolicit the stockholders
with respect to the Agreement.
The Adjusted Shareholders' Equity will be calculated ten days prior to
the Closing (the "Determination Date") as the difference between (i) the amount
of the shareholders' equity of GBHC as reflected on the April 30, 1997 balance
sheet (which amount is $5,744,071) (the "Valuation Date Shareholders' Equity")
and (ii) the sum of the following adjustments (after taking into account the
tax effect): the additional accrual at Closing of certain payments to be made
to terminate employment contracts and retirement obligations of GBHC and
Guaranty Bank, investment banking fees paid in connection with the Merger in
excess of $28,125, other expenses of the Merger in excess of $145,000, any
special discretionary bonus paid by Guaranty Bank, any dividend paid by GBHC
prior to the Determination Date, all or a portion of the cost of the purchase
of a five-year extension of the GBHC and Guaranty Bank directors' and officers'
liability policy and certain loan losses described herein.
-4-
<PAGE> 29
Payments to terminate employment contracts and retirement obligations.
Guaranty Bank instituted an unqualified defined benefit retirement program for
four of its executive officers, Randolph Cullom, Lee A. Ringeman, Conley J.
Dutreix and Leo R. Broussard. The program was implemented pursuant to
Supplemental Retirement Agreements entered into between Guaranty Bank and each
of the named individuals. See "Executive Compensation." Under the retirement
program, if a participant's employment is terminated or if the participant
voluntarily terminates his employment within twenty- four (24) months following
a change in control of Guaranty Bank, the participant is entitled to the
actuarial equivalent of his annual retirement benefit, computed in accordance
with the agreement, increased by 50%. The retirement agreements provide that
Guaranty Bank shall not merge or consolidate into or with another corporation
unless and until the successor corporation agrees to assume and discharge the
obligations under the retirement agreement.
The Agreement requires that the retirement agreements be terminated
prior to the Closing Date. Guaranty Bank intends to effect that termination by
paying the participants on or immediately prior to the Closing Date the
benefits to which they are entitled under the retirement agreements in the
event of termination following a change in control and then terminating the
retirement agreements. Although the retirement agreements do not provide for
termination of the agreements, the Agreement requires them to be terminated
prior to the Closing so that MC Bank will not incur any obligation to make
payments under the retirement agreements following the Closing. As the
agreements are being terminated in connection with a change in control (and the
agreements do not otherwise provide a process to terminate such agreements
prior to a change in control), the Board of Directors concluded that it was
fair and reasonable to and in the best interests of GBHC and its stockholders
to make the change in control payment. The officers have agreed to terminate
the retirement agreements pursuant to this arrangement.
The amount due under each such retirement agreement in excess of the
amounts that have been (and will be prior to the Closing) accrued are a cost to
Guaranty Bank. Those amounts (the amount due in excess of accruals net of tax
benefits) are required by the Agreement to be deducted from the Valuation Date
Shareholders' Equity in calculating the Adjusted Shareholders' Equity. The
following chart shows as of the dates shown below the value of the retirement
benefits, the projected liability accrued for the retirement benefits, the
unaccrued cost related to the retirement benefits, the tax benefit on the
additional accrual and the total
-5-
<PAGE> 30
estimated deduction from the Valuation Date Shareholders' Equity based on the
retirement benefits:
Estimated Adjustments to Valuation Date
Shareholders' Equity Related to
Termination of Retirement Agreements
<TABLE>
<CAPTION>
Assumed Closing Date
------------------------------------------
11/30/97 12/31/97
--------- --------
<S> <C> <C>
Value of retirement benefits
Randolph Cullom $365,247 $373,686
Lee A. Ringeman 253,749 259,613
Conley J. Dutreix 182,558 186,777
Leo R. Broussard 87,552 90,777
-------- --------
Total 889,106 910,853
Projected liability accrued
for retirement benefits
Randolph Cullom 189,953 193,701
Lee A. Ringeman 162,828 166,087
Conley J. Dutreix 56,872 57,958
Leo R. Broussard 58,421 60,356
-------- --------
Total (468,074) (478,102)
Unaccrued cost related to
retirement benefits
Randolph Cullom 175,294 179,985
Lee A. Ringeman 90,921 93,526
Conley J. Dutreix 125,686 128,819
Leo R. Broussard 29,131 30,421
-------- --------
Total 421,032 432,751
Tax benefit on
additional accrual
Randolph Cullom 59,600 61,195
Lee A. Ringeman 30,913 31,799
Conley J. Dutreix 42,733 43,798
Leo R. Broussard 9,905 10,343
-------- --------
Total (143,151) (147,135)
Net estimated deduction
from the Valuation Date
Shareholders' Equity
</TABLE>
-6-
<PAGE> 31
<TABLE>
<S> <C> <C>
based on retirement
benefits (Unaccrued
cost less tax benefit)
Randolph Cullom 115,694 118,790
Lee A. Ringeman 60,008 61,727
Conley J. Dutreix 82,953 85,021
Leo R. Broussard 19,226 20,078
-------- --------
Total $277,881 $285,616
======== ========
</TABLE>
Mr. Cullom and Mr. Broussard also have employment contracts with
Guaranty Bank. Neither contract is for a term, but instead each is for the
period mutually agreeable to the parties. Mr. Cullom's contract provides for
a payment to him upon termination without good cause (as defined in the
contract) of one year's annual salary. Mr. Broussard's contract provides that
upon a change in control in which Guaranty Bank is acquired by one of certain
specified institutions (including MC Bank), the contract shall become a 5-year
contract (running from the date of execution, which was March 16, 1995). Upon
termination without good cause (as defined in the contract) after such event,
Mr. Broussard is entitled to his annual salary for the remaining term of the
contract. The Agreement requires that these employment contracts be terminated
prior to the Closing Date.
Guaranty Bank intends to effect that termination by paying Mr. Cullom
on or immediately prior to the Closing Date the amount due him upon termination
without good cause under his contract and then terminating his contract and by
paying Mr. Broussard on or immediately prior to the Closing Date the amount due
him upon termination without good cause following a change in control under his
contract and then terminating the contract. The Board of Directors concluded
that this arrangement is fair and reasonable to and in the best interests of
GBHC and its stockholders. Although Mr. Cullom's contract purports to be for
whatever period is mutually agreeable to the parties, because it provides for a
severance payment in the event that Mr. Cullom is terminated without good
cause, the Board believes that the contract could not likely be terminated
without payment of that severance benefit. Similarly, because Mr. Broussard's
contract provides for a term and a severance benefit in the event of a
termination without good cause following a change in control in which MC Bank
acquires Guaranty Bank, the Board believes that the contract could not likely
be terminated in contemplation of that event without payment of the severance
benefit. Mr. Cullom and Mr. Broussard have agreed to terminate the contracts
pursuant to this arrangement.
-7-
<PAGE> 32
The Agreement requires that the cost of terminating the contracts (net
of tax benefits) be deducted from the Valuation Date Shareholders' Equity in
determining the Adjusted Shareholders' Equity. The following chart shows the
amounts due under the contracts at the dates shown, the tax benefit of those
payments and the total estimated deduction from the Valuation Date
Shareholders' Equity based on the employment contracts:
ESTIMATED ADJUSTMENTS TO VALUATION DATE
SHAREHOLDERS' EQUITY RELATED TO
TERMINATION OF EMPLOYMENT CONTRACTS
<TABLE>
<CAPTION>
Assumed Closing Date
---------------------
11/30/97 12/31/97
--------- --------
<S> <C> <C>
Amounts due under
Mr. Cullom's employment
contract $100,000 $100,000
Amounts due under
Mr. Broussard's
employment contract 99,688 96,063
======== ========
Tax benefit (67,893) (66,661)
======== ========
Total estimated deduction
from the Valuation Date
Shareholders' Equity
based on employment
contracts (Amounts due
less tax benefit) $131,795 $129,402
======== ========
</TABLE>
Mr. Cullom's employment contract contains an amendment dated May 1,
1995 that entitles Mr. Cullom to an annual cash bonus of $300 for each basis
point of return on average annual assets (as defined therein) up to a maximum
of $30,000. In addition, GBHC and Guaranty Bank entered into Bonus Agreements
with Mr. Ringeman and Mr. Dutreix. These agreements entitle the employee to an
annual cash bonus of $100 for each basis point of return on average annual
assets (as defined therein), up to a maximum of $10,000. Under each of the
three agreements, an annualized pro-rated bonus is due the employee if he is
terminated without good cause. GBHC and Guaranty Bank intend to pay the
annualized pro-rated bonuses due
-8-
<PAGE> 33
these individuals at Closing and terminate the contracts. As Guaranty Bank
regularly accrues for these bonuses, it is not expected that this will result
in any purchase price adjustment.
Investment banking fees and expenses of the Merger. Guaranty Bank has
a written agreement to pay Sheshunoff fees of up to $56,250 for its services in
connection with this transaction. Sheshunoff has orally agreed instead to cap
its fees at $40,000.
The Agreement provides that any fees owed Sheshunoff in excess of
$28,125 (net of the tax benefit) must be deducted from the Valuation Date
Shareholders' Equity in calculating the Adjusted Shareholders' Equity. The
excess fees are estimated to be $12,000.
The Agreement also requires that if expenses of the Merger generally
(which include reasonable legal and accounting fees and costs incurred in
connection with the Merger, fees to Sheshunoff of $28,125, costs to Sheshunoff,
costs and expenses of the Proxy Statement and other mailings to GBHC
shareholders in connection with the Merger, costs and expenses of the Annual
Meeting and fees and expenses of filing the Proxy Statement with the SEC)
exceed $145,000, any excess (net of the tax benefit) must be deducted from the
Valuation Date Shareholders' Equity in calculating the Adjusted Shareholders'
Equity. As of August 11, 1997, these expenses (including $28,125 of the fees
owed to Sheshunoff) were approximately $100,000. It is anticipated that the
cost of filing the Proxy Statement with the SEC and printing and mailing the
proxy materials and the GBHC Annual Report to Stockholders will be
approximately $15,000. It is uncertain whether the total amount of the
expenses at the Determination Date will exceed $145,000. To the extent they
do, there will be an additional deduction from the Valuation Date Shareholders'
Equity.
Purchase of directors' and officers' tail policy. The Agreement
provides that GBHC will purchase a 5-year extension of its directors' and
officers' liability policy to cover directors and officers against certain
claims made against them during a 5-year period after the Effective Date.
(There are currently no claims pending against the officers and directors of
GBHC or Guaranty Bank.) The cost of the tail policy, which is estimated to be
$50,000, net of the tax benefit, is a deduction to the Valuation Date
Shareholders' Equity, except that if expenses of the Merger as described above
are less than $145,000, the amount of any excess can be applied to the cost of
the tail policy. In that case only the difference between (i) the cost of the
tail policy (net of the tax benefit) and (ii) the amount by which the other
expenses of the Merger are less than $145,000 would be deducted from the
Valuation
-9-
<PAGE> 34
Date Shareholders' Equity in calculating the Adjusted Shareholders' Equity.
Loan losses. The Agreement requires Guaranty Bank to establish a
$100,000 reserve with respect to certain property reacquired by it in June
1997. Of that amount, $67,500 (net of the tax benefit) must be deducted from
the Valuation Date Shareholders' Equity in calculating the Adjusted
Shareholders' Equity. If Guaranty Bank is able to sell the property for a
price in excess of its carrying value prior to the Closing Date, any excess up
to $67,500 will be applied to reduce this deduction to the Valuation Date
Shareholders' Equity. At the date of this Proxy Statement, there were no
prospects for such a sale. In addition, the Agreement provides that any loan
loss (other than in connection with the property described above and another
loan specifically identified in the Agreement) in excess of $25,000 between the
date of the Agreement and the Closing Date (net of the tax benefit) will reduce
the Valuation Date Shareholders' Equity.
Miscellaneous. Finally, the Agreement provides that any dividends
paid by GBHC following the date of the Agreement or any discretionary special
bonuses not consistent with past practice paid to employees (in each case net
of the tax benefit) will reduce the Valuation Date Shareholders' Equity in
calculating the Adjusted Shareholders' Equity. The Board of Directors does not
currently intend to pay any dividends and has not yet decided whether it will
make any discretionary bonuses; however, it does not intend to make any
discretionary bonus payments that would cause the purchase price to go below
$7,300,000. Net operating losses for periods following the date of the
Agreement will also reduce the Valuation Date Shareholders' Equity.
In sum, the anticipated adjustments to the Valuation Date
Shareholders' Equity are estimated as follows as of the dates shown below:
OVERALL ESTIMATED ADJUSTMENTS TO
VALUATION DATE SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Assumed Closing Date
------------------------------
11/30/97 12/31/97
--------- --------
<S> <C> <C> <C>
(A) Deduction for retirement
benefits (net of tax
benefit) (see page __) $ 277,881 $ 285,616
(B) Deduction for employment
contracts (net of tax
</TABLE>
-10-
<PAGE> 35
<TABLE>
<S> <C> <C> <C>
benefit) (see page __) 131,795 129,402
(C) Deduction for Sheshunoff
fees in excess of $28,125
(see page __) 12,000 12,000
(D) Deduction for cost of tail
policy (1) (see page __) 50,000 50,000
(E) Deduction for loan
losses (2) (see page __) 67,500 67,500
(F) Tax benefit of items
(C), (D) and (E) (44,030) (44,030)
(G) Total estimated deduction
from Valuation Date
Shareholders' Equity (after
giving effect to tax
benefit)(3) 495,146 500,488
(H) Estimated Adjusted
Shareholders' Equity
(Valuation Date
Shareholders' Equity
of $5,744,071 less
item (G)) 5,248,925 5,243,583
(I) Estimated Adjustment to
Purchase Price ($5,284,000
less item (H)) 35,075 40,417
(J) Estimated Adjusted Purchase
Price ($7,500,000
less item (I)) 7,464,925 7,459,583
</TABLE>
- -----------------
(1) This might be reduced if other expenses of the Merger are less than
$145,000.
-11-
<PAGE> 36
(2) This might be reduced if the property to which this reserve relates is
sold for a price in excess of the carrying value of the property prior
to the Closing Date. At the date of this Proxy Statement there were no
prospects for such a sale. This might be increased if there are other
loan losses in excess of $25,000.
(3) This could be increased if (i) expenses of the Merger exceed $145,000,
(ii) there are operating losses between the date of the Agreement and
the Closing Date, (iii) Guaranty Bank pays discretionary special
employee bonuses not consistent with past practice (which it does not
intend to do if it would reduce the purchase price below $7,300,000),
(iv) GBHC pays a dividend (which it does not intend to do if it would
reduce the purchase price below $7,300,000) or (v) there are
additional loan losses in excess of $25,000.
These purchase price adjustments are designed to implement the concept that
(except as reflected in the adjustments) the earnings of GBHC from May 1, 1997
through the Closing are intended to inure to the benefit of MC Bank.
While the chart above reflects estimated adjusted purchase prices,
there can be no assurance that any of these estimates will be correct. Under
the Agreement, Guaranty Bank cannot terminate the Agreement solely based upon
the purchase price unless the price is below $7,300,000 (and then only in
certain circumstances). If the purchase price is adjusted to below $7,300,000,
the Board would intend, to the extent permitted under the Agreement, either to
terminate the Agreement or to resolicit the stockholders with respect to the
Agreement.
CASH CONSIDERATION TO BE PAID TO GBHC'S STOCKHOLDERS
The cash consideration to be paid to GBHC's Common Stockholders will
be dependent upon (i) the amount owed to the Preferred Stockholders on the
Closing Date (which amount increases each day as dividends continue to accrue)
and (ii) the purchase price adjustments as described above. Following is a
table showing the payments to be made with respect to the Preferred Stock
assuming a Closing on each of the dates indicated below:
-12-
<PAGE> 37
PAYMENTS WITH RESPECT TO PREFERRED STOCK
<TABLE>
<CAPTION>
Assumed Closing Date
-----------------------------------------
11/30/97 12/31/97
----------- ----------
<S> <C> <C>
Redemption Price of GBHC
$2.70 Preferred Stock $4,002,028 $4,002,028
Accrued Dividends on GBHC
$2.70 Preferred Stock (1) 2,792,648 2,825,628
Redemption Price of GBHC
$0.50 Preferred Stock 109,500 109,500
Accrued Dividends on GBHC
$0.50 Preferred Stock (1) 89,996 90,918
---------- ----------
Total Amount due with
respect to Preferred
Stock $6,994,172 $7,028,074
========== ==========
</TABLE>
(1) Dividends on the GBHC $2.70 Preferred Stock have accrued since October
13, 1990 (which dividends were first payable on January 13, 1991).
Dividends on the GBHC $0.50 Preferred Stock have accrued since July
13, 1989 (which dividends were first payable January 13, 1990).
The purchase price will be reduced by the adjustments described above
and the payments owed with respect to the Preferred Stock will be made before
payments are made with respect to the Common Stock. Following is a table
showing the payments to be made with respect to the Common Stock assuming a
Closing on the dates shown below and the purchase price adjustments shown
above.
ESTIMATED PAYMENTS WITH RESPECT TO COMMON STOCK
<TABLE>
<CAPTION>
Assumed Closing Date
-----------------------------------------
11/30/97 12/31/97
----------- ----------
<S> <C> <C>
Estimated purchase price
adjustment (see page __) $ 35,075 $ 40,417
</TABLE>
-13-
<PAGE> 38
<TABLE>
<S> <C> <C>
Total cash consideration
(see page __) 7,464,925 7,459,583
Amount owed with respect
to Preferred Stock 6,994,172 7,028,074
Amount available for
distribution with
respect to Common Stock 470,753 431,509
Per share price to
Common Stock 1.26 1.16
</TABLE>
Finally, although the purchase price adjustments are estimated at the
amounts described above, as noted above, they could be more (or less) under
various circumstances. The following table shows the payments to be made with
respect to the Common Stock if the purchase price adjustments turn out to be
higher than expected, bringing the total cash consideration down to the levels
shown in the table:
ESTIMATED PAYMENTS WITH RESPECT TO COMMON STOCK
<TABLE>
<CAPTION>
Assumed Closing Date
-----------------------------------------------------------------------
Assumed 11/30/97 12/31/97
Purchase Price --------- ---------
(As Adjusted) Aggregate Per Share Aggregate Per Share
- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$7,400,000 405,828 1.09 371,926 1.00
$7,350,000 355,828 0.95 321,926 0.86
$7,300,000 305,828 0.82 271,926 0.73
</TABLE>
All of the foregoing tables are presented for illustration purposes
only. No inference is intended or may be drawn as to what the actual purchase
price as adjusted will be at Closing. Holders of Common Stock of GBHC should
be aware that holders of Preferred Stock will be paid the full amount due them
upon redemption of their Preferred Stock and adjustments to the purchase price,
if any, will affect holders of Common Stock only. Directors and executive
officers of GBHC and their affiliates beneficially owned,
-14-
<PAGE> 39
as of the Record Date, 49,407 shares (or approximately 34% of the outstanding
shares) of GBHC $2.70 Preferred Stock and 16,146 shares (or approximately 74%
of the outstanding shares) of GBHC $0.50 Preferred Stock.
The actual adjustments to the purchase price and the final purchase
price may vary from the examples given above. If the purchase price, as
adjusted, is less than $7,300,000, the Board of GBHC will have the option to
terminate the Agreement (unless the purchase price is less than $7,300,000
because Guaranty Bank paid special discretionary bonuses to employees). If the
purchase price is adjusted to below $7,300,000, the Board would intend, to the
extent permitted under the Agreement, either to terminate the Agreement or to
resolicit the stockholders with respect to the Agreement. The Board does not
intend to pay special discretionary bonuses to employees if that would cause
the purchase price to fall below $7,300,000.
Depending on the Effective Time of the Merger and the Adjusted
Shareholders' Equity, the cash consideration that may be received in exchange
for each share of Common Stock could range from $1.26 (assuming an adjusted
purchase price of $7,464,925 as estimated on the previous page and a November
30, 1997 Closing) to $0.73 (assuming an adjusted purchase price of $7,300,000
and a December 31, 1997 Closing) per share. (The consideration could be less
if the purchase price is less than $7,300,000 and the Board does not have the
option to terminate the Agreement or otherwise decides not to terminate the
Agreement (although the Board would intend, to the extent permitted, to
terminate the Agreement or resolicit the stockholders if the purchase price
fell below $7,300,000). The consideration could be higher if the purchase
price adjustments result in a higher purchase price, although at the date
hereof, management estimates that the adjustments will result in a purchase
price of approximately $7,465,000.)
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. During the last several years, there have
been significant developments in the banking and financial services industry.
These developments have included the increased emphasis and dependence on
automation, specialization of products and services, increased competition from
other financial institutions, and a trend toward consolidation and geographic
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expansion, coupled with a relaxation of regulatory restrictions on interstate
conduct of business of financial institutions.
Further, during the past several years, the dividend arrearages on the
GBHC Preferred Stock have increased to a level that management of GBHC is
concerned that it will not be possible to pay dividends to the holders of
Common Stock of GBHC without an overall restructure of the capital of GBHC or a
sale of GBHC. Management of GBHC proposed a capital restructure in 1996, but
the proposal was defeated when submitted to the stockholders for approval. In
the absence of a restructure, management and the Board concluded that the best
way to provide value to the holders of GBHC Common Stock was through an
acquisition of GBHC.
Earlier this year, GBHC received acquisition offers or expressions of
interest from several institutions, including Regions Financial Corporation,
MidSouth Bancorp, Inc. and MidSouth National Bank and MC Bancshares and MC
Bank. The Board of Directors considered whether all or any of the offers were
in the best interests of the stockholders and considered the respective values
of the offers in terms of price, strength and prospects of the acquiror (with
respect to the offer that involved stock as consideration), value and liquidity
of the consideration offered by the acquiror, compatibility of the acquiror
with Guaranty Bank, its customers, depositors, employees and the community,
likelihood of regulatory and stockholder approval with respect to the various
offers, and other factors.
Two of the three offers or expressions of interest considered by the
Board involved cash and one involved a combination of cash, common stock and
preferred stock. Both the highest cash offer and the offer involving cash and
stock were at amounts the Board was advised by Sheshunoff were in a range of
fair prices. In assessing the value of the offer involving a combination of
cash and stock, the Board, with advice from Sheshunoff, analyzed the liquidity
and value of the stock portion of the consideration and assessed the prospects
of such stock. This analysis by the Board and Sheshunoff resulted in several
possible values, the discrepancies between which could not be reconciled with
certainty. Moreover, the offer involving a combination of cash and stock was
also conditioned upon the acquiror securing certain employment contracts which
the Board was
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not certain could be obtained. In view of the foregoing, and with
Sheshunoff's concurrence, the Board determined that the offer involving a
combination of cash and stock was less certain than the cash offer the Board is
currently recommending to the shareholders. Given these factors and the Board's
analysis, the Board concluded that the MC Bancshares' offer was in the best
interests of the stockholders and GBHC. Consequently, GBHC and MC Bancshares
entered into negotiations which culminated in the Agreement.
GBHC's reasons for the Merger. In approving the Merger, the directors
of GBHC considered a number of factors. Without assigning any relative or
specific weights to the factors, the GBHC Board of Directors considered the
following material factors:
(a) the information presented to the directors by the management
of GBHC concerning the business, operations, earnings, asset quality, and
financial condition of GBHC, including the capital structure of GBHC and the
prospects for payment of dividends in the future;
(b) the financial terms of the Merger, including the relationship
of the Merger price to the market value, tangible book value and earnings per
share of GBHC Common Stock;
(c) the nonfinancial terms of the Merger;
(d) the likelihood of the Merger being approved by applicable
regulatory authorities without undue conditions or delay; and
(e) the opinion rendered by GBHC's financial advisor to the effect
that, from a financial point of view, the consideration to be paid to
stockholders of GBHC on the terms and conditions set forth in the Agreement is
fair to the holders of GBHC Common Stock.
The terms of the Merger were the result of arms-length negotiations
between representatives of GBHC and representatives of MC Bancshares. Based
upon consideration of the foregoing factors, the Board of Directors of GBHC
unanimously approved the Merger as being in the best interests of GBHC and its
stockholders. Each member of the Board of Directors of GBHC (and each
executive officer and holder of 5% or more of the Common Stock of GBHC) has
agreed to vote those GBHC Common Shares over which such person has voting
authority (other than in a fiduciary capacity) in favor of the Merger.
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GBHC's Board of Directors unanimously recommends that GBHC
stockholders vote for approval of the Agreement.
MC Bank's reasons for the Merger. The Board of Directors of MC Bank
has approved the Agreement and determined that the Merger is in the best
interests of MC Bank and its stockholders. In approving the Agreement, MC
Bank's Board considered a number of factors. Without assigning any relative or
specific weights to the factors, MC Bank's Board of Directors considered the
following material factors:
(a) a review, based in part on a presentation by MC Bank's
management, of (i) the business, operations, earnings, and financial condition,
including the capital levels and asset quality, of GBHC on an historical,
prospective, and pro forma basis and in comparison to other financial
institutions in the area, (ii) the demographic, economic, and financial
characteristics of the markets in which GBHC operates, including existing
competition, history of the market areas with respect to financial
institutions, and average demand for credit, on an historical and prospective
basis, and (iii) the results of MC Bank's due diligence review of GBHC, and
(b) a variety of factors affecting and relating to the overall
strategic focus of MC Bank, including its desire to expand meaningfully into
markets in the general vicinity of its existing core markets and meaningful
entry into the Lafayette, Louisiana marketplace.
MC Bancshares and MC Bank have agreed to take all action necessary to
obtain approval of the Agreement of the sole shareholder of MC Subsidiary
(which shareholder is MC Bank).
OPINION OF GBHC'S FINANCIAL ADVISOR
GBHC retained Alex Sheshunoff & Co. Investment Banking ("Sheshunoff")
on March 11, 1997 to render an opinion as to the fairness of the financial
terms of the transaction contemplated by the Agreement. GBHC and MC Bancshares
negotiated the consideration to be paid pursuant to the Agreement; Sheshunoff
did not recommend any particular amount and was not involved in the
negotiations. In connection with its engagement, Sheshunoff also analyzed the
offers and/or expressions of interest received by GBHC from Regions and
MidSouth.
Sheshunoff was selected as GBHC's advisor on the basis of Sheshunoff's
experience and expertise in transactions similar to the Merger, particularly
with community banks, and Sheshunoff's
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reputation in the banking and investment communities. Sheshunoff is a
recognized investment banking firm and is experienced in the securities
industry, in investment analysis and appraisal, and in related corporate
finance and investment banking activities, including mergers and acquisitions,
corporate recapitalizations, and valuations for estate, corporate and other
purposes. Sheshunoff is regularly retained to perform similar services for
other banks and bank holding companies.
In connection with Sheshunoff's engagement to render the fairness
opinion to GBHC with respect to the Merger, GBHC instructed Sheshunoff to
evaluate the fairness to GBHC's stockholders, from a financial point of view,
of the consideration to be received by GBHC's stockholders, pursuant to the
provisions of the Agreement, and to conduct such investigations as Sheshunoff
deemed appropriate for such purposes. GBHC did not place any limitations on
the scope or manner of Sheshunoff's investigation and review.
Sheshunoff rendered its opinion to GBHC's Board of Directors on
___________, 1997, to the effect that, based upon and subject to the
assumptions made, the factors considered, the review undertaken and the
limitations stated and based upon such other matters as Sheshunoff considered
relevant, as of the date of the opinion, the consideration to be received by
the stockholders of GBHC in the Merger was fair, from a financial point of
view, to the holders of GBHC common stock and to the holders of GBHC preferred
stock (the "fairness opinion").
Sheshunoff reserved the right to withdraw its opinion if the purchase
price, as adjusted, declined below $7,300,000. If such event were to take
place, the Board would expect to notify the stockholders.
The full text of Sheshunoff's fairness opinion is attached hereto as
Appendix B and is incorporated by reference. The summary description of the
fairness opinion set forth herein addresses the material aspects of the
fairness opinion, but is qualified in its entirety by reference to Appendix B.
GBHC's stockholders are urged to read the fairness opinion in its entirety in
connection herewith for a description of the procedures followed, assumptions
made, matters considered and limitations on the review undertaken by
Sheshunoff. Sheshunoff's opinion is directed only to the fairness of the
Merger, from a financial point of view, to GBHC's stockholders and does not
constitute a recommendation to any GBHC stockholder as to how such stockholder
should vote at the Annual Meeting.
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In connection with rendering its fairness opinion, Sheshunoff, among
other things: (i) reviewed the Agreement and GBHC's draft Proxy Statement for
the Merger, provided to Sheshunoff on August 1, 1997, in substantially the form
to be sent by GBHC to its stockholders, and subsequent changes made to the
draft; (ii) reviewed and analyzed certain publicly-available financial
statements and other information of GBHC and MC Bank, respectively; (iii)
reviewed and analyzed certain internal financial statements and other financial
and operating data concerning GBHC, prepared by the management of GBHC; (iv)
discussed the past and current operations and financial condition, and the
prospects of GBHC with the President of GBHC; (v) reviewed the historical
prices and trading volumes of the shares of GBHC Common Stock; (vi) compared
the financial performance of GBHC with that of certain other comparable
companies; (vii) reviewed the financial terms of business combinations in the
commercial banking industry specifically and other industries generally, which
Sheshunoff deemed generally comparable to the proposed transaction; (viii)
considered a number of valuation methodologies, including among others, those
that incorporate book value, deposit base premium and capitalization of
earnings, and (ix) performed such other studies and analyses as Sheshunoff
deemed appropriate to the opinion.
In rendering its opinion, Sheshunoff relied, without independent
verification, upon the accuracy and completeness of the historical and
projected financial information, and all other information reviewed by it for
purposes of its opinion. Sheshunoff did not make or obtain an independent
review of GBHC's assets or liabilities, nor was Sheshunoff furnished with any
such appraisals. Sheshunoff relied solely on GBHC for information as to the
adequacy of its respective loan loss reserve and values of other real estate
owned. With respect to GBHC's budgeted financial results, Sheshunoff assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of GBHC of future financial
performance of GBHC. Sheshunoff informed GBHC that in the process of its
review, nothing came to its attention that would cause it to believe that the
information provided by GBHC was incomplete or not true. Sheshunoff's opinions
were necessarily based upon market, economic and other conditions as they
existed on, and could be evaluated as of, the date of its opinion. Sheshunoff
expressed no opinion on the tax consequences of the proposed transaction or the
effect of any tax consequences on the value to be received by the holders of
GBHC Common Stock.
Neither Sheshunoff nor any of its officers or employees has any
interest in the stock of GBHC or MC Bancshares. GBHC has or
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will pay Sheshunoff approximately $40,000 in fees plus out-of-pocket expenses
for rendering its fairness opinion and related services. The fees received by
Sheshunoff in connection with its services to GBHC are not dependent or
contingent upon the occurrence or lack thereof of any transaction.
GBHC has agreed to indemnify and hold harmless Sheshunoff, and its
officers, employees, and agents from any losses, expenses, claims, damages or
liabilities related to or arising out of Sheshunoff's engagement (except those
finally judicially determined to have resulted from Sheshunoff's bad faith or
gross negligence).
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time will occur on the date and at the time specified
in a certificate or other written record issued by the Louisiana Secretary of
State. Unless otherwise agreed upon by GBHC and MC Bank, and subject to the
conditions to the obligations of the parties to effect the Merger, the parties
will use their reasonable efforts to cause the Effective Date to occur on the
last day of the month in which the last of the following events occur: (i) the
effective date (including the expiration of any applicable waiting period) of
the last required consent of any regulatory authority having authority over and
approving or exempting the Merger and (ii) the date on which the Agreement is
approved by the requisite vote of holders of GBHC Common Stock.
No assurance can be given that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. GBHC anticipates that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the fourth quarter of 1997. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either GBHC or MC Bank generally may
terminate the Agreement if the Merger is not consummated by December 31, 1997,
unless the failure to consummate by that date is the result of certain
specified breaches of the Agreement by the party seeking termination. See
"--Conditions to Consummation of the Merger" and "-- Waiver, Amendment, and
Termination of the Agreement" below.
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SURRENDER OF GBHC STOCK CERTIFICATES AND PAYMENT OF CASH
If the holders of GBHC of Common Stock approve the Agreement at the
Annual Meeting, as soon as practicable after the Annual Meeting, MC Bank will
mail to each record holder of outstanding GBHC Common Stock certificates and
GBHC Preferred Stock certificates, a form letter of transmittal, together with
instructions for use in surrendering such certificates for payment of cash. A
notice of redemption (which may accompany or be a part of the letter of
transmittal) will be sent to record holders of outstanding GBHC Preferred
Stock. NO CASH PAYMENTS WILL BE MADE TO ANY HOLDER OF GBHC COMMON OR PREFERRED
STOCK UNTIL THE HOLDER DULY SURRENDERS HIS OR HER STOCK CERTIFICATES.
The letter of transmittal will contain instructions that address what
a stockholder who has lost his or her stock certificates should do. Generally,
stockholders who cannot locate their certificates will need to follow the
appropriate procedures to have GBHC issue replacement certificate(s). This
will require execution by the stockholder of an affidavit certifying that his
certificate(s) cannot be located and agreeing to indemnify GBHC and MC Bank
against any claim that may be made against such parties by the owner of the
certificate(s) alleged to have been lost or destroyed. GBHC or MC Bank may
also require the stockholder to post a bond in such sum as is sufficient to
support the stockholder's indemnification agreement.
GBHC STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to MC
Bank of certificates of GBHC Common Stock and GBHC Preferred Stock together
with a properly completed letter of transmittal, promptly after the Effective
Time, GBHC stockholders will receive a check for the payment of their shares.
Under the Louisiana unclaimed property statutes, if the cash consideration
described above is not claimed within five years and there are no other
communications with MC Bank during that time, the right to receive cash in
exchange for the GBHC shares may be deemed abandoned and the cash may be
required to be delivered to the State of Louisiana.
The stock transfer books of GBHC will be closed at the Effective Time
of the Merger and after the Effective Time, there will be no transfers of
shares of GBHC Common Stock or GBHC Preferred Shares on GBHC's stock transfer
books. If certificates representing shares of GBHC Common Stock or GBHC
Preferred Stock are presented for transfer after the Effective Time, they will
be cancelled and a check for the amount due in exchange therefor will be issued
to the presenting stockholder.
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CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions,
including, but not limited to:
(a) approval from all regulatory authorities required for
consummation of the Merger, and the expiration of all applicable waiting
periods associated with these approvals, without any condition or restrictions
that would, in the reasonable judgment of MC Bank's Board of Directors, so
materially adversely impact the economic benefits of the transactions
contemplated by the Agreement that, had such condition or requirement been
known, MC Bank would not, in its reasonable judgment have entered into the
Agreement;
(b) the approval by the holders of the requisite number of shares
of GBHC Common Stock and the approval by MC Bank as the sole stockholder of MC
Subsidiary;
(c) the absence of any action by any judicial, governmental or
regulatory authority of competent jurisdiction restricting, prohibiting,
restraining or making illegal the consummation of the transaction contemplated
by the Agreement; and
(d) receipt of the fairness opinion from Sheshunoff, which
fairness opinion shall not have been withdrawn prior to Closing.
Consummation of the Merger also is subject to the satisfaction or
waiver of various other conditions specified in the Agreement, including
generally, among others: (i) the delivery by GBHC and MC Bank of opinions of
their respective counsel opining generally as to the corporate authority,
existence, and ownership of the respective party; (ii) certificates executed by
the parties' respective duly authorized officers as to the satisfaction of
certain conditions and obligations set forth in the Agreement; (iii) as of the
Effective Date, the accuracy of certain representations and warranties and the
compliance in all material respects with the agreements and covenants of each
party; and (iv) the disposition or restructure of a specific loan held by
Guaranty Bank (and, if the loan is restructured, the purchase by certain
individuals at Closing of a participation in the amount of 20% of the loan
balance that will provide MC Bank in case of default with first payments until
MC Bank is paid its balance in full before the participant receives any funds).
Any of the foregoing conditions other than required regulatory approvals and
stockholder approval may be waived by the party in whose favor the condition
runs.
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REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. There also can be no
assurance that such approvals will not be accompanied by a conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Agreement. Applications for the approvals described below have
been submitted to the appropriate regulatory agencies.
GBHC is not aware of any material governmental approvals or actions
that are required for consummation of the Merger, except as described below.
Should any other approval or action be required, it presently is contemplated
that such approval or action would be sought.
The transaction contemplated by the Agreement involves (i) the
formation and capitalization by MC Bank of MC Subsidiary, (ii) the Merger,
(iii) the liquidation of GBHC's nonbank subsidiary (Brashear Management
Corporation) into GBHC, (iv) the liquidation of GBHC into MC Bank, (v) the
liquidation of Guaranty Bank's nonbank subsidiary (Guaranty Enterprises, Inc.)
into Guaranty Bank and (vi) the merger of Guaranty Bank into MC Bank. The
ultimate merger of Guaranty Bank into MC Bank requires approval of the FDIC
under the Bank Merger Act.
MC Bank has sought from the Federal Reserve a waiver from filing an
application with the Federal Reserve in connection with this transaction. The
Bank Holding Company Act of 1956, as amended (the "BHC Act"), generally
requires the prior approval of the Federal Reserve for any action that causes a
company to become a bank holding company. There is an exception for
acquisitions involving bank mergers subject to the Bank Merger Act. The
regulations enacted pursuant to the BHC Act specifically provide that prior
Federal Reserve approval is not required for the acquisition by a bank holding
company of shares of a bank or bank holding company as part of the merger of
the bank with a subsidiary bank (which Guaranty Bank will be after the Merger
and the liquidation of GBHC) where: the bank merger occurs simultaneously with
the acquisition of the bank holding company and the bank is not operated by the
acquiring bank holding company as a separate entity; approval of a federal
supervisory agency is required under the Bank Merger Act; the transaction does
not involve the acquisition of any nonbank company that would require prior
approval under the BHC Act; the acquiring bank holding company meets the
Federal Reserve capital adequacy guidelines before and after the transaction;
and the acquiring company provides the
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Federal Reserve with at least 10 days prior notice and the Federal Reserve does
not inform the company that an application is required. MC Bank has filed a
notice with the Federal Reserve seeking to take advantage of this exception.
The Federal Reserve has informed MC Bank that if the FDIC approves the
transaction under the Bank Merger Act, no application to the Federal Reserve
will be required.
In granting approval under the statutes referenced above, the
appropriate regulatory agency must take into consideration, among other
factors, the financial and managerial resources and future prospects of the
institutions and the convenience and needs of the communities to be served.
The relevant statutes prohibit approval the Merger (i) if it would result in a
monopoly or be in furtherance of any combination or conspiracy to monopolize or
attempt to monopolize the business of banking in any part of the United States
or (ii) if its effect in any section of the country may be to substantially
lessen competition or to tend to create a monopoly, or if it would be a
restraint of trade in any other manner, unless the regulatory authority finds
that any anti-competitive effects are outweighed clearly by the public interest
and the probable effect of the transaction in meeting the convenience and needs
of the communities to be served. The Merger may not be consummated until the
30th day following the date of federal regulatory approval, which may be
shortened by the regulator to the 15th day, during which time the United States
Department of Justice may challenge the transaction on antitrust grounds. The
commencement of any antitrust action would stay the effectiveness of the
regulator's approval, unless a court specifically orders otherwise.
The transaction contemplated by the Agreement, including the
capitalization of MC Subsidiary, is also subject to the approval of the
Louisiana Commissioner. In its evaluation, the Office of the Louisiana
Commissioner will take into account considerations similar to those described
above.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Time, and to the extent permitted by law, any
provision (except that the requirements for regulatory and stockholder approval
may not be waived) of the Agreement generally may be (i) waived by the party
benefitted by the provision or (ii) amended by a written agreement between GBHC
and MC Bank approved by their respective Boards of Directors; provided,
however, that after approval by the GBHC stockholders, no amendment that
pursuant to the Louisiana Act requires further approval of
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GBHC stockholders may be made without the further approval of such
stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Time, either before or after approval by GBHC
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of
any required consent of any regulatory authority;
(b) by the Board of Directors of either party, if the holders of
the requisite number of shares of GBHC Common Stock shall not have approved the
Agreement;
(c) by mutual agreement of the Boards of Directors of GBHC and MC
Bank;
(d) by the Board of Directors of either party, in the event of a
breach by the other party of any provision of the Agreement which meets certain
standards specified in the Agreement and cannot be or has not been cured within
30 days after the giving of written notice to the breaching party;
(e) by the Board of Directors of either party if the Merger shall
not have been consummated by December 31, 1997, but only if the failure to
consummate the Merger by such date has not been caused by the terminating
party's breach of certain provisions of the Agreement;
(f) by the Board of Directors of GBHC if Sheshunoff is unable to
render the fairness opinion required by the Agreement or withdraws it prior to
the Closing or if the cash consideration to be paid at the Closing is less than
$7,300,000; or
(g) by the Board of Directors of MC Bank if the Shareholder's
Equity of GBHC is less than $5,284,000 at the Closing.
Any of the conditions listed in items (c) through (g) above giving
rise to termination rights may be waived by the party in whose favor the
condition runs. It is not the current intention of the Board of GBHC to waive
the condition to Closing that Sheshunoff have rendered and not withdrawn a
fairness opinion.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination
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generally will not relieve the parties from the consequences of any uncured
willful breach of the Agreement giving rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of GBHC and MC Bank generally has agreed to take no action that
would affect, adversely and materially, the ability of either party to perform
its covenants and agreements under the Agreement or to obtain any consent or
approval required for the consummation of the transactions contemplated by the
Agreement. In addition, the Agreement contains certain other restrictions
applicable to the conduct of the business of GBHC prior to consummation of the
Merger, as described below.
GBHC has agreed not to take certain actions relating to the operation
of its business pending consummation of the Merger without the prior written
consent of MC Bank and MC Bancshares. Those actions generally include, without
limitation, the following (except as otherwise required or permitted by the
Agreement): (i) amending the Articles of Incorporation or Bylaws or other
governing instruments of GBHC and its subsidiaries; (ii) incurring any
additional debt or other obligation for borrowed money (other than indebtedness
among GBHC and other GBHC companies) in excess of an aggregate amount
outstanding at any time of $150,000 (for the GBHC companies on a consolidated
basis) except in the ordinary course of business consistent with past
practices; (iii) acquiring or exchanging any shares, or any securities
convertible into shares, of its capital stock or paying any dividend or other
distribution, in respect of its capital stock; (iv) issuing, encumbering, or
selling any additional shares of any GBHC capital stock, any rights to acquire
any such stock, or any security convertible into such stock; (v) adjusting,
splitting, combining, or reclassifying any of its capital stock or the capital
stock of any subsidiary; (vi) making any material investment in or otherwise
acquiring control over any other entity; (vii) granting any increase in
compensation or benefits to employees, officers, or directors (except in
accordance with past practice or previously approved by the GBHC Board of
Directors, in each case as previously disclosed to MC Bank or as required by
law), paying any severance pay or bonus (except pursuant to any existing
written policies or contracts and the regular bonuses paid by Guaranty Bank to
its officers and employees consistent with past practices as previously
disclosed to MC Bank and except as otherwise disclosed to MC Bank), entering
into or amending any severance agreements with officers, or voluntarily
accelerating the vesting of any employee benefits; (viii) entering into or
amending any employment contract so that GBHC does not have the unconditional
right to terminate it without
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liability (unless such amendment is required by law); (ix) adopting any new
employee benefit plan or program, or materially changing any existing plan or
program (except for any change required by law or a change which, in the
opinion of counsel, is necessary to maintain the tax qualified status of any
such plan); (x) making any significant change in any tax or accounting methods
or systems of internal accounting controls (except in conformity with changes
in tax laws or generally accepted accounting principles); (xi) commencing any
material litigation (except in accordance with past practices), or settling any
litigation for money damages in excess of $100,000 or imposing material
restrictions upon the operations of GBHC or any of its subsidiaries; (xii)
modifying, amending or terminating any material contract or waiving, releasing,
compromising or assigning any material rights or claims; (xiii) failing to
maintain the books, accounts, and records of GBHC and its subsidiaries in the
usual manner on a basis consistent with that heretofore employed; (xiv)
entering into any new line of business, (xv) charging off or selling any of its
portfolio of loans, discounts, or financing leases other than sales of mortgage
loans in a manner consistent with past practices; or (xvi) making any extension
of new credit or renewing any existing extension of credit which, when added to
all other extensions of credit to the borrower and its affiliates, would exceed
$2,400,000 or committing or otherwise becoming obligated to make any such
extension of new credit in excess of $500,000.
In addition, GBHC has agreed not to solicit, directly or indirectly,
any acquisition proposal from any other person or entity. GBHC also has agreed
not to negotiate with respect to any such proposal, provide nonpublic
information to any party making such a proposal, or enter into any agreement
with respect to any such proposal, except in compliance with the fiduciary
obligations of its Board of Directors. In addition, GBHC has agreed to use
reasonable efforts to cause its advisors and other representatives not to
engage in any of the foregoing activities.
MANAGEMENT FOLLOWING THE MERGER
At the Effective Time, the directors of MC Subsidiary immediately
prior to the Merger will become the directors of GBHC, replacing the directors
elected at the Annual Meeting who will no longer be involved in the management
of GBHC. Immediately after the Effective Time, MC Bank intends to liquidate
GBHC into MC Bank and then merge Guaranty Bank with MC Bank.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
GBHC. The Agreement generally provides that prior to the Closing,
GBHC will purchase a five-year extension of its directors' and officers'
liability insurance policy to meet the indemnification obligations provided by
GBHC's Articles of Incorporation or Bylaws in effect on the date of the
Agreement with respect to matters occurring at or prior to the Effective Time,
and MC Bank or MC Bancshares will pay the deductible that the insured director
may be obligated for in connection with claims made pursuant thereto. The
extension would cover claims made during the five-year period following the
Effective Date for actions prior to the Effective Date. No claims are
currently pending against officers and directors of GBHC and Guaranty Bank.
The Agreement also provides that, after the Effective Time, MC
Bancshares or MC Bank will provide generally to officers and employees of GBHC
and its subsidiaries who, at or after the Effective Time, become officers or
employees of MC Bancshares or any of its subsidiaries, employee benefits under
employee benefit plans on the same terms and conditions as those currently
provided by MC Bancshares or its subsidiaries to their similarly situated
officers and employees. For purposes of participation, vesting and accrual of
benefits under such employee benefit plans, service with GBHC or its
subsidiaries prior to the Effective Time will be treated as service under any
similar employee benefit plans maintained by MC Bancshares. The Agreement
further provides that MC Bancshares will cause GBHC and its subsidiaries to
honor all employment, severance, consulting, and other compensation contracts
previously disclosed to MC Bank between GBHC or Guaranty Bank and any current
or former director, officer, or employee, and all provisions for vested amounts
earned or accrued through the Effective Time under GBHC's benefit plans.
Each of Mr. Randolph Cullom and Mr. Leo R. Broussard have employment
contracts with Guaranty Bank. Neither contract is for a term, but instead,
each is for the period mutually agreeable to the parties. Mr. Cullom's
contract provides for a payment to him upon termination without good cause (as
defined in the contract) of one year's annual salary. Mr. Broussard's contract
provides that upon a change in control in which Guaranty Bank is acquired by
one of certain specified institutions (including MC Bank), the contract shall
become a 5-year contract (running from the date of execution, which was March
16, 1995). Upon termination without good cause (as defined in the contract)
after such event, Mr. Broussard is entitled to his annual salary for the
remaining term of the contract.
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<PAGE> 54
The Agreement requires that these employment contracts be terminated
prior to the Closing Date. Guaranty Bank intends to effect the termination of
Mr. Cullom's employment contract by paying him on or immediately prior to the
Closing Date the amount due him upon termination without good cause under his
contract (which is $100,000) and then terminating his contract. See
"Description of the Transaction -- Adjustment of Purchase Price." After an
analysis of Mr. Cullom's contract, the Board of Directors concluded that it
could not likely be terminated under the circumstances without making such
severance payment. As termination of the contract is a condition to the
Merger, the Board of Directors concluded that making the severance payment is
fair and reasonable to and in the best interests of GBHC and its stockholders.
Mr. Cullom has agreed to terminate his contract pursuant to this arrangement.
Guaranty Bank intends to effect the termination of Mr. Broussard's
contract by paying Mr. Broussard on or immediately prior to the Closing Date
the amount due him upon termination without good cause following a change in
control (which would be $99,688 at November 30, 1997) and then terminating the
contract. See "Description of the Transaction -- Adjustment of Purchase
Price." The Board of Directors concluded that because the contract was being
terminated in contemplation of a change in control, it could not likely be
terminated without making the severance payment. As termination of the
contract is a condition to the Merger, the Board of Directors concluded that
making the severance payment was fair and reasonable to and in the best
interests of GBHC and its stockholders. Mr. Broussard has agreed to terminate
the contract pursuant to this arrangement.
Supplemental Retirement Agreements between Guaranty Bank and Randolph
Cullom, Leo R. Broussard, Lee A. Ringeman and Conley J. Dutreix provide for the
payment of accrued retirement benefits (increased by 50%) to each of these
officers in the event of termination of the officer within twenty-four months
following a change in control. The retirement agreements provide that Guaranty
Bank shall not merge or consolidate into or with another corporation unless and
until the successor corporation agrees to assume and discharge the obligations
under the retirement agreements. The Agreement requires that the retirement
agreements be terminated prior to the Closing Date. Guaranty Bank intends to
effect that termination by paying the participants on or immediately prior to
the Closing Date the benefits to which they are entitled under the retirement
agreements in the event of a termination following a change in control (which
would total $889,106 to the four officers at November 30, 1997) and then
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<PAGE> 55
terminating the retirement agreements. See "Description of the Transaction --
Adjustment of Purchase Price." The Board of Directors concluded that because
the retirement agreements were being terminated in connection with a change of
control, and because such termination is a condition to the Merger, making the
change in control payment was fair and reasonable to and in the best interests
of GBHC and its stockholders. The officers have agreed to terminate the
retirement agreements pursuant to this arrangement.
Randolph Cullom (as part of his employment contract), Conley J.
Dutreix and Lee A. Ringeman have bonus contracts with GBHC and Guaranty Bank.
These contracts will be terminated at the Closing upon payment of the
annualized pro-rata bonus that would be required upon termination of the
employee without good cause. See "Description of the Transaction -- Adjustment
of Purchase Price."
Pursuant to the Agreement, each director, executive officer and 5% or
greater holder of Common Stock of GBHC was required to execute and deliver to
MC Bank a Joinder of Shareholder Agreement providing, among other things, that
such person (i) will not transfer his shares of GBHC Common Stock during the
term of the Agreement and (ii) will vote or cause to be voted all of the shares
of GBHC Common Stock over which he has voting authority (other than in a
fiduciary capacity) in favor of the Agreement.
Each director of GBHC also executed a non-compete agreement agreeing
that such director will not, for a period of two years after the Effective Time
of the Merger, become a director of any de novo bank, savings bank, savings
association, trust company, financial institution or other similar business
enterprise within St. Mary Parish, Louisiana, or initiate or assist, directly
or indirectly, any action toward the formation of any de novo bank, savings
bank, savings association, trust company, financial institution or other
similar business enterprise within St. Mary Parish, Louisiana.
Further, each of the directors and officers of GBHC was required to
execute and deliver to MC Bancshares and MC Bank a Claims Letter, stating that
such officer or director has no claims against GBHC and has no knowledge of any
facts or circumstances that are likely to give rise to any claim for
indemnification under GBHC's Articles of Incorporation or Bylaws or as may be
afforded by law in such officer or director's capacity as such.
As a condition to MC Bank's obligations to close the Merger, Guaranty
Bank is required either to dispose of or restructure a specifically identified
loan (to a party that is not an affiliate
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<PAGE> 56
of GBHC) in the amount of approximately $867,000. In the event that the loan
is restructured, Guaranty Bank is required to cause to be obtained at Closing a
participation in the amount of 20% of the loan balance at Closing that will
provide MC Bank in case of default with first payments until MC Bank is paid
its balance in full before the participant receives any funds. It is
contemplated that the participant(s) will be one or more directors of GBHC.
Those directors will, thereafter, receive 20% of the regular loan payments made
in connection with such loan. In addition, in the event of a default in the
loan, such directors may potentially lose the value of their participation.
As of the Record Date, directors and executive officers of GBHC, and
their affiliates, beneficially owned 1,200 shares of MC Bancshares common
stock.
MC Bank. Guaranty Bank leases its banking facility in the
Guaranty Bank & Trust Building at 1201 Brashear Avenue, Morgan City, Louisiana
pursuant to a 15-year lease executed on June 28, 1991 by and between Guaranty
Bank and The Carline Land Corporation and the adjacent parking lot pursuant to
a 15-year lease executed on June 28, 1991 by and between Guaranty Bank and The
Carline Land Trust. Wallace M. Carline, a director and officer of both MC Bank
and MC Bancshares is the president of The Carline Land Corporation and a
settlor of The Carline Land Trust.
Other than the above described leases and the Agreement, there are no
other material contracts, arrangements, or transactions between GBHC or
Guaranty Bank and MC Bank, MC Bancshares or any officer, director or 5%
shareholder of either MC Bank or MC Bancshares.
As of the Record Date, 1997, directors and executive officers of MC
Bancshares and MC Bank owned 1,939 shares of GBHC Common Stock. In addition,
such persons owned 1,028 shares of GBHC $2.70 Preferred Stock and no shares of
GBHC $0.50 Preferred Stock.
DISSENTING STOCKHOLDERS
General. Each GBHC common stockholder who objects to the
Merger shall be entitled to the rights and remedies of dissenting stockholders
provided in Section 131 of the Louisiana Act, a copy of which is included as
Appendix C to this Proxy Statement.
Statutory Requirements. The following is a summary of the steps to be
taken by a GBHC common stockholder who is interested in perfecting such
holder's dissenters' rights and, while it contains
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<PAGE> 57
the material aspects of the dissenters' rights statute, it should be read in
conjunction with the full text of Section 131 of the Louisiana Act. Each of
the steps enumerated below must be taken in strict compliance with the
applicable provisions of the statute in order for holders of GBHC Common Stock
to perfect their dissenters' rights. If the Merger is approved by 80% or more
of the total voting power of GBHC, then dissenters' rights of appraisal, in
accordance with the Louisiana Act, will not be available.
Any written objection, demand, or notice required by the Louisiana Act
in connection with the exercise of dissenters' rights should be sent or
delivered to GBHC at P.O. Box 2208, Morgan City, Louisiana 70381 or 1201
Brashear Avenue, Morgan City, Louisiana 70380, Attention: Paul Ordogne,
Secretary. It is recommended that all required documents to be delivered by
mail be sent by registered or certified mail with return receipt requested.
Any holder of GBHC Common Stock who disapproves of or objects to the
proposed Merger and who wishes to receive in cash the "fair value" of such
shares (which amount will be determined as of the day before the Agreement is
approved by the stockholders and which amount could be greater or lesser than
the cash consideration being offered for such shares pursuant to the Merger)
may elect to do so by taking all of the following steps:
(a) Such stockholder must file with GBHC, prior to or at the
Annual Meeting, a written objection to the proposed Merger.
(b) Such stockholder must also vote such holder's shares of GBHC
Common Stock against the Merger. If the Merger is approved by the required
vote, but by less than 80% of the total voting power, and the Merger authorized
thereby is effected, MC Bank promptly thereafter shall give written notice
thereof, by registered mail, to each stockholder who both filed such written
objection to, and voted such holder's shares against, the Merger, at such
stockholder's last address on GBHC's records.
(c) Each such stockholder, within 20 days after the mailing of
such notice to such holder, but not thereafter, must file with MC Bank a demand
in writing for the fair cash value of such holder's shares of GBHC Common Stock
as of the day before such vote was taken, and such holder must state in such
demand the value demanded and a post office address to which the reply of MC
Bank may be sent.
(d) At the same time, such stockholder must deposit in escrow in a
chartered bank or trust company located in St. Mary Parish the certificates
representing such holder's shares of GBHC Common
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<PAGE> 58
Stock, duly endorsed and transferred to MC Bank upon the sole condition that
such certificates shall be delivered to MC Bank upon payment of the value of
the shares determined in accordance with the provisions of Section 131 of the
Louisiana Act.
(e) With the demand, the stockholder must deliver to MC Bank the
written acknowledgment of such bank or trust company that it so holds such
holder's certificates of GBHC Common Stock.
Any stockholder who fails to take each of the required actions
outlined above in a timely manner will not be entitled to exercise the rights
of a dissenting stockholder.
Unless the objection, demand, and acknowledgment are made and
delivered by the stockholder within the required time period, such holder
conclusively shall be presumed to have acquiesced in the Merger. If MC Bank
does not agree to the value so stated and demanded, or does not agree that a
payment is due, within 20 days after receipt of such demand and acknowledgment,
it shall notify the stockholder in writing, at the designated post office
address, of its disagreement and shall state in such notice the value it will
agree to pay if any payment should be held to be due; otherwise it shall be
liable for, and shall pay to the dissatisfied stockholder, the value demanded.
In case of disagreement as to such fair cash value, or as to whether
any payment is due, after compliance by the parties with the provisions
described above, the dissatisfied stockholder, within 60 days after receipt of
notice in writing of MC Bank's disagreement, but not thereafter, may file suit
against MC Bank, in the district court of St. Mary Parish praying the court to
fix and decree the fair cash value of the dissatisfied stockholder's shares of
GBHC Common Stock as of the day before the stockholder vote on the Agreement
was taken, and the court, on such evidence as may be adduced in relation
thereto, shall determine summarily whether any payment is due and, if so, such
cash value and render judgment accordingly. Any stockholder entitled to file
such suit, within such 60-day period, but not thereafter, may intervene as a
plaintiff in such suit filed by another stockholder and recover therein
judgment against MC Bank for the fair cash value of such holder's shares of
GBHC Common Stock. Failure of the stockholder to bring suit, or to intervene
in such a suit, within 60 days after receipt of notice of disagreement by MC
Bank conclusively shall bind the stockholder (i) to acquiesce in, and not
contest MC Bank's statement that no payment is due or (ii) if MC Bank does not
contend that no payment is due, to accept the value of such holder's shares of
GBHC Common Stock as fixed by MC Bank in its notice of disagreement.
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<PAGE> 59
A stockholder, upon filing a demand for the value of such holder's
shares, shall cease to have any of the rights of a stockholder, except the
rights accorded by Section 131 of the Louisiana Act. Such a demand may be
withdrawn by the stockholder at any time before MC Bank gives notice of
disagreement, as provided by the Louisiana Act. After such notice of
disagreement is given, withdrawal of the demand shall require the consent of MC
Bank. If a demand is withdrawn, or the Merger is abandoned or rescinded, or a
court shall determine that the stockholder is not entitled to receive payment
for such holder's shares of GBHC Common Stock, or the stockholder shall
otherwise lose such holder's dissenters' rights, such holder shall have the
right to receive a cash payment for such holder's shares of GBHC Common Stock
pursuant to the exchange formula described in the Agreement.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of certain anticipated federal income tax
consequences of the Merger. This summary is based on the federal income tax
laws now in effect and as currently interpreted; it does not take into account
possible changes in such laws or interpretations, including amendments to
applicable statutes or regulations or changes in judicial or administrative
rulings, some of which may have retroactive effect. This summary does not
purport to address all aspects of the possible federal income tax consequences
of the Merger and is not intended as tax advice to any person. In particular,
and without limiting the foregoing, this summary does not address the federal
income tax consequences of the Merger to stockholders in light of their
particular circumstances or status (for example, as foreign persons, tax-exempt
entities, dealers in securities, insurance companies, and corporations, among
others). Nor does this summary address any consequences of the Merger under
any state, local, estate, or foreign tax laws. Stockholders, therefore, are
urged to consult their own tax advisors as to the specific tax consequences to
them of the Merger, including tax return reporting requirements, the
application and effect of federal, foreign, state, local, and other tax laws,
and the implications of any proposed changes in the tax laws.
Subject to the provisions and limitations of Section 302(a) of the
Internal Revenue Code, the Merger will constitute a taxable event for the
shareholders of GBHC. The cash to be received by each shareholder (other than
the portion attributable to the payment of accrued dividends) may result in the
recognition of gain or loss, depending upon the shareholder's basis in the GBHC
shares exchanged for cash. Generally, any gain or loss recognized upon such
exchange will be capital gain or loss, provided the shares
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<PAGE> 60
would constitute a capital asset in the hands of the exchanging stockholder.
The cash received may be treated as ordinary income, as opposed to capital
gain, depending on the length of time the shareholder has owned the stock. The
cash received attributable to the payment of accrued dividends will be treated
as ordinary income.
GBHC STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO THEM INDIVIDUALLY,
INCLUDING TAX CONSEQUENCES UNDER STATE, LOCAL OR FOREIGN LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will qualify for purchase accounting
treatment under generally accepted accounting principles. Under this method of
accounting, MC Bank will record its acquisition of GBHC at its cost on the
Effective Date, which cost would include the cash paid in the Merger and all
direct acquisition costs. The acquisition cost will be allocated to the
acquired assets and liabilities of GBHC based upon their fair market values at
the Effective Date in accordance with generally accepted accounting principles.
Acquisition costs in excess of fair values of the net assets acquired will be
recorded as an intangible asset and amortized for financial accounting
purposes. The reported income of MC Bank will include the operations of GBHC
after the Effective Date.
EXPENSES AND FEES
The Agreement provides, in general, that the expenses incurred by GBHC
in connection with the transactions contemplated by the Agreement, including
fees and expenses of its financial or other consultants, investment bankers,
accountants, and counsel and filing fees and printing costs in connection with
this Proxy Statement shall be paid by GBHC. The excess of $28,125.00 in fees
owed to Sheshunoff and the excess of $145,000.00 incurred for expenses of the
Merger generally (net of the tax benefit) will be deducted from the Valuation
Date Shareholders' Equity of GBHC in calculating the Adjusted Shareholders'
Equity for purposes of determining the total consideration due to the
shareholders of GBHC at the Effective Time.
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INFORMATION ABOUT GBHC
PRINCIPAL BUSINESS
GBHC is a bank holding company organized under the laws of the State
of Louisiana with its principal executive office located in Morgan City,
Louisiana. GBHC operates principally through Guaranty Bank, which is a
state-chartered commercial bank and which provides a range of retail banking
services through two full service offices in St. Mary Parish, Louisiana and one
full service office in Lafayette Parish, Louisiana. At June 30, 1997, GBHC had
total consolidated assets of approximately $62.5 million, total consolidated
deposits of approximately $51.1 million, total consolidated net loans of
approximately $36.2 million and total consolidated stockholders' equity of
approximately $5.8 million. GBHC's principal executive office is located at
1201 Brashear Avenue, Morgan City, Louisiana, 70380; its mailing address is
P.O. Box 2208, Morgan City, Louisiana 70381; and its telephone number at its
principal executive office is (504) 384-2813.
GBHC also has a wholly-owned subsidiary called Brashear Management
Corporation which was formed in 1985 to operate and manage property acquired by
Guaranty Bank through foreclosure. The company is currently dormant. Guaranty
Bank has a wholly-owned subsidiary called Guaranty Enterprises, Inc. (formerly
Guaranty Building, Inc.), which was formed to construct and own the Amelia
branch of Guaranty Bank.
Additional information with respect to GBHC and its subsidiaries is
included in documents incorporated by reference in this Proxy Statement. A
copy of GBHC's Annual Report for the fiscal year ended December 31, 1996
accompanies this Proxy Statement.
MARKET PRICES OF COMMON STOCK
GBHC Common Stock is not traded on any exchange and there is no
established public trading market for the stock. There are no bid or asked
prices available for the Common Stock. There is very limited and sporadic
trading of GBHC Common Stock in its local area and, based on the limited
information available to management, it is believed that such trades have
involved combinations of Common and Preferred Stock. Management does not have
information on the allocation of such purchase prices.
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<PAGE> 62
DIVIDENDS
The holders of the GBHC $2.70 Preferred Stock are entitled to receive
dividends in preference to the holders of GBHC Common Stock and any Preferred
Stock ranking junior to the GBHC $2.70 Preferred Stock. (The GBHC $0.50
Preferred Stock ranks junior to the $2.70 Preferred.) Holders of GBHC $2.70
Preferred Stock are entitled to receive if, when and as declared by the Board
of Directors out of funds of GBHC legally available therefor, cumulative cash
dividends at a rate of $2.70 per annum per share. Dividends are cumulative and
accrue on each share of the $2.70 Preferred Stock (whether or not declared)
from the date of issuance. Dividends are payable semiannually on the 13th day
of January and July of each year (or the next business day if such day is not a
business day). Dividends for any period less than six calendar months are pro
rated based upon a 365 day year. Dividends in arrears do not bear interest.
GBHC paid a $2.70 dividend on its $2.70 Preferred Stock on January 24,
1997, which was used to pay arrearages. As of June 30, 1997, dividends
accumulated on the $2.70 Preferred Stock totaled $2,629,665.
The holders of GBHC $0.50 Preferred Stock are entitled to receive
dividends in preference to the holders of GBHC Common Stock and any Preferred
Stock ranking junior to the $0.50 Preferred Stock. The holders of $0.50
Preferred Stock are entitled to receive, if, when and as declared by the Board
of Directors out of funds of GBHC legally available therefor, cumulative cash
dividends at a rate of $0.50 per annum per share. Dividends accrue on each
share of $0.50 Preferred Stock (whether or not declared) from the date of
issuance. Dividends are payable semiannually on the 13th day of January and
July of each year (or the next business day if such day is not a business day).
Dividends for any period less than six calendar months are prorated based upon
a 365 day year. No dividends have been paid on the $0.50 Preferred Stock.
As of June 30, 1997, dividends accumulated from January 13, 1990 on
the $0.50 Preferred Stock totaled $85,437.
GBHC has been unable to declare or pay any dividends on its Common
Stock since the issuance of the Preferred Stock.
GBHC's primary source of income for dividends is from Guaranty Bank,
which is subject to certain legal restrictions on the payment of dividends.
With respect to Guaranty Bank, the prior approval of the Louisiana Commissioner
of Financial Institutions is required if the total of all dividends declared
and paid (together with amounts
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used to redeem or repurchase the Bank's stock) in any calendar year will exceed
the sum of its net profits of that year combined with the net profits of the
immediately preceding year. (Net profits for this purpose means the remainder
of all earnings from current operations and other assets, after deducting all
current operating expenses, paid and accrued dividends on preferred stock, if
any, federal and state taxes, dividends on common stock paid or accrued and
amounts paid or accrued to redeem or repurchase stock over the calculation
period.) The FDIC also has the power to restrict a state bank's dividend
payments if such payments are deemed an unsafe or unsound banking practice or
if the FDIC deems the bank's capital to be inadequate.
PROPERTY
Guaranty Bank owns the land on which its Amelia branch is located
(Service Road, Highway 90, Amelia, Louisiana 70340) and the building and land
at which the Lafayette branch is located (109A Energy Parkway, Lafayette,
Louisiana 70508). Guaranty Bank leases its main office location and the
parking lot at that location. See "DESCRIPTION OF THE TRANSACTION - Interests
of Certain Persons in the Merger." A subsidiary of Guaranty Bank (Guaranty
Enterprises, Inc.) owns the building in which the Amelia branch is located.
On June 26, 1997, by dation en paiement (which means giving in
payment) entered into pursuant to settlement of certain litigation, Guaranty
Bank reacquired certain property (the "Property") that had originally been
acquired by Guaranty Bank through foreclosure. In connection with Guaranty
Bank's reacquisition of the Property, the Agreement requires Guaranty Bank to
increase its reserves by $100,000. Of this amount, $67,500 is required to be
deducted from the Valuation Date Shareholders' Equity in calculating the
Adjusted Shareholders' Equity. In the event that the Property is sold for an
amount in excess of the carrying value between the date of the Agreement and
the Closing Date, the excess will reduce the $67,500 adjustment to the
Valuation Date Shareholders' Equity. As of the date of this Proxy Statement,
the Property has not been sold.
FINANCIAL INFORMATION
For the consolidated financial statement of GBHC at December 31, 1996
and the management's discussion and analysis of financial condition and results
of operations related thereto, see the portions of GBHC's Annual Report to
Stockholders that have been incorporated herein by reference. For the
consolidated financial report of GBHC at June 30, 1997, and the management's
discussion
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and analysis of financial condition and results of operations related thereto,
see the consolidated financial statements attached to this Proxy Statement.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF GBHC
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of GBHC Common Stock, as of the Record
Date.
PRINCIPAL STOCKHOLDERS
The persons named below were, to the knowledge of Bancshares, the only
persons as of the Record Date who beneficially owned more than 5% of the
outstanding GBHC Common Stock. (The two classes of Preferred Stock are
nonvoting except in very limited circumstances in the event of an amendment to
the Articles of Incorporation or Bylaws of GBHC that adversely affect the class
of Preferred Stock and 5% owners of the Preferred Stock are, therefore, not
reflected in the table below.) Beneficial ownership consists of sole voting
and investment power, unless otherwise indicated below.
<TABLE>
<CAPTION>
Name and Address of Common Shares Percent of Class
Beneficial Owner Beneficially Owned (1) (2) of Common Shares(2)
-------------------- ------------------------- -------------------
<S> <C> <C>
Brooks Blakeman 34,070 (3) 9.12%
Post Office Box 2208
Morgan City, LA 70381
Paul Ordogne 24,936 (4) 6.68%
Post Office Box 2208
Morgan City, LA 70381
Anthony Guarisco, Sr. 37,342 10.00%
Post Office Box 2208
Morgan City, LA 70381
</TABLE>
- -------------------------
(1) Determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934 based upon the information furnished by the persons listed
or contained in filings made by them with the Securities and Exchange
Commission.
(2) Includes aggregate of Class A Common Stock and Class B Common Stock.
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(3) Includes 33,870 shares held by the Blakeman Trust over which Mr.
Blakeman shares voting powers.
(4) Includes 16,556 shares held by the Estate of Murray P. Ordogne of
which Mr. Ordogne is executor and a beneficiary.
CERTAIN LITIGATION
GBHC is not presently engaged in any litigation. GBHC and/or Guaranty
Bank are, however, from time to time party to routine litigation arising from
regular business activities. In some instances, such litigation involves
claims or counterclaims against GBHC and/or Guaranty Bank.
ELECTION OF DIRECTORS
The By-laws of GBHC authorize the Board of Directors or the
shareholders, at any meeting thereof, to fix the number of members of the Board
at not less than five nor more than thirty. The persons named in the enclosed
proxy intend to vote such proxy, unless otherwise directed, for the election of
the twelve nominees named below to serve until the Effective Time of the Merger
or until their successors are duly elected and qualified. In the unanticipated
event that any of the nominees cannot be a candidate at the Annual Meeting,
proxies will be voted in favor of such additional nominees as may be designated
by the Board of Directors.
The following tables sets forth certain information, as of the Record
Date, concerning the nominees, and all nominees and officers as a group,
including their beneficial ownership of Common Shares, as well as $0.50
Preferred Shares and $2.70 Preferred Shares, of GBHC. Unless otherwise
indicated, (i) each nominee has been engaged in the principal occupation shown
for more than the past five years (except as noted below), and (ii) shares
shown as being beneficially owned are also held with sole voting and investment
power. Nominees are also members of the Board of Directors of GBHC's
wholly-owned subsidiary, Guaranty Bank.
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<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
$2.70 Percent of $.50 Percent of
Year First Common Percent of Preferred Class of Preferred Class of
Name, Age and Became Shares Class of Shares $2.70 Shares $.50
Principal Director of Beneficially Common Beneficially Preferred Beneficially Preferred
Occupation Bancshares Owned (1)(2) Shares (2) Owned (1) Shares Owned (1) Shares
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Virgil Allen 1996 5,478 (3) 1.47% 1,256 (4) * 0 --
(43) President,
The Rig Museum
(previously,
Engineer/Safety
Director,
Athena
Construction)
- -----------------------------------------------------------------------------------------------------------------------
H.W. Bailey 1982 17,666 (5) 4.73% 7,700 (6) 5.31% 2,266 10.35%
(74)
Retired since
1/1/83;
Executive Vice
President and
Chief
Administrative
Officer of
McDermott, Inc.
(offshore
construction)
- -----------------------------------------------------------------------------------------------------------------------
Brooks Blakeman 1988 34,070 (7) 9.12% 15,475 (8) 10.67% 3,175 (8) 14.50%
(50)
Chairman of the
Board of GBHC
and Guaranty
Bank; Vice
President and
General Manager
of Frank's
Casing Crews,
Inc. (oil field
services)
- -----------------------------------------------------------------------------------------------------------------------
Vincent A. 1996 7,110 (9) 1.90% 3,455(10) 2.38% 0 --
Cannata
(36)
President of
Cannata's Super
Market, Inc.
and Cannata
Corporation
- -----------------------------------------------------------------------------------------------------------------------
Randolph Cullom 1990 200 * 0 -- 0 --
(60)
President and
Chief Executive
Officer of GBHC
and Guaranty
Bank
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-42-
<PAGE> 67
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
$2.70 Percent of $.50 Percent of
Year First Common Percent of Preferred Class of Preferred Class of
Name, Age and Became Shares Class of Shares $2.70 Shares $.50
Principal Director of Beneficially Common Beneficially Preferred Beneficially Preferred
Occupation Bancshares Owned (1)(2) Shares (2) Owned (1) Shares Owned (1) Shares
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank J. 1982 5,280 (11) 1.41% 2,045 (12) 1.41% 1,190 5.43%
Domino, Sr.
(77)
President of
Frank's Motor,
Inc. (auto
sales);
Secretary and
Treasurer of
Domino
Developers,
Inc. (home
construction)
------------------------------------------------------------------------------------------------------------------------
Anthony 1996 200 * 0 -- 0 --
Guarisco, Jr.
(58)
President of
Dispute
Resolution
Associates
(legal
mediation
firm), former
Louisiana State
Senator)
------------------------------------------------------------------------------------------------------------------------
Anthony 1982 37,342 10.00% 4,558 3.14% 2,500 11.42%
Guarisco, Sr.
(87)
President of
Guarisco
Enterprises,
Inc. (holding
company for
subsidiaries
engaged in
diesel fuel
distribution,
shell sales and
transport; and
real estate)
------------------------------------------------------------------------------------------------------------------------
Wiley Magee 1982 4,538(13) 1.21% 1,160(14) * 1,238 5.65%
(54)
President of
Morgan City
Supply, Inc.
(wholesale and
retail
hardware)
------------------------------------------------------------------------------------------------------------------------
</TABLE>
-43-
<PAGE> 68
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
$2.70 Percent of $.50 Percent of
Year First Common Percent of Preferred Class of Preferred Class of
Name, Age and Became Shares Class of Shares $2.70 Shares $.50
Principal Director of Beneficially Common Beneficially Preferred Beneficially Preferred
Occupation Bancshares Owned (1)(2) Shares (2) Owned (1) Shares Owned (1) Shares
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul Ordogne 1996 24,936(15) 6.68% 5,157(16) 3.56% 3,090(17) 14.11%
(45)
Secretary to
the Board of
GBHC and
Guaranty Bank;
Treasurer and
Controller
(and from 1988
to 1994,
Assistant
Treasurer and
Controller) of
Cari Investment
Company
------------------------------------------------------------------------------------------------------------------------
Christian 1996 17,979 (18) 4.81% 8,046(19) 5.55% 1,887(19) 8.62%
Vaccari (37)
President of
Cari Investment
Company and
Cari Capital
Company
------------------------------------------------------------------------------------------------------------------------
Kay S. Vinson 1996 200 * 0 -- 0 --
(57)
President of
Sub-Surface
Tools, Inc.
(oil field
equipment sales
and rentals)
------------------------------------------------------------------------------------------------------------------------
All Executive N/A 157,130 42.08% 49,407 34.07% 16,146 73.73%
Officers and
Directors of
GBHC and
Guaranty Bank
------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Percent of class omitted where less than one percent.
(1) Except as noted below, all shares of GBHC's stock set forth above
constitute direct beneficial ownership by such director with full
voting and investment power. The address of each director is c/o
Guaranty Bank & Trust Company of Morgan City, Post Office Box 2208,
Morgan City, Louisiana 70381.
(2) Includes aggregate of Class A Common Stock and Class B Common Stock.
-44-
<PAGE> 69
(3) Includes 112 Common Shares held by Mr. Allen's wife over which Mr.
Allen shares voting power.
(4) Includes 56 shares held by Mr. Allen's wife over which Mr. Allen
shares voting power.
(5) Includes 7,700 shares in the name of the Bailey Estate, a partnership
of which Mr. Bailey is a 25% owner and the Managing Partner.
(6) Includes 3,850 shares in the name of Bailey Estate.
(7) Includes 33,870 shares held by the Blakeman Trust over which Mr.
Blakeman shares voting powers.
(8) Shares held by the Blakeman Trust over which Mr. Blakeman shares
voting powers.
(9) Includes 6,910 shares in the name of Cannata's Super Market, Inc. over
which Mr. Cannata shares voting and investment power.
(10) Shares held by Cannata's Super Market, Inc.
(11) Includes 60 shares held in the name of Mr. Domino's wife.
(12) Includes 30 shares held in the name of Mr. Domino's wife.
(13) Includes 234 shares held by the Magee Family Trust of which Mr. Magee
is a co-trustee.
(14) Includes 117 shares held by the Magee Family Trust.
(15) Includes 16,556 shares held by the Estate of Murray P. Ordogne of
which Mr. Ordogne is executor and a beneficiary.
(16) Includes 3,392 shares held by the Estate of Murray P. Ordogne.
(17) Shares held by the Estate of Murray P. Ordogne.
(18) Includes 7,846 shares owned by Cari Investment Company over which Mr.
Vaccari shares voting and investment power and 9,933 shares owned by
Cari Corporation over which Mr. Vaccari shares voting and investment
power.
(19) Shares owned by Cari Corporation.
-45-
<PAGE> 70
None of the directors of GBHC holds a directorship in any company with a
class of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended, or subject to the requirements of Section 15(d) of that
Act or in any company registered as an investment company under the Investment
Company Act of 1940, as amended.
Guaranty Bank directors received compensation at the rate of $250 for each
regular directors meeting attended, $100 for committee meetings attended. No
fees were paid for service on GBHC's Board.
No family relationships exist among the above named directors, nominees
for the Board or the executive officers of GBHC or Guaranty Bank, except that
Anthony Guarisco, Sr. and Anthony Guarisco, Jr. are father and son.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
According to (i) the Forms 3 and 4 and any amendments thereto filed
pursuant to Section 16(a) of the Securities Exchange Act of 1934 ("Section 16")
and furnished to GBHC during 1996 by persons subject to Section 16 at any time
during 1996 with respect to securities of GBHC ("Section 16 Insiders"), (ii)
the Forms 5 with respect to 1996 and any amendments thereto filed pursuant to
Section 16 and furnished to GBHC by GBHC Section 16 Insiders, and (iii) the
written representations from GBHC Section 16 Insiders that no Form 5 with
respect to the securities of GBHC was required to be filed by such GBHC Section
16 Insider, respectively, with respect to 1996, no GBHC Section 16 Insider
failed to file altogether or timely any Forms 3, 4 or 5 required by Section 16
with respect to the securities of GBHC or to disclose on such Forms
transactions required to be reported thereon except Mr. Guarisco, Jr. and Mr.
Cannata, who failed to file their Form 3s following their election to the Board
of GBHC in October 1996 timely. Those Form 3s were filed in July 1997.
BOARD COMMITTEES
During 1996, the Board of Directors of GBHC met 11 times. During 1996,
the Board of Directors of Guaranty Bank met 16 times (consisting of 12 regular
and 4 special meetings). Each director attended at least 75% of the aggregate
number of board and committee meetings held.
The Board of Directors of Guaranty Bank has an Executive Committee, the
current members of which are Messrs. Cullom, Bailey,
-46-
<PAGE> 71
Blakeman, Cannata and Guarisco, Jr. The Executive Committee has and may
exercise all of the authority of the Board of Directors and the management of
business and affairs of Guaranty Bank. However, the committee does not have
the authority of the Board of Directors in references to:
(a) amending the Articles of Incorporation;
(b) approving a plan of merger of consolidation;
(c) recommending to the shareholders the sale, lease, or exchange
of all or substantially all of the property and assets of Guaranty Bank
otherwise than in the usual and regular course of its business;
(d) recommending to the shareholders a voluntary dissolution of
Guaranty Bank or a revocation thereof;
(e) amending, altering, or repealing the by-laws or adopting new
by-laws;
(f) filling vacancies in or removing members of the Board of
Directors or of any committee;
(g) electing or removing officers or committee members;
(h) fixing the compensation of any committee member; and
(i) altering or repealing any resolution of the Board of Directors
which by its terms provides that it shall not be amendable or repealable.
The Executive Committee did not meet during 1996.
The Board of Directors of Guaranty Bank has an Audit Committee, the
current members of which are: Messrs. Blakeman, Guarisco, Jr., Ordogne and
Mrs. Vinson, all of whom are outside directors. The Audit Committee, which met
one time during 1996, is responsible for: (1) making recommendations to the
Board of Directors concerning the selection and retention of GBHC's independent
auditors; (2) consulting with the Controller with regard to the plan of audit;
(3) consulting directly with the Controller on any matter the Committee or the
Controller deems appropriate in connection with carrying out the audit; (4)
reviewing the plan and results of audits by its independent auditors and the
Federal Deposit Insurance Corporation; and (5) discussing audit recommendations
with management and reporting the
-47-
<PAGE> 72
results of its reviews to the Board of Directors. Each director attended the
meeting.
Neither GBHC nor Guaranty Bank has a Nominating Committee. Nominees
for directors are selected by their Board of Directors. Neither company has
procedures established to consider nominees recommended by security holders.
EXECUTIVE OFFICERS
The executive officers of GBHC and Guaranty Bank as of the Record
Date, are as follows:
<TABLE>
<CAPTION>
FIRST
APPOINTED
POSITION CURRENTLY TO SUCH
NAME (AGE) HELD POSITION STOCK OWNERSHIP
<S> <C> <C> <C>
Brooks Blakeman Chairman of the Board of GBHC 1992 See "Election of
(50) and Guaranty Bank Directors"
Randolph Cullom President and Chief Executive 1990 See "Election of
(60) Officer of GBHC and Guaranty Directors"
Bank
Paul Ordogne Secretary of the Board of GBHC 1996 See "Election of
(45) and Guaranty Bank Directors"
Lee A. Ringeman Executive Vice President and 1990 1,931 shares common stock
(67) Chief Financial Officer of (1)
GBHC and Guaranty Bank 555 shares $2.70 Preferred
Stock (2)
800 shares (3.65%) $0.50
Preferred Stock
Conley J. Dutreix Executive Vice President of 1989 200 shares Common Stock
(50) Guaranty Bank and Assistant
Secretary of the Board of
Directors of GBHC and Guaranty
Bank
</TABLE>
- -----------------
(1) Includes 1,186 shares that Mr. Ringeman holds jointly with his wife
and 32 shares that Mr. Ringeman holds jointly with his grandson.
(2) Includes 144 shares held by Mr. Ringeman's wife and 32 shares held
jointly by Mr. Ringeman and his grandson.
-48-
<PAGE> 73
Each executive officer, except Mr. Ordogne, has been an officer or
director of GBHC and Guaranty Bank for five years or more. Mr. Ordogne was
appointed Secretary of the Board of GBHC and Guaranty Bank in 1996 following
his election to the Board.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by
the Bank for services rendered in all capacities during the fiscal years ended
December 31, 1994, 1995 and 1996, with respect to each executive officer whose
total cash compensation exceeded $100,000.00.
Active officers of GBHC are also officers of the Bank and receive no
annual compensation from GBHC.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
NAME AND OTHER ALL OTHER
PRINCIPAL ANNUAL COMPEN- COMPEN-
POSITION YEAR SALARY BONUS (1) SATION (2) SATION (3)
<S> <C> <C> <C> <C> <C>
Randolph Cullom 1996 $100,000 $27,042 $5,250 $40,782
President and Chief 1995 90,000 26,785 4,500 37,621
Executive Officer of GBHC 1994 90,000 30,000 4,250 34,498
and Guaranty Bank
</TABLE>
- -----------------
(1) Mr. Cullom is entitled to a non-cumulative annual cash bonus of $300
for each basis point of return on average annual assets, up to a
maximum of $30,000. Return on average annual assets is defined as the
after tax earnings before any bonuses. The bonus earned in each
fiscal year is paid in the following fiscal year.
-49-
<PAGE> 74
(2) Represents directors fees.
(3) Includes term life insurance premiums paid on behalf of Mr. Cullom in
the amounts of $792 in 1996, $765 in 1995 and $529 in 1994. This
group policy has no cash surrender value. Also includes amounts
accrued on behalf of Mr. Cullom pursuant to the Bank's unqualified
defined benefit retirement program (in the amounts of $39,990 in 1996,
$36,856 in 1995 and $33,969 in 1994), which program is more fully
described below.
The Bank instituted an unqualified defined benefit retirement program
for four of its executive officers which provides, pursuant to the terms of the
retirement agreements, that the following benefits will be paid to the
executive officers by the Bank:
<TABLE>
<CAPTION>
Pre-Retirement Annual Planned
Name and Principal Death Retirement Retirement
Position Benefit (1) Benefit (2) Date (Age)
<S> <C> <C> <C>
Randolph Cullom $487,250 $50,000 2002 (65)
President and Chief Executive
Officer
Lee A. Ringeman $292,350 $30,000 2000 (70)
Executive Vice President
Conley J. Dutreix $292,350 $50,000 2012 (65)
Executive Vice President
Leo R. Broussard $ 70,000 $12,000 1999 (65)
Vice President
</TABLE>
- -----------------
(1) Benefits payable to the participant's named beneficiaries.
(2) Benefits payable monthly for life, 15 years certain.
The death benefits are funded by single premium life insurance
policies on the lives of the participants. The policies are owned by Guaranty
Bank and the proceeds from death benefits under the policies that would be paid
to the Bank (and out of which the Bank would expect to fund the death benefits
it would be required to pay to the executive officers) are payable to Guaranty
Bank. Projected
-50-
<PAGE> 75
June 30, 1997 death benefits that would be paid to the Bank are approximately
as follows: with respect to Mr. Cullom - $829,000; with respect Mr. Ringeman -
$316,000; with respect Mr. Dutreix -$388,000; and with respect Mr. Broussard -
$155,000. The retirement benefits are being funded by regular accruals by the
Bank.
If Guaranty Bank terminates a participant's employment prior to his
planned retirement date for cause, the participant shall not be entitled to any
benefits. If employment is terminated prior to his planned retirement date,
other than by death or discharge for cause, Guaranty Bank shall pay to the
participant an amount which is the actuarial equivalent of his annual
retirement benefit, computed in accordance with the agreement.
If a participant's employment is terminated within twenty-four (24)
months following a change in control of Guaranty Bank, the participant will be
entitled to the benefits set forth in the preceding paragraph with the
respective benefits being increased in amount by fifty (50%) percent. Change
in control is defined as an occurrence in which a person, not presently owning
25% of the voting shares, including a syndicate or group deemed under Louisiana
law to be a person, becomes the beneficial owner, directly or indirectly, of
securities of the Bank having 25% or more of the total number of votes which
may be cast for directors of GBHC, or during any period of two consecutive
years, individuals who constitute the board of directors at the beginning of
such period cease for any reasons to constitute at least a majority thereof
unless the election, or the nomination for election by GBHC's shareholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period. The increased benefits made applicable in this event are not included
in the insurance policies or accruals referred to above and would be a cost to
GBHC at the point any such benefits became payable. If the Agreement is
approved and the Merger takes place, the Agreement requires that these
retirement agreements be terminated prior to the Closing. See "Description of
the Transaction -- Adjustment of Purchase Price."
GBHC and Guaranty Bank have no established policy or practice with
respect to providing personal benefits to officers, directors or principal
stockholders. Although the Bank pays for civic and social club memberships for
certain officers, the aggregate annual value per person of such benefits is
considerably less than $2,500.
Mr. Cullom and Mr. Broussard have employment contracts with Guaranty
Bank. Under Mr. Cullom's employment contract, his initial
-51-
<PAGE> 76
base salary was $90,000. His current base salary is $100,000. In addition to
the annual salary, he is entitled to a noncumulative annual cash bonus of $300
for each basis point of return on Average Annual Assets, up to a maximum of
$30,000. Return on Average Annual Assets is defined as the after tax earnings
before any bonuses. Also, as part of the employment agreement, in the event
Mr. Cullom is terminated without good cause, he is entitled to receive one
year's annual salary as severance pay. Mr. Broussard's employment contract
provides that in the event of a change in control where one of certain
specified institutions (including MC Bank) is the acquiror, the contract shall
become a five-year contract (running from the date of execution, which was
March 16, 1995). Upon termination without good cause (as defined in the
contract) after such event, Mr. Broussard is entitled to his annual salary for
the remaining term of the contract. If the Agreement is approved and the
Merger takes place, the Agreement requires that these employment contracts be
terminated prior to the Closing. See "Description of the Transaction --
Adjustment of Purchase Price."
Mr. Ringeman and Mr. Dutreix also have bonus contracts that provide
for an annual cash bonus of $100 for each basis point of return on Average
Annual Assets (as defined therein), up to a maximum of $100,000. These
contracts will be terminated prior to the Closing. See "Description of the
Transaction -- Adjustment of Purchase Price."
Neither GBHC nor Guaranty Bank has any other remuneration, pension or
retirement plans in effect. The Bank provides health and life insurance
coverage for all employees.
Guaranty Bank has in the ordinary course of business banking
transactions with the directors and executive officers of Guaranty Bank and
their associates. When the transactions consisted of loans, such loans were
made on substantially the same terms, including interest rates, collateral and
repayment terms, as those prevailing at the time for comparable transactions
with others, and did not involve more than the normal risk of collectibility or
present other unfavorable features.
As authorized by holders of GBHC Common Stock at GBHC's 1996 annual
meeting, GBHC reimbursed Cari Investment Company (of which director Christian
Vaccari is president, and approximately a 33% shareholder and director Paul
Ordogne is Treasurer and Controller) for $80,000 of its costs and expenses
incurred in preparing an opposing proxy statement, solicitation of proxies and
certain legal actions in which it engaged in connection therewith.
-52-
<PAGE> 77
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of GBHC, incorporated by
reference in this Proxy Statement, have been audited by Darnall, Sikes, Kolder,
Frederick & Rainey, independent auditors, for the periods indicated in their
report thereon which is included in the Annual Report to Stockholders for the
year ended December 31, 1996 that accompanies this Proxy Statement. The
financial statements audited by Darnall, Sikes, Kolder, Frederick & Rainey have
been incorporated herein be reference in reliance on their report given on
their authority as experts in accounting and auditing.
A representative of Darnall, Sikes, Kolder, Frederick & Rainey (which
as of May 1, 1997 changed its name to Darnall, Sikes & Frederick) is expected
to be present at the Annual Meeting and, although he is not expected to make a
statement, he will be available to respond to questions.
FINANCIAL STATEMENTS
The Financial Report of GBHC and subsidiaries for the quarters ended
June 30, 1997 and 1996 are attached hereto. A copy of GBHC's Annual Report to
Stockholders, portions of which have been incorporated herein by reference,
accompanies this Proxy Statement.
STOCKHOLDER PROPOSALS
If the Agreement is not approved by the GBHC stockholders or the
Merger is not consummated for some other reason, stockholders who desire to
present a proposal qualified for inclusion in the proxy materials relating to
the 1998 Annual Meeting of GBHC must forward such proposals to the Secretary of
GBHC at the address listed on the first page of this Proxy Statement in time to
arrive prior to December 15, 1997, unless GBHC notifies the stockholders
otherwise. Only those proposals that are proper for stockholder action and
otherwise proper may be included in GBHC's Proxy Statement.
OTHER MATTERS
GBHC does not know of any matters to be presented at the Annual
Meeting other than those mentioned herein. However, if other matters properly
come before the meeting or any adjournments thereof, it is the intention of the
persons named in the enclosed proxy to vote the shares represented by them in
accordance with their best judgment.
-53-
<PAGE> 78
Stockholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors of GBHC, and return it at once in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Paul Ordogne
Secretary
________________, 1997
-54-
<PAGE> 79
CONSOLIDATED FINANCIAL STATEMENTS
OF GUARANTY BANCSHARES HOLDING CORPORATION
AND SUBSIDIARIES (UNAUDITED)
For the Quarters Ended June 30, 1997 and 1996
-55-
<PAGE> 80
I N D E X
Financial Statements
Consolidated Statement of Condition
June 30, 1997, and December 31, 1996 2
Consolidated Statement of Income -
Quarters Ended June 30, 1997 and 1996 3
Consolidated Statement of Cash Flows -
Quarters Ended June 30, 1997 and 1996 5
Consolidated Statement of Changes in
Stockholders' Equity 6
Notes to Consolidated and Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
<PAGE> 81
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATION STATEMENT OF CONDITION
<TABLE>
<CAPTION>
June 30 December
1997 31, 1996
-------- ---------
(in thousands)
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,646 $ 2,626
Investment securities available for sale 3,593 4,648
(Estimated market value $12,463,000
and $12,832,000, respectively) 12,446 12,818
Federal funds sold 4,125 5,350
Loans 36,656 38,142
Less: Allowance for loan losses 481 506
-------- --------
Net Loans 36,175 37,636
Premises and equipment 1,848 1,969
Other real estate 152 0
Other assets 1,468 1,383
-------- --------
Total Assets $ 62,453 $ 66,430
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 51,112 $ 56,793
Securities sold under agreement to repurchase 1,802 0
Obligation under capital lease 1,496 1,546
Notes payable 1,374 1,480
Other liabilities 832 1,045
-------- --------
Total Liabilities 56,616 60,864
-------- --------
Commitments and contingent liabilities (Note 2) -- --
Stockholders' Equity
$2.70 Cumulative Preferred stock; 145,001
shares authorized, issued and outstanding 3,481 3,481
$.50 Cumulative Preferred stock, 64,999 shares
authorized, 21,900 issued and outstanding 107 107
Class A Common stock; $5 par value; 210,000
shares authorized and outstanding 1,050 1,050
Class B Common stock; no par value; 210,000
shares authorized, 170,887 issued and
Outstanding 17 17
Capital surplus 2,039 2,039
Accumulated deficit (843) (1,131)
Treasury Stock (14) (14)
Unrealized gain on securities
available for sale 0 17
-------- --------
Total Stockholders' Equity 5,837 5,566
-------- --------
Total Liabilities and Stockholders' Equity $ 62,453 $ 66,430
======== ========
</TABLE>
2
<PAGE> 82
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1997 1996
--------- ---------
(In thousands, except
per share data)
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 883 $ 885
Interest on federal
funds sold 49 48
Interest on investment securities:
Taxable income 235 203
Non-Taxable income 9 9
--------- ---------
Total Interest Income 1,176 1,145
INTEREST EXPENSE
Interest on deposits 409 414
Federal funds purchased and securities sold
under agreements to repurchase 12 0
Interest on capital lease 38 40
Interest on notes payable 25 28
--------- ---------
Total Interest Expense 484 482
--------- ---------
Net Interest Income 692 663
Provision (recovery) from reserve
for loan losses 0 0
--------- ---------
Net Interest Income after Provision (Recovery)
from reserve for loan losses 692 663
Other operating income 67 69
Operating expenses 562 642
--------- ---------
Income before income tax expense 197 90
Income tax expense 67 32
--------- ---------
Net income 130 58
Dividends required for preferred stock (101) (101)
--------- ---------
Net income (loss) available for common
stockholders $ 29 $ ( 43)
========= =========
Earnings (loss) per common share $ .08 $ ( .12)
========= =========
Weighted average common shares
outstanding 373,425 373,025
========= =========
</TABLE>
3
<PAGE> 83
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1997 1996
(In thousands, except
per share data)
(Unaudited)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,793 $ 1,701
Interest on federal
funds sold 101 141
Interest on investment securities:
Taxable income 488 410
Non-Taxable income 18 19
--------- ---------
Total Interest Income 2,400 2,271
INTEREST EXPENSE
Interest on deposits 851 822
Federal funds purchased and securities sold
under agreements to repurchase 12 0
Interest on capital lease 76 81
Interest on notes payable 49 56
--------- ---------
Total Interest Expense 988 959
--------- ---------
Net Interest Income 1,412 1,312
Provision (recovery) from reserve
for loan losses 0 0
--------- ---------
Net Interest Income after Provision (Recovery)
from reserve for loan losses 1,412 1,312
Other operating income 137 148
Operating expenses 1,113 1,207
--------- ---------
Income before income tax expense 436 253
Income tax expense 148 90
--------- ---------
Net income 288 163
Dividends required for preferred stock (202) (202)
--------- ---------
Net income (loss) available for common
stockholders $ 86 $ ( 39)
========= =========
Earnings (loss) per common share $ .23 $ ( .10)
========= =========
Weighted average common shares
outstanding 373,425 373,025
========= =========
</TABLE>
4
<PAGE> 84
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1997 1996
---- ----
(In thousands)
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 288 $ 163
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of premium (accretion of discount
on investments), net (187) (98)
Depreciation and amortization 122 142
(Increase) decrease in accrued interest receivable 52 (6)
Increase (decrease) in accrued interest payable (28) 63
Increase (decrease) in accounts payable
and other liabilities (184) 65
-------- --------
Net cash provided by operating activities 63 329
Cash flows from investing activities:
Increase (decrease) in federal funds sold 1,225 1,325
Proceeds from maturities of investment securities 10,867 13,856
Purchase of investment securities (9,273) (15,250)
Net (increase) decrease in loans 1,462 (4,102)
Investment in other real estate owned (152) --
Purchase of premises and equipment (1) (160)
Change in other assets (136) (75)
-------- --------
Net cash provided (used) by investing activities 3,992 (4,406)
Cash flows from financing activities:
Net increase (decrease) in demand deposits
NOW, savings, and certificates of deposit (5,681) 2,864
Net increase (decrease) in securities sold under
Agreement to repurchase 1,802 --
Increase (decrease) of notes payable (106) (99)
Repayment of capital lease obligation (50) (38)
-------- --------
Net cash provided (used) in financing activities (4035) 2,727
Net increase (decrease) in cash and due from banks 20 (1,350)
Cash and due from banks, beginning of year 2,626 3,230
-------- --------
Cash and due from banks, end of quarter $ 2,646 $ 1,880
======== ========
Supplement cash flow information:
Interest paid $ 1,017 $ 898
======== ========
Income taxes paid $ 89 $ 139
======== ========
</TABLE>
5
<PAGE> 85
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
On Securities
Balance at Available Balance at
Jan. 1, 1997 Net Income For Sale June 30, 1997
<S> <C> <C>
$ 2.70
Preferred
Stock $ 3,481 -- -- 3,481
$ .50
Preferred
Stock $ 107 -- -- 107
Class A
Common
Stock $ 1,050 -- -- 1,050
Class B
Common
Stock $ 17 -- -- 17
Capital
Surplus $ 2,039 -- -- 2,039
Accumulated
Deficit $(1,131) 288 -- (843)
Treasury
Stock $ (14) -- -- (14)
Unrealized
loss on
Securities
available
for sale $ 17 -- (17) 0
</TABLE>
6
<PAGE> 86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of results for the six
(6) months ended June 30, 1997 and 1996. All adjustments are considered to be
of recurring nature. Results for the interim period may not necessarily be
indicative of results for the entire year.
NOTE 1:
On January 13, 1983, pursuant to a Reorganization and Merger
Agreement, Guaranty Bank & Trust Company of Morgan City (the Bank) was merged
into a subsidiary of Guaranty Bancshares Holding Corporation (Bancshares) with
the effect that the Bank became a wholly owned subsidiary of Bancshares.
Bancshares has outstanding $2.70 Cumulative Preferred Stock and Class
B, No Par Value, Common Stock which were issued in 1988 in exchange for
subordinated debentures issued in 1983 when the company was formed. Bancshares
also has outstanding Class A, $5.00 Par Value, Common Stock which were also
issued when the company was formed. The $.50 Cumulative Preferred Stock is
subordinate to the $2.70 Preferred Stock and were issued for cash in 1989 and
1990.
The Class B common stock does not differ from the Class A common stock
except that Class A common stock has a par value of $5 per share and Class B
Common stock has no par value.
NOTE 2: Contingent Liabilities
As of June 30, 1997, there were $575,808 of letters of credit
outstanding which are not reflected in the consolidated financial statements.
Management does not expect any loss as a result of these transactions.
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary
For the six months ended June 30, 1997, Bancshares earned $288,000,
compared with earnings of $163,000 for the comparable period in 1996. The
primary reasons for the increase in earnings were increased net interest income
and lower operating expenses. The subsidiary bank did not make a provision for
loan losses in either period.
7
<PAGE> 87
Changes in financial position at June 30, 1997 from December 31, 1996
were net decreases in investment securities and loans. Deposits decreased
$5,681,000. Investments decreased $1,427,000. Loans decreased $1,486,000. Notes
payable to the Federal Home Loan Bank of Dallas decreased 106,000 through
amortization. These borrowings are used to match maturities and amortization on
certain loans.
Net credit income is the most significant component of financial
operations and is affected by interacting forces, including changes in
investment market interest rates and changes in volume and mix of interest
earning assets and interest bearing deposits. For the first six months of 1997,
net interest income as a percent of average earning assets of $59,380,000 was
4.75 percent, up from 4.68 percent for the six months of 1996. The increase is
attributable to a small decline interest rates paid on deposits.
Net Operating Results
The following analysis should be read in conjunction with the
accompanying financial statements.
Net interest income increased a net of $100,000. Of this amount,
interest on funds sold decreased $40,000. Interest on loans increased $92,000,
while interest earned on securities investments increased $77,000. Total
interest expenses increased $29,000.
The increase in loan income is attributable to a $1,937,000 increase
in average loans outstanding, average yields remained constant at 9.5 percent.
The increase in investment income was the result of a $2,903,000 increase in
average securities investments and was offset by a 0.1 percent decrease in
average yields.
Interest expense increased $29,000 from 1996 levels. Average interest
bearing deposits increased $3,082,000, while average rates paid decreased 0.2
percent from 1996 levels to 3.7 percent. Funds borrowed are from the Federal
Home Loan Bank of Dallas and were used to fund commercial real estate loans
which have a comparable scheduled amortization and maturity.
Investment Securities
Investment securities decreased from $17,632,000 as of June 30, 1996
to $16,039,000 at June 30, 1997. This is primarily attributable to maturities
of U.S. Government agency securities and scheduled amortization on mortgage
backed securities. There were no securities sales during the first six months
of 1997 or 1996.
8
<PAGE> 88
An analysis of investment securities follows (in thousands).
<TABLE>
<CAPTION>
Amortized Unrealized Market
Cost Gain Loss Value
------- ------- ------- -------
<S> <C> <C> <C> <C>
June 30, 1996
Held to Maturity
U.S. Treasury Securities $ 1,251 $ -- $ 2 $ 1,249
Obligations of U.S.
Agencies and Corporations 10,545 4 33 10,516
Obligations of states and
political subdivisions 666 5 35 668
Other Investments 15 -- -- 15
------- ------- ------- -------
Total $12,477 $ 9 $ 38 $12,448
======= ======= ======= =======
Available for Sale
Obligations of U.S.
Agencies and Corporations $ 4,649 $ 11 $ 8 $ 4,652
Other investments 503 -- -- 503
------- ------- ------- -------
Total $ 4,606 $ 11 $ 8 $ 5,155
======= ======= ======= =======
December 31, 1996
Held to Maturity
U.S. Treasury Securities $ 250 $ 1 $ -- $ 251
Obligations of U.S.
Agencies and Corporations 11,898 8 8 11,898
Obligations of states and
political subdivisions 661 13 -- 674
Other Investments 9 -- -- 9
------- ------- ------- -------
Total $12,818 $ 22 $ 8 $12,832
======= ======= ======= =======
Available for Sale
Obligations of U.S.
Agencies and Corporations $ 4,109 $ 30 $ 5 $ 4,134
Other investments 514 -- -- 514
------- ------- -------
Total $ 4,623 $ 30 $ 5 $ 4,648
======= ======= ======= =======
</TABLE>
9
<PAGE> 89
June 30, 1997
Held to Maturity
U.S. Treasury Securities $ 1,996 $ 2 $ -- $ 1,998
Obligations of U.S.
Agencies and Corporations 9,811 2 1 9,812
Obligations of states and
political subdivisions 636 14 -- 650
Other investments 3 -- -- 3
------- ----- ----- -------
Total $12,446 $ 18 $ 1 $12,463
======= ===== ===== =======
Available for Sale
U.S. Treasury Securities $ 999 $ -- $ 1 $ 998
Obligations of U.S.
Agencies and Corporations 2,069 9 7 2,071
Other investments 524 -- -- 524
------- ----- ----- -------
Total $ 3,592 $ 2 $ 1 $ 3,593
======= ===== ===== =======
An analysis of the market value of the investment portfolio by
maturity periods or repricing frequency at June 30, 1997 follows (in
thousands):
<TABLE>
<CAPTION>
Amortized Market
Cost Value
------- -------
<S> <C> <C>
Within one year $10,806 $10,809
One to five years 3,826 3,847
Five to ten years 224 230
After ten years 1,182 1,170
------- -------
Total $16,038 $16,056
======= =======
</TABLE>
Maturities of mortgage backed securities are classified by contractual
(stated) maturity dates. Expected maturities will differ from contractual
maturities because borrowers have the right to call or prepay obligations.
Investment securities with a carrying value of approximately
$8,822,000, $9,047,000, and $8,106,000 at June 30, 1997, December 31, 1996 and
June 30, 1996, respectively, were pledged to secure public deposits as required
by law.
10
<PAGE> 90
Deposits
A summary of the deposits as of June 30, 1997, December 31, and June
30, 1996 is as follows:
<TABLE>
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Demand Deposits $10,247 $ 8,826 $ 9,023
NOW Accounts 6,752 7,539 5,361
Money Market
Investment Accts 5,261 8,461 6,342
Savings Deposits 6,751 6,675 6,596
Other Time Deposits 15,671 18,886 19,413
Certificates of Dep
of $100,000 or
more 6,430 6,406 6,899
------- ------- -------
$51,112 $56,793 $53,634
======= ======= =======
</TABLE>
Non-interest bearing demand deposits at June 30, 1997 increased
$1,224,000, from June 30, 1996. As interest rates paid on money market
investment accounts and other bank deposits remained low, depositors
transferred funds to higher yielding and more competitive non-bank related
institutions. Certificates of deposits of $100,000 or more to commercial
entities increased only $63,000 while public fund deposits in certificates of
deposit of $100,000 or more decreased $532,000.
The Bank has insignificant foreign and no brokered deposits.
Short Term Borrowings
The Bank had no short term borrowings in 1996. However during the
second quarter of 1997, the Bank instituted a program of selling securities
under repurchase agreements. The amount outstanding at June 30, 1997 was
$1,802,000.
11
<PAGE> 91
Allowance for Loan Losses and Non-Performing Loans and Other Real Estate
The allowance for loan losses was 1.31 percent of loans outstanding at
June 30, 1997, compared with 1.32 percent at December 31, 1996 and June 30,
1996. The Bank did not make a provision to the reserve for loan losses during
the six months of 1997 or 1996.
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C> <C>
Balance at January 1, $506,000 $505,000
(Recovery) Provision for loan losses 0 0
Recoveries credited to the allowance 8,000 6,000
-------- --------
514,000 511,000
Losses charged to the allowance 33,000 2,000
-------- --------
Balance at June 30 $481,000 $509,000
======== ========
</TABLE>
Indicative of improving conditions in the local economy, the following
schedule shows non-performing loans on non-accrual status and repossessed and
foreclosed real estate.
<TABLE>
<CAPTION>
June 30 December 31 June 30
1997 1996 1996
-------- -------- -------
<S> <C> <C> <C>
Non-accrual loans $ -0- $145,000 $82,000
Foreclosed real estate 152,000 -0- 64,000
</TABLE>
Management believes the Bank has adequate reserves to provide for
possible future loan losses.
Other Income
Other operating income aggregated to $137,000 for the first six months
of 1997 compared with $148,000 in 1996. There was no trading account activity
in 1997 or 1996.
<TABLE>
<CAPTION>
Six Months Ending
June 30
1997 1996
-------- --------
<S> <C> <C>
Service charges on deposit accounts $ 87,000 $ 95,000
Other service charges and fees 29,000 35,000
Other operating income 21,000 18,000
-------- --------
Total $137,000 $148,000
======== ========
</TABLE>
12
<PAGE> 92
Operating Expenses
Other operating expenses totaled $1,113,000 for the first six months
of 1997, compared with $1,207,000 for 1996, a $94,000 decrease, primarily due
to accounting and legal fees incurred in 1996 in an unsuccessful stock exchange
offer.
Personnel expenses totaled $549,000 for the period, compared with
$534,000 in 1996. In 1996, expenses related to other real estate and
repossessed property, net of rental income on these properties, totaled $2,000.
In 1997, these expenses, net of rental income on these properties, totaled
$6,000. These expenses represent taxes, maintenance and insurance on the
foreclosed real estate reported above.
A summary of other operating expenses is as follows:
<TABLE>
<CAPTION>
Six Months 1997
Ending Over
June 30, (Under)
1997 1996 1996
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Salaries and benefits $ 549 $ 534 $ 15
Expenses related to other real
estate and repossessed
properties, net of rental
income on these properties 6 2 4
Net occupancy expenses 206 209 (3)
Equipment and computer expenses 70 94 (24)
Professional fees and services 67 149 (82)
FDIC and other insurance 21 19 2
Other 194 200 (6)
------ ------ ----
Total $1,113 $1,207 $ 94
====== ====== ====
</TABLE>
Income Taxes
Income taxes were accrued at the U.S. federal tax rate.
Liquidity
The term "liquidity" generally refers to the ability of a company to
generate adequate of cash to meet its needs. For a bank, "liquidity" represents
its ability to meet timely the demand for funds used to honor checks, to pay
maturing time deposits, to fund increases in loan demand and to satisfy other
commitments. Unless it borrows funds, a bank's sources of funds are generally
its core deposits and its retained earnings.
At June 30, 1997 and 1996, the Bank's gross loans-to-deposits ratios
were 71.5 percent and 72.1 percent, respectively. Loans decreased $2,097,000
from 1996 levels. Significant to the loan-to-deposit ratio computation,
deposits also decreased $2,522,000 as of June 30, 1997 from 1996. The Bank has
no brokered deposits.
13
<PAGE> 93
As a bank holding company, the ability of Bancshares to pay its
obligations is wholly dependent upon the receipt of dividends and tax benefits
from the Bank.
Capital Resources
At June 30, 1997, stockholders' equity amounted to $5,837,000 compared
with $5,820,000 at June 30, 1996 and $5,566,000 at December 31, 1996.
Selected capital adequacy measures for Bancshares and Guaranty Bank are as
follows as of June 30, 1997:
Risk-based capital
<TABLE>
<CAPTION>
GUARANTY GUARANTY
BANCSHARES BANK
---------- ----
<S> <C> <C>
Tier 1 10.36% 10.27%
Total Capital 11.22% 11.13%
Leverage ratio 9.35% 9.27%
</TABLE>
Bancshares paid a $2.70 dividend on its $2.70 cumulative preferred stock on
January 24, 1997. No dividends have been declared or paid on its $.50
cumulative preferred stock since their issuance. As a result, accumulated and
unpaid dividends at July 13, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
$2.70 Preferred stock, dividends
accumulated from January 13, 1991
through July 13, 1997 $2,643,000
$.50 Preferred stock, dividends
accumulated from January 13, 1990
through July 13, 1997 86,000
----------
$2,729,000
==========
</TABLE>
14
<PAGE> 94
APPENDIX A
SELECTED PORTIONS
OF
ACQUISITION AGREEMENT
<PAGE> 95
ACQUISITION AGREEMENT
BY AND BETWEEN
MC BANK & TRUST COMPANY
AND
GUARANTY BANCSHARES HOLDING CORPORATION
DATED AS OF JUNE 24, 1997
<PAGE> 96
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.2 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . . -2-
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
ARTICLE 2 EFFECTS OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . -3-
2.1 Constituent Corporations. . . . . . . . . . . . . . . . . . . . . . -3-
2.2 Articles of the Surviving Corporation. . . . . . . . . . . . . . . . -3-
2.3 Bylaws of the Surviving Corporation. . . . . . . . . . . . . . . . . -3-
2.4 Directors and Officers of the Surviving Corporation. . . . . . . . . -3-
ARTICLE 3 CONVERSION OF SHARES IN THE MERGER . . . . . . . . . . . . . . . . . -3-
3.1 Conversion of Shares. . . . . . . . . . . . . . . . . . . . . . . . -3-
3.2 Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
3.3 Shares Held by GBHC or MC. . . . . . . . . . . . . . . . . . . . . . -6-
3.4 Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.5 Cash Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
ARTICLE 4 EXCHANGE OF SHARES IN THE MERGER . . . . . . . . . . . . . . . . . . -6-
4.1 Payment for Converted Shares. . . . . . . . . . . . . . . . . . . . -6-
4.2 Rights of Former GBHC Stockholders. . . . . . . . . . . . . . . . . -7-
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF GBHC AND G BANK . . . . . . . . . -7-
5.1 Organization, Standing, and Power. . . . . . . . . . . . . . . . . . -8-
5.2 Corporate Authorizations. . . . . . . . . . . . . . . . . . . . . . -8-
5.3 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5.4 GBHC Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . -10-
5.6 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . -10-
5.7 Absence of Certain Changes or Events. . . . . . . . . . . . . . . -10-
5.8 Loan and Investment Portfolios. . . . . . . . . . . . . . . . . . -12-
5.9 Adequacy of Allowances for Losses. . . . . . . . . . . . . . . . . -12-
5.10 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
5.11 Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
5.12 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . -14-
5.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . -14-
5.14 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . -15-
5.15 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . -17-
5.16 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . -17-
5.17 Statements True and Correct. . . . . . . . . . . . . . . . . . . . -18-
5.18 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . -18-
5.19 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . . -19-
5.20 Joinder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
5.21 Covenant Not to Compete. . . . . . . . . . . . . . . . . . . . . . -19-
5.22 Charter Provisions. . . . . . . . . . . . . . . . . . . . . . . . -19-
5.23 Derivative Contracts. . . . . . . . . . . . . . . . . . . . . . . -19-
</TABLE>
-i-
<PAGE> 97
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF MC and M C BANK . . . . . . . . -19-
6.1 Organization, Standing, and Power. . . . . . . . . . . . . . . . . -20-
6.2 Ownership of M C Bank. . . . . . . . . . . . . . . . . . . . . . . -20-
6.3 Ownership of M C Subsidiary. . . . . . . . . . . . . . . . . . . . -20-
6.5 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
6.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . -21-
6.7 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . -22-
6.8 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . -22-
6.9 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . -22-
6.10 Statements True and Correct. . . . . . . . . . . . . . . . . . . . -23-
6.11 Adequate Resources. . . . . . . . . . . . . . . . . . . . . . . . -24-
6.12 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . -24-
6.13 Affiliate Status. . . . . . . . . . . . . . . . . . . . . . . . . -24-
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . -24-
7.1 Affirmative Covenants of GBHC and G Bank. . . . . . . . . . . . . -24-
7.2 Negative Covenants of GBHC and G Bank. . . . . . . . . . . . . . . -24-
7.3 Covenants of MC. . . . . . . . . . . . . . . . . . . . . . . . . . -27-
7.4 Adverse Changes in Condition. . . . . . . . . . . . . . . . . . . -27-
7.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
ARTICLE 8 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . -28-
8.1 Preparation of Proxy Statement. . . . . . . . . . . . . . . . . . -28-
8.2 Applications. . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
8.3 Filings with State Offices. . . . . . . . . . . . . . . . . . . . -29-
8.4 Cooperation and Best Efforts. . . . . . . . . . . . . . . . . . . -29-
8.5 Investigation and Confidentiality. . . . . . . . . . . . . . . . . -29-
8.6 Press Releases. . . . . . . . . . . . . . . . . . . . . . . . . . -30-
8.7 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . . -30-
8.8 Approval of Merger Agreement. . . . . . . . . . . . . . . . . . . -31-
8.9 GBHC Common Shareholder Approval. . . . . . . . . . . . . . . . . -31-
8.10 Operating Functions. . . . . . . . . . . . . . . . . . . . . . . . -31-
8.11 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . . -31-
8.12 Charter Provisions. . . . . . . . . . . . . . . . . . . . . . . . -32-
8.13 Employee Benefits and Contracts. . . . . . . . . . . . . . . . . . -32-
8.14 Joinder of Shareholders. . . . . . . . . . . . . . . . . . . . . . -32-
8.15 Insurance Retention. . . . . . . . . . . . . . . . . . . . . . . . -32-
8.16 Transmittal Letters. . . . . . . . . . . . . . . . . . . . . . . . -32-
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . -33-
9.1 Conditions to Obligations of Each Party. . . . . . . . . . . . . . -33-
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . -33-
(b) Regulatory Approvals. . . . . . . . . . . . . . . . . . . -33-
(c) Consents and Approvals. . . . . . . . . . . . . . . . . . -33-
(d) Legal Proceedings. . . . . . . . . . . . . . . . . . . . -33-
(e) Opinion of Investment Bankers. . . . . . . . . . . . . . -33-
</TABLE>
-ii-
<PAGE> 98
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C>
9.2 Conditions to Obligations of M C Bank. . . . . . . . . . . . . . . -34-
(a) Representations and Warranties. . . . . . . . . . . . . . -34-
(b) No Material Adverse Effect. . . . . . . . . . . . . . . . -34-
(c) Dissenters' Rights. . . . . . . . . . . . . . . . . . . . -34-
(d) Performance of Covenants. . . . . . . . . . . . . . . . . -35-
(e) Certificates. . . . . . . . . . . . . . . . . . . . . . . -35-
(f) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . -35-
(g) Claims Letters. . . . . . . . . . . . . . . . . . . . . . -35-
(h) Covenant Not to Compete. . . . . . . . . . . . . . . . . -35-
(i) Cancellation of Contracts. . . . . . . . . . . . . . . . -35-
(j) Specific Loans. . . . . . . . . . . . . . . . . . . . . . -35-
9.3 Conditions to Obligations of GBHC and G Bank. . . . . . . . . . . -35-
(a) Representations and Warranties. . . . . . . . . . . . . . -36-
(b) Performance of Covenants. . . . . . . . . . . . . . . . . -36-
(c) Certificates. . . . . . . . . . . . . . . . . . . . . . . -36-
(d) Opinion of Counsel. . . . . . . . . . . . . . . . . . . . -36-
(e) Adequate Resources. . . . . . . . . . . . . . . . . . . . -36-
ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . -38-
10.3 Non-Survival of Representations. . . . . . . . . . . . . . . . . . -38-
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
11.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-
11.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -46-
11.3 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . -46-
11.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . -47-
11.5 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
11.6 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -47-
11.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
11.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
11.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
11.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
11.11 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
11.12 Interpretations. . . . . . . . . . . . . . . . . . . . . . . . . . -49-
11.13 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . -49-
11.14 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
11.15 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
LIST OF EXHIBITS
Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Joinder of Shareholders . . . . . . . . . . . . . . . . . . . . . . . Exhibit B
Opinion of Counsel for GBHC . . . . . . . . . . . . . . . . . . . . . Exhibit C
Claims Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit D
Agreement Not to Compete . . . . . . . . . . . . . . . . . . . . . . . Exhibit E
Opinion of Counsel for MC, M C Bank and M C Subsidiary . . . . . . . . Exhibit F
</TABLE>
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<PAGE> 99
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is made and entered into
as of June 24, 1997, by and between M C Bank & Trust Company ("M C Bank"), a
Louisiana financial institution domiciled in Morgan City, Louisiana, and its
registered bank holding company, MC Bancshares, Inc. ("MC"), a Louisiana
business corporation, on the one hand, and Guaranty Bancshares Holding
Corporation ("GBHC"), a Louisiana business corporation, and its wholly-owned
subsidiary, Guaranty Bank & Trust Company of Morgan City ("G Bank"), a
Louisiana financial institution domiciled in Morgan City, Louisiana, on the
other.
RECITALS
WHEREAS, the Board of Directors of M C Bank and MC have determined
that it is desirable and in the best interests of M C Bank, MC and the
respective shareholders of MC, that GBHC become a wholly-owned
subsidiary of M C Bank by means of a transaction through which a
Louisiana business corporation to be formed by M C Bank ("M C
Subsidiary") would merge with and into GBHC (the "Merger"), in
accordance with the LBCL and on the terms and subject to the
conditions set forth in this Agreement and in the Agreement of Merger
attached hereto as Exhibit A (the "Merger Agreement");
WHEREAS, the Board of Directors of GBHC and G Bank have determined
that it is desirable and in the best interests of GBHC, G Bank, and
the respective shareholders of GBHC, that M C Subsidiary be merged
with and into GBHC in accordance with this Agreement and the Merger
Agreement;
WHEREAS, M C Subsidiary and GBHC are entering into the Merger
Agreement, which provides for, among other things, the Merger and the
conversion of all of the outstanding capital stock of GBHC into cash
at the rate provided herein and in the Merger Agreement, all as more
fully described herein and in the Merger Agreement;
WHEREAS, M C Bank proposes to liquidate GBHC into M C Bank in
accordance with the LBCL and Section 332 of the Internal Revenue Code
immediately following the Effective Time of the Merger; and
WHEREAS, M C Bank proposes to liquidate G Bank into M C Bank by means
of Section 112(G) of the LBCL and in accordance with Section 332 of
the Internal Revenue Code immediately following the liquidation of
GBHC into M C Bank.
NOW, THEREFORE, in consideration of the foregoing and the mutual
warranties, representations, covenants, and agreements set forth herein, and
subject to the satisfaction of the
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terms and conditions set forth herein and in the Merger Agreement, the Parties
hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the provisions
of this Agreement and the Merger Agreement, M C Subsidiary will be merged with
and into GBHC at the Effective Time in accordance with the provisions of Section
115 of the LBCL and with the effect provided therein. M C Bank and MC agree to
abide and comply with, and cause M C Subsidiary to abide and comply with, all of
the terms and conditions set forth in this Agreement and the Merger Agreement.
GBHC agrees to abide and comply with all of the terms and conditions set forth
in this Agreement and the Merger Agreement.
1.2 Time and Place of Closing. The Closing of the
transaction contemplated by this Agreement and the Merger Agreement will take
place at 9:00 a.m., Central Time, on a mutually agreeable date as soon as
practicable following satisfaction of the conditions set forth in Sections
9.1(a) and (b) of this Agreement. If all conditions set forth in Sections
9.1(a) and (b) of this Agreement are satisfied and the other conditions of
Article 9 are satisfied or waived by the Party entitled to grant such waiver,
at the Closing, M C Subsidiary, MC Bank, and MC, on the one hand, and GBHC on
the other hand, shall each provide to the other (a) such proof or indication of
satisfaction of the conditions set forth in Section 9.1 of this Agreement, (b)
the certificates, letters, and opinions required by Article 9 shall be
delivered, (c) the appropriate officers of the Parties shall execute,
acknowledge, and deliver the Merger Agreement and (d) the Parties shall take
such further action as is required to consummate the transaction contemplated
by this Agreement and the Merger Agreement. If on any date established for the
Closing all conditions in Article 9 hereof have not been satisfied or waived by
the Party entitled to grant such waiver, then any Party, on one or more
occasions, may declare a delay of the Closing of such duration, not exceeding
ten (10) business days, as the declaring Party shall select, but no such delay
shall extend beyond the date set forth in Section 10.1(e) of this Agreement and
no such delay shall interfere with the right of any Party to declare a
termination pursuant to Article 10. The place of Closing shall be at the
offices of M C Bank, in Morgan City, Louisiana, or such other place as may be
mutually agreed upon by the Parties.
1.3 Effective Time. The Merger Agreement shall
be filed with the Secretary of State for the State of Louisiana immediately
following the Closing, and the Merger shall be effective on the date and at the
time specified in a certificate or other written record issued by the Louisiana
Secretary of State. The date on which and the time at which the Merger becomes
effective are hereinafter referred to as the "Effective Time." Subject to the
terms and conditions hereof, unless otherwise mutually agreed upon in writing
by the duly authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on the last
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<PAGE> 101
day of the month in which occurs the later of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the holders of GBHC Common Stock approve the
Merger Agreement.
ARTICLE 2
EFFECTS OF THE MERGER
2.1 Constituent Corporations.
At the Effective Time (i) the separate existence of M C Subsidiary shall cease
and M C Subsidiary will be merged with and into GBHC, (ii) GBHC shall continue
to possess all of the rights, privileges and franchises possessed by it and
shall, at the Effective Time, become vested with and possess all rights,
privileges and franchises possessed by M C Subsidiary, and (iii) GBHC, as the
Surviving Corporation resulting from the Merger, shall be responsible for all
of the liabilities and obligations of each of the merging corporations in the
same manner as if the Surviving Corporation had itself incurred such
liabilities or obligations and the Merger shall not affect or impair the rights
of creditors or of any persons dealing with the merging corporations.
2.2 Articles of the Surviving Corporation.
The Articles of Incorporation of GBHC in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation after the Effective Time until otherwise amended or repealed.
2.3 Bylaws of the Surviving Corporation.
The Bylaws of GBHC in effect immediately prior to the Effective Time shall be
the Bylaws of the Surviving Corporation after the Effective Time until
otherwise amended or repealed.
2.4 Directors and Officers of the Surviving Corporation.
The directors of M C Subsidiary in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected or
appointed, shall serve as the directors of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of M C Subsidiary in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected or appointed, shall serve as the officers of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the
Surviving Corporation.
ARTICLE 3
CONVERSION OF SHARES IN THE MERGER
3.1 Conversion of Shares. Subject to the provisions of
this Article, at the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, the shares of the constituent
corporations in the Merger shall be converted as follows:
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<PAGE> 102
(a) Each share of common stock of M C Subsidiary issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one share of no par value voting
capital stock of the Surviving Corporation from and after the
Effective Time;
(b) Each share of GBHC $2.70 Cumulative Preferred Stock issued and
outstanding at the Effective Time shall be considered redeemed
and shall be converted into the right to receive in cash an
amount equal to $27.60 plus all accrued cash dividends due
thereon, and thereupon shall be cancelled;
(c) Each share of GBHC $0.50 Cumulative Preferred Stock issued and
outstanding at the Effective Time shall be considered redeemed
and shall be converted into the right to receive in cash an
amount equal to $5.00 plus all accrued dividends due thereon,
and thereupon shall be cancelled; and
(d) Each share of GBHC Class A Common Stock and each share of GBHC
Class B Common Stock issued and outstanding at the Effective
Time shall be converted into the right to receive in cash an
amount equal to the quotient of:
X
---
Y
where X is equal to $7,500,000 (subject to the
adjustments as hereinafter provided) less the total
amount due to the holders of all of the issued and
outstanding shares of the GBHC $2.70 Cumulative
Preferred Stock determined in accordance with Section
3.1(b) and the total amount due to the holders of all
of the issued and outstanding shares of the GBHC
$0.50 Cumulative Preferred Stock determined in
accordance with Section 3.1(c); and
where Y is equal to the number of shares of GBHC Class
A Common Stock and GBHC Class B Common Stock
outstanding at the Effective Time; and
shall thereupon be cancelled.
3.2 Adjustments. The aggregate consideration of
$7,500,000.00 due to the shareholders of GBHC at the Effective Time shall be
subject to adjustment according to this Section 3.2.
(a) If the Adjusted Shareholders' Equity
of GBHC is less than $5,284,000.00, then the $7,500,000.00 shall be reduced by
an amount equal to the difference between $5,284,000.00 and the Adjusted
Shareholders' Equity of GBHC; provided, however, except as set forth in
Subsection 3.2(b), if the consideration due to the shareholders of GBHC at and
after the Effective Time is less than $7,300,000.00, GBHC may terminate this
Agreement.
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<PAGE> 103
(b) The Adjusted Shareholders' Equity of
GBHC shall be calculated ten (10) days prior to the Closing (the "Determination
Date") as the difference between the shareholders' equity of GBHC as reflected
on the April 30, 1997 balance sheet of GBHC less (in each case with the
recognition of any tax effect thereof) (i) the sum of (A) the additional
accrual through the Closing of all payments to be made to terminate all
employment contracts and retirement obligations of GBHC and G Bank, (B) the
accrual of fees owed to Alex Sheshunoff & Co., in excess of $28,125.00, (C) the
accrual of GBHC's other expenses of the Merger in excess of $145,000.00, if
any, (D) the accrual of any special bonus paid by G Bank to any officer or
employee (other than bonuses required by contract or paid pursuant to the
customary past practices of G Bank), (E) the accrual of any dividend paid by
GBHC prior to the Determination Date, and (F) the accrual of the costs for the
purchase of a five (5) year extension of the directors' and officers' liability
insurance policy of GBHC and G Bank to the extent that such costs are not
includable in the GBHC Merger Expenses, and less (ii) the amount of any loan
loss arising after May 1, 1997 on loans other than those described in Section
3.2(d) and Section 9.2(j) of this Agreement in excess of $25,000.00, and less
(iii) the amount described in Section 3.2(d)(ii), if any. Provided in all
events, however, if the accruals set forth in item (i)(D) of this Subsection
3.2(b) result in the aggregate consideration due to the shareholders of GBHC at
the Effective Time being reduced to less than $7,300,000.00, GBHC may not
terminate this Agreement.
(c) The shareholders' equity of GBHC at
the Closing shall be equal to the Adjusted Shareholders' Equity of GBHC plus
all earnings of GBHC from May 1, 1997 though the Closing after reflecting (i)
the payment of the GBHC Merger Expenses in the aggregate amount of $145,000
(which shall include reasonable legal and accounting fees and costs incurred in
connection with the Merger, fees of $28,125.00 and costs due to Alex Sheshunoff
& Co., costs and expenses of the Proxy Statement and other mailings to the
shareholders of GBHC in connection with the Merger, costs and expenses of the
Shareholders' Meeting, the fees and expenses of filing the Proxy Statement with
the SEC, and, to the extent the foregoing delineated costs do not exceed
$145,000.00, the costs for the purchase of a five (5) year extension of the
directors' and officers' liability insurance policy of GBHC and G Bank), (ii)
the effects, if any, envisioned by Subsection 3.2(d) of this Agreement, and
(iii) the amount of any loan loss arising after May 1, 1997 up to $25,000.00;
provided, however, if the shareholders' equity of GBHC at the Closing is less
than $5,284,000.00, M C Bank may terminate this Agreement. The Parties
recognize that, except as provided in the preceding sentence, all earnings of
GBHC from May 1, 1997 through the Closing shall inure to the benefit of M C
Bank, and that M C Bank has an expectation to the reasonable earnings of GBHC
from May 1, 1997 through the Closing less the amounts described in the
preceding sentence. However, the Parties recognize and agree that GBHC makes
no warranty as to its earnings from May 1, 1997 through the Closing.
(d) With respect to the property
securing Loan Nos. 3714461 and 3714458 to be acquired by G Bank on June 26,
1997 pursuant to a dation en paiement (the "Property"), upon acquisition by G
Bank of the Property, the loss, if any, on Loan Nos. 3714461 and 3714458
(related to the Property) to be recognized shall be applied as follows:
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(i) The first $32,500.00 shall be
charged to G Bank's loan loss reserve and shall not affect the shareholders'
equity of GBHC at April 30, 1997;
(ii) Up to the next $67,500.00 shall
reduce the pre-May 1, 1997 earnings before income taxes of GBHC; and
(iii) In the event that between the
date hereof and the Closing, G Bank sells the Property for an amount in excess
of the carrying value of the Property, the gain up to $67,500.00 shall be
applied to the pre-May 1, 1997 earnings before income taxes of GBHC; any
remaining gain shall be applied to the post- April 30, 1997 earnings of GBHC.
3.3 Shares Held by GBHC or MC. Each of the shares of GBHC
Preferred Stock or GBHC Common Stock held by any of the GBHC Companies or by
any of the MC Companies, in each case other than in a fiduciary capacity or as
a result of debts previously contracted, shall be cancelled and retired at the
Effective Time and no consideration shall be issued in exchange therefore.
3.4 Dissenters' Rights. Any holder of
shares of GBHC Common Stock who validly perfects dissenters' rights in
accordance with Section 131 of the LBCL shall be entitled to receive the fair
value of such shares in cash as determined pursuant to the provisions of the
LBCL; provided, that no such payment shall be made to any dissenting holder of
GBHC Common Stock unless and until such dissenting holder has complied with the
applicable provisions of Section 131 of the LBCL, including but not limited to
the provisions relating to the deposit in escrow, endorsement, and transfer of
the certificate or certificates representing the shares for which payment is
being made. In the event that a holder of GBHC Common Stock fails to perfect,
or otherwise withdraws or loses his statutory dissenters' rights under Section
131 of the LBCL, such person shall not have the right to receive the fair cash
value for his shares of GBHC Common Stock, and, instead, as of the Effective
Time, the shares of GBHC Common Stock held by such person shall be converted in
accordance with Section 3.1.
3.5 Cash Payments. If all of the conditions set
forth in this Agreement are satisfied, at and after the Effective Time, MC, M C
Bank, and M C Subsidiary shall be obligated to make the cash payments described
in this Article 3 in accordance with the terms described in this Article 3.
ARTICLE 4
EXCHANGE OF SHARES IN THE MERGER
4.1 Payment for Converted Shares. As soon as
practicable after the Stockholders' Meeting provided for in Section 8.9, M C
Bank shall mail to each record holder of an outstanding certificate or
certificates which represents shares of GBHC Preferred Stock or GBHC Common
Stock to be converted pursuant to Section 3.1 (a "Certificate" or the
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<PAGE> 105
"Certificates"), a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Surviving Corporation) and
instructions for use in effecting the surrender of the Certificates for payment
therefor or for actions to be taken in the event the Certificate(s) cannot be
located. Such letter of transmittal shall comply in all respects with the
requirements of, and contain the information required by, the Articles of
Incorporation, as amended, of GBHC with respect to the redemption of GBHC
Preferred Stock. Upon surrender to M C Bank of a Certificate (or such
documentation reasonably requested by M C Bank if the Certificate(s) cannot be
located), together with such letter of transmittal duly executed, the holder of
such Certificate shall be entitled, promptly after the Effective Time, to
receive in exchange therefor cash into which the shares represented by such
Certificate shall have been converted pursuant to Section 3.1 and such
Certificate shall thereafter be cancelled. No interest will be paid or accrued
on the cash payable after the Effective Time upon the surrender of the
Certificates of GBHC Preferred Stock and GBHC Common Stock. If payment is to
be made to a person other than the person in whose name the Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this
Section 4.1, each Certificate shall represent for all purposes at the Effective
Time the right to receive the amount into which the shares represented by such
Certificate shall have been converted pursuant to Section 3.1, but the holder
of such Certificate shall have no other rights with respect thereto.
4.2 Rights of Former GBHC Stockholders. At the
Effective Time, the stock transfer books of GBHC shall be closed as to holders
of GBHC Preferred Stock and GBHC Common Stock immediately prior to the
Effective Time and no transfer of GBHC Preferred Stock or GBHC Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of GBHC Preferred Stock or
GBHC Common Stock (other than shares to be canceled pursuant to Section 3.3 of
this Agreement or shares of GBHC Common Stock as to which dissenters' rights of
appraisal have been perfected and not withdrawn or forfeited under Section 131
of the LBCL) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Section 3.1 of this
Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by GBHC in respect of such shares of GBHC Preferred Stock and GBHC Common Stock
in accordance with the terms of this Agreement and which remain unpaid at the
Effective Time.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF GBHC AND G BANK
Except as set forth in the GBHC Companies Disclosure Memorandum, GBHC
and G Bank, as the case may be, hereby represent and warrant to MC and M C Bank
that:
5.1 Organization, Standing, and Power. GBHC is a
corporation duly organized and validly existing, and in good standing under the
LBCL, and has the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Material Assets. G Bank is a
state-chartered financial institution duly organized and validly existing under
the LBL, and has all the requisite corporate power and authority to own and
lease its property and to carry on its business as it is currently being
conducted.
5.2 Corporate Authorizations.
(a) GBHC and G Bank each have the corporate power and
authority necessary to execute, deliver, and perform their obligations under
this Agreement and the Merger Agreement, as the case may be, and to consummate
the transaction contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the Merger Agreement and consummation of the
transaction contemplated hereby and thereby, including the Merger, have been
duly and validly authorized by all necessary corporate action in respect
thereof on the part of GBHC and G Bank, subject to approval of the Merger
Agreement by the requisite vote of the outstanding shares of GBHC Common Stock,
which is the only GBHC stockholder vote required for approval of this Agreement
and the Merger. Subject to such requisite stockholder approval, and the
requisite approvals referred to in Section 9.1(b) hereof, this Agreement and
the Merger Agreement represent legal, valid and binding obligations of GBHC and
G Bank, as the case may be, enforceable against GBHC and G Bank, as the case
may be, in accordance with their terms (except in all cases as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and (ii) application of, and limitations on the
application of, equitable principles and remedies, including limitations on the
availability of the equitable remedy of specific performance or injunctive
relief).
(b) Neither the execution and delivery of this Agreement
or the Merger Agreement by GBHC or G Bank, as the case may be, nor the
consummation by GBHC of the transaction contemplated hereby, nor compliance by
GBHC or G Bank with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of GBHC's or G Bank's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of GBHC, G Bank, or any of their Subsidiaries under any Contract or
Permit of any GBHC Company, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBHC or G Bank, or (iii) subject to
receipt of the requisite approval referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any GBHC Company or any of
their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and other than Consents required from Regulatory Authorities, and other
than notices to or filings with the Internal Revenue Service or
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<PAGE> 107
the Pension Benefit Guaranty Corporation or both with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on GBHC or G
Bank, no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation of the Merger by GBHC and the other transactions
contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of GBHC consists of (i)
420,000 shares of common stock, 210,000 shares of which are designated as Class
A Common Stock of the par value of $5.00, and 210,000 shares of which are
designated as Class B Common Stock of no par value; and (ii) 210,000 shares of
preferred stock of no par value, 171,024 of which are designated as $2.70
Cumulative Preferred Stock and 61,023 shares of which are designated as $0.50
Cumulative Preferred Stock. As of the date hereof, 206,524 shares of GBHC
Class A Common Stock, 166,901 shares of GBHC Class B Common Stock, 145,001
shares of GBHC $2.70 Cumulative Preferred Stock, and 21,900 shares of GBHC
$0.50 Cumulative Preferred Stock are issued and outstanding. GBHC holds in
treasury 3,476 shares of GBHC Class A Common Stock and 3,976 shares of GBHC
Class B Common Stock. All of the issued and outstanding shares of capital
stock of GBHC are duly and validly issued and outstanding and are fully paid
and nonassessable under the LBCL. To the Knowledge of GBHC, none of the
outstanding shares of capital stock of GBHC has been issued in violation of any
preemptive rights of the current or past stockholders of GBHC. Except as set
forth above, there are no other equity securities of GBHC outstanding and no
outstanding Rights relating to the capital stock of GBHC.
(b) The authorized capital stock of G Bank consists of
210,000 shares of common stock of the par value of $5.00, of which 210,000
shares are issued and outstanding as of the date hereof. All of the issued and
outstanding shares of capital stock of G Bank are duly and validly issued and
outstanding and are fully paid and, except as provided in Section 262 of the
LBL, nonassessable. To the Knowledge of G Bank, none of the outstanding shares
of capital stock of G Bank have been issued in violation of any preemptive
rights of the current or past stockholders of G Bank. Except as set forth
above, there are no other equity securities of G Bank outstanding and no
outstanding Rights relating to the capital stock of G Bank.
5.4 GBHC Subsidiaries. GBHC has
disclosed in the GBHC Companies Disclosure Memorandum all of the GBHC
Subsidiaries as of the date of this Agreement. GBHC or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of each GBHC
Subsidiary. No equity securities of any GBHC Subsidiary are or may become
required to be issued (other than to another GBHC Company) by reason of any
Rights, and there are no Contracts by which any GBHC Subsidiary is bound to
issue (other than to another GBHC Company) additional shares of its capital
stock or Rights or by which any GBHC Company is or may be bound to transfer any
shares of the capital stock of any GBHC Subsidiary (other than to another GBHC
Company). There are no Contracts relating to the rights of any GBHC Company to
vote or to dispose of any shares of the capital stock of any GBHC Subsidiary.
All
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<PAGE> 108
of the shares of capital stock of each GBHC Subsidiary held by a GBHC Company
are authorized, validly issued, fully paid, and nonassessable (except pursuant
to Section 262 of the LBL in the case of state financial institutions) under
the applicable Law of the jurisdiction in which such Subsidiary is incorporated
or organized and are owned by a GBHC Company free and clear of any Lien. Each
GBHC Subsidiary is either a bank or a corporation, and is duly organized,
validly existing, and in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and
authority necessary for it to own, lease, and operate its Assets and to carry
on its business as now conducted. Each GBHC Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund.
5.5 Financial Statements. GBHC has included
in the GBHC Companies Disclosure Memorandum copies of all GBHC Financial
Statements for periods ended prior to the date hereof and will deliver to MC
copies of all GBHC Financial Statements prepared subsequent to the date hereof.
The GBHC Financial Statements (as of the dates thereof and for the periods
covered thereby) present or will present, as the case may be, fairly the
consolidated financial position of the GBHC Companies as of the dates indicated
and the consolidated results of operations, changes in stockholders' equity,
and cash flows of the GBHC Companies for the periods indicated, in accordance
with GAAP (subject to any exceptions as to consistency specified therein or as
may be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments that are not Material in
amount or effect and to the absence from interim financial statements of any
footnote disclosures).
5.6 Absence of Undisclosed Liabilities. No GBHC Company has
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBHC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of GBHC as of
April 30, 1997 included in the GBHC Financial Statements or reflected in the
notes thereto. No GBHC Company has incurred or paid any Liability since May 1,
1997, except for such Liabilities incurred or paid in the ordinary course of
business consistent with past business practice or incurred in connection with
the process leading up to the execution and consummation of this Agreement and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on GBHC.
5.7 Absence of Certain Changes or Events. Since May 1, 1997,
except as disclosed in the GBHC Financial Statements or in the GBHC Companies
Disclosure Memorandum, to the Knowledge of GBHC or G Bank, (i) there have been
no events, changes, or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on GBHC, G
Bank, or any of the other GBHC Companies; and (ii) the GBHC Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a Material breach or violation of any of the
covenants and agreements of GBHC and G Bank, as the case may be, provided in
Article 7 of this Agreement, other than conducting the process that has led up
to
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the execution and consummation of this Agreement. No GBHC Company has, since
the date of the of the latest balance sheet forming part of the GBHC Financial
Statements (the "Latest Balance Sheet"):
(a) (i) borrowed any money or, except in the ordinary
course of business consistent with past practices, (ii) loaned any money or
pledged any of its credit in connection with any aspect of its business, (iii)
mortgaged or otherwise subjected to any lien, encumbrance, or other liability
any of its assets, (iv) sold, assigned, or transferred any of its assets in
excess of $10,000 in the aggregate, other than sales or cars and trucks held as
foreclosed assets and sales of mortgage loans in each case consistent with past
practices, or (v) incurred any Material liability, commitment, indebtedness, or
obligation (of any kind whatsoever, whether accrued, contingent, known,
unknown, matured, or unmatured);
(b) suffered any Material damage, destruction, or loss,
whether or not covered by insurance;
(c) experienced any Material change in asset
concentrations as to customers or industries or in the nature and source of its
liabilities or in the mix of interest-bearing versus non-interest bearing
deposits;
(d) received notice or had knowledge or reasons to
believe that any Material labor unrest exists among any of its employees or
that any group, organization, or union has attempted to organize any of its
employees;
(e) except solely by reason of the transaction
contemplated by this Agreement, received notice or had knowledge or reasons to
believe that any of its substantial customers has terminated or intends to
terminate such customer's relationship with it;
(f) failed to operate its business in the ordinary course
consistent with past practices, or failed to preserve its business organization
intact or to preserve the goodwill of its customers and others with whom it has
business relations;
(g) incurred any Material loss except for losses
adequately reserved against on the date of the Latest Balance Sheet or waived
any Material right in connection with any aspect of its business, whether or
not in the ordinary course of business;
(h) cancelled any debt in excess of $10,000 owed to it,
or cancelled any of its claims in excess of $10,000, or paid any of its
non-current obligations or liabilities in excess of $10,000;
(i) made any capital expenditure or capital addition or
betterment in excess of $25,000 each;
(j) entered into any agreement requiring the payment,
conditionally or otherwise, of any salary, bonus, extra compensation, pension,
or severance payment to any of its present or former directors, officers, or
employees, except such agreements as are terminable at will without any penalty
or other payment by it, or increased the compensation (including salaries,
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fees, bonuses, profit sharing, incentive, pension, retirement, or other similar
payments) of any such person whose annual compensation would, following such
increase, exceed $25,000, consistent with past practices;
(k) changed any accounting practice followed or employed
in preparing the GBHC Financial Statements except changes required to be made
in accordance with GAAP;
(l) made any loan, given any discount, or entered into
any financing lease which has not been (i) at the time and under the
circumstances in which made, made for good, valuable, and adequate
consideration in the ordinary course of business, (ii) evidenced by genuine
notes or other evidences of indebtedness and (iii) fully reserved against in an
amount sufficient to provide for all charge-offs reasonably anticipated in the
ordinary course of business after taking into account all recoveries reasonably
anticipated in the ordinary course of business; or
(m) entered into any agreement, contract, or commitment
to do any of the foregoing.
5.8 Loan and Investment Portfolios. All loans and
discounts reflected on the Latest Balance Sheet forming part of the GBHC
Financial Statements (a) were, at the time and under the circumstances in which
made, made for good, valuable, and adequate consideration in the ordinary
course of business, (b) are evidenced by genuine notes, agreements, or other
evidences of indebtedness, and (c) to the extent secured, have been secured by
valid liens and security interests which have been perfected. Accurate lists
of all such loans and discounts as of the date of such Latest Balance Sheet (or
a more recent date), and of the investment portfolios as of such date, have
been made available to M C Bank.
5.9 Adequacy of Allowances for Losses. Each of the
allowances for losses on loans and other real estate shown on the Latest
Balance Sheet forming part of the GBHC Financial Statements is adequate in
accordance with applicable regulatory guidelines and GAAP in all Material
respects, and there are no facts or circumstances known to any executive
officer of GBHC or G Bank which are likely to require in accordance with
applicable regulatory guidelines or GAAP a future Material increase in any such
provisions for losses or a Material decrease in any of the allowances therefor
reflected in such Latest Balance Sheet. Each of the allowances for losses on
loans and other real estate reflected on the books of any GBHC Company at all
times from and after the date of such Latest Balance Sheet has been and will be
adequate in accordance with applicable regulatory guidelines and GAAP in all
Material respects.
5.10 Tax Matters.
(a) All Tax returns required to be filed by or on behalf
of any of the GBHC Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1996, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, except to the extent that
all such failures to file or untimely filings, individually or in the
aggregate, are not reasonably
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likely to have a Material Adverse Effect on GBHC and all returns filed are
complete and accurate in all Material respects. All Taxes shown on filed
returns have been paid. There is no audit examination, deficiency, refund
Litigation, or penalties due or owed with respect to any Taxes that is
reasonably likely to result in a determination that would have a Material
Adverse Effect on GBHC, except as reserved against in the GBHC Financial
Statements delivered with the GBHC Companies Disclosure Memorandum. All Taxes
and other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the GBHC Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the GBHC Companies for the period or periods through and including
the date of the respective GBHC Financial Statements has been made and is
reflected on such GBHC Financial Statements.
(d) Deferred Taxes of the GBHC Companies have been
adequately provided for in the GBHC Financial Statements.
(e) Each of the GBHC Companies is in compliance with, and
its records contain the information and documents (including properly completed
IRS Forms W-9) necessary to comply with, in all Material respects, applicable
information reporting and Tax withholding requirements under federal, state,
and local Tax Laws, and such records identify the accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code.
(f) None of the GBHC Companies has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(g) There are no Liens with respect to Taxes upon any of
the assets of the GBHC Companies.
(h) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of any GBHC Company that occurred during
or after any Taxable Period in which the GBHC Company incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1995.
(i) None of the GBHC Companies have filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(j) All Material elections with respect to Taxes
affecting the GBHC Companies as of the date of this Agreement have been or will
be timely made. After the date hereof, no election with respect to Taxes will
be made without the prior written consent of M C Bank, which consent will not
be unreasonably withheld.
(k) None of the GBHC Companies have or have had a
permanent establishment in any foreign country, as defined in any applicable
tax treaty or convention between the United States and such foreign country.
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5.11 Assets. The GBHC Companies have good and
marketable title, free and clear of all Liens, to all of their respectively
owned Material Assets. All Material tangible properties used in the businesses
of the GBHC Companies are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with GBHC's past
practices. All Assets which are Material to GBHC's business on a consolidated
basis, held under leases or subleases by any of the GBHC Companies, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance and injunctive relief, is subject to
the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The GBHC Companies currently
maintain insurance similar in amounts, scope, and coverage to that maintained
by other peer banking organizations in their geographic area. None of the GBHC
Companies has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no claims pending under
such policies of insurance and no notices have been given by any GBHC Company
under such policies. The Assets of the GBHC Companies include all Assets
required to operate the business of the GBHC Companies as presently conducted.
5.12 Environmental Matters.
(a) To the Knowledge of GBHC and G Bank, each of the GBHC
Companies, their Participation Facilities, and their Loan Properties are, and
have been, in compliance with all Environmental Laws, except for such instances
of non-compliance that are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on GBHC, G Bank, or any other of the
GBHC Companies.
(b) There is no Litigation pending or to the Knowledge of
any GBHC Company, threatened before any court, governmental agency, or
authority or other forum in which any of the GBHC Companies or any of its Loan
Properties or Participation Facilities (or any GBHC Company in respect of any
such Loan Property or Participation Facility) has been or, with respect to
threatened Litigation, may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, or involving a site
owned, leased, or operated by any of the GBHC Companies or any of their Loan
Properties or Participation Facilities, except for such Litigation pending or
threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBHC, G Bank, or any other GBHC Company
and to the Knowledge of GBHC and G Bank, there is no reasonable basis for any
such Litigation.
(c) To the Knowledge of GBHC, there have been no releases
of Hazardous Material in, on, under, or affecting any Participation Facility,
or Loan Property, except such as
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are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on GBHC, G Bank, or any of the other GBHC Companies.
5.13 Compliance with Laws. Each GBHC Company has in effect all
Permits necessary for it to own, lease, or operate its Material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on GBHC. None of
the GBHC Companies:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBHC; and
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any GBHC Company
is not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on GBHC, G Bank, or any other GBHC Company, (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on GBHC, G Bank, or any other
GBHC Company, or (iii) requiring any GBHC Company to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or to adopt any board resolution or
similar undertaking, which restricts materially the conduct of its business, or
in any Material manner relates to its capital adequacy, its credit or reserve
policies, its management, or the payment of dividends.
5.14 Employee Benefit Plans.
(a) GBHC and G Bank have disclosed in the GBHC Companies
Disclosure Memorandum, and have delivered or made available to MC prior to the
execution of this Agreement, copies in each case of all written pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other written health plans, all life insurance plans, and all other
written employee benefit plans or fringe benefit plans, including written
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to, by any GBHC Company or Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries and under which employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries are
eligible to participate (collectively, the "GBHC Benefit Plans"). Any of the
GBHC Benefit Plans which is an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "GBHC ERISA Plan."
Each GBHC ERISA Plan which is also a "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code)
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is referred to herein as a "GBHC Pension Plan." No GBHC Pension Plan is or has
been a multi-employer plan within the meaning of Section 3(37) of ERISA.
(b) To the Knowledge of GBHC and G Bank, all GBHC Benefit
Plans are in compliance with the applicable terms of ERISA, the Internal
Revenue Code, and any other applicable Laws, the breach or violation of which
are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on GBHC. Each GBHC ERISA Plan which is intended to be qualified
under Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and GBHC and G Bank are
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. No GBHC Company has engaged in a transaction
with respect to any GBHC Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject any GBHC Company to a
tax or penalty imposed by either Section 4975 of the Internal Revenue Code or
Section 502(i) of ERISA that, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on GBHC, G Bank, or any other GBHC
Company.
(c) No GBHC Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan equals or exceeds the plan's
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no Material change in the
financial position of any GBHC Pension Plan, (ii) no change in the actuarial
assumptions with respect to any GBHC Pension Plan, and (iii) no increase in
benefits under any GBHC Pension Plan as a result of plan amendments or changes
in applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBHC, G Bank, or any other GBHC Company
or materially adversely affect the funding status of any such plan. Neither
any GBHC Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any GBHC
Company, or the single-employer plan of any entity which is considered one
employer with GBHC under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA. No GBHC
Company has provided, or is required to provide, security to an GBHC Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(d) No Liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by any GBHC Company with respect
to any ongoing, frozen, or terminated single-employer plan or the
single-employer plan of any ERISA Affiliate. No GBHC Company has incurred any
withdrawal Liability with respect to a multi-employer plan under Subtitle B of
Title IV of ERISA (regardless of whether based on contributions of an ERISA
Affiliate). No notice of a "reportable event," within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any
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GBHC Pension Plan or by any ERISA Affiliate within the 12-month period ending
on the date hereof.
(e) No GBHC Company has any Liability for retiree health
and life benefits under any of the GBHC Benefit Plans and there are no
restrictions on the rights of such GBHC Company to amend or terminate any such
Plan without incurring any Liability thereunder.
(f) Neither the execution and delivery of this Agreement
nor the consummation of the transaction contemplated hereby will (i) result in
any payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of any GBHC Company
from any GBHC Company under any GBHC Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any GBHC Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any GBHC Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject to
the provisions of Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the GBHC Financial Statements to the extent
required by and in accordance with GAAP.
5.15 Material Contracts. Except as reflected
in the GBHC Financial Statements and the GBHC Companies Disclosure Memorandum,
none of the GBHC Companies, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $15,000, (ii) any Contract relating to the borrowing of money by any
GBHC Company or the guarantee by any GBHC Company of any such obligation (other
than Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, and Federal Home Loan Bank or Federal
Reserve advances of depository institution Subsidiaries, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), and (iii) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by GBHC with the SEC
(collectively, the "GBHC Contracts"). With respect to each GBHC Contract: (i)
the Contract is in full force and effect; (ii) no GBHC Company is in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on GBHC, G Bank, or
any other GBHC Company; (iii) no GBHC Company has repudiated or waived any
Material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of GBHC or G Bank, in Default in any respect,
other than Defaults which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on GBHC, G Bank, or any other GBHC
Company, or has repudiated or waived any Material provision thereunder. Except
for Federal Home Loan Bank advances, all of the indebtedness of any GBHC
Company for money borrowed is prepayable at any time by such GBHC Company
without penalty or premium.
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5.16 Legal Proceedings. There is no
Litigation instituted or pending, or, to the Knowledge of GBHC or G Bank,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable
outcome) against any GBHC Company, or against any Asset, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on GBHC, G Bank, or any other GBHC
Company, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any GBHC Company
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on any GBHC Company. The GBHC Companies Disclosure Memorandum
includes a summary report of all Litigation as of the date of this Agreement to
which any GBHC Company is a party as a defendant or cross-defendant and where
the maximum exposure is estimated to be $50,000 or more.
5.17 Statements True and Correct. Since January 1, 1995, or
the date of organization if later, each GBHC Company has timely filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with any Regulatory Authorities
(except failures to file which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on GBHC, G Bank, or any other
GBHC Company). At the time of filing (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
report and other document, including financial statements, exhibits, and
schedules thereto, filed by a GBHC Company with any Regulatory Authority
complied in all Material respects with all applicable Laws, and (ii) each such
report and document did not, in all Material respects, contain any untrue
statement of a Material fact or omit to state a Material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The statements,
certificates, instruments, and other writings, taken as a whole, furnished or
to be furnished by any GBHC Company or any Affiliate thereof to MC pursuant to
this Agreement or, to the Knowledge of GBHC and G Bank, any other document,
agreement, or instrument referred to herein, do not and will not contain any
untrue statement of Material fact or omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the information supplied or to be supplied
by any GBHC Company or any Affiliate thereof pursuant to this Agreement for
inclusion in any application to Regulatory Authorities is or will be false or
misleading with respect to any Material fact, or contain any untrue statement
of a Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any GBHC Company or any Affiliate
thereof for inclusion in the Proxy Statement to be used in connection with the
Stockholders' Meeting, and any other documents to be filed by a GBHC Company or
any Affiliate thereof with any Regulatory Authority in connection with the
transaction contemplated hereby, will, at the respective time such documents
are filed, and, with respect to the Proxy Statement, when first mailed, be
false or misleading with respect to any Material fact, or contain any
misstatement of Material fact, or omit to state any Material fact required to
be stated thereunder or necessary to make the statements therein, in light of
the circumstances under which they were
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made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meeting, be
false or misleading with respect to any Material fact, or omit to state any
Material fact required to be stated thereunder or necessary to correct any
Material statement in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
any GBHC Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transaction contemplated hereby
will comply as to form in all Material respects with the provisions of
applicable Law.
5.18 Regulatory Matters. Except as
specifically contemplated by this Agreement, no GBHC Company or any Affiliate
thereof has taken any action, or agreed to take any action, or has any
Knowledge of any fact or circumstance that is reasonably likely to materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement. To the Knowledge of GBHC there exists no
fact, circumstance, or reason why the requisite Consents referred to in Section
9.1(b) of this Agreement cannot be received in a timely manner without
imposition of any condition of the type described in the last sentence of such
Section 9.1(b).
5.19 State Takeover Laws. To the extent applicable,
GBHC has taken all necessary action to exempt the transaction contemplated by
this Agreement from Sections 132 through 140.2 of the LBCL and any comparable
provisions of the Articles of Incorporation of any of the GBHC Companies.
5.20 Joinder. Each of the
directors of GBHC has executed and delivered to MC a Joinder of Shareholders
Agreement.
5.21 Covenant Not to Compete. The Directors of GBHC and G
Bank each agree that for the period from the date hereof until two (2) years
after the Effective Time, they will not become a director of any de novo bank,
savings bank, savings association, trust company, financial institution or
other similar business enterprise within St. Mary Parish, Louisiana. The
Directors of GBHC and G Bank further agree not to initiate or assist, directly
or indirectly, any action toward the formation of any de novo bank, savings
bank, savings association, trust company, financial institution or other
similar business enterprise within St. Mary Parish, Louisiana, for the period
from the date hereof until two (2) years after the Effective Time. Each of the
directors of GBHC and G Bank have executed and delivered to MC a Non-Compete
Agreement to this effect.
5.22 Charter Provisions. Each GBHC Company
has taken all action so that the entering into of this Agreement and the
consummation of the Merger and the other transaction contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
any GBHC Company or restrict or impair the ability of MC or any of its
Subsidiaries to vote, or
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otherwise to exercise the rights of a stockholder with respect to, shares of
any GBHC Company that may be directly or indirectly acquired or controlled by
it.
5.23 Derivative Contracts. No GBHC Company is a party
to or has agreed to enter into an exchange-traded or over-the-counter swap,
forward, future, option, cap, floor, or collar financial contract, or any other
interest rate or foreign currency protection contract not reflected in GBHC
Financial Statements which is a financial derivative contract (including
various combinations thereof) and which might reasonably be expected to have a
Material Adverse Effect on GBHC.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF MC and M C BANK
MC and M C Bank, as the case may be, hereby represent and warrant to
GBHC as follows:
6.1 Organization, Standing, and Power. MC is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Louisiana, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and operate its
Material Assets. M C Bank is a state-chartered financial institution duly
organized and validly existing under the laws of the State of Louisiana, has
all requisite corporate power and authority to own and lease its property and
to carry on its business as it is currently being conducted. At the Closing, M
C Subsidiary will be a corporation duly organized, validly existing, and in
good standing under the Laws of the State of Louisiana, and will have the
corporate power and authority to carry out its business and to own, lease, and
operate its Material Assets.
6.2 Ownership of M C Bank. MC owns all
of the issued and outstanding capital stock of M C Bank, free and clear of any
Lien or other encumbrance.
6.3 Ownership of M C Subsidiary. At the
Closing, M C Bank will own all of the issued and outstanding capital stock of M
C Subsidiary, free and clear of any Lien or other encumbrance.
6.4 Corporate Authorizations.
(a) MC and M C Bank each have, and M C Subsidiary will
have, the corporate power and authority necessary to execute, deliver, and
perform their obligations under this Agreement and the Merger Agreement, as the
case may be, and to consummate the transaction contemplated hereby and thereby.
The execution, delivery, and performance of this Agreement and the Merger
Agreement and the consummation of the transaction contemplated hereby and
thereby, including the Merger, have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of MC and M C Bank
and, in the case of M C Subsidiary, will be by its board of directors and sole
shareholder which will constitute all of the necessary
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corporate action on the part of M C Subsidiary. This Agreement and the Merger
Agreement represent, and in the case of M C Subsidiary, will represent, legal,
valid, and binding obligations of MC, M C Bank, and M C Subsidiary, enforceable
against MC, M C Bank and M C Subsidiary in accordance with their terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws affecting the
enforcement of creditors' rights generally and except that the availability of
the equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
or the Merger Agreement by MC, M C Bank, or M C Subsidiary, as the case may be,
nor the consummation by MC, M C Bank and M C Subsidiary of the transaction
contemplated hereby, nor compliance by MC, M C Bank and MC Subsidiary with any
of the provisions hereof, will (i) conflict with or result in a breach of any
provision of the Articles of Incorporation or Bylaws of MC or the Certificate
of Authority, Articles of Incorporation, or Bylaws of M C Bank, or the Articles
of Incorporation or Bylaws of M C Subsidiary, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result in the creation of
any Lien on any Asset of any MC Company under, any Contract or Permit of any MC
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on MC, M C Bank, M C Subsidiary, or any MC Company, or (iii) subject to
receipt of the requisite approvals referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any MC Company or any of
their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws and other than Consents required from Regulatory Authorities, and other
than notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation, or both, with respect to any employee benefit
plans, or under the HSR Act, and other than Consents, filings, or notifications
which, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on MC, M C Bank, M C Subsidiary,
or any other MC Company, no notice to, filing with, or Consent of, any public
body or authority is necessary for the consummation by MC or M C Bank or M C
Subsidiary of the Merger and the other transactions contemplated in this
Agreement and the Merger Agreement.
6.5 Capital Stock. (a)
The authorized capital stock of M C Subsidiary will consist of one (1) share of
no par value common stock, of which one (1) share will be issued and
outstanding as of the Closing. The issued and outstanding share of common
stock of M C Subsidiary will be duly and validly issued and outstanding and
fully paid and nonassessable under LBCL at the Closing, and will not have been
issued in violation of any preemptive rights of the stockholder of M C
Subsidiary. There will be no other equity securities of M C Subsidiary
outstanding and no outstanding Rights relating to the capital stock of M C
Subsidiary at the Closing.
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(b) The authorized capital stock of
M C Bank consists of 8,000 shares of common stock of the par value of $50.00,
of which 7,116 shares are issued and outstanding as of the date hereof. All of
the issued and outstanding shares of capital stock of M C Bank are duly and
validly issued and outstanding and are fully paid and, except as provided in
Section 262 of the LBL, nonassessable. To the knowledge of M C Bank, none of
the outstanding shares of capital stock of M C Bank have been issued in
violation of any preemptive rights of the current or past stockholders of M C
Bank. Except as set forth above, there are no other equity securities of M C
Bank outstanding and no outstanding Rights relating to the capital stock of M C
Bank.
6.6 Compliance with Laws. MC is duly
registered as a bank holding company under the BHC Act. Each MC Company has in
effect, and M C Subsidiary will have in effect, all Permits necessary for it to
own, lease, or operate its Material Assets and to carry on its business as now
conducted, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on MC. No MC Company:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on MC; or
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any MC Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on MC, M C Bank, M C Subsidiary, or any other MC Company, (ii)
threatening to revoke any Permits, the revocation of which is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on MC, M C
Bank, M C Subsidiary or any other MC Company, or (iii) requiring any MC Company
to enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of understanding, or to adopt
any board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any Material manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
6.7 Legal Proceedings.
There is no Litigation instituted or pending, or, to the Knowledge of MC or M C
Bank, threatened (or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable probability of an unfavorable
outcome) against any MC Company, or against any Asset, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on MC, M C Bank, or any other MC Company,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any MC Company,
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that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on MC, M C Bank, or any other MC Company.
6.8 Financial Statements. MC has
delivered to GBHC copies of all MC Financial Statements for periods ended prior
to the date hereof and will deliver to GBHC copies of all MC Financial
Statements prepared subsequent to the date hereof. The MC Financial Statements
(as of the dates thereof and for the periods covered thereby) present or will
present, as the case may be, fairly the consolidated financial position of the
MC Companies as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows of the MC Companies
for the periods indicated, in accordance with GAAP (subject to any exceptions
as to consistency specified therein or as may be indicated in the notes thereto
or, in the case of interim financial statements, to normal recurring year-end
adjustments that are not Material in amount or effect and to the absence from
interim financial statements of any footnote disclosures).
6.9 Absence of Undisclosed Liabilities. No MC
Company has any Liabilities that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on MC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of MC as of
December 31, 1996 included in the MC Financial Statements or reflected in the
notes thereto. No MC Company has incurred or paid any Liability since January
1, 1997, except for such Liabilities incurred or paid in the ordinary course of
business consistent with past business practice or incurred in connection with
the process leading up to the execution and consummation of this Agreement and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on MC.
6.10 Statements True and Correct. Since
January 1, 1996, or the date of organization if later, each MC Company has
timely filed all reports and statements, together with any amendments required
to be made with respect thereto, that it was required to file with any
Regulatory Authorities (except failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on MC, M C
Bank, M C Subsidiary, or any other MC Company). At the time of filing (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing): (i) each report and other document, including
financial statements, exhibits, and schedules thereto, filed by an MC Company
with any Regulatory Authority complied in all Material respects with all
applicable Laws, and (ii) each such report and document did not, in all
Material respects, contain any untrue statement of a Material fact or omit to
state a Material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The statements, certificates, instruments, and other
writings, taken as a whole, furnished or to be furnished by any MC Company or
any Affiliate thereof to GBHC pursuant to this Agreement or any other document,
agreement, or instrument referred to herein, do not and will not contain any
untrue statement of Material fact or omit to state a Material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the information supplied or to be supplied
by any MC Company
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or any Affiliate thereof pursuant to this Agreement is or will be false or
misleading with respect to any Material fact, or contain any untrue statement
of a Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to make the statements therein not misleading. None of
the information supplied or to be supplied by any MC Company or any Affiliate
thereof for inclusion in the Proxy Statement to be used in connection with the
Stockholders' Meeting, and any other documents to be filed by an MC Company or
any Affiliate thereof with any Regulatory Authority in connection with the
transactions contemplated hereby and by the Merger Agreement, will, at the
respective time such documents are filed, and, with respect to the Proxy
Statement, when first mailed, be false or misleading with respect to any
Material fact, or contain any misstatement of Material fact, or omit to state
any Material fact required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material
fact required to be stated thereunder or necessary to correct any Material
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that any MC Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all Material respects with the provisions of applicable Law.
6.11 Adequate Resources. M C Bank has, and at
the Closing M C Subsidiary will have, all of the funds necessary for the Merger
and consummation of the transaction contemplated by this Agreement and the
Merger Agreement and such funds will not be subject to any restrictions that
would prevent them from being paid to the shareholders of GBHC as provided
herein.
6.12 Regulatory Matters. Except as specifically
contemplated by this Agreement, no MC Company or any Affiliate thereof has taken
any action, or agreed to take any action, or has any Knowledge of any fact or
circumstance that is reasonably likely to materially impede or delay receipt of
any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement. To the Knowledge of MC, M C Bank, and any other MC Company there
exists no fact, circumstance, or reason why the requisite Consents referred to
in Section 9.1(b) of this Agreement cannot be received in a timely manner
without imposition of any condition of the type described in the last sentence
of such Section 9.1(b).
6.13 Affiliate Status. Neither MC nor M C Bank
have any reason to believe that they are, or that M C Subsidiary will be, an
"interested shareholder" or an "affiliate" of an interested shareholder of GBHC
or any of its Subsidiaries as those terms are defined in Section 132 of the
LBCL.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of GBHC and G Bank. Unless the prior
written consent of MC and M C Bank shall have been obtained, which consent
shall not be unreasonably withheld, and except as otherwise expressly
contemplated herein, GBHC, G Bank, and any other GBHC Company shall from the
date of this Agreement until the Effective Time or termination of this
Agreement, (i) operate its business only in the usual, regular, and ordinary
course, (ii) preserve intact in all Material respects its business organization
and use its best efforts to preserve intact in all Material respects its Assets
and maintain its rights and franchises, and (iii) take no action which would
(a) materially adversely affect the ability of any Party to obtain any Consents
required for the transaction contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentences of
Sections 9.1 (b) and (c) of this Agreement, or (b) materially adversely affect
the ability of any Party to perform its covenants and agreements under this
Agreement.
7.2 Negative Covenants of GBHC and G Bank. From the date of
this Agreement until the earlier of the Effective Time or the termination of
this Agreement, GBHC and G Bank, as the case may be, covenant and agree that
they will not do or agree or commit to do, or permit any of their Subsidiaries
to do or agree or commit to do, any of the following without the prior written
consent of MC, M C Bank and M C Subsidiary, as the case my be, which consent
shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of any GBHC Company; or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of an GBHC Company to
another GBHC Company) in excess of an aggregate amount outstanding at any time
of $150,000 (for the GBHC Companies on a consolidated basis) except in the
ordinary course of the business of GBHC, or such Subsidiary, consistent with
past practices (which shall include, for G Bank, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve Bank
or Federal Home Loan Bank, whether or not G Bank has previously received any
such advances, overnight borrowings to meet temporary liquidity needs, and
entry into repurchase agreements fully secured by U.S. Government or agency
securities), or impose, or suffer the imposition on any Asset of any GBHC
Company of any Lien or permit any such Lien to exist (other than in connection
with deposits, repurchase agreements, bankers acceptances, "treasury tax and
loan" accounts established in the ordinary course of business, the satisfaction
of legal requirements in the exercise of trust powers, Liens to secure debt
obligations or other obligations for borrowed money permitted under this
paragraph (b), and Liens in effect as of the date hereof that are disclosed in
the GBHC Companies Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any GBHC Company, or declare or
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pay any dividend or make any other distribution in respect of GBHC's capital
stock except as envisioned by this Agreement; or
(d) issue, sell, pledge, encumber, authorize the issuance
of, enter into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares
of GBHC Preferred Stock or GBHC Common Stock or any other capital stock of any
GBHC Company, or any Rights to acquire such stock; or
(e) adjust, split, combine, or reclassify any capital
stock of any GBHC Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of GBHC Common Stock or
GBHC Preferred Stock, or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber any shares of capital stock of any GBHC Company (unless any
such shares of stock are sold or otherwise transferred to another GBHC Company)
or any Asset having a book value in excess of $50,000 other than in the
ordinary course of business for reasonable and adequate consideration and other
than dispositions in the ordinary course of business of (i) investment
securities, (ii) loans, including dispositions thereof through loan
participation agreements, and (iii) other real estate owned by any GBHC
Company; or
(f) except for purchases of U.S. Treasury securities or
U.S. Government agency securities, which in each case have maturities of five
years or less, purchase any securities or make any material investment, either
by purchase of stock or securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person other than a wholly-owned GBHC
Subsidiary, or otherwise acquire direct or indirect control over any Person,
other than in connection with (i) foreclosures in the ordinary course of
business, or (ii) acquisitions of control by a depository institution
Subsidiary in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the
employees or officers of any GBHC Company, except in accordance with past
practice or previously approved by the Board of Directors of GBHC, in each case
as disclosed in the GBHC Companies Disclosure Memorandum or as required by Law;
except as disclosed in the GBHC Companies Disclosure Memorandum, pay any
severance or termination pay or any bonus other than pursuant to written
policies or written Contracts in effect on the date of this Agreement and the
regular bonuses paid by G Bank to its officers and employees consistent with
past practices and disclosed in the GBHC Companies Disclosure Memorandum; and
enter into or amend any severance agreements with officers of any GBHC Company,
or grant any increase in fees or other increases in compensation or other
benefits to directors of any GBHC Company except in accordance with past
practices disclosed in the GBHC Companies Disclosure Memorandum; or voluntarily
accelerate the vesting of any stock options or other stock-based compensation
or employee benefits; or
(h) enter into or amend any employment Contract between
any GBHC Company and any Person (unless such amendment is required by Law) so
that the GBHC Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered) at any
time on or after the Effective Time; or
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(i) adopt any new employee benefit plan of any GBHC
Company or make any material change in or to any existing employee benefit
plans of any GBHC Company other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan; or
(j) fail to pay or to make adequate provisions for the
payment of all taxes or, make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws, or regulatory accounting
requirements or GAAP; or
(k) commence any material Litigation other than in
accordance with past practice, settle any Litigation involving any Liability
of any GBHC Company for money damages in excess of $100,000 or imposing
material restrictions upon the operations of any GBHC Company;
(l) modify, amend, or terminate any material Contract or
waive, release, compromise, or assign any material rights or claims;
(m) merge or consolidate with another entity, or sell or
otherwise dispose of a substantial part of the Assets of any GBHC Company or,
except in the ordinary course of business consistent with past practices or as
otherwise permitted in this Agreement, sell any of its Material Assets;
(n) permit or omit to do any act which act or omission
would cause a breach of any covenant of GBHC or G Bank contained in this
Agreement or would cause any representation or warranty of GBHC or G Bank
contained in this Agreement to become untrue, as if such representation and
warranty were continuously made from and after the date hereof;
(o) violate in any Material respect any Law, statute,
rule, governmental regulation, or Order;
(p) fail to maintain the books, accounts, and records of
any GBHC Company in the usual manner on a basis consistent with that heretofore
employed;
(q) enter into any new line of business;
(r) charge off (except as may otherwise be required by
Law or by Regulatory Authorities or by GAAP consistently applied) or sell
(except for a price not less than the book value thereof) any of its portfolio
of loans, discounts, or financing leases other than sales of mortgage loans in
a manner consistent with past practices; or
(s) make any extension of new credit or renew any
existing extension of credit which, when added to all other extensions of
credit to the borrower and its affiliates, would exceed $2,400,000, or, without
the prior written consent of MC and M C Bank, which consent shall not be
unreasonably withheld, commit or otherwise become obligated to make any such
extension of new credit in excess of $500,000. Extensions of new credit and
renewals of existing extensions of credit for purposes of this provision shall
not include drawing one or more times on
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existing credit lines whether or not amounts are outstanding on any such lines
at the date hereof or funding of unfunded commitments.
7.3 Covenants of MC.
(a) From the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement, MC covenants and
agrees that it shall and shall cause each of its Subsidiaries to (i) continue
to conduct its business and the business of its Subsidiaries in the usual
regular and ordinary course, and (ii) take no action which would (a) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of Sections 9.1(b)
and 9.1(c) of this Agreement, or (b) materially adversely affect the ability of
any Party to perform its covenants and agreements under this Agreement.
(b) M C Bank covenants and agrees that it shall (i) cause
M C Subsidiary to be validly incorporated and duly formed under the provisions
of the LBCL, and (ii) capitalize M C Subsidiary with necessary unrestricted
funds sufficient to close the transaction contemplated by this Agreement and
the Merger Agreement.
(c) MC and M C Bank covenant and agree that all
applications to Regulatory Authorities for prior Consent to consummate the
transaction contemplated by this Agreement and the Merger Agreement shall be
prepared and filed as soon as reasonably practicable.
7.4 Adverse Changes in Condition. Each Party
agrees to give written notice promptly to the other Party upon becoming aware
of the occurrence or impending occurrence of any event or circumstance relating
to it or any of its Subsidiaries which (i) is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on it or (ii) would
cause or constitute a Material breach of any of its representations,
warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.
7.5 Reports. Each Party
and its Subsidiaries shall file all reports required to be filed by it with
Regulatory Authorities between the date of this Agreement and the Effective
Time and shall deliver to the other Party copies of all such reports promptly
after the same are filed. If financial statements are contained in any such
reports filed with the SEC, such financial statements will fairly present the
consolidated financial position of the entity filing such statements as of
the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flow for the periods then ended in accordance
with GAAP, (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of the respective
dates, such reports filed with the SEC will comply in all Material respects
with the Securities Laws and will not contain any untrue statement of Material
fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority
shall be prepared in accordance with Laws applicable to such reports.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Preparation of Proxy Statement. Each of the Parties
will cooperate in the preparation of the Proxy Statement of GBHC (the "Proxy
Statement") which complies with the requirements of all applicable Laws, rules,
and regulations, for the purposes of submitting the Merger Agreement and the
transaction contemplated hereby and thereby to the holders of GBHC Common Stock
for approval. Each of the Parties will as promptly as practicable after the
date hereof furnish all such data and information relating to it and its
Subsidiaries as any of the other Parties may reasonably request for the purpose
of including such data and information in the Proxy Statement. In connection
with the Stockholders' Meeting, (i) GBHC shall mail the Proxy Statement to the
holders of GBHC Common Stock, (ii) provided it has obtained a fairness opinion
from Alex Sheshunoff & Co., as provided in Section 9.1(e), the Board of
Directors of GBHC shall recommend (subject to compliance with their fiduciary
duties as advised by counsel) to holders of GBHC Common Stock the approval of
the Merger Agreement, and (iii) the Board of Directors and officers of GBHC
shall (subject to compliance with their fiduciary duties as advised by counsel)
use their reasonable efforts to obtain the approval of the Merger Agreement by
the holders of GBHC Common Stock.
8.2 Applications. GBHC shall
promptly prepare and file the Proxy Statement and all other SEC Documents and
MC, M C Bank and M C Subsidiary shall cooperate in the preparation of the Proxy
Statement. MC and M C Bank shall promptly obtain all Consents necessary for
the formation and incorporation of M C Subsidiary, and thereafter expeditiously
form and incorporate M C Subsidiary. MC, M C Bank, and M C Subsidiary, as the
case may be, shall promptly prepare and file, and GBHC and G Bank shall
cooperate in the preparation and the execution of applications with all other
Regulatory Authorities having jurisdiction over the transactions contemplated
by this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement and the Merger Agreement. GBHC
shall promptly provide MC and M C Bank with a list of the states other than
Louisiana in which, according to the stock records of GBHC, its shareholders
reside as of the date hereof, and MC and M C Bank shall make any filings
required in connection herewith by the corporate, securities or other Laws of
such states.
8.3 Filings with State Offices. Upon the
terms and subject to the conditions of this Agreement and the Merger Agreement,
M C Subsidiary and GBHC shall execute, and MC and M C Bank shall file, the
Merger Agreement with the Secretary of State of the State of Louisiana and as
otherwise required by Law.
8.4 Cooperation and Best Efforts. Subject to the
terms and conditions of this Agreement, each Party agrees to use, and to cause
its Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws, to consummate and make effective, as
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soon as practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable efforts to lift
or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its
reasonable efforts to obtain all Consents necessary or desirable for the
consummation of the transactions contemplated by this Agreement.
8.5 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep
the other Party advised of all Material developments relevant to its business
and to consummation of the Merger, and GBHC and G Bank shall permit MC and M C
Bank to make or cause to be made such reasonable investigation of the business
and properties of GBHC and G Bank and its financial and legal conditions as MC
and M C Bank may reasonably request from time to time, provided that such
investigations shall be reasonably related to the transaction contemplated
hereby and shall not interfere unreasonably with normal operations. GBHC shall
cooperate with M C Bank in obtaining, at the election and expense of M C Bank,
environmental audits of any or all of the properties owned or occupied by any
GBHC Company. No investigation by MC or M C Bank shall affect the
representations and warranties of GBHC and G Bank.
(b) Each Party shall, and shall cause its Representatives
to, maintain the confidentiality of all written, oral, and other confidential
information furnished to it by the other Party concerning its and its
Subsidiaries' businesses, operations, and financial positions ("Confidential
Information") and shall not use such information for any purpose except in
furtherance of the transaction contemplated by this Agreement. Each Party
shall maintain the confidentiality of all Confidential Information obtained in
connection with this Agreement or the transaction contemplated hereby unless
(i) such information becomes publicly available through no fault of such Party,
or was, is, or becomes available to that Party from a source other than the
other Party or its Representatives, which source was itself not bound by a
confidentiality agreement with, or other contractual, legal, or fiduciary
obligation of confidentiality with respect to that information, or (ii) the
furnishing or use of such information is required by proper judicial,
administrative, or other legal proceeding, provided that the other Party is
promptly notified in writing of such request, unless such notification is not,
in the opinion of counsel, permitted by Law. Each Party and its
Representatives will hold and maintain all Confidential Information in
confidence and will not disclose to any third party or permit any third party
access to any Confidential Information or the substance thereof provided that a
Party may disclose Confidential Information to such of its Representatives who
need to know such information in connection with the transaction contemplated
hereby. If this Agreement is terminated prior to the Effective Time, each
Party shall promptly return or certify the destruction of all documents and
copies thereof, and all work papers containing or derived from Confidential
Information received from the other Party.
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(c) Each Party agrees to give the other Party notice as
soon as practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent,
either a Material breach of any representation, warranty, covenant, or
agreement of the other Party or which has had or is reasonably likely to have a
Material Adverse Effect on the other Party.
8.6 Press Releases. Prior to the
Effective Time, GBHC and MC or M C Bank or M C Subsidiary, as the case may be,
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or to the
transaction contemplated hereby; provided, that nothing in this Section 8.6
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.7 Certain Actions.
(a) Except to the extent necessary to comply with the
fiduciary duties or other legal obligations as advised by counsel of GBHC's
Board of Directors, no GBHC Company nor any Affiliate thereof shall: (i)
directly or indirectly solicit any Acquisition Proposal from any Person; (ii)
furnish any non-public information that it is not legally obligated to furnish
to any Person; or (iii) negotiate with respect to, or enter into any Contract
with respect to, any Acquisition Proposal, but GBHC may communicate information
about such an Acquisition Proposal to its stockholders if and to the extent
that it or its directors are required to do so in order to comply with its or
their legal obligations as advised by counsel. GBHC shall promptly notify MC
orally and in writing in the event that it receives any inquiry or information
relating to any Acquisition Proposal. In the event any non-public information
is provided by any GBHC Company to any Person in order to comply with the
fiduciary duties or other legal obligations as advised by counsel of GBHC, then
information so furnished shall be supplied pursuant to a confidentiality
agreement that reasonably protects the confidentiality of such information.
GBHC shall (i) immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing subject to legal obligations and fiduciary duties as aforesaid.
(b) Except as may be necessary as advised in writing by
its counsel to discharge its fiduciary duties, neither the Board of Directors
of GBHC nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to M C Bank, the approval or
recommendations to the shareholders of this Agreement or the Merger, provided
that GBHC shall have received the opinion of Alex Sheshunoff & Co., in form and
substance reasonably satisfactory to it to the effect that the terms of the
transaction as contemplated by this Agreement and the Merger Agreement are fair
to GBHC and its shareholders from a financial point of view as required by
Subsection 9.1(e) and such opinion has not been withdrawn, (ii) approve or
recommend or propose to recommend any Acquisition Proposal with respect to GBHC
or G Bank, except such action that counsel advises in writing is necessary to
discharge its
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fiduciary duties to the GBHC Companies and the shareholders of GBHC, or (iii)
modify, or waive or release any Party from any Material provision of, or fail
to enforce any Material provision of, if M C Bank reasonably so requests such
enforcement, any confidentiality agreement entered into by GBHC or G Bank with
any prospective acquiror after the date of this Agreement or within two (2)
years prior to such date.
8.8 Approval of Merger Agreement. MC and M C Bank, as
the sole shareholder of M C Subsidiary, shall take all action necessary to
effect shareholder approval of the Merger Agreement.
8.9 GBHC Common Shareholder Approval. GBHC's Board of
Directors shall submit the Merger Agreement to the holders of GBHC Common Stock
for approval in accordance with the LBCL, together with its recommendation that
such approval be given, provided that it has obtained a fairness opinion from
Alex Sheshunoff & Co., in form and substance satisfactory to GBHC as provided
in Section 9.1(e), at the Stockholders' Meeting duly called for that purpose as
soon as practicable after all filings with Regulatory Authorities have been
made. If the Board of Directors of GBHC so determines, the Stockholders'
Meeting may be the annual meeting of shareholders of GBHC.
8.10 Operating Functions. Each GBHC Company
agrees to cooperate in the consolidation of appropriate operating functions
with MC, M C Bank, and M C Subsidiary, at and after the Effective Time,
provided that the foregoing shall not be deemed to require any action that, in
the opinion of the members of the Board of Directors of GBHC would adversely
affect the operations of GBHC or G Bank if the Merger were not consummated.
8.11 State Takeover Laws. GBHC shall take all
necessary steps to exempt the transaction contemplated by this Agreement from
Sections 132 through 140.2 of the LBCL.
8.12 Charter Provisions. Each GBHC
Company shall take all necessary action to ensure that the entering into of
this Agreement and the consummation of the Merger and the other transaction
contemplated hereby do not and will not result in the grant of any rights to
any Person under the Articles of Incorporation, Bylaws, or other governing
instruments of any GBHC Company or restrict or impair the ability of MC, M C
Bank, M C Subsidiary, or any MC Company to vote, or otherwise to exercise the
rights of a stockholder with respect to, shares of any GBHC Company that may be
directly or indirectly acquired or controlled by it.
8.13 Employee Benefits and Contracts. Following the
Effective Time, MC or M C Bank shall provide generally to officers and
employees of the GBHC Companies, who at or after the Effective Time become
employees of a MC Company, employee benefits under employee benefit plans on
the same terms and conditions as those currently provided by the MC Companies
to their similarly situated officers and employees. For purposes of
participation, vesting and
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accrual of benefits under such employee benefit plans service under any
employee benefit plans of GBHC shall be treated as service under any similar
employee benefit plans maintained by MC. Officers and employees of any GBHC
Company shall be eligible to participate in any life, health and disability
insurance programs provided by any MC Company regardless of any pre-existing
conditions. MC also shall cause GBHC and its Subsidiaries to honor, on terms
reasonably agreed upon by the Parties, all employment, severance, consulting,
and other compensation Contracts disclosed in the GBHC Companies Disclosure
Memorandum between any GBHC Company and any current or former director,
officer, or employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under the GBHC
Benefit Plans.
8.14 Joinder of Shareholders. A Joinder of
Shareholders in the form of Exhibit B annexed hereto shall have been executed
by each Person who beneficially owns 5% or more of GBHC Common Stock, and by
each person who serves as a director or executive officer of GBHC or G Bank;
and M C Subsidiary shall have received from each Person who executes a Joinder
of Shareholders a written confirmation dated not earlier than five (5) days
prior to the Closing to the effect that each representation made by such Person
in the Joinder of Shareholders is true and correct as of the date of such
confirmation and that such Person has complied with all of his or her covenants
therein through the date of such confirmation.
8.15 Insurance Retention. GBHC or G
Bank, as applicable, shall purchase a five (5) year extension of its directors'
and officers' liability insurance policy. MC or M C Bank, as applicable, shall
pay the deductible that the insureds thereunder may be obligated for in
connection with claims made pursuant thereto. The provisions of this Section
8.15 are intended to be for the benefit of, and shall be enforceable by, each
person entitled to payments of insurance retention hereunder and his or her
heirs or personal representatives.
8.16 Transmittal Letters. MC, M C
Bank and M C Subsidiary covenant and agree that the transmittal letters to be
sent to the shareholders of GBHC, for use in effecting the exchange of shares
in the Merger under Section 4.1, shall contain the information required by, and
comply in all respects with the requirements of, the Articles of Incorporation,
as amended, of GBHC with respect to the redemption of GBHC Preferred Stock
(including the requirement of at least thirty (30) days notice).
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The
respective obligations of each Party to consummate the Merger are subject to
the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(a) Stockholder Approval. The holders
of GBHC Common Stock, and M C Bank as the sole shareholder of M C Subsidiary,
shall have approved the Merger
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Agreement, and the consummation of the transaction contemplated hereby and
thereby, as and to the extent required by Law or by the provisions of any
governing instruments.
(b) Regulatory Approvals. All
Consents of, filings and registrations with, and notifications to, all
Regulatory Authorities required for consummation of the Merger shall have been
obtained or made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any Regulatory
Authority which is necessary to consummate the transaction contemplated hereby
shall be conditioned or restricted in a manner (including requirements relating
to the raising of additional capital or the disposition of Assets) which in the
reasonable judgment of the Board of Directors of M C Bank would so materially
adversely impact the economic or business benefits of the transaction
contemplated by this Agreement that, had such condition or requirement been
known, M C Bank would not, in its reasonable judgment, have entered into this
Agreement.
(c) Consents and Approvals. Each Party
shall have obtained any and all Consents required for consummation of the
Merger (other than those referred to in Section 9.1(b) of this Agreement) or
for the preventing of any Default under any Contract or Permit of such Party
which, if not obtained or made, is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on such Party. No Consent so
obtained which is necessary to consummate the transaction contemplated hereby
shall be conditioned or restricted in a manner which in the reasonable judgment
of the Board of Directors of M C Bank would so materially adversely impact the
economic or business benefits of the transaction contemplated by this Agreement
that, had such condition or requirement been known, M C Bank would not, in its
reasonable judgment, have entered into this Agreement.
(d) Legal Proceedings. No
court or governmental or regulatory authority of competent jurisdiction shall
have enacted, issued, promulgated, enforced, or entered any Law or Order
(whether temporary, preliminary, or permanent) or taken any other action which
prohibits, restrains, restricts, or makes illegal consummation of the
transaction contemplated by this Agreement.
(e) Opinion of Investment Bankers. GBHC shall
have received from Alex Sheshunoff & Co., in form and substance reasonably
satisfactory to GBHC, dated within five (5) days prior to the mailing of the
Proxy Statement and updated within five (5) days of the Closing if the Closing
does not occur within thirty (30) days of the Stockholders' Meeting, an opinion
to the effect that the terms of the transaction as contemplated by this
Agreement and the Merger Agreement are fair to GBHC and its shareholders from a
financial point of view, which opinion shall not have been withdrawn by Alex
Sheshunoff & Co., prior to Closing.
9.2 Conditions to Obligations of M C Bank. The
obligations of MC, M C Bank, and M C Subsidiary, as the case may be, to
consummate the Merger are subject to the satisfaction of the following
conditions, unless waived by M C Bank pursuant to Section 11.6(a) of this
Agreement:
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(a) Representations and Warranties. For
purposes of this Section 9.2(a), the accuracy of the representations and
warranties of GBHC and G Bank set forth in this Agreement shall be assessed as
of the date of this Agreement and as of the Effective Time with the same effect
as though all such representations and warranties had been made on and as of
the Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of GBHC and G Bank set forth in Section 5.3 of
this Agreement shall be true and correct (except for inaccuracies which are de
minimus in amount). The representations and warranties of GBHC and G Bank set
forth in Sections 5.18, 5.19, and 5.22 of this Agreement shall be true and
correct in all Material respects. There shall not exist inaccuracies in the
representations and warranties of GBHC and G Bank set forth in this Agreement
(including the representations and warranties set forth in Sections 5.3, 5.18,
5.19, and 5.22) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on GBHC or G Bank;
provided that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material Adverse
Effect" or to the "Knowledge" of GBHC or G Bank or to a matter being "known" by
GBHC or G Bank shall be deemed not to include such qualifications.
(b) No Material Adverse Effect. There shall
not have occurred, from the date of the Latest Balance Sheet to the Effective
Time, any change, event, or occurrence, which with any other change, event, or
occurrence has a Material Adverse Effect on the financial condition, results of
operation, business or prospects of GBHC on a consolidated basis. Without
limiting the change, event, or occurrence that would have such a Material
Adverse Effect with respect to GBHC on a consolidated basis, the following
shall be deemed to constitute such a change, event, or occurrence with respect
to GBHC for all purposes of this Agreement: (i) any change or changes,
exclusive of expenses of the Merger, which, in the aggregate, have resulted in
a reduction of net earnings after taxes when compared to such earnings for the
corresponding period in 1996 of 50% or more.
(c) Dissenters' Rights. The number
of shares of GBHC Common Stock as to which the holders thereof at the time of
the Closing are legally entitled to assert dissenting shareholders'
rights shall not exceed 5% of the total number of shares of GBHC Common Stock
issued and outstanding at the Closing.
(d) Performance of Covenants. Each and
all of the agreements and covenants of GBHC and G Bank to be performed
and complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly performed
and complied with in all Material respects.
(e) Certificates. GBHC and
G Bank shall have delivered to M C Bank and M C Subsidiary (i) a certificate,
dated as of the Effective Time and signed on its behalf by its duly
authorized officer, to the effect that the conditions of its obligations set
forth in Sections 9.2(a) and 9.2(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by GBHC's Board of
Directors evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this
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Agreement, and the consummation of the transaction contemplated hereby, all in
such reasonable detail as M C Bank and M C Subsidiary and their counsel shall
request.
(f) Opinion of Counsel. M C Bank
shall have received an opinion of Gordon, Arata, McCollam & Duplantis, L.L.P.,
counsel to GBHC and its Subsidiaries, dated as of the Effective Time, in form
reasonably satisfactory to M C Bank, as to the matters set forth in Exhibit C of
this Agreement.
(g) Claims Letters. Each of the
directors and officers of GBHC shall have executed and delivered to M C Bank
letters in substantially the form of Exhibit D of this Agreement.
(h) Covenant Not to Compete. Each of the
directors of GBHC and G Bank have executed and delivered to MC a Non-Compete
Agreement in substantially the form of Exhibit E of this Agreement.
(i) Cancellation of Contracts. Each and all
of the employment contracts and retirement obligations of GBHC and G Bank shall
have been cancelled and paid.
(j) Specific Loans. G Bank
shall do one of the following with respect to Loan Nos. 3715872, 3718204 and
3719975:
(i) Dispose of the loan without any recourse on
the part of G Bank or any other GBHC Company and without any loss of principal
or interest to G Bank; or
(ii) Restructure the loan to remove Lot 6 of Tract
O and Lots 19 and 20 of Tract Q from the collateral securing the loan and cause
to be obtained at Closing a participation in the amount of 20% of the loan
balance at Closing that will provide M C Bank in case of default a first out of
its balance before participant receives any funds. It is contemplated that the
participation will be paid from funds received by certain individuals in the
transaction made the subject of this Agreement. If such funds are not
available at the Closing, a commitment to purchase the participation will be
provided until those funds are available.
9.3 Conditions to Obligations of GBHC and G Bank. The
obligations of GBHC and G Bank to consummate the Merger are subject to the
satisfaction of the following conditions, unless waived by GBHC and G Bank
pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For
purposes of this Section 9.3(a), the accuracy of the representations and
warranties of MC, M C Bank, and M C Subsidiary, as the case may be, set forth
in this Agreement shall be assessed as of the date of this Agreement and as of
the Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of MC, M C
Bank, and M C Subsidiary set forth in Sections 6.2 and 6.3 of this Agreement
shall be true and correct (except for inaccuracies which are de minimus
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in amount). The representations and warranties of M C Bank set forth in
Section 6.12 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of M C Bank set forth in this Agreement (including the
representations and warranties set forth in Sections 6.2, 6.3 and 6.12) such
that the aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Material Adverse Effect on MC and M C Bank; provided that, for purposes
of this sentence only, those representations and warranties which are qualified
by references to "material" or "Material Adverse Effect" or to the "Knowledge"
of MC or M C Bank to a matter being "known" by MC or M C Bank shall be deemed
not to include such qualifications.
(b) Performance of Covenants. Each and all
of the agreements and covenants of MC, M C Bank, and M C Subsidiary, as the case
may be, to be performed and complied with pursuant to this Agreement and the
other agreements contemplated hereby prior to the Effective Time shall have been
duly performed and complied with in all material respects.
(c) Certificates. M C Bank, or M C
Subsidiary, as the case may be, shall have delivered to GBHC and G Bank (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that the
conditions of its obligations set forth in Sections 9.3(a) and 9.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by board of directors of M C Bank evidencing the taking of all corporate
action necessary to authorize the execution, delivery, and performance of this
Agreement, and the consummation of the transaction contemplated hereby, all in
such reasonable detail as GBHC and G Bank and their counsel shall request.
(d) Opinion of Counsel. GBHC and G Bank
shall have received an opinion of Pickering, Cotogno & Dunn, counsel to MC, M C
Bank and M C Subsidiary, dated as of the Effective Time, in form reasonably
acceptable to GBHC and G Bank, as to the matters set forth in Exhibit F of this
Agreement.
(e) Adequate Resources. M C Subsidiary,
M C Bank and MC shall have sufficient funds immediately available to pay the
cash consideration to the shareholders of GBHC as provided herein.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any
other provision of this Agreement, and notwithstanding the approval of the
Merger Agreement by the holders of GBHC Common Stock and by M C Bank as the
sole shareholder of M C Subsidiary, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Boards of Directors of MC,
M C Bank, and M C Subsidiary, and the Boards of Directors of GBHC and G Bank; or
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(b) By the Board of Directors of either Party in the
event of an inaccuracy of any representation or warranty of the other Party
contained in this Agreement which cannot be or has not been cured within thirty
(30) days (but in no event later than the date provided in Section 10.1(e))
after the giving of written notice to the breaching Party of such inaccuracy
and which inaccuracy would provide the terminating Party the ability to refuse
to consummate the Merger under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of GBHC and G Bank and Section 9.3(a) of
this Agreement in the case of MC and M C Bank and M C Subsidiary; or
(c) By the Board of Directors of either Party in the
event of a Material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within thirty
(30) days (but in no event later than the date provided in Section 10.1(e))
after the giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required for consummation of
the Merger and the other transactions contemplated hereby shall have been
denied by final non-appealable action of such authority or if any action taken
by such authority is not appealed within the time limit for appeal, or (ii) the
holders of GBHC Common Stock fail to vote their approval of this Agreement and
the transactions contemplated hereby as required by the LBCL at the
Stockholders' Meeting; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by December 31, 1997,
except that a Party that has breached the obligation to consummate the Closing
upon satisfaction or waiver by the Party entitled to grant such waiver of the
conditions of Article 9 (provided that no Party shall be required to waive any
such provision) and has failed to cure such breach may not terminate under this
Section 10.1(e); or
(f) By the Board of Directors of either Party in the
event that any of the conditions precedent to the obligations of such Party to
consummate the Merger, other than the conditions in Section 9.2(a) in the case
of GBHC and G Bank or 9.3(a) in the case of MC and M C Bank and M C Subsidiary,
cannot be satisfied or fulfilled by the date specified in Section 10.1(e) of
this Agreement; or
(g) By the Board of Directors of GBHC if (i) Alex
Sheshunoff & Co., is unable to render the fairness opinion required by Section
9.1(e) of this Agreement or withdraws it prior to the Closing, or (ii) the cash
consideration to be paid at the Closing is less than $7,300,000; or
(h) By the Board of Directors of M C Subsidiary and M C
Bank, if the shareholders' equity of GBHC is less than $5,284,000 at the
Closing.
10.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 10.1, this
Agreement shall become void and have no effect, and neither Party shall have
any claim or legal right to redress, whether for breach of contract or
otherwise, as a result of a breach of any representation, warranty, covenant,
or condition of this Agreement, except that (i) the provisions of Section
8.5(b), this Section 10.2 and
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Article 11 of this Agreement shall survive any such termination and
abandonment, and (ii) a termination pursuant to Section 10.1(b), (c), or (f) of
this Agreement shall not relieve the breaching Party from Liability for an
uncured intentional breach of a representation, warranty, material covenant, or
material agreement giving rise to such termination (unless such breach was
required by law or by a Regulatory Authority), it being understood that a
disclosure in any closing or other certificate concerning the inaccuracy of a
representation, warranty, covenant or agreement shall not of itself be deemed
to be an intentional breach.
10.3 Non-Survival of Representations. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 of this Agreement and Sections 6.11, 7.3, 8.13, 8.15,
and 8.16 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided herein,
the capitalized terms set forth below shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger,
acquisition of all of the stock or assets of, or other business
combination involving such Party or any of its Subsidiaries or the
acquisition of a substantial equity interest in, or a substantial
portion of the assets of, such Party or any of its Subsidiaries other
than the acquisition contemplated by this Agreement.
"Adjusted Shareholders' Equity of GBHC" shall mean the
shareholders' equity of GBHC as of April 30, 1997, adjusted on the
Determination Date in accordance with Section 3.2 of this Agreement.
"Affiliate" of a Person shall mean any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such Person.
"Agreement" shall mean this Acquisition Agreement, including
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature,
character, and description, whether real, personal
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or mixed, tangible or intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of
such Person or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Closing" shall mean the closing of the transaction
contemplated hereby, as described in Section 1.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking
of any kind or character, or other document to which any Person is a
party or that is binding on any Person or its capital stock, Assets,
or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order, or Permit where, in any such event, such
Default is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on a Party.
"Determination Date" shall mean that date ten (10) days prior
to the Closing on which the Adjusted Shareholders' Equity of GBHC
shall be calculated.
"Effective Time" shall mean the date and time at which the
Merger becomes effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata)
and which are administered, interpreted, or enforced by the United
States Environmental Protection Agency and state and local agencies
with
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jurisdiction over, and including common law in respect of, pollution
or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of
any Hazardous Material, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall have the meaning provided in Section
5.14 of this Agreement.
"ERISA Plan" shall have the meaning provided in Section 5.14
of this Agreement.
"Exhibits" shall mean the Exhibits referred to in this
Agreement and which are so marked are attached to this Agreement.
Such Exhibits are hereby incorporated by reference herein and made a
part hereof, and may be referred to in this Agreement and any other
related instrument or document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBHC ERISA Plan" shall have the meaning set forth in Section
5.14(a) of this Agreement.
"GBHC Benefit Plans" shall have the meaning set forth in
Section 5.14 of this Agreement.
"GBHC Capital Stock" shall mean GBHC Common Stock and GBHC
Preferred Stock.
"GBHC Class A Common Stock" shall mean the $5.00 par value
Common Stock of GBHC.
"GBHC Class B Common Stock" shall mean the no par value
Common Stock of GBHC.
"GBHC Common Stock" shall mean the GBHC Class A Common Stock
and the GBHC Class B Common Stock.
"GBHC Companies" shall mean, collectively, GBHC and all GBHC
Subsidiaries.
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"GBHC Companies Disclosure Memorandum" shall mean the written
information entitled "Guaranty Bancshares Holding Corporation
Disclosure Memorandum" delivered to MC in connection with this
Agreement and describing in reasonable detail the matters contained
therein.
"GBHC Contracts" shall have the meaning set forth in Section
5.15.
"GBHC $2.70 Cumulative Preferred Stock" shall mean the $2.70
Cumulative Preferred Stock of GBHC.
"GBHC $0.50 Cumulative Preferred Stock" shall mean the $0.50
Cumulative Preferred Stock of GBHC.
"GBHC Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of GBHC
as of April 30, 1997, and as of December 31, 1996 and 1995, and the
related consolidated statements of income, changes in stockholders'
equity, and cash flows (including related notes and schedules, if any)
for the four months ended April 30, 1997, and for each of the three
years ended December 31, 1996, 1995, and 1994, included in the GBHC
Companies Disclosure Memorandum, and (ii) the consolidated balance
sheets of GBHC (including related notes and schedules, if any) and
related statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) with
respect to quarterly or annual periods ended subsequently to April 30,
1997.
"GBHC Merger Expenses" shall mean the reasonable expenses of
GBHC in connection with the Merger paid from the earnings of GBHC from
May 1, 1997 through the Closing, which shall include reasonable legal
and accounting fees and costs incurred in connection with the Merger,
fees of $28,125.00 and costs due to Alex Sheshunoff & Co., costs and
expenses of the Proxy Statement and other mailings to the shareholders
of GBHC in connection with the Merger, costs and expenses of the
Shareholders' Meeting, the fees and expenses of filing the Proxy
Statement with the SEC, and the costs for the purchase of a five (5)
year extension of the directors' and officers' liability insurance
policy of GBHC and G Bank, and which shall not exceed $145,000.00 in
the aggregate.
"GBHC Pension Plan" shall have the meaning set forth in
Section 5.14 this Agreement.
"GBHC Preferred Stock" shall mean the GBHC $2.70 Cumulative
Preferred Stock and the GBHC $0.50 Cumulative Preferred Stock.
"GBHC Rights" shall mean any Rights applicable to GBHC Capital
Stock.
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"GBHC Subsidiaries" shall mean the Subsidiaries of
GBHC, which shall include the GBHC Subsidiaries described in
Section 5.4 of this Agreement and any corporation, bank,
savings association, or other organization acquired as a
Subsidiary of GBHC in the future and owned by GBHC at the
Effective Time.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated
thereunder.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated
thereunder.
"Joinder of Shareholders" shall mean the Joinder of
Shareholders in substantially the form of Exhibit B.
"Knowledge" as used with respect to a Person shall mean the
actual knowledge of the chairman, president, chief financial officer,
chief accounting officer, or any senior or executive vice president of
such Person.
"LBCL" shall mean the Louisiana Business Corporation Law.
"LBL" shall mean the Louisiana Banking Law.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities, or business, including those
promulgated, interpreted, or enforced by any of the Regulatory
Authorities.
"Liability" shall mean any direct or indirect, primary or
secondary liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute, or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
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"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction,
security interest, title retention, or other security arrangement, or
any adverse right or interest, charge, or claim of any nature
whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property or other Taxes not
yet due and payable, (ii) such imperfections of title and
encumbrances, if any, as do not materially detract from the value or
interfere with the present use of any of such Party's Assets, (iii)
for depository institution Subsidiaries of a Party, pledges to secure
deposits, and other Liens incurred in the ordinary course of the
banking business, and (iv) Liens that arise by operation of Law with
respect to Liabilities that are not delinquent or are being contested
in good faith.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative, or other proceeding, or notice (written or oral) by
any Person alleging potential Liability or requesting information
about a potential claim relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"Loan Property" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest.
"MC Companies" shall mean, collectively, MC, M C Bank, and all
other MC Subsidiaries.
"MC Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of MC
as of April 30, 1997, and as of December 31, 1996 and 1995, and the
related consolidated statements of income, changes in stockholders'
equity, and cash flows (including related notes and schedules, if any)
for the four months ended April 30, 1997, and for each of the three
years ended December 31, 1996, 1995, and 1994, and (ii) the
consolidated balance sheets of MC (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) with respect to quarterly or annual periods ended
subsequently to April 30, 1997.
"MC Subsidiaries" shall mean the Subsidiaries of MC, which
shall include the MC Subsidiaries described in Section 6.1 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of MC in the future and owned by
MC at the Effective Time.
"M C Subsidiary" shall mean the Louisiana business corporation
formed by M C Bank as its wholly-owned subsidiary.
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"Material" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question;
provided that any specific monetary amount stated in this Agreement
shall determine materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event,
change, or occurrence which, together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement,
provided that "material adverse impact" shall not be deemed to include
the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles
generally applicable to banks and savings associations and their
holding companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party
in contemplation of the transactions contemplated hereby, and (d) the
Merger and compliance with the provisions of this Agreement on the
operating performance of the Parties.
"Merger" shall mean the merger of M C Subsidiary with and into
GBHC in accordance with the LBCL as envisioned under this Agreement
and the Merger Agreement.
"Merger Agreement" shall mean the Agreement of Merger of M C
Subsidiary with and into GBHC in the form attached hereto as Exhibit
A.
"Order" shall mean any written administrative decision or
award, decree, injunction, judgment, order, quasi-judicial decision or
award, ruling, or writ of any federal, state, local, or foreign or
other court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority applicable to a Person or its capital stock,
Assets or business.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates
in the management.
"Party" shall mean either GBHC or MC and their respective
Subsidiaries, and "Parties" shall mean both GBHC and MC and their
respective Subsidiaries.
"Permit" shall mean any written federal, state, local, and
foreign governmental approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any
Person is a party or that is binding upon any Person or its
securities, Assets, or business.
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"Person" shall mean a natural person or any legal, commercial,
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by GBHC
to solicit the approval of its stockholders holding GBHC Common Stock
of the Merger transaction contemplated by this Agreement and the
Merger Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board
of the Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries and
the SEC.
"Representatives" means with respect to any Party its
directors, officers, employees, agents, advisors, attorneys,
accountants, and other representatives.
"Rights" shall mean all arrangements, calls, commitments,
options, rights to subscribe to, scrip, understandings, warrants, or
other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of
the capital stock of a Person or by which a Person is or may be bound
to issue additional shares of its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents
filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended,
and the rules and regulations of any Regulatory Authority promulgated
thereunder.
"Stockholders' Meeting" shall mean the meeting of the
stockholders of GBHC holding GBHC Common Stock to be held pursuant to
Section 8.9 of this Agreement, including any adjournment or
adjournments or postponements thereof (which, at the option of the
Board of Directors of GBHC, may be the annual meeting of shareholders
of GBHC).
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns
or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of
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which 50% or more of the outstanding equity securities is owned
directly or indirectly by its parent; provided, there shall not be
included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a
fiduciary capacity.
"Surviving Corporation" shall mean GBHC as the Surviving
Corporation resulting from the Merger.
"Tax" or "Taxes" shall mean all federal, state, local, and
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income, gross receipts, excise, employment,
sales, use, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital,
profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including
any interest, penalties or additions thereto.
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2 and
subject to the provisions of Section 3.2 of this Agreement, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
filing and application fees, printing fees, and fees and expenses of its own
financial or other consultants, investment bankers, accountants, and counsel;
provided, however, the aggregate expenses of GBHC to be paid for out of the
earnings of GBHC from May 1, 1997 through the Closing, shall not exceed the
amount contemplated by Section 3.2(c) of this Agreement.
(b) Nothing contained in this Section 11.2. shall
constitute or shall be deemed to constitute liquidated damages for the
intentional breach by a Party of the terms of this Agreement or otherwise limit
the rights of the non-breaching Party.
11.3 Brokers and Finders. Each of the Parties represents and
warrants that, except as otherwise disclosed, neither it nor any of its
officers, directors, employees, or Affiliates has employed any broker or finder
or incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transaction contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by GBHC and G Bank on the one hand or
MC, M C Bank, and M C Subsidiary, on the other, each of GBHC and G Bank on the
one hand, and MC, M C Bank, and M C Subsidiary, on the other, as the case may
be, agrees to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
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11.4 Entire Agreement. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement between the
Parties with respect to the transaction contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral,
other than the confidentiality agreement between the Parties, which shall
remain in effect. Except as contemplated by Articles 3 and 4 of this Agreement
and Sections 8.13, 8.14 and 8.15 of this Agreement, nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
11.5 Amendments. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each of the Parties
upon the approval of the Boards of Directors of each of the Parties; provided,
that after any approval by the holders of GBHC Common Stock, there shall be
made no amendment that, pursuant to the LBCL, requires further stockholder
approval without the further approval of such stockholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, MC, M C Bank or M
C Subsidiary, as the case may be, shall have the right to waive any Default in
the performance of any term of this Agreement by GBHC or G Bank, to waive or
extend the time for the compliance or fulfillment by GBHC or G Bank of any and
all of their obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of MC, M C Bank, and M C Subsidiary
under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless
in writing signed by the duly authorized officers of MC, M C Bank or M C
Subsidiary, as the case may be, except that any unfulfilled conditions shall be
deemed to have been waived at the Effective Time.
(b) Prior to or at the Effective Time, GBHC and G Bank
shall have the right to waive any Default in the performance of any term of
this Agreement by MC, M C Bank, and M C Subsidiary, to waive or extend the time
for the compliance or fulfillment by MC, M C Bank, and M C Subsidiary of any
and all of their obligations under this Agreement, and to waive any or all of
the conditions precedent to the obligations of GBHC and G Bank under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing
signed by the duly authorized officers of GBHC and G Bank except that any
unfulfilled conditions shall be deemed to have been waived at the Effective
Time.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.
11.7 Assignment. Except as expressly
contemplated hereby, neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any Party
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hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by the
Parties and their respective successors and assigns.
11.8 Notices. All notices or other
communications which are required or permitted hereunder shall be in writing
and sufficient if delivered by hand, by facsimile transmission, by registered
or certified mail, postage pre-paid, or by courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so delivered:
GBHC: Guaranty Bancshares Holding Corporation
Post Office Box 2208
Morgan City, LA 70380-1931
Fax: (504) 384-3436
Attention: Randolph Cullom, President and CEO
Copy to counsel: Gordon, Arata, McCollam & Duplantis, L.L.P.
40th Floor, 201 St. Charles Avenue
New Orleans, LA 70170-4000
Fax: (504) 582-1121
Attention: Cathy E. Chessin
M C Bank: M C Bank & Trust Company
Post Office Drawer 2000
Morgan City, LA 70381-2000
Fax: (504) 384-6351
Attention: Maurice Roberie, President and CEO
Copy to counsel: Pickering, Cotogno & Dunn
301 Magazine Street, 3rd Floor
New Orleans, LA 70130
Fax: (504) 581-3912
Attention: Gary A. Cotogno
11.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Louisiana, without regard
to any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this
Agreement are for reference purposes only and are not part of this Agreement.
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11.12 Interpretations. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
Party, whether under any rule of construction or otherwise. No Party to this
Agreement shall be considered the draftsman. The Parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of the Parties. Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.13 Enforcement of Agreement. The Parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.14 Severability. Any term or provision of
this Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
11.15 Arbitration. Any dispute, controversy or
claim arising out of or relating to this Agreement or breach thereof (other
than matters related to the exercise of dissenters' rights) will be settled by
arbitration in Morgan City, Louisiana, before a panel of three arbitrators with
experience in and knowledge of the banking industry, in accordance with the
Rules of the American Arbitration Association, then in effect. One arbitrator
shall be appointed by the MC Companies (or a Representative thereof) and one
arbitrator shall be appointed by the GBHC Companies (or a Representative
thereof) and the two arbitrators so appointed shall select the third
arbitrator. The arbitrators will have no authority to award any damages not
measured by the actual damages of the prevailing party. The determination of
the arbitrators shall be accepted as final by the Parties.
IN WITNESS WHEREOF, pursuant to authority duly given by the respective
Board of Directors of MC and M C Bank, on the one hand, and GBHC and G Bank on
the other, this Agreement has been signed on behalf of the said Parties by
their respective officers.
MC BANCSHARES, INC.
By: /s/ MAURICE ROBERIE
------------------------------------
Maurice Roberie, President
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M C BANK & TRUST COMPANY
By: /s/ MAURICE ROBERIE
------------------------------------
Maurice Roberie, President
GUARANTY BANCSHARES HOLDING CORPORATION
By: /s/ RANDOLPH CULLOM
------------------------------------
Randolph Cullom, President
GUARANTY BANK & TRUST COMPANY OF
MORGAN CITY
By: /s/ RANDOLPH CULLOM
------------------------------------
Randolph Cullom, President
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LIST OF EXHIBITS TO ACQUISITION AGREEMENT
EXHIBIT ITEM DESCRIPTION
- ------------ -----------
A Merger Agreement of MC Subsidiary, Inc. with and
into Guaranty Bancshares Holding Corporation
B Form of Joinder of Shareholders (Sections 5.20, 8.14).
C Matters as to which Counsel for GBHC will opine
(Section 9.2(f)).
D Form of Claims Letter (Section 9.2(g)).
E Form of Agreement Not to Compete (Sections 5.21, 9.2(h)).
F Matters as to which Counsel for MC Bank will opine
(Section 9.3(d)).
[EXHIBITS OMITTED EXCEPT EXHIBIT A]
<PAGE> 151
EXHIBIT A
MERGER AGREEMENT
<PAGE> 152
AGREEMENT OF MERGER
OF
M C SUBSIDIARY, INC.
WITH AND INTO
GUARANTY BANCSHARES HOLDING CORPORATION
THIS AGREEMENT OF MERGER (this Merger Agreement) is made and entered
into as of June 24, 1997, by and between M C Subsidiary, Inc. ("M C
Subsidiary"), a Louisiana business corporation and Guaranty Bancshares Holding
Corporation ("GBHC"), a Louisiana business corporation, and, in connection with
the Acquisition Agreement, dated as of June 24, 1997, by and between M C Bank
and Trust Company ("M C Bank") and MC Bancshares, Inc. ("MC"), on the one hand,
and GBHC and Guaranty Bank and Trust Company of Morgan City ("Guaranty Bank"),
on the other, (the "Acquisition Agreement"), is joined in by M C Bank, a
Louisiana financial institution and the parent of M C Subsidiary, and by MC, a
Louisiana business corporation and the parent holding company of M C Bank.
PREAMBLE
M C Subsidiary is a wholly-owned subsidiary of M C Bank. M C Bank is a
wholly-owned subsidiary of MC. GBHC is the registered bank holding company of
Guaranty Bank & Trust Company of Morgan City, a Louisiana financial institution
("Guaranty Bank").
The respective Boards of Directors of M C Subsidiary, M C Bank, MC and
GBHC are of the opinion that the best interests of their respective
organizations would be served if M C Subsidiary is merged with and into GBHC
(the "Merger") on the terms and conditions provided in this Merger Agreement.
As a result of the Merger, GBHC shall continue to operate as a Louisiana
business corporation and as the wholly owned-subsidiary of M C Bank.
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, and other good and valuable consideration, the Boards of
Directors of M C Subsidiary and M C Bank, and MC, on the one hand, and GBHC, on
the other, hereby make, adopt, and approve this Agreement of Merger and
prescribe the terms and conditions of this Agreement of Merger and the mode of
effecting this Agreement of Merger, as follows:
ARTICLE I
TERMS OF MERGER
Subject to the terms and conditions of this Agreement of Merger and
the Acquisition Agreement, at the Effective Time the Merger shall occur as
authorized by and in accordance with Sections 112 and 115 of the Louisiana
Business Corporation Law. GBHC shall be the Surviving Corporation resulting
from the Merger and shall be a wholly-owned subsidiary of M C Bank and shall
continue to be governed by the laws of the State of Louisiana.
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ARTICLE II
EFFECT OF THE MERGER
2.1 Surviving Corporation.
(a) Articles of Incorporation and Bylaws. The
Articles of Incorporation of GBHC in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation until
otherwise amended or repealed. The Bylaws of GBHC in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
otherwise amended or repealed.
(b) Business Activities. The business of the Surviving
Corporation from and after the Effective Time shall continue to be that of a
Louisiana business corporation. The business of the Surviving Corporation shall
continue to be conducted from its main office at the Effective Time.
2.2 Assumption of Rights. At the Effective Time the separate
existence and corporate organization of M C Subsidiary shall be merged into and
continued in the Surviving Corporation. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time and thereafter, except as
otherwise provided herein, all the rights, privileges, immunities, and
franchises, of a public as well as of a private nature, of M C Subsidiary and
GBHC and all property (real, personal, and mixed), and all debts due on
whatever account, and all other courses of action, and all and every other
interest of or belonging to or due to M C Subsidiary and GBHC shall be taken
and deemed to be transferred to and vested in the Surviving Corporation without
further act or deed; and the title to any real estate, or any interest therein,
vested in M C Subsidiary and GBHC shall not revert or be in any way impaired by
reason of the Merger. All rights, franchises, and interests of both M C
Subsidiary and GBHC in and to every type of property (real, personal, and
mixed), and all courses in action of both M C Subsidiary and GBHC shall be
transferred to and vested in the Surviving Corporation without any deed or
other transfer. The Surviving Corporation, upon consummation of the Merger and
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights or property, franchises, and interests, including
appointments, designations, and nominations, and all other rights and interest
as trustee, executor, administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver, and committee of estates of incompetent persons,
and in every other fiduciary capacity, in the same manner and to the same
extent as such rights, franchises, and interest were held or enjoyed by either
M C Subsidiary or GBHC at the Effective Time.
2.3 Assumption of Liabilities. All liabilities and
obligations of both M C Subsidiary and GBHC of every kind and description shall
be assumed by the Surviving Corporation, and the Surviving Corporation shall be
bound thereby in the same manner and to the same extent that M C Subsidiary and
GBHC were so bound at the Effective Time.
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2.4 Directors and Officers. The directors of M C Subsidiary in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the directors of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation. The officers of M C Subsidiary in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected or appointed, shall serve as the officers of the
Surviving Corporation from and after the Effective Time in accordance with the
Bylaws of the Surviving Corporation.
ARTICLE 3
CONVERSION OF SHARES IN THE MERGER
3.1 Conversion of Shares. Subject to the provisions of this
Article, at the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof, the shares of the constituent corporations
in the Merger shall be converted as follows:
(a) Each share of common stock of M C Subsidiary issued and
outstanding immediately prior to the Effective Time shall be
converted into and become one share of no par value voting
capital stock of the Surviving Corporation from and after the
Effective Time;
(b) Each share of GBHC $2.70 Cumulative Preferred Stock issued and
outstanding at the Effective Time shall be considered redeemed
and shall be converted into the right to receive in cash an
amount equal to $27.60 plus all accrued cash dividends due
thereon, and thereupon shall be cancelled;
(c) Each share of GBHC $0.50 Cumulative Preferred Stock issued and
outstanding at the Effective Time shall be considered redeemed
and shall be converted into the right to receive in cash an
amount equal to $5.00 plus all accrued dividends due thereon,
and thereupon shall be cancelled; and
(d) Each share of GBHC Class A Common Stock and each share of GBHC
Class B Common Stock issued and outstanding at the Effective
Time shall be converted into the right to receive in cash an
amount equal to the quotient of:
X
-------
Y
where X is equal to $7,500,000 (subject to the
adjustments as hereinafter provided) less the total
amount due to the holders of all of the issued and
outstanding shares of the GBHC $2.70 Cumulative
Preferred Stock determined in accordance with Section
3.1(b) and the total amount due to the holders of all
of the issued and outstanding shares of the GBHC
$0.50 Cumulative Preferred Stock determined in
accordance with Section 3.1(c); and
3
<PAGE> 155
where Y is equal to the number of shares of GBHC
Class A Common Stock and GBHC Class B Common Stock
outstanding at the Effective Time; and
shall thereupon be cancelled.
3.2 Adjustments. The aggregate consideration of $7,500,000.00
due to the shareholders of GBHC at the Effective Time shall be subject to
adjustment according to this Section 3.2.
(a) If the Adjusted Shareholders' Equity
of GBHC is less than $5,284,000.00, then the $7,500,000.00 shall be reduced by
an amount equal to the difference between $5,284,000.00 and the Adjusted
Shareholders' Equity of GBHC; provided, however, except as set forth in
Subsection 3.2(b), if the consideration due to the shareholders of GBHC at and
after the Effective Time is less than $7,300,000.00, GBHC may terminate this
Agreement.
(b) The Adjusted Shareholders' Equity of
GBHC shall be calculated ten (10) days prior to the Closing (the "Determination
Date") as the difference between the shareholders' equity of GBHC as reflected
on the April 30, 1997 balance sheet of GBHC less (in each case with the
recognition of any tax effect thereof) (i) the sum of (A) the additional
accrual through the Closing of all payments to be made to terminate all
employment contracts and retirement obligations of GBHC and G Bank, (B) the
accrual of fees owed to Alex Sheshunoff & Co., in excess of $28,125.00, (C) the
accrual of GBHC's other expenses of the Merger in excess of $145,000.00, if
any, (D) the accrual of any special bonus paid by G Bank to any officer or
employee (other than bonuses required by contract or paid pursuant to the
customary past practices of G Bank), (E) the accrual of any dividend paid by
GBHC prior to the Determination Date, and (F) the accrual of the costs for the
purchase of a five (5) year extension of the directors' and officers' liability
insurance policy of GBHC and G Bank to the extent that such costs are not
includable in the GBHC Merger Expenses, and less (ii) the amount of any loan
loss arising after May 1, 1997 on loans other than those described in Section
3.2(d) hereof and Section 9.2(j) of the Acquisition Agreement in excess of
$25,000.00, and less (iii) the amount described in Section 3.2(d)(ii), if any.
Provided in all events, however, if the accruals set forth in item (i)(D) of
this Subsection 3.2(b) result in the aggregate consideration due to the
shareholders of GBHC at the Effective Time being reduced to less than
$7,300,000.00, GBHC may not terminate this Agreement.
(c) The shareholders' equity of GBHC at
the Closing shall be equal to the Adjusted Shareholders' Equity of GBHC plus
all earnings of GBHC from May 1, 1997 though the Closing after reflecting (i)
the payment of the GBHC Merger Expenses in the aggregate amount of $145,000
(which shall include reasonable legal and accounting fees and costs incurred in
connection with the Merger, fees of $28,125.00 and costs due to Alex Sheshunoff
& Co., costs and expenses of the Proxy Statement and other mailings to the
shareholders of GBHC in connection with the Merger, costs and expenses of the
Shareholders' Meeting, the fees and expenses of filing the Proxy Statement with
the SEC, and, to the extent the foregoing delineated costs do not exceed
$145,000.00, the costs for the purchase of a five (5) year extension of the
directors' and officers' liability insurance policy of
4
<PAGE> 156
GBHC and G Bank), (ii) the effects, if any, envisioned by Subsection 3.2(d) of
this Agreement, and (iii) the amount of any loan loss arising after May 1, 1997
up to $25,000.00; provided, however, if the shareholders' equity of GBHC at the
Closing is less than $5,284,000.00, M C Bank may terminate this Agreement. The
Parties recognize that, except as provided in the preceding sentence, all
earnings of GBHC from May 1, 1997 through the Closing shall inure to the
benefit of M C Bank, and that M C Bank has an expectation to the reasonable
earnings of GBHC from May 1, 1997 through the Closing less the amounts
described in the preceding sentence. However, the Parties recognize and agree
that GBHC makes no warranty as to its earnings from May 1, 1997 through the
Closing.
(d) With respect to the property
securing Loan Nos. 3714461 and 3714458 to be acquired by G Bank on June 26,
1997 pursuant to a dation en paiement (the "Property"), upon acquisition by G
Bank of the Property, the loss, if any, on Loan Nos. 3714461 and 3714458
(related to the Property) to be recognized shall be applied as follows:
(i) The first $32,500.00 shall be
charged to G Bank's loan loss reserve and shall not affect the shareholders'
equity of GBHC at April 30, 1997;
(ii) Up to the next $67,500.00 shall
reduce the pre-May 1, 1997 earnings before income taxes of GBHC; and
(iii) In the event that between the
date hereof and the Closing, G Bank sells the Property for an amount in excess
of the carrying value of the Property, the gain up to $67,500.00 shall be
applied to the pre-May 1, 1997 earnings before income taxes of GBHC; any
remaining gain shall be applied to the post-April 30, 1997 earnings of GBHC.
ARTICLE IV
EFFECTIVENESS
4.1 Conditions Precedent. Consummation of the Merger is
conditioned upon the approval of this Agreement of Merger by the Boards of
Directors of M C Subsidiary, M C Bank and MC, and the Board of Directors of
GBHC, and the common stockholders of GBHC, M C Bank as the sole shareholder of
M C Subsidiary, the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation and the Louisiana Office of Financial
Institutions and the other terms and conditions set forth in the Acquisition
Agreement.
4.2 Termination. This Agreement of Merger may be terminated at
any time prior to the Effective Time by mutual agreement of the parties hereto
or as described in the Acquisition Agreement.
4.3 Effective Time. The Merger and other transactions
contemplated by this Agreement of Merger shall become effective on the date and
at the time reflected in the Certificate of Merger issued by the Secretary of
State (the "Effective Time").
5
<PAGE> 157
ARTICLE V
AMENDMENT AND WAIVER
5.1 Amendment. This Agreement of Merger may be amended at any time
prior to the Effective Time by mutual agreement of the parties hereto.
5.2 Waiver.
(a) Prior to or at the Effective Time, M C Subsidiary,
acting through its Board of Directors or an authorized officer, shall
have the right to waive any default in the performance of any terms of
this Agreement of Merger by GBHC, to waive or extend the time for the
compliance or fulfillment by GBHC of any and all of its obligations
under this Agreement of Merger, and to waiver any or all of the
conditions precedent to the obligations of M C Subsidiary under this
Agreement of Merger, except any conditions which, if not satisfied,
would result in the violation of any law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of M C
Subsidiary.
(b) Prior to or at the Effective Time, GBHC, acting through
its Board of Directors or any authorized officer, shall have the right
to waive any default in the performance of any term of this Agreement
of Merger by M C Subsidiary, to waive or extend the time for the
compliance of fulfillment by M C Subsidiary of any and all of its
obligations under this Agreement of Merger, and to waive any or all of
the conditions precedent to the obligations of GBHC under this
Agreement of Merger, except any condition which, if not satisfied,
would result in the violation of any law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of
GBHC.
ARTICLE VI
DEFINITIONS
6.1 "Certificate of Merger" shall mean the certificate of merger
issued by the Louisiana Secretary of State.
6.2 "Effective Time" shall mean the time at which the Merger
becomes effective as defined in Section 4.3 of this Merger Agreement.
6.3 "GBHC Class A Common Stock" shall mean the $5.00 par value
Common Stock of GBHC.
6.4 "GBHC Class B Common Stock" shall mean the no par value Common
Stock of GBHC.
6
<PAGE> 158
6.5 "GBHC Common Stock" shall mean the GBHC Class A Common Stock
and the GBHC Class B Common Stock.
6.6 "GBHC $2.70 Cumulative Preferred Stock" shall mean the $2.70
Cumulative Preferred Stock of GBHC.
6.7 "GBHC $0.50 Cumulative Preferred Stock" shall mean the $0.50
Cumulative Preferred Stock of GBHC.
6.8 "GBHC Preferred Stock" shall mean the GBHC $2.70 Cumulative
Preferred Stock and the GBHC $0.50 Cumulative Preferred Stock.
6.9 "M C Subsidiary Common Stock" shall mean the no par value
common stock of M C Subsidiary, Inc.
6.10 "Surviving Corporation" shall mean GBHC as the surviving
entity of the Merger.
6.11 Capitalized terms not otherwise defined herein shall have
their respective meanings set forth in the Acquisition Agreement.
ARTICLE VII
MISCELLANEOUS
7.1 Counterparts. This Agreement of Merger may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
7.2 Binding Effect; Governing Law. This Agreement of Merger
shall be binding upon and inure to the benefit of the parties hereto, and their
respective stockholders, successors, and assigns, and shall be governed by, and
construed in accordance with, the laws of the State of Louisiana.
IN WITNESS WHEREOF, M C Subsidiary, Inc., and Guaranty Bancshares
Holding Corporation have caused this Merger Agreement to be executed by a
majority of the entire Board of Directors of M C Subsidiary, Inc., and Guaranty
Bancshares Holding Corporation, who have hereunto subscribed their names,
together with a majority of the entire Board of Directors of M C Bank & Trust
Company and MC Bancshares, Inc.
[ALL SIGNATURE PAGES HAVE BEEN
INTENTIONALLY OMITTED]
7
<PAGE> 159
APPENDIX B
FAIRNESS OPINION
OF
ALEX SHESHUNOFF & CO. INVESTMENT BANKING
<PAGE> 160
DRAFT
August xx, 1997
Board of Directors
Guaranty Bancshares Holding Corporation
1201 Brashear Avenue
Morgan City, Louisiana 70381
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of Guaranty Bancshares Holding Corporation ("GBHC")
Morgan City, Louisiana of the cash consideration ("Consideration") to be
received by such shareholders in connection with the sale of GBHC to MC
Bancshares, Inc., Morgan City, Louisiana ("MC Bancshares"). GBHC and its
wholly owned subsidiary Guaranty Bank & Trust Company of Morgan City ("Guaranty
Bank") have entered into an Acquisition Agreement with MC Bank & Trust Company
("MC Bank") and MC Bancshares and a related Agreement of Merger between GBHC
and a newly formed corporate subsidiary of MC Bank ("MC Subsidiary") and joined
in by MC Bancshares and MC Bank (the Acquisition Agreement and Agreement of
Merger collectively referred to as the "Agreement"). Pursuant to the
Agreement, MC subsidiary will merge with and into GBHC with GBHC becoming a
wholly owned subsidiary of MC Bank.
The Consideration to be received by GBHC shareholders will be determined at the
Effective Time of the Merger. At the Effective Time of the Merger, each share
of $2.70 Preferred Stock of GBHC then issued and outstanding will be redeemed
and converted into the right to receive cash equal to $27.60 plus all accrued
and unpaid cash dividends due thereon; each share of GBHC $0.50 Preferred Stock
then issued and outstanding will be redeemed and converted into the right to
receive an amount of cash equal to $5.00 plus all accrued and unpaid cash
dividends due thereon; and, each share of GBHC Common Stock then issued and
outstanding will be converted into the right to receive cash in the amount
equal to the quotient of: (a) $7,500,000.00 (subject to certain purchase price
adjustments) minus the total amount due to the holders of all of the issued and
outstanding shares of GBHC $2.70 Preferred Stock and GBHC $0.50 Preferred
Stock, divided by (b) the total number of shares of GBHC Common Stock
outstanding at the Effective Time. The cash price into which the shares of
GBHC Common Stock will be converted depends upon (i) the Effective Date of the
closing of the transaction (the Effective Date depends upon when all required
approvals are received and other conditions are satisfied or waived); the later
the Effective Date,
<PAGE> 161
Board of Directors
Guaranty Bancshares Holding Corporation
August xx, 1997
Page 2
the larger the payment owed with respect to the Preferred Stock will be (as
dividends on the two classes of preferred stock will continue to accrue), and,
as a result, the smaller the payment with respect to the shares of GBHC Common
Stock will be and (ii) purchase price adjustments at various levels as provided
for in the Agreement. The exact Closing Date and the final purchase price
(after taking into account the adjustments required by the Agreement) cannot be
finally determined at this time. The range of the estimated adjusted purchase
prices is between $7,500,000.00 and $7,300,000.00. Assuming a Closing Date of
10/31/97 and the maximum purchase price of $7,500.000.00, the payment to GBHC
Common shareholders would be $538,637, or $1.44 per share. Assuming the
minimum purchase price of $7,300.000.00 and a Closing date of 12/31/97, the
minimum payment to GBHC Common shareholders would be $271,926, or $0.73 per
share. Descriptions of the factors effecting the purchase price and
adjustments to the purchase price are contained in the Agreement.
The parties to the Agreement expect that all conditions to consummation of the
Merger will be satisfied so that the Merger can be consummated during the
fourth quarter of 1997, although there can be no assurance as to whether or
when the Merger will occur. If the purchase price, as adjusted, is less than
$7,300,000.00 the Board of Directors of GBHC will have the option to terminate
the Agreement. Completion of the Merger is dependent upon the successful
completion of a number of factors as described in the Agreement. This opinion
is based upon the assumption that the factors necessary to assure completion of
the Merger can be met; however, this opinion does not imply, and should not be
interpreted to imply, that all of the factors necessary to insure completion of
the Merger can be met. Should the purchase price, as adjusted, decline below
$7,300,000.00, we reserve the right to withdraw our opinion.
Alex Sheshunoff & Co. Investment Banking ("Sheshunoff") is regularly engaged in
the valuation of securities in connection with mergers and acquisitions,
private placements, and valuations for estate, corporate and other purposes.
Sheshunoff was retained by GBHC to assist it in evaluating offers to acquire
GBHC and to render this opinion. GBHC solicited expressions of interest in
acquiring GBHC directly and Sheshunoff did not participate in such
solicitations. GBHC and MC Bancshares negotiated the Consideration to be
received by GBHC shareholders and other terms and conditions of the Merger.
Sheshunoff did not participate in those negotiations.
<PAGE> 162
Board of Directors
Guaranty Bancshares Holding Corporation
August xx, 1997
Page 3
In connection with our opinion, we have, among other things:
1. Reviewed three offers to acquire GBHC as solicited by GBHC
from MC Bancshares and two other parties; two offers,
including MC Bancshares were for cash and one was for a
combination of cash, preferred stock and common stock;
2. Reviewed GBHC's recent financial performance and management's
estimate of GBHC's likely future performance for the next
year;
3. Reviewed GBHC's year-end financial information for 1996 and
1995 and publicly available information for MC Bancshares for
the same periods;
4. Reviewed certain internal financial reports and earnings
estimates for GBHC for 1997;
5. Reviewed the ownership profile of the two issues of GBHC's
preferred stock and common stock and held discussions with
GBHC's management concerning the circumstances under which
such stock was issued, the status of the dividends in arrears
on the two issues of preferred stock, and, the lack of a
market for any of GBHC's preferred or common stock;
6. Compared GBHC's recent financial performance with that of a
group of similar sized institutions that we deemed to be
comparable;
7. Reviewed a draft of the Agreement and a draft of GBHC's Proxy
Statement;
8. Reviewed the consideration received in the sale of other small
banks in the last year, and;
9. Performed such other analyses as we deemed appropriate.
<PAGE> 163
Board of Directors
Guaranty Bancshares Holding Corporation
August xx, 1997
Page 4
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the information provided to us by GBHC for the purposes of
this opinion. In addition, where appropriate, we have relied upon publicly
available information that we believe to be reliable, accurate and complete;
however, we cannot guarantee the reliability, accuracy or completeness of any
such publicly available information. We have not made an independent
evaluation of the assets or liabilities of GBHC, nor have we been furnished
with any such appraisals. We did not conduct any review of GBHC's or Guaranty
Bank's credit files. With respect to MC Bancshares, we relied solely upon
publicly available data and we did not conduct discussions with the management
of MC Bancshares regarding MC Bancshares financial condition, performance and
prospects. We did not conduct any independent evaluation or appraisal of the
assets, liabilities or business prospects of MC Bancshares and we were not
furnished with any appraisals. We did not conduct any review of MC Bancshares
or MC Bank's credit files.
We have assumed that financial forecasts and earnings estimates prepared by the
management of GBHC have been reasonably prepared and reflect management's best
currently available estimates and judgment as to the future financial
performance of the company. We have assumed such forecasts and projections
would be realized in the amounts and at the times contemplated thereby.
We are not experts in the evaluation of loan portfolios for the purposes of
assessing the adequacy of the allowance for losses and have assumed that such
allowances are in the aggregate, adequate to cover such losses. We assume that
no material change in the signed final Agreement will occur when compared to
the last draft of the Agreement provided to us. We have assumed that both GBHC
and MC Bancshares will receive all required regulatory approvals necessary to
consummate the Merger without conditions that will materially impact the
Merger.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof.
Events occurring after the date hereof could materially affect the assumptions
used in preparing this opinion.
<PAGE> 164
Board of Directors
Guaranty Bancshares Holding Corporation
August xx, 1997
Page 5
Our opinion is limited to the fairness, from a financial point of view, to the
shareholders of GBHC, of the cash Consideration to be received in the Merger
and does not address GBHC's' underlying business decision to undertake the
Merger. Moreover, this letter, and the opinion expressed herein, does not
constitute a recommendation to any shareholder as to any approval of the Merger
or the Agreement. As discussed above and in the Agreement, consummation of the
Merger and the final amount of the cash Consideration is contingent upon
several factors which cannot be predicted with certainty at this time, and the
exact timing of the closing of the Merger (which timing affects the cash
Consideration to be received by GBHC Common Stockholders) also cannot be
predicted with certainty at this time. This opinion does not imply that all
conditions necessary for a closing of the transaction will be met or that the
transaction will close in the time frame estimated by GBHC and MC Bancshares.
It is understood that this letter is for the information of the Board of
Directors of GBHC and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in
any regulatory filings or Proxy Statement issued by GBHC with respect to the
Merger.
Based on the foregoing and such other matters we have deemed relevant, it is
our opinion, as of the date hereof, that the cash Consideration to be received
by GBHC's shareholders is fair, from a financial point of view, to GBHC's
shareholders.
Very truly yours,
DRAFT
ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
<PAGE> 165
APPENDIX C
EXCERPT FROM SECTION 131
OF
THE LOUISIANA BUSINESS CORPORATION LAW
<PAGE> 166
Section 131. RIGHTS OF A SHAREHOLDER DISSENTING FROM CERTAIN CORPORATE ACTIONS
A. Except as provided in subsection B of this section,
if a corporation has, by vote of its shareholders, authorized a sale, lease or
exchange of all of its assets, or has, by vote of its shareholders, become a
party to a merger or consolidation, then, unless such authorization or action
shall have been given or approved by at least eighty per cent of the total
voting power, a shareholder who voted against such corporate action shall have
the right to dissent. If a corporation has become a party to a merger pursuant
to R.S. 12:112(G), the shareholders of any subsidiaries party to the merger
shall have the right to dissent without regard to the proportion of the voting
power which approved the merger and despite the fact that the merger was not
approved by vote of the shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall
not exist in the case of:
(1) A sale pursuant to an order of a court having
jurisdiction in the premises.
(2) A sale for cash on terms requiring
distribution of all or substantially all of the net proceeds to the
shareholders in accordance with their respective interests within one year
after the date of the sale.
(3) Shareholders holding shares of any class of
stock which, at the record date fixed to determine shareholders entitled to
receive notice of and to vote at the meeting of shareholders at which a merger
or consolidation was acted on, were listed on a national securities exchange,
or were designated as a national market system security on an inter-dealer
quotation system by the National Association of Securities Dealers, unless the
articles of the corporation issuing such stock provide otherwise or, except in
the case of shareholders of a corporation surviving the merger or consolidation
in which each share of such corporation outstanding immediately prior to the
effective date of the merger or consolidation is an identical outstanding or
treasury share of such corporation after the effective date of the merger or
consolidation, the shares of such shareholders were not converted by the merger
or consolidation solely into shares of the surviving or new corporation.
C. Except as provided in the last sentence of this
Subsection, any shareholder electing to exercise such right of dissent shall
file with the corporation, prior to or at the meeting of shareholders at which
such proposed corporate action is submitted to a vote, a written objection to
such proposed corporate action, and shall vote his shares against such action.
If such proposed corporate action be taken by the required vote, but by
<PAGE> 167
less than eighty percent of the total voting power, and the merger,
consolidation or sale, lease or exchange of assets authorized thereby be
effected, the corporation shall promptly thereafter give written notice thereof
to each shareholder who filed such written objection to, and voted his shares
against, such action, at such shareholder's last address on the corporation's
records. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. Each
such shareholder may, within twenty days after the mailing of such notice to
him, but not thereafter, file with the corporation a demand in writing for the
fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole
condition that said certificates shall be delivered to the corporation upon
payment of the value of the shares determined in accordance with the provisions
of this Section. With his demand the shareholder shall deliver to the
corporation, the written acknowledgment of such bank or trust company that it
so holds his certificates of stock. Unless the objection, demand and
acknowledgment aforesaid be made and delivered by the shareholder within the
period above limited, he shall conclusively be presumed to have acquiesced in
the corporate action proposed or taken. In the case of a merger pursuant to
R.S. 12:112(G), the dissenting shareholder need not file an objection with the
corporation nor vote against the merger, but need only file with the
corporation within twenty days after a copy of the merger certificate was
mailed to him, a demand in writing for the cash value of his shares as of the
day before the certificate was filed with the secretary of state, state in such
demand the value demanded and a post office address to which the corporation's
reply may be sent, deposit the certificates representing his shares in escrow
as hereinabove provided, and deliver to the corporation with his demand the
acknowledgment of the escrow bank or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so
stated and demanded, or does not agree that a payment is due, it shall, within
twenty days after receipt of such demand and acknowledgment, notify in writing
the shareholder, at the designated post office address, of its disagreement,
and shall state in such notice the value it will agree to pay if any payment
should be held to be due; otherwise it shall be liable for, and shall pay to
the dissatisfied shareholder, the value demanded by him for his shares.
E. In case of disagreement as to such fair cash value,
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<PAGE> 168
or as to whether any payment is due, after compliance by the parties with the
provisions of subsections C and D of this section, the dissatisfied
shareholder, within sixty days after receipt of notice in writing of the
corporation's disagreement, but not thereafter, may file suit against the
corporation, or the merged or consolidated corporation, as the case may be, in
the district court of the parish in which the corporation or the merged or
consolidated corporation, as the case may be, has its registered office,
praying the court to fix and decree the fair cash value of the dissatisfied
shareholder's shares as of the day before such corporate action complained of
was taken, and the court shall, on such evidence as may be adduced in relation
thereto, determine summarily whether any payment is due, and, if so, such cash
value, and render judgment accordingly. Any shareholder entitled to file such
suit may, within such sixty-day period but not thereafter, intervene as a
plaintiff in such suit filed by another shareholder, and recover therein
judgment against the corporation for the fair cash value of his shares. No
order or decree shall be made by the court staying the proposed corporate
action, and any such corporate action may be carried to completion
notwithstanding any such suit. Failure of the shareholder to bring suit, or to
intervene in such a suit, within sixty days after receipt of notice of
disagreement by the corporation shall conclusively bind the shareholder (1) by
the corporation's statement that no payment is due, or (2) if the corporation
does not contend that no payment is due, to accept the value of his shares as
fixed by the corporation in its notice of disagreement.
F. When the fair value of the shares has been agreed
upon between the shareholder and the corporation, or when the corporation has
become liable for the value demanded by the shareholder because of failure to
give notice of disagreement and of the value it will pay, or when the
shareholder has become bound to accept the value the corporation agrees is due
because of his failure to bring suit within sixty days after receipt of notice
of the corporation's disagreement, the action of the shareholder to recover
such value must be brought within five years from the date the value was agreed
upon, or the liability of the corporation became fixed.
G. If the corporation or the merged or consolidated
corporation, as the case may be, shall, in its notice of disagreement, have
offered to pay to the dissatisfied shareholder on demand an amount in cash
deemed by it to be the fair cash value of his shares, and if, on the
institution of a suit by the dissatisfied shareholder claiming an amount in
excess of the amount so offered, the corporation, or the merged or consolidated
corporation, as the case may be, shall deposit in the registry of the court,
there to remain until the final determination of the cause, the amount so
offered, then, if the amount finally awarded such shareholder, exclusive of
interest and costs, be more than the
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<PAGE> 169
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as
the case may be; otherwise the costs of the proceeding shall be taxed against
such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a shareholder except the
rights accorded by this section. Such a demand may be withdrawn by the
shareholder at any time before the corporation gives notice of disagreement, as
provided in subsection D of this section. After such notice of disagreement is
given, withdrawal of a notice of election shall require the written consent of
the corporation. If a notice of election is withdrawn, or the proposed
corporate action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him
in exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand
for value, including any intervening preemptive rights, and the right to
payment of any intervening dividend or other distribution, or, if any such
rights have expired or any such dividend or distribution other than in cash has
been completed, in lieu thereof, at the election of the corporation, the fair
value thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
-4-
<PAGE> 170
PRELIMINARY COPY
GUARANTY BANCSHARES HOLDING CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Frank J. Domino, Sr. and Wiley
Magee, and each or any one of them, with full power of substitution, as Proxies
to represent and to vote as designated below, all the shares of common stock of
Guaranty Bancshares Holding Corporation (the "Company") held of record by the
undersigned on August 29, 1997, at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held on September 30, 1997, or any adjournments or
postponements thereof.
1. Proposal to approve the Acquisition Agreement dated as of June 24,
1997 (the "Agreement"), by and between the Company and Guaranty Bank &
Trust Company of Morgan City ("Guaranty Bank"), on the one hand, and
MC Bank & Trust Company ("MC Bank") and MC Bancshares, Inc. ("MC
Bancshares"), on the other hand, and a related Agreement of Merger by
and between the Company and a newly-formed corporate subsidiary of MC
Bank ("MC Subsidiary") and joined in by MC Bancshares and MC Bank (the
Acquisition Agreement and the Agreement of Merger being collectively
referred to as the "Agreement") pursuant to which (i) each issued and
outstanding share of common stock of MC Subsidiary shall be converted
into and become one share of common stock of the Company through the
merger of MC Subsidiary with and into the Company (the "Merger") and
(ii) each outstanding share of the Company's $2.70 Preferred Stock and
$0.50 Preferred Stock will be redeemed and will be converted into the
right to receive accrued and unpaid dividends and the redemption price
thereof as described in the Agreement and each outstanding share of
the Company's Class A Common Stock and Class B Common Stock (except
for shares of common stock held by stockholders who perfect their
dissenters' rights of appraisal with respect to their common stock)
will be converted into the right to receive an amount of cash as
described more fully in the Proxy Statement that accompanies this
Proxy and in the Agreement:
_____ FOR _____ AGAINST _____ ABSTAIN
2. Election of directors:
For any or all nominees listed
below (except those written by Withhold authority to vote
me below) [ ] for all nominees below [ ]
The nominees are: Virgil Allen, H. W. Bailey, Brooks Blakeman, Vincent
A. Cannata, Randolph Cullom, Frank J. Domino, Sr., Anthony J.
Guarisco, Sr., Anthony J. Guarisco, Jr., Wiley Magee, Paul Ordogne,
Christian Vaccari and K. Vinson.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NAME ON THE LINE BELOW.
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3. Allow proxies, or either of them to vote in their discretion as to any
other matters that may properly come before the meeting or any
adjournment or postponement thereof.
<PAGE> 171
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 AND FOR ANY DIRECTOR NOMINEE LISTED ABOVE AS TO WHOM THE
PROXY DOES NOT WITHHOLD AUTHORITY TO VOTE. This Proxy confers authority, in the
discretion of the proxies, to vote with respect to the election of any person
nominated by the Board as a director if any of the named nominees become
unavailable for election. This Proxy will be voted in the discretion of the
persons named as Proxies on all other matters which may properly come before
the Annual Meeting or any adjournment or postponement thereof (unless authority
to do so is withheld by striking through proposition No. 3).
This Proxy revokes all prior proxies with respect to the Annual Meeting and may
be revoked prior to its exercise.
Dated:_____________________, 1997.
<TABLE>
<S> <C>
________________________________________
(Print Name of Stockholder)
Please date and sign exactly as name appears on ________________________________________
your stock certificate. When shares are held by (Signature of Stockholder)
joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such. If a ________________________________________
corporation, please sign in full corporate name by (Print Name of Stockholder)
president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person. ________________________________________
(Signature of Stockholder)
</TABLE>
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE
