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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D. C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE COLONIAL BANCGROUP, INC.
(Exact name of Registrant as specified in its charter)
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Delaware 6711 63-0661573
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer Identification
Classification Code Number) No.)
ONE COMMERCE STREET, SUITE 800 (334) 240-5000
MONTGOMERY, ALABAMA 36104 (Telephone No.)
(Address of principal executive offices)
-----------------------------
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W. FLAKE OAKLEY, IV
SECRETARY
POST OFFICE BOX 1108
MONTGOMERY, ALABAMA 36102
(Name and address of agent for service)
Copies to:
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MICHAEL D. WATERS, ESQUIRE KATHRYN KNUDSON, ESQ.
MILLER, HAMILTON, SNIDER & ODOM, L.L.C. POWELL, GOLDSTEIN, FRAZER & MURPHY
ONE COMMERCE STREET, SUITE 802 SIXTEENTH FLOOR
P. O. BOX 19 191 PEACHTREE STREET, N.E.
MONTGOMERY, ALABAMA 36101-0019 ATLANTA, GEORGIA 30303
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Approximate date of commencement of proposed sale to
the public: As soon as practicable after the
effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE (1)
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Title of Each Amount to be Proposed Maximum Proposed Maximum Amount of
Class of Registered Offering Price Per Aggregate Offering Registration Fee
Securities to be Unit Price
Registered
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Common Stock, par
value $2.50 per share 688,282 Not Applicable $14,951,720 $5,155.77
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(1) Calculated pursuant to Rule 457(f)(2) based upon the market value of
$20.00 per share of 747,586 shares of company acquired, including
46,750 shares subject to employee stock options.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON EACH SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.
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THE COLONIAL BANCGROUP, INC.
CROSS REFERENCE SHEET
TO ITEMS IN FORM S-4
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FORM S-4 ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS OR OTHER
- -------------------------------- LOCATION IN REGISTRATION STATEMENT
----------------------------------
Item 1. Forepart of Registration Statement Facing page,
and Outside Front Cover Page of Cross Reference Sheet,
Prospectus Outside front cover page of
Prospectus
Item 2. Inside Front and Outside Back "AVAILABLE INFORMATION,"
Cover Pages of Prospectus Inside front cover page of Pros-
pectus, "DOCUMENTS INCORPORATED BY REFERENCE,"
"TABLE OF CONTENTS"
Item 3. Risk Factors, Ratio of Earnings "SUMMARY," Cover Page of Pros-
to Fixed Charges and Other pectus, "PER SHARE
Information DATA," "THE MERGER," "PRO
FORMA FINANCIAL INFORMATION" AND
"SELECTED FINANCIAL DATA"
Item 4. Terms of the Transaction "THE MERGER," "DOCUMENTS INCORPORATED
BY REFERENCE"
Item 5. Pro Forma Financial Information "PER SHARE DATA," "CONDENSED PRO FORMA
STATEMENTS OF CONDITION,"
AND "CONDENSED PRO FORMA
STATEMENTS OF INCOME"
Item 6. Material Contacts with the Company "THE MERGER -- Background of the Merger,"
"Bankshares' Board of Directors'
Reasons for Approving the Merger,"
and "Interests of Certain Persons in
the Merger"
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Item 7. Additional Information Required for Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters
Item 8. Interests of Named Experts and "LEGAL MATTERS" and
Counsel "EXPERTS"
Item 9. Disclosure of Commission Position Not Applicable; See Items
on Indemnification for Securities 20 and 22 below
Act Liabilities
Item 10. Information with Respect to S-3 "DOCUMENTS INCORPORATED
Registrants BY REFERENCE," "BUSINESS OF
BANCGROUP"
Item 11. Incorporation of Certain Information "DOCUMENTS INCORPORATED
by Reference BY REFERENCE"
Item 12. Information with Respect to S-2 or Not Applicable
S-3 Registrants -- Item 12(b)
Item 13. Incorporation of Certain Information Not Applicable
by Reference
Item 14. Information with Respect to Not Applicable
Registrants Other Than S-3 or S-2
Registrants
Item 15. Information with Respect to S-3 Not Applicable
Companies
Item 16. Information with Respect to S-2 or Not Applicable
S-3 Companies
Item 17. Information with Respect to "BUSINESS OF BANKSHARES,"
Companies Other than S-3 or S-2 "FINANCIAL STATEMENTS"
Companies
Item 18. Information if Proxies, Consents or "THE SPECIAL MEETING,"
Authorizations are to be Solicited "BUSINESS OF BANCGROUP - Voting Securities and
Principal Stockholders," "Security Ownership of
Management," "Management Information"
Item 19. Information if Proxies, Consents or Not Applicable
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Authorizations are not to be
Solicited or in an Exchange Offer
Item 20. Indemnification of Directors and PART II, Item 20
Officers
Item 21. Exhibits and Financial Statement PART II, Item 21
Schedules
Item 22. Undertakings PART II, Item 22
</TABLE>
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D/W BANKSHARES, INC.
401 SOUTH THORNTON AVENUE
DALTON, GEORGIA 30720
(706)226-1500
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1996
---------------------
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "Special
Meeting") of D/W Bankshares, Inc. ("Bankshares") will be held at the office of
Dalton/Whitfield Bank & Trust, located at 401 South Thornton Avenue, Dalton,
Georgia, on , , 1996, at 4:30 p.m., local time, for the
following purposes:
1. Merger. To consider and vote upon the proposed merger (the
"Merger") of Bankshares with and into The Colonial BancGroup, Inc.
("BancGroup"), in accordance with an Agreement and Plan of Merger, dated as
of September 12, 1996 between Bankshares and BancGroup (the "Agreement").
BancGroup will be the surviving corporation in the Merger. Each share of
common stock of Bankshares outstanding at the time of the Merger will be
converted into the right to receive a number of shares of BancGroup Common
Stock which is equal to $27.39 divided by the Market Value (as defined in
the Agreement), with cash paid in lieu of fractional shares, as described
more fully in the accompanying Joint Proxy Statement and Prospectus. The
Agreement is attached to the accompanying Joint Proxy Statement and
Prospectus as Appendix A.
2. Other Matters. To transact such other business as may properly
come before the Special Meeting or any adjournments or postponements
thereof.
The Board of Directors of Bankshares has fixed the close of business on
, 1996, as the record date for the determination of shareholders
entitled to notice of and to vote at the Special Meeting. Only holders of record
of the common stock of Bankshares at the close of business on that date will be
entitled to notice of and to vote at the Special Meeting or any adjournments or
postponements thereof.
Under Georgia law, holders of Common Stock of Bankshares are eligible to
exercise dissenters' rights of appraisal and demand payment in cash of the fair
value of his or her shares of Bankshares Common Stock if the Merger is
consummated. The right of any Bankshares stockholder to receive such payment is
contingent upon strict compliance with Article 13 of the Georgia Business
Corporation Code, a copy of which is attached to the Joint Proxy Statement and
Prospectus as Appendix B and is incorporated herein by reference. For a summary
of Article 13 of the Georgia Business Corporation Code, see "APPROVAL OF THE
MERGER -- Rights of Dissenting Stockholders."
You are requested to complete and sign the enclosed form of proxy and to
mail it promptly in the enclosed envelope. The proxy may be revoked at any time
by filing a written revocation with the Secretary of Bankshares, by executing a
later dated proxy and delivering it to the Secretary of Bankshares, or by
attending the Special Meeting and voting in person.
BY ORDER OF THE BOARD OF DIRECTORS
CHARLES Y. ALLGOOD
President
Dalton, Georgia
, 1996
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JOINT PROXY STATEMENT AND PROSPECTUS
COLONIAL BANCGROUP
COMMON STOCK
D/W BANKSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1996
This Joint Proxy Statement and Prospectus (the "Prospectus") relates to the
proposed merger (the "Merger") of D/W Bankshares, Inc., a Georgia corporation
("Bankshares"), with and into The Colonial BancGroup, Inc., a Delaware
corporation ("BancGroup"). This Prospectus is being furnished to the
shareholders of Bankshares in connection with the solicitation of proxies by the
Board of Directors of Bankshares for use at a special meeting of the
shareholders of Bankshares (the "Special Meeting") to be held on , , 1996, at
4:30 p.m., local time, at the offices of Dalton/Whitfield Bank & Trust, located
at 401 South Thornton Avenue, Dalton, Georgia, including any adjournments or
postponements thereof. At the Special Meeting, shareholders of Bankshares will
consider and vote upon the matters set forth in the preceding Notice of Special
Meeting of the Shareholders, as more fully described in this Prospectus.
The Merger will be consummated pursuant to the terms of a certain Agreement
and Plan of Merger dated as of September 12, 1996 by and between BancGroup and
Bankshares (the "Agreement"). The Agreement provides that, subject to the
approval of the Agreement by the shareholders of Bankshares at the Special
Meeting and the satisfaction (or waiver, to the extent that such waiver is
permitted by law) of other conditions contained in the Agreement, Bankshares
will be merged with and into BancGroup and BancGroup will be the surviving
corporation. Each issued and outstanding share of common stock, par value $1.00
per share of Bankshares (the "Bankshares Common Stock"), shall be converted into
a number of shares of common stock of BancGroup (the "BancGroup Common Stock"),
par value $2.50 per share, which is equal to $27.39 divided by the Market Value,
subject to certain limitations set forth in the Agreement and described in this
Prospectus. For this purpose, "Market Value" shall be determined by calculating
the average of the closing prices of the BancGroup Common Stock as reported by
the New York Stock Exchange ("NYSE") on each of the ten trading days ending on
the trading day immediately preceding the date of consummation of the Merger,
provided that the Market Value shall not be less than $29.75 or more than
$37.75. The shares of BancGroup Common Stock are listed on the NYSE. The closing
price per share of the BancGroup Common Stock on the NYSE on October 31, 1996
was $37 7/8.
Consummation of the Merger requires, among other things, the affirmative
vote of the holders of at least a majority of the outstanding shares of
Bankshares Common Stock.
BancGroup has filed a Registration Statement pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), to register the shares of the
BancGroup Common Stock to be issued in connection with the Merger as well as
shares of BancGroup Common Stock to be issued upon the exercise of employee
stock options of Bankshares assumed by BancGroup in the Merger. This document
constitutes a Proxy Statement of Bankshares in connection with the solicitation
of proxies by Bankshares for the Special Meeting and a Prospectus of BancGroup
with respect to the BancGroup Common Stock to be issued in the Merger and upon
the exercise of employee stock options assumed in the Merger. This Prospectus
and accompanying form of proxy are first being mailed to shareholders of
Bankshares on or about , 1996.
THE BOARD OF DIRECTORS OF BANKSHARES UNANIMOUSLY RECOMMENDS APPROVAL OF THE
MERGER.
---------------------
THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE SHARES OF BANCGROUP COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
The office and mailing address of Bankshares is 401 South Thornton Avenue,
Post Office Box 1929, Dalton, Georgia 30720 (telephone 706-226-1500), and the
principal office and mailing address of BancGroup is Colonial Financial Center,
One Commerce Street, Post Office Box 1108, Montgomery, Alabama 36192 (telephone
334-240-5000).
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 7
AVAILABLE INFORMATION
BancGroup and Bankshares are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information filed
by BancGroup and Bankshares, including proxy and information statements, can be
inspected and copied at the public reference facilities of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at certain regional offices: 7 World Trade Center, 13th Floor, New York, New
York 10048; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; 1401 Brickell Avenue, Suite 200, Miami, Florida 33131; 1801
California Street, Suite 4800, Denver, Colorado 80202-2648; and 5670 Wilshire
Boulevard, 11th Floor, Los Angeles, California 90036-3648. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as BancGroup, that file electronically with the Commission.
The BancGroup Common Stock is listed for trading on the NYSE. Reports,
including proxy and information statements, of BancGroup and other information
may be inspected at the NYSE, 20 Broad Street, New York, New York 10005.
BancGroup has filed with the Commission a Registration Statement under the
Securities Act to register the shares of BancGroup Common Stock being offered in
connection with the Merger. This Prospectus omits certain information contained
in the Registration Statement and exhibits thereto. Such Registration Statement,
including the exhibits thereto, can be inspected at the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
such Registration Statement can be obtained at prescribed rates from the
Commission at that address.
The information in this Prospectus concerning BancGroup and its
subsidiaries has been furnished by BancGroup, and the information concerning
Bankshares and its subsidiary has been furnished by Bankshares. Bankshares is
also subject to the periodic reporting requirements of the Exchange Act.
DOCUMENTS INCORPORATED BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE, WITHOUT CHARGE,
UPON REQUEST FROM THE PERSON SPECIFIED BELOW. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE RECEIVED BY BANCGROUP NO LATER THAN FIVE
BUSINESS DAYS PRIOR TO THE SPECIAL MEETING.
The following documents filed by BancGroup with the Commission are hereby
incorporated by reference into this Prospectus:
(1) BancGroup's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(2) BancGroup's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996;
(3) BancGroup's Report on Form 8-K dated July 17, 1996;
(4) BancGroup's Report on Form 8-K/A dated October 9, 1996; and
(5) BancGroup's Registration Statement on Form 8-A dated November 22,
1994, effective February 22, 1995, containing a description of the
BancGroup Common Stock.
All documents filed by BancGroup pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
Special Meeting, or, in the case of the exercise of options that are being
assumed by BancGroup, prior to the exercise of such options, shall be deemed
incorporated by reference in this Prospectus and made a part hereof from the
date of filing of such documents. Any statement
ii
<PAGE> 8
contained in a document incorporated or deemed incorporated herein by reference
will be deemed to be modified or superseded for the purpose of this Prospectus
to the extent that a statement contained herein or in the other subsequently
filed document which also is or is deemed to be, incorporated herein by
reference modifies or supersedes such statement. Any such statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
BancGroup has entered into the Agreement with Bankshares regarding the
Merger described herein. Various provisions of the Agreement are summarized or
referred to in this Prospectus, and the Agreement is incorporated by reference
into this Prospectus and attached hereto as Appendix A.
BancGroup will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of any
such person, a copy of any and all of the documents which have been incorporated
herein by reference but not delivered herewith (other than the exhibits to such
documents unless specifically incorporated herein). Such request, in writing or
by telephone, should be directed to W. Flake Oakley, IV, Secretary, The Colonial
BancGroup, Inc., One Commerce Street, Post Office Box 1108, Montgomery, Alabama
36192 (telephone 334-240-5000).
The following documents filed by Bankshares with the Commission are hereby
incorporated by reference into, and accompany, this Prospectus:
(1) Bankshares' Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;
(2) Bankshares' Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1996 and June 30, 1996; and
(3) Bankshares' Report on Form 8-K dated August 13, 1996.
iii
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TABLE OF CONTENTS
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PAGE
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SUMMARY...............................................................................
THE SPECIAL MEETING...................................................................
General.............................................................................
Record Date; Shares Entitled to Vote; Vote Required for the Merger..................
Solicitation, Voting and Revocation of Proxies......................................
Effect of Merger on Outstanding BancGroup Common Stock..............................
THE MERGER............................................................................
General.............................................................................
Background of the Merger............................................................
Bankshares's Reasons for Approving the Merger.......................................
Opinion of Financial Advisor........................................................
Recommendation of the Board of Directors of Bankshares..............................
BancGroup's Reasons for the Merger..................................................
Interests of Certain Persons in the Merger..........................................
Conversion of Bankshares Common Stock...............................................
Surrender of Bankshares Common Stock Certificates...................................
Certain Federal Income Tax Consequences.............................................
Other Possible Consequences.........................................................
Conditions to Consummation of the Merger............................................
Amendment or Termination............................................................
Regulatory Approvals................................................................
Conduct of Business Pending the Merger..............................................
Commitments with Respect to Other Offers............................................
Indemnification.....................................................................
Rights of Dissenting Shareholders...................................................
Resale of BancGroup Common Stock Issued in the Merger...............................
Accounting Treatment................................................................
Treatment of Bankshares Options.....................................................
NYSE Reporting of BancGroup Common Stock Issued in the Merger.......................
COMPARATIVE MARKET PRICES AND DIVIDENDS...............................................
BancGroup...........................................................................
Bankshares..........................................................................
BANCGROUP CAPITAL STOCK AND DEBENTURES................................................
BancGroup Common Stock..............................................................
Preference Stock....................................................................
1986 Debentures.....................................................................
Changes in Control..................................................................
COMPARATIVE RIGHTS OF STOCKHOLDERS....................................................
Director Elections..................................................................
Removal of Directors................................................................
Voting..............................................................................
Preemptive Rights...................................................................
Directors' Liability................................................................
Indemnification.....................................................................
Special Meetings of Stockholders; Action Without a Meeting..........................
Mergers, Share Exchanges and Sales of Assets........................................
Amendment of Certificate of Incorporation and Bylaws................................
Rights of Dissenting Stockholders...................................................
Antitakeover Statutes...............................................................
Preferred Stock.....................................................................
Effect of the Merger on Bankshares Shareholders.....................................
PRO FORMA INFORMATION.................................................................
Condensed Pro Forma Statements of Condition (Unaudited).............................
Condensed Pro Forma Statements of Income (Unaudited)................................
Pro Forma Selected Financial Data (Unaudited).......................................
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES.........................................
Selected Interim Financial Data (Unaudited).........................................
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PAGE
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Selected Financial Data.............................................................
BUSINESS OF BANCGROUP.................................................................
General.............................................................................
Proposed Affiliate Banks............................................................
Voting Securities and Principal Stockholders........................................
Security Ownership of Management....................................................
Management Information..............................................................
Certain Regulatory Considerations...................................................
BUSINESS OF BANKSHARES................................................................
General.............................................................................
Principal Holders of Bankshares Common Stock........................................
Bankshares Common Stock Owned by Management.........................................
ADJOURNMENT OF SPECIAL MEETING........................................................
OTHER MATTERS.........................................................................
DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS................................
LEGAL MATTERS.........................................................................
EXPERTS...............................................................................
INDEX TO FINANCIAL STATEMENTS......................................................... F-1
APPENDIX A -- Agreement and Plan of Merger............................................ A-1
APPENDIX B -- Georgia Statute Respecting Dissenters' Appraisal Rights................. B-1
APPENDIX C -- Opinion of Financial Adviser............................................ C-1
</TABLE>
v
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF
SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY BANCGROUP OR BANKSHARES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION, TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE
ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF BANCGROUP OR BANKSHARES SINCE THE DATE OF THIS PROSPECTUS OR THAT
INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THE DATES
THEREOF.
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SUMMARY
The following provides a summary of certain information included in this
Prospectus. This summary is qualified in its entirety by the more detailed
information appearing elsewhere herein, the Appendices hereto and the documents
incorporated herein by reference. Shareholders of Bankshares are urged to read
this Prospectus in full.
GENERAL
This Prospectus relates to the issuance of shares of BancGroup Common Stock
in connection with the proposed Merger of Bankshares with and into BancGroup.
Simultaneously with the Merger, Bankshares' subsidiary, Dalton/Whitfield Bank &
Trust (the "Bank"), will be merged with BancGroup's Georgia subsidiary bank,
Colonial Bank. See "THE MERGER -- General."
THE SPECIAL MEETING
The Special Meeting will be held at the office of the Bank, located at 401
South Thornton Avenue, Dalton, Georgia on , 1996, at 4:30 p.m.,
local time, for the purpose of considering and voting upon the Agreement. Only
holders of record of Bankshares Common Stock at the close of business on
, 1996 (the "Record Date") are entitled to the notice of and to vote
at the Special Meeting. As of such date, [700,836] shares of Bankshares Common
Stock were issued and outstanding. See "THE SPECIAL MEETING."
THE COMPANIES
BancGroup. BancGroup is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the "BHCA"). It was organized in
Delaware in 1974. BancGroup operates banking subsidiaries in the states of
Alabama, Florida, Georgia and Tennessee. BancGroup, through its wholly-owned
subsidiary, Colonial Bank, conducts a full service commercial banking business
in the State of Alabama through 110 banking offices. In Tennessee, BancGroup,
through the Colonial Bank of Tennessee, conducts a general commercial banking
business through three offices. In Georgia, BancGroup operates a wholly-owned
federal savings bank, Colonial Bank, FSB, which has four offices in the Atlanta,
Georgia area and a wholly owned commercial bank, Colonial Bank, located in
Lawrenceville, Georgia which operates seven offices. In Florida, BancGroup's
wholly owned commercial bank subsidiary in Orlando, Colonial Bank, operates
eight offices. BancGroup has also entered into agreements or letters of intent
to acquire four additional banks. Colonial Mortgage Company, a subsidiary of the
Colonial Bank in Alabama, is a mortgage banking company which services
approximately $10 billion in residential loans and which originates residential
mortgages in 29 states through 6 regional offices. At June 30, 1996, BancGroup
had consolidated total assets of $4.5 billion and consolidated stockholders
equity of $317.6 million. See "BUSINESS OF BANCGROUP."
Bankshares. Bankshares was incorporated as a Georgia business corporation
in December 1993 and became a bank holding company by acquiring all of the
common stock of the Bank on April 8, 1994. The Bank is presently the sole
operating subsidiary of Bankshares. The Bank, a state bank located in Dalton,
Georgia, was incorporated on March 23, 1989 and opened for business on April 30,
1990. The Bank conducts a general commercial banking business that serves the
Dalton/Whitfield County area. The Bank has no subsidiaries and does not engage
in any line of business in addition to normal commercial banking activities. At
June 30, 1996, Bankshares had consolidated total assets of $140 million and
consolidated stockholders' equity of $10 million. See "BUSINESS OF BANKSHARES."
TERMS OF THE MERGER
The Agreement provides for the Merger of Bankshares with and into
BancGroup, with BancGroup to be the surviving corporation. Upon the date of
consummation of the Merger (the "Effective Date"), each outstanding share of
Bankshares Common Stock shall be converted by operation of law and without any
action by any holder thereof into shares of BancGroup Common Stock (the "Merger
Consideration"). Specifically, each outstanding share of Bankshares Common Stock
shall be converted into a number of shares of
1
<PAGE> 13
BancGroup Common Stock which is equal to $27.39 divided by the Market Value. For
this purpose, "Market Value" shall represent the per share market value of the
BancGroup Common Stock at the Effective Date and shall be determined by
calculating the average of the closing prices of the BancGroup Common Stock as
reported by the NYSE on each of the ten trading days ending on the trading day
immediately preceding the Effective Date; provided, however, that regardless of
the actual Market Value as calculated above, Market Value shall not be less than
$29.75, nor more than $37.75. Accordingly, the maximum number of shares of
BancGroup Common Stock to be issued in the Merger shall be 645,240 (based upon a
minimum Market Value of $29.75) and the minimum number of shares of BancGroup
Common Stock to be issued in the Merger shall be 508,500 (based upon a maximum
Market Value of $37.75), assuming 700,836 shares of Bankshares Common Stock
outstanding.
To the extent that the number of shares of Bankshares Common Stock may
increase based upon the exercise of options respecting Bankshares Common Stock
or the conversion of Bankshares Series A 7% Convertible Subordinated Debentures,
the aggregate number of shares of BancGroup Common Stock to be issued in the
Merger shall be increased with each share of Bankshares Common Stock outstanding
at the Effective Date being exchanged for a number of shares of BancGroup Common
Stock which is equal to one share of Bankshares Common Stock multiplied by the
Exchange Ratio, i.e., $27.39 divided by the Market Value. No fractional shares
of BancGroup Common Stock will be issued in connection with the Merger. To the
extent cash is paid in lieu of fractional shares, the cash will be paid based
upon the Market Value.
As of the date of this Prospectus, Bankshares had granted options (the
"Bankshares Options") which entitled the holders thereof to acquire up to 46,750
shares of Bankshares Common Stock. On the Effective Date, BancGroup will assume
all Bankshares Options outstanding, and each such option shall represent the
right to acquire BancGroup Common Stock on substantially the same terms
applicable to the Bankshares Options. The number of shares of BancGroup Common
Stock to be issued pursuant to such options shall equal the number of shares of
Bankshares Common Stock subject to the Bankshares Options multiplied by the
Exchange Ratio, as defined below, provided that no fractions of shares of
BancGroup Common Stock shall be issued. If a fractional share exists, the number
of shares of BancGroup Common Stock to be issued upon the exercise of Bankshares
Options, shall equal the number of whole shares obtained by rounding to the
nearest whole number, taking into account such fraction. The exercise price for
the acquisition of BancGroup Common Stock shall be the exercise price for each
share of Bankshares Common Stock subject to such options divided by the Exchange
Ratio, adjusted appropriately for any rounding to whole shares that may be done.
The "Exchange Ratio" shall mean the result obtained by dividing $27.39 by the
Market Value.
On the Effective Date, BancGroup will assume Bankshares' Series A 7%
Convertible Subordinated Debentures (the "Series A Debentures") respecting the
issuance of 64,773 shares of Bankshares Common Stock. The Series A Debentures
shall be convertible into shares of BancGroup Common Stock, with each share of
Bankshares Common Stock that would have been issued upon conversion of such
debentures being convertible into a number of shares of BancGroup Common Stock
which is equal to one share of Bankshares Common Stock multiplied by the
Exchange Ratio. No fractions of shares of BancGroup Common Stock will be issued
upon conversion of such debentures, and any fractions to be issued shall be paid
in cash based upon the market value of any fraction at the time of conversion,
as set forth in such debentures.
Bankshares shareholders will be given notice of the Merger promptly after
the Effective Date of the Merger. Certificates for the BancGroup Common Stock
will not be distributed or dividends paid until shareholders surrender their
certificates representing their shares of Bankshares Common Stock.
See "THE MERGER -- Conversion of Bankshares Common Stock," "Surrender of
Bankshares Common Stock Certificates," "Treatment of Bankshares Options," and
"Treatment of Series A Debentures."
For certain information concerning dissenters' rights, voting at the
Special Meeting, and management of BancGroup and Bankshares, see "THE
MERGER -- Rights of Dissenting Shareholders," "-- Conversion of Bankshares
Common Stock"; "THE SPECIAL MEETING -- Solicitation, Voting and Revocation of
Proxies," "-- Record Date; Shares Entitled to Vote; Vote Required"; "BUSINESS OF
BANCGROUP -- Voting Securities and Principal Stockholders," "-- Security
Ownership of Management," and "BUSINESS
2
<PAGE> 14
OF BANKSHARES -- Principal Holders of Common Stock," and "-- Common Stock Owned
By Management."
RECOMMENDATION OF BANKSHARES' BOARD OF DIRECTORS
The Board of Directors of Bankshares has unanimously approved the
Agreement. THE BOARD OF DIRECTORS OF BANKSHARES BELIEVES THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF BANKSHARES, AND RECOMMENDS
THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AGREEMENT. For a discussion of
the factors considered by the Board of Directors in reaching its conclusions,
see "THE MERGER -- Background of the Merger" and "Bankshares' Board of
Directors' Reasons for Approving the Merger."
OPINION OF FINANCIAL ADVISOR
Bankshares has received an opinion from T. Stephen Johnson & Associates,
Inc. ("Stephen Johnson") that the Merger is fair to the shareholders of
Bankshares from a financial point of view. See "THE MERGER -- Opinion of
Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain of the directors and executive officers of Bankshares hold
Bankshares Options which entitle them to purchase, in the aggregate, up to
46,750 shares of Bankshares Common Stock. Under the terms of the Agreement, any
Bankshares Options which are not exercised prior to the Effective Date will be
assumed by BancGroup. See "THE MERGER -- Conversion of Bankshares Common Stock,"
and "Treatment of Bankshares Options."
Certain of the directors and executive officers of Bankshares own Series A
Debentures which are convertible into, in the aggregate, up to 15,906 shares of
Bankshares Common Stock. Under the terms of the Agreement, any Series A
Debentures which are not converted prior to the Effective Date will be assumed
by BancGroup. See "The Merger -- Conversion of Bankshares Common Stock" and
"Treatment of Series A Debentures."
The Agreement stipulates that it is a condition to BancGroup's obligation
to close the Merger that Charles Y. Allgood, president of Bankshares and the
Bank, enter into a severance agreement with BancGroup that will provide a
lump-sum payment to Mr. Allgood if BancGroup terminates Mr. Allgood's employment
within one year after the Effective Date, under certain circumstances.
On the Effective Date, all employees of Bankshares (including its executive
officers) shall, at BancGroup's option, either become employees of BancGroup or
its subsidiaries or be entitled to severance benefits in accordance with
BancGroup's severance policy as of the date of the Agreement. All employees of
Bankshares who become employees of BancGroup or its subsidiaries on the
Effective Date shall be entitled, to the extent permitted by applicable law, to
participate in all benefit plans of BancGroup to the same extent as BancGroup's
employees. BancGroup has indicated that it currently intends to retain each of
the executive officers of Bankshares following the consummation of the Merger
(although it has no obligation to do so), on substantially the same terms and
conditions (including salary) as currently earned by such executive officers.
Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of Bankshares against certain claims and liabilities arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Date, to the fullest extent that Bankshares would have been permitted
under Georgia law, or under its Articles of Incorporation or Bylaws, to
indemnify such persons (and also to advance expenses as incurred to the fullest
extent permitted under applicable law).
Except as described above, none of the directors or executive officers of
Bankshares, and no associate of any such person, has any substantial direct or
indirect interest in the Merger, other than an interest arising from the
ownership of Bankshares Common Stock.
See "THE MERGER -- Interests of Certain Persons in the Merger."
3
<PAGE> 15
VOTE REQUIRED
Under Georgia law, the Agreement must be approved by the affirmative vote
of the holders of at least a majority of the outstanding shares of Bankshares
Common Stock. Each share of Bankshares Common Stock is entitled to one vote on
the Agreement. Approval of the Agreement and the Merger by BancGroup
stockholders is not required under Delaware, Georgia or other applicable law, or
the rules of the NYSE on which the BancGroup Common Stock is listed. See "THE
SPECIAL MEETING."
Only holders of record of Bankshares Common Stock at the close of business
on , 1996 are entitled to notice of and to vote at the Special Meeting.
As of such date, [700,836] shares of Bankshares Common Stock were issued and
outstanding. As of the Record Date, Bankshares's directors, executive officers
and their affiliates held approximately 39% of the outstanding shares of
Bankshares Common Stock. As of the same date, the directors, executive officers
and affiliates of BancGroup held no shares of Bankshares Common Stock. See "THE
SPECIAL MEETING."
BancGroup and the directors of Bankshares have entered into letter
agreements under which the directors have agreed, among other things, to vote or
cause the record owner to vote any shares of Bankshares Common Stock held by
such directors in favor of the Merger and the Agreement and in favor of the
other transactions contemplated between Bankshares and BancGroup pursuant to the
terms of the Agreement and against any business combination or other
reorganization of any kind involving Bankshares or its subsidiaries with any
entity other than BancGroup. As of the Record Date, the directors owned, either
beneficially or of record, 255,127 shares of Bankshares Common Stock or
approximately 36% of the outstanding shares of Bankshares Common Stock held on
such date. The parties anticipate that all of the shares of Bankshares Common
Stock held by the directors will be voted in favor of the Agreement and the
Merger. Directors and executive officers of BancGroup beneficially own in the
aggregate 2,187,008 shares of BancGroup Common Stock representing approximately
13% of the outstanding shares, but no vote of BancGroup stockholders is required
to approve the Merger. See "THE SPECIAL MEETING."
Proxies should be returned to Bankshares in the envelope enclosed herewith.
Shareholders of Bankshares submitting proxies may revoke their proxies by (i)
giving notice of such revocation in writing to the Secretary of Bankshares at or
prior to the Special Meeting, (ii) by executing and delivering a proxy bearing a
later date to the Secretary of Bankshares at or prior to the Special Meeting, or
(iii) by attending the Special Meeting and voting in person. Because approval of
the Merger requires the approval of at least a majority of the outstanding
shares of Bankshares Common Stock, failure to submit a proxy or failure to vote
in person at the Special Meeting will have the same effect as a negative vote.
See "THE SPECIAL MEETING -- Solicitation, Voting and Revocation of Proxies."
RIGHTS OF DISSENTING SHAREHOLDERS
Any shareholder of Bankshares may dissent from the Merger and obtain the
fair value of such holder's Bankshares Common Stock in cash rather than receive
shares of BancGroup Common Stock if such shareholder (i) has delivered notice in
writing to Bankshares before the vote is taken at the Special Meeting that he or
she intends to demand payment of his shares if the Merger is consummated and
(ii) votes against the Merger or refrains from voting on the Merger. If a
shareholder votes against the Merger or refrains from voting on the Merger but
does not deliver the notice in writing to Bankshares before the shareholder vote
on the Merger occurs, such shareholder will lose his or her appraisal rights. If
the Merger is authorized at the Special Meeting, BancGroup will deliver a
written dissenters' notice within ten (10) days of the Effective Date to all
holders of Bankshares Common Stock who have provided notice that they intend to
seek payment. Shareholders wishing to exercise dissenters' rights must follow
properly all requirements for the exercise of such rights as set forth in
Article 13 of the Georgia Business Corporation Code, a copy of which is attached
as Appendix B hereto.
Any shareholder who properly exercises appraisal rights and receives fair
market value for his or her shares will encounter income tax treatment different
than the treatment for stockholders who do not exercise appraisal rights. See
"APPROVAL OF THE MERGER -- Certain Federal Income Tax Consequences."
4
<PAGE> 16
See "THE MERGER -- Rights of Dissenting Shareholders."
CONDITIONS TO THE MERGER
The parties' obligation to consummate the Merger is subject to the
satisfaction (or waiver, to the extent permitted by law) of various conditions
set forth in the Agreement.
The mutual obligations of the parties to consummate the Merger are subject
to the following conditions, among others: (i) the approval of the Agreement by
the holders of at least a majority of the outstanding shares of Bankshares
Common Stock; (ii) any required approvals of the Merger by the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and the Georgia
Department of Banking and Finance (the "Georgia Department"), and the approval
of the merger of the Bank with Colonial Bank by the Federal Deposit Insurance
Corporation ("FDIC") and the Georgia Department, (iii) the absence of any
pending or threatened litigation which seeks to restrain or prohibit the Merger;
and (iv) the consummation of the Merger on or before May 31, 1997.
The obligation of Bankshares to consummate the Merger is further subject to
several conditions, including: (i) the absence of any material adverse changes
in the financial condition or affairs of BancGroup; and (ii) the shares of
BancGroup Common Stock to be issued under the Agreement having been approved for
listing on the NYSE.
The obligation of BancGroup to consummate the Merger is subject to various
conditions, including: (i) the absence of any material adverse change in the
financial condition or affairs of Bankshares; and (ii) the Merger qualifying for
pooling of interests accounting treatment.
Applications for approval of the Merger by the Federal Reserve, the FDIC
and the Georgia Department were filed with such agencies on or about November 6,
1996. The regulatory approval process is expected to take approximately three
months from that date.
See "THE MERGER -- Conditions to Consummation of the Merger" and "Regulatory
Approvals."
AMENDMENT OR TERMINATION OF AGREEMENT
The Boards of Directors of BancGroup and Bankshares may agree to amend or
terminate the Agreement at any time prior to the Effective Date. However, the
Board of Directors of Bankshares shall not agree to any amendments to the
Agreement which would alter the Merger Consideration or which, in the opinion of
the Board of Directors of Bankshares, would adversely affect the rights of the
shareholders of Bankshares, unless such amendments are approved by the holders
of a majority of the outstanding Bankshares Common Stock. Such amendments may
require the filing of an amendment of the Registration Statement, of which this
Prospectus forms a part, with the Commission. See "THE MERGER -- Amendment or
Termination."
COMPARISON OF SHAREHOLDER RIGHTS
The rights of the holders of the Bankshares Common Stock may be different
from the rights of the holders of the BancGroup Common Stock. A discussion of
these rights and a comparison thereof is set forth in the section of this
Prospectus at "COMPARATIVE RIGHTS OF STOCKHOLDERS."
FEDERAL INCOME TAX CONSEQUENCES
No ruling with respect to the federal income tax consequences of the Merger
to Bankshares' shareholders will be requested from the Internal Revenue Service
(the "IRS"). BancGroup and Bankshares have received an opinion from counsel to
BancGroup, Miller, Hamilton, Snider & Odom, L.L.C., Mobile, Alabama, that, among
other things, a shareholder of Bankshares who exchanges shares of Bankshares
Common Stock for BancGroup Common Stock shall not recognize gain, except that
shareholders of Bankshares will recognize gain to the extent such shareholders
receive cash in lieu of fractional shares of BancGroup Common Stock or cash as a
result of the exercise of dissenters' appraisal rights. See "APPROVAL OF THE
MERGER -- Certain Federal Income Tax Consequences."
5
<PAGE> 17
ACCOUNTING TREATMENT
The acquisition of Bankshares will be treated as a "pooling of interests"
transaction by BancGroup for accounting purposes. See "THE MERGER -- Accounting
Treatment."
RECENT PER SHARE MARKET PRICES
Bankshares. Bankshares Common Stock, $1.00 par value, is not traded on an
established trading market and there is only very limited trading. The following
sets forth high and low bid information for Bankshares Common Stock for each of
the quarters in which trading has occurred since January 1, 1994. The prices set
forth below reflect only information that has come to management's attention and
do not include retail mark-ups, mark-downs or commissions and may not represent
actual transactions.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH BID LOW BID
- --------------------------------------------------------------------------- -------- -------
<S> <C> <C>
September 30, 1994......................................................... $18.50 $16.50
December 31, 1994.......................................................... 17.50 16.50
March 31, 1995............................................................. 18.00 18.00
June 30, 1995.............................................................. 18.00 18.00
March 31, 1996............................................................. 20.00 20.00
</TABLE>
Immediately prior to the public announcement of the Merger on August 2,
1996, Bankshares Common Stock was trading at $20.00. On February 24, 1996, the
last reported sales price per share reported for Bankshares Common Stock was
$20.00.
BancGroup. BancGroup Common Stock is listed for trading on the NYSE under
the symbol "CNB." The following table indicates the high and low closing prices
of the BancGroup Class A Common Stock and the BancGroup Common Stock as reported
on the NASDAQ System and the NYSE, respectively, for the last two full fiscal
years. Prior to February 21, 1995, BancGroup had two classes of Common Stock
outstanding, Class A and Class B. Class B was not publicly traded. Class A was
traded as a NASDAQ security under the symbol "CLBGA" until February 24, 1995. On
February 21, 1995, the BancGroup Class A and Class B Common Stock were
reclassified into BancGroup Common Stock.
<TABLE>
<CAPTION>
PRICE PER
SHARE OF
COMMON STOCK
--------------
HIGH LOW
---- ---
<S> <C> <C>
1994
First Quarter.............................................................. 20 1/4 18
Second Quarter............................................................. 25 19 1/4
Third Quarter.............................................................. 24 3/4 22
Fourth Quarter............................................................. 23 3/4 19 1/2
1995
First Quarter(1)........................................................... 23 5/8 19 1/2
Second Quarter............................................................. 27 1/2 23 1/8
Third Quarter.............................................................. 29 7/8 27 1/2
Fourth Quarter............................................................. 32 7/8 28 1/2
1996
First Quarter.............................................................. 36 1/2 30
Second Quarter............................................................. 36 1/8 31 1/4
Third Quarter.............................................................. 35 7/8 31 1/4
Fourth Quarter (through October 31)........................................ 37 7/8 34 3/4
</TABLE>
- ---------------
(1) Trading on the NYSE commenced on February 24, 1995.
On August 2, 1996, the business day immediately prior to the public
announcement of the Merger, the closing price of the BancGroup Common Stock on
the NYSE was $33 1/4 per share.
6
<PAGE> 18
The following table presents the market value of BancGroup Common Stock on
August 2, 1996, and the market value and equivalent per share value of
Bankshares Common Stock on that date:
<TABLE>
<CAPTION>
EQUIVALENT
BANCGROUP BANKSHARES BANCGROUP
COMMON STOCK COMMON STOCK COMMON STOCK
(PER SHARE) (PER SHARE) (PER SHARE)
------------ ------------ ------------
<S> <C> <C> <C>
Comparative Market Value................ $33.25(1) $20.00(2) $ 32.825(3)
</TABLE>
- ---------------
(1) Closing price as reported by the NYSE.
(2) Represents the last reported sales price of Bankshares Common Stock.
(3) If the Merger had closed on August 2, 1996, .8344 shares of BancGroup Common
Stock would have been exchanged for each share of the Bankshares Common
Stock (i.e. $27.39 / $32.825).
See "COMPARATIVE MARKET PRICES AND DIVIDENDS."
CERTAIN LEGAL RESTRICTIONS ON ACQUISITIONS OF CONTROL
Certain restrictions under Delaware law prevent a person who beneficially
owns 15% or more of the BancGroup Common Stock from engaging in a "business
combination" with BancGroup unless certain conditions are satisfied. Also, the
Change in Bank Control Act of 1978 prohibits a person from acquiring "control"
of BancGroup unless certain notice provisions with the Federal Reserve Board
have been satisfied.
BancGroup's Restated Certificate of Incorporation and bylaws also contain
provisions which may deter or prevent a takeover of BancGroup that is not
supported by BancGroup's Board of Directors. These provisions include: (i) a
classified board of directors, (ii) supermajority voting requirements that
exceed the provisions of Delaware law described above for certain "business
combinations" (iii) flexibility for the board to consider non-economic and other
factors in evaluating a "business combination," (iv) inability of stockholders
to call special meetings or act by written consent, and (v) certain advance
notice provisions for the conduct of business at stockholder meetings.
See "BANCGROUP CAPITAL STOCK AND DEBENTURES" and "COMPARATIVE RIGHTS OF
STOCKHOLDERS."
PER SHARE DATA
The table below presents on a per share basis the book value, cash
dividends and income from continuing operations of BancGroup and Bankshares on a
historical basis and on a pro forma equivalent basis assuming the combination
with Bankshares. Certain information from the table has been taken from the
condensed pro forma statements of condition and income included elsewhere in
this document. The table should be read in conjunction with those pro forma
statements.
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR YEAR
SIX MONTHS ENDED ENDED JUNE ENDED ENDED ENDED
PER SHARE DATA JUNE 30, 1996(D) 30, 1995 1995 1994 1993(A)
- -------------------------------------------- ---------------- ------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
BANCGROUP-HISTORICAL:
Net Income
Primary................................... $ 1.65 $ 1.41 $ 2.63 $ 2.00 $ 1.65
Fully diluted............................. 1.63 1.38 2.56 1.97 1.64
Book value at end of period................. 19.62 17.10 18.65 15.62 14.40
Dividends per share:
Common Stock.............................. 0.54 0.45 0.675
Common A.................................. 0.225 0.80 0.71
Common B.................................. 0.125 0.40 0.31
</TABLE>
7
<PAGE> 19
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR YEAR
SIX MONTHS ENDED ENDED JUNE ENDED ENDED ENDED
PER SHARE DATA JUNE 30, 1996(D) 30, 1995 1995 1994 1993(A)
- -------------------------------------------- ---------------- ------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
BANKSHARES:
Net Income
Historical:
Primary................................ 1.05 1.06 1.87 1.60 1.24
Fully diluted.......................... 1.00 1.05 1.81 1.60 1.24
Pro forma equivalent assuming combination
with D/W Bankshares, Inc. only(b):
Primary................................ 1.28 1.10 2.05 1.56 1.28
Fully diluted.......................... 1.27 1.08 1.99 1.54 1.27
Pro forma equivalent assuming combination
with Bankshares, Jefferson and other
proposed combinations(b):
Primary................................ 1.18 0.98 1.88 1.45 1.20
Fully diluted.......................... 1.17 0.96 1.84 1.44 1.20
Book value at end of period
Historical................................ 14.90 13.34 14.05 11.73 10.56
Pro forma equivalent assuming combination
with Bankshares only................... 15.32 N/A N/A N/A N/A
Pro forma equivalent assuming combination
with Bankshares, Jefferson and other
proposed combinations(b):.............. 15.02 N/A N/A N/A N/A
Dividends per share
Historical................................ 0.00 0.00 0.00 0.00 0.00
Pro forma equivalent assuming combination
with Bankshares, only(c)............... 0.42 0.35 0.70 0.63 0.55
Pro forma equivalent assuming combination
with Bankshares, Inc., Jefferson
Bancorp, Inc. and other proposed
combinations(c):....................... 0.42 0.35 0.70 0.63 0.55
BANCGROUP -- PRO FORMA COMBINED BANKSHARES
(ONLY):
Net Income
Primary................................... 1.64 1.41 2.62 2.00 1.64
Fully diluted............................. 1.62 1.38 2.54 1.97 1.63
Book value at end of period................. 19.61 N/A N/A N/A N/A
BANCGROUP -- PRO FORMA COMBINED (BANKSHARES,
JEFFERSON AND OTHER PROPOSED
COMBINATIONS):
Net Income
Primary................................... 1.51 1.26 2.41 1.85 1.54
Fully diluted............................. 1.50 1.23 2.35 1.84 1.54
Book value at end of period................. $19.22 N/A N/A N/A N/A
</TABLE>
- ---------------
N/A Not applicable due to pro forma balance sheet being presented only at June
30, 1996 which assumes the transaction was consummated on the latest
balance sheet date in accordance with Rule 11.02(b) of Regulation S-X.
(a) Net Income per share for the year ended December 31, 1993 represents income
before extraordinary items and cumulative effect of change in accounting
principle.
(b) Pro forma equivalent per share amounts are calculated by multiplying the pro
forma combined total income per share and the pro forma combined total book
value per share of BancGroup by the conversion ratio so that the per share
amounts are equated to the respective values for one share of
8
<PAGE> 20
Bankshares. For the purposes of these pro forma equivalent per share
amounts, a .7815 BancGroup common stock share conversion ratio is utilized.
The ratio is based on the 10-day average of the closing market price of
Colonial BancGroup, Inc. common stock of $35.05 at September 19, 1996
($27.39/35.05 = .7815).
(c) Pro forma equivalent dividends per share are shown at BancGroup's Common
Stock dividend per share rate multiplied by the .7815 conversion ratio per
share of Bankshares common stock (see note (b)). BancGroup presently
contemplates that dividends will be declared in the future. However, the
payment of cash dividends is subject to BancGroup's actual results of
operations as well as certain other internal and external factors.
Accordingly, there is no assurance that cash dividends will either be
declared and paid in the future, or, if declared and paid, that such
dividends will approximate the pro forma amounts indicated.
(d) Pro forma net income excludes two non-recurring charges for employee
severance and bonuses expected to result from the proposed pooling of
interests business combination with Jefferson in the amount of $4.4
million, net of tax.
9
<PAGE> 21
THE SPECIAL MEETING
GENERAL
This Prospectus is being furnished to the shareholders of Bankshares in
connection with the solicitation of proxies by the Board of Directors of
Bankshares for use at the Special Meeting. The purpose of the Special Meeting is
to consider and vote upon the proposed Merger of Bankshares with and into
BancGroup. BancGroup will be the surviving corporation in the Merger.
This Prospectus is also furnished by BancGroup in connection with the offer
of shares of BancGroup Common Stock to be issued in the Merger. No vote of
BancGroup stockholders is required to approve the Merger.
The Board of Directors of Bankshares believes that the Merger is in the
best interests of Bankshares and its shareholders and unanimously recommends
that shareholders vote "FOR" the Merger (item 1 on the proxy card).
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED FOR THE MERGER
The Board of Directors of Bankshares has fixed the close of business on
, 1996, as the Record Date for determination of shareholders entitled
to vote at the Special Meeting. There were [471] record holders of Bankshares
Common Stock as of such date. On that date, there were [700,836] shares of
Bankshares Common Stock outstanding, each entitled to one vote per share.
Bankshares is obligated to issue an additional 46,750 shares of Bankshares
Common Stock upon the exercise of outstanding Bankshares Options. Bankshares is
also obligated to issue an additional 64,773 shares of Bankshares Common Stock
upon the conversion of the outstanding Series A Debentures.
The affirmative vote of the holders of at least a majority of the
outstanding shares of Bankshares Common Stock, whether or not present or
represented at the Special Meeting, is required to approve the Agreement. Broker
non-votes and abstentions will not be counted as votes cast for or against the
proposal to approve the Agreement and, as a result, will have the same effect as
votes cast against the Agreement. Each holder of record of shares of Bankshares
Common Stock is entitled to cast, for each share registered in his or her name,
one vote on the Agreement and on each other matter presented to a vote of
shareholders at the Special Meeting.
As of the Record Date, directors and executive officers of Bankshares and
their affiliates were the owners of 277,247 shares of Bankshares Common Stock,
representing approximately 39% of the outstanding shares of Bankshares Common
Stock. All of such persons will vote their Bankshares Common Stock in favor of
the Merger.
If the Merger is approved at the Special Meeting, Bankshares is expected to
merge with and into BancGroup promptly after the other conditions to the
Agreement are satisfied. See "THE MERGER -- Conditions of Consummation of the
Merger."
THE BOARD OF DIRECTORS OF BANKSHARES URGES THE SHAREHOLDERS OF BANKSHARES
TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE AND
UNANIMOUSLY RECOMMENDS THAT THE SHARES REPRESENTED BY THE PROXY BE VOTED IN
FAVOR OF THE MERGER.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
In addition to soliciting proxies by mail, directors, officers and other
employees of Bankshares, without receiving special compensation therefor, may
solicit proxies from Bankshares's shareholders by telephone, by telegram or in
person. Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries, if any, to forward solicitation materials
to any beneficial owners of shares of Bankshares Common Stock.
10
<PAGE> 22
Bankshares will bear the cost of assembling and mailing this Prospectus and
other materials furnished to shareholders of Bankshares. It will also pay all
other expenses of solicitation, including the expenses of brokers, custodians,
nominees, and other fiduciaries who, at the request of Bankshares, mail material
to or otherwise communicate with beneficial owners of the shares held by them.
BancGroup will pay all expenses incident to the registration of the BancGroup
Common Stock to be issued in connection with the Merger.
Shares of Bankshares Common Stock represented by a proxy properly signed
and received at or prior to the Special Meeting, unless properly revoked, will
be voted in accordance with the instructions on the proxy. IF A PROXY IS SIGNED
AND RETURNED WITHOUT ANY VOTING INSTRUCTIONS, SHARES OF BANKSHARES COMMON STOCK
REPRESENTED BY THE PROXY WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE
AGREEMENT, AND, AT THE DISCRETION OF THE HOLDER OF THE PROXY, FOR ANY NECESSARY
ADJOURNMENT OF THE SPECIAL MEETING. A shareholder may revoke any proxy given
pursuant to this solicitation by: (i) delivering to the Secretary of Bankshares,
prior to or at the Special Meeting, a written notice revoking the proxy; (ii)
delivering to the Secretary of Bankshares, at or prior to the Special Meeting, a
duly executed proxy relating to the same shares bearing a later date; or (iii)
by voting in person at the Special Meeting. All written notices of revocation
and other communications with respect to the revocation of Bankshares' proxies
should be addressed to:
<TABLE>
<S> <C>
If hand-delivered: If mailed:
D/W Bankshares, Inc. D/W Bankshares, Inc.
401 South Thornton Avenue P.O. Box 1929
Dalton, Georgia 30720 Dalton, Georgia 30720
Attention: Rita B. Gray, Secretary Attention: Rita B. Gray, Secretary
</TABLE>
Attendance at the Special Meeting will not, in and of itself, constitute a
revocation of a proxy.
Votes will be tabulated by one or more inspectors of election appointed by
Bankshares. Proxies marked as abstentions and shares held in street name which
have been designated by brokers on proxy cards as not voted will not be counted
as votes cast. Such proxies will be counted for purposes of determining whether
a quorum is present at the Special Meeting.
The Board of Directors of Bankshares is not aware of any business to be
acted upon at the Special Meeting other than consideration of the Merger
described herein. If, however, other matters are properly brought before the
Special Meeting, or any adjournments or postponements thereof, the persons
appointed as proxies will have the discretion to vote or act on such matters
according to their best judgment. Proxies voted in favor of the Merger, or
proxies as to which no voting instructions are given, will be voted to adjourn
the Special Meeting, if necessary, in order to solicit additional proxies in
favor of the Merger. Proxies voted against the Merger or abstentions will not be
voted for an adjournment. See "ADJOURNMENT OF THE SPECIAL MEETING."
EFFECT OF MERGER ON OUTSTANDING BANCGROUP COMMON STOCK
On the Effective Date, and assuming a Market Value, calculated as of
September 19, 1996, of $35.05, BancGroup will issue 547,672 shares of BancGroup
Common Stock to the shareholders of Bankshares pursuant to the Merger, not
counting any BancGroup Common Stock to be issued pursuant to Bankshares Options
or Bankshares Series A Debentures. These 547,672 shares of BancGroup Common
Stock would represent approximately 3.2% of the total number of shares of
BancGroup Common Stock outstanding following the Merger, not counting any
additional shares BancGroup may issue, including shares to be issued pursuant to
other pending acquisitions.
THE MERGER
THE FOLLOWING SETS FORTH A SUMMARY OF ALL MATERIAL PROVISIONS OF THE
AGREEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE AGREEMENT
ATTACHED HERETO AS APPENDIX A. ALL BANKSHARES SHAREHOLDERS ARE URGED TO READ THE
AGREEMENT AND THE APPENDICES IN THEIR ENTIRETY.
11
<PAGE> 23
GENERAL
The Agreement provides that, subject to shareholder ratification and
confirmation, receipt of necessary regulatory approval and certain other
conditions described below at "Conditions to Consummation of the Merger,"
Bankshares will merge with and into BancGroup. Upon completion of the Merger,
the corporate existence of Bankshares will cease, and BancGroup will succeed to
the business formerly conducted by Bankshares. Simultaneously with the Merger,
Bankshares' subsidiary bank, Dalton/Whitfield Bank & Trust, will be merged with
BancGroup's wholly owned subsidiary bank in Georgia, Colonial Bank.
BACKGROUND OF THE MERGER
Between April 1995 and March 1996, Bankshares received four offers for
acquisition which were reviewed by the Board of Directors and declined as
inadequate. Three additional inquiries expressing interest in an acquisition
were also received but no actual offers were made.
On June 19, 1996, Bankshares engaged the services of T. Stephen Johnson &
Associates. The firm was requested to develop a bid package and submit a list of
potential merger partners for the Board's review. The firm was also asked to
evaluate Bankshares' projected future value as an independent institution.
On July 25, 1996, T. Stephen Johnson and Associates presented four bids to
the Board of Directors of Bankshares and reviewed the bids, along with
projections relating to Bankshares' future value as an independent institution.
Counsel to Bankshares reviewed with the Board its fiduciary obligations in
considering offers to acquire Bankshares. The meeting was then recessed to give
each director an opportunity to consider the information presented and was
reconvened on July 29, 1996. At the July 29 meeting, the Board unanimously
approved the offer submitted by BancGroup as being superior to the other offers
and to Bankshares' future value as an independent institution. The Board also
authorized bank management to execute a letter of intent with BancGroup.
During the month of August 1996, both Bankshares and BancGroup conducted
due diligence investigations which were completed with satisfactory results. At
a special called meeting of the Board of Bankshares, counsel to Bankshares led a
detailed discussion of the content of a proposed definitive agreement. After a
lengthy discussion of the specific terms of the agreement, the Board unanimously
approved the acquisition of Bankshares on terms and conditions as substantially
set forth in the proposed agreement. They further authorized President and CEO
Charles Y. Allgood and Secretary Rita B. Gray to execute and deliver the
proposed agreement on behalf of Bankshares.
BANKSHARES' REASONS FOR APPROVING THE MERGER
Bankshares' Board of Directors, after consideration of relevant business,
financial, legal, and market factors, approved the Agreement. Bankshares' Board
did not assign any relative or specific weight to the factors considered. The
factors considered included:
(a) The alternatives to the Merger, including remaining an independent
institution in light of the current economic conditions of the
market and the competitive disadvantages as compared to the larger
financial institutions operating in the market;
(b) The value of the consideration to be received by Bankshares
shareholders relative to the book value and earnings per share of
Bankshares Common Stock;
(c) Certain information concerning the financial condition, results of
operations and business prospects of BancGroup;
(d) The financial terms of recent business combinations in the
financial services industry and a comparison of the multiples of
selected combinations with the terms of the proposed transaction
with BancGroup;
(e) The marketability of Bankshares Common Stock;
(f) The competitive and regulatory environment for financial
institutions generally;
12
<PAGE> 24
(g) The fact that the Merger will enable Bankshares shareholders to
exchange their shares of Bankshares Common Stock, in a tax-free
transaction, for shares of common stock of a regional company, the
stock of which is widely held and actively traded; and
(h) BancGroup's ability to provide comprehensive financial services to
its markets.
THE BOARD OF DIRECTORS OF BANKSHARES RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE AGREEMENT AND CONSUMMATION OF THE MERGER.
OPINION OF FINANCIAL ADVISOR
T. Stephen Johnson & Associates, Inc. (the "Advisor") is an investment
banking and financial services firm located in Atlanta, Georgia. As part of its
investment banking business, Advisor engages in the review of the fairness of
bank acquisition transactions from a financial perspective and in the valuation
of banks and other businesses and their securities in connection with mergers,
acquisitions and other transactions. Neither Advisor nor any of its affiliates
has a material financial interest in Bankshares or BancGroup. Advisor was
selected to advise Bankshares' Board of Directors based upon its familiarity
with Bankshares, the regional community banking industry and its knowledge of
the banking industry as a whole. No instructions were given or limitations
imposed by the Bankshares Board of Directors upon Advisor regarding the scope of
its investigation or the procedures it followed in rendering its opinion.
Advisor has rendered its opinion (the "Fairness Opinion") to the Board of
Directors of Bankshares that the consideration to be paid to the holders of
Bankshares common stock under the Agreement is fair to such shareholders from a
financial point of view. A copy of the Fairness Opinion, which sets forth
certain assumptions made, matters considered and limitations on the review
undertaken, is attached as Appendix C to this Prospectus and should be read in
its entirety. The summary of the Fairness Opinion set forth herein is qualified
in its entirety by reference to the text of the Fairness Opinion.
In addition to rendering the Fairness Opinion, Advisor was engaged to
develop a bid package and to preside over the bidding process on behalf of
Bankshares.
In arriving at its Fairness Opinion, Advisor performed merger analyses
described below. Advisor also reviewed certain publicly available business and
financial information relating to Bankshares and BancGroup. Advisor also
considered certain financial and stock market data of Bankshares and BancGroup,
compared that data with similar data for certain other publicly held banks and
bank holding companies in the Southeastern United States and considered the
financial terms of certain other recent comparable community bank acquisition
transactions in three southeastern states, as further discussed below. Advisor
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria that it deemed
relevant. In connection with its review, Advisor did not independently verify
the foregoing information and relied on such information as being complete and
accurate in all material respects. Financial forecasts prepared by Bankshares
management and submitted to Advisor were based on assumptions believed by
Advisor to be reasonable and to reflect currently available information, but
Advisor did not independently verify such information. Advisor did not make an
independent evaluation or appraisal of the assets of Bankshares or BancGroup.
In connection with rendering the Fairness Opinion, Advisor performed a
variety of financial analyses, including those summarized below. The summary set
forth below does not purport to be a complete description of the analyses
performed by Advisor in this regard. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, notwithstanding the separate factors
summarized below, Advisor believes that its analyses must be considered as a
whole and that selecting portions of its analyses and the factors considered by
it, without considering all analyses and factors, could create an incomplete
view of the evaluation process underlying its opinion. In performing its
analyses, Advisor made numerous assumptions with respect to industry
performance, business and economic conditions and other matters, many of which
are beyond Bankshares' or BancGroup's control. The analyses performed by Advisor
are not necessarily indicative
13
<PAGE> 25
of actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. No company or transaction considered
as a comparison in the analyses is identical to Bankshares, BancGroup or the
Merger. Accordingly, an analysis of the results of such comparisons is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of companies
and other factors that could affect the public trading value of the companies
involved in such comparisons. In addition, the analyses do not purport to be
appraisals or reflect the process by which or the prices at which businesses
actually may be sold or the prices at which any securities may trade at the
present time or at any time in the future.
Merger Analysis. The merger consideration to be received by Bankshares
shareholders is set at $27.39. Advisor reviewed the terms of the Agreement and
determined that the Market Value of BancGroup Common Stock to be used for
setting the exchange ratio continues to be appropriate ranging from $29.75 per
share to $37.75 per share. BancGroup's Common Stock trades on the New York Stock
Exchange and closed at $35.00 per share on October 17, 1996. Average daily
volume for 1996 year-to-date is estimated at 8,500 shares. The current dividend
yield is 3.09%.
Comparable Transactions Analysis. Advisor reviewed the Merger as of
October 11, 1996, for the purpose of determining purchase premiums which could
be used in comparing the Merger with other announced transactions. Advisor
reviewed the purchase premiums paid in 74 transactions that were announced
between July 1, 1995 and October 11, 1996 involving selling institutions
headquartered in the state of Alabama, Florida, Georgia and Tennessee. Of these
transactions, nine involved selling institutions that have been determined to be
comparable transactions. They include institutions representing commercial banks
with total assets between $100 million and $200 million. The purchase premiums
in the Merger rank within the range of purchase premiums paid in the comparable
transactions. On average, the nine comparable transactions reported an announced
deal price to book value of 1.646 times and an announced deal price to earnings
of 14.36 times. A listing of the comparable transactions is included in the
following table.
DEALS ANNOUNCED FROM 7/1/95 TO 10/11/96
Targets in Florida, Georgia, Tennessee and Alabama
Targets are Commercial Banks with Total Assets Between $100 Million and $200
Million
<TABLE>
<CAPTION>
SELLER: SELLER:
TOTAL EQTY/
BANK/ ASSETS ASSETS
BUYER ST SELLER ST THRIFT ($000) (%)
---------------------------- --------------------------- ----------- -------- ------
<S> <C> <C> <C> <C>
Colonial BancGroup AL Fort Brooke Bancorp FL Bank 185,443 8.61
Eagle Bancshares GA Southern Crescent GA Bank 122,738 7.27
United Security Bank AL First Bancshares AL Bank 186,884 9.13
First Liberty Financial GA Middle Georgia Bank GA Bank 112,804 8.83
ABC Bancorp, Inc. GA Southland Bancorp AL Bank 102,336 7.03
Regions Financial AL Metro Financial GA Bank 198,646 6.32
1st United Bancorp FA American Bancorp FL Bank 182,539 4.86
First Union Corp NC Brentwood National TN Bank 112,799 10.79
Pioneer Bancshares TN Sweetwater Valley TN Bank 168,492 12.26
-------- ------
AVERAGES: $152,518 8.34
</TABLE>
14
<PAGE> 26
<TABLE>
<CAPTION>
ANN'D ANN'D DEAL
DEAL DEAL PR/ ANN'D
VALUE CONSIDER PR/BK 4-QTR
ANNOUNCE DATE STATUS ($M) TYPE (%) ESP(X)
------------------------------------- ----- ------------ ------- ------
<S> <C> <C> <C> <C>
09/24/96 NonBinding 32.8 Com Stock 205.46 18.94
08/13/96 Pending 16.1 Com Stock 180.51 13.42
07/16/96 NonBinding 15.4 Com Stock 92.96 5.43
01/19/96 Pending 17.0 Com Stock 170.58 10.63
12/19/95 Completed 11.2 Mixture 180.00 13.21
08/23/95 Completed 30.0 Com Stock 216.49 19.01
07/27/95 Completed 11.3 Com Stock 126.97 N/A
07/18/95 Completed 24.0 Mixture 197.14 22.86
07/13/95 Completed 23.0 Com Stock 111.36 11.39
------- ------
AVERAGES $164.61 14.36
</TABLE>
The cost of the Fairness Option is included in the total costs charged by
the Advisor for its marketing services for Bankshares.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF BANKSHARES
The Board of Directors of Bankshares has determined that the Merger is in
the best interests of Bankshares and its shareholders. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF BANKSHARES VOTE IN FAVOR OF THE
APPROVAL AND ADOPTION OF THE MERGER AND THE AGREEMENT.
BANCGROUP'S REASONS FOR THE MERGER
The Board of Directors of BancGroup has unanimously approved the Merger and
the Agreement. BancGroup has been seeking to expand its banking service in the
Georgia market and currently operates a commercial bank and a federal savings
bank in the Atlanta area. The Board of Directors of BancGroup believes that the
acquisition of Bankshares and the Bank is consistent with that strategy.
In approving the Merger and the Agreement, the Board of Directors of
BancGroup took into account: (i) the financial performance and condition of
Bankshares, including its strong capital and good asset quality; (ii)
similarities in the philosophies of BancGroup and Bankshares, including
Bankshares' commitment to delivering high quality personalized financial
services to its customers; and (iii) Bankshares' management's knowledge of and
experience in the Northwest Georgia area.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of Bankshares hold Bankshares
Options which entitle them to purchase, in the aggregate, up to 46,750 shares of
Bankshares Common Stock. Under the terms of the Agreement, any Bankshares
Options which are not exercised prior to the Effective Date will be assumed by
BancGroup giving the holders of such options the right to acquire shares of
BancGroup Common Stock. See "Conversion of Bankshares Common Stock."
Certain of the directors and executive officers of Bankshares own Series A
Debentures which are convertible into, in the aggregate, up to 15,906 shares of
Bankshares Common Stock. Under the terms of the Agreement, any Series A
Debentures which are not converted prior to the Effective Date will be assumed
by BancGroup. See "The Merger -- Conversion of Bankshares Common Stock" and
"Treatment of Series A Debentures."
The Agreement provides that it is a condition to BancGroup's obligation to
close the Merger that Charles Y. Allgood, president of Bankshares and the Bank,
execute a severance agreement with BancGroup. Mr. Allgood and BancGroup have
agreed upon the terms of the severance agreement which will provide that (i) for
a period of one year following the Effective Date, BancGroup may terminate Mr.
Allgood's employment at any time by paying Mr. Allgood a lump-sum payment equal
to Mr. Allgood's annual cash
15
<PAGE> 27
salary at the time the notice of termination is given plus $12,300; (ii)
BancGroup's obligation to make the payments referenced in the foregoing clause
(i) shall not apply if BancGroup terminates Mr. Allgood for "cause", as defined
in the severance agreement, or if Mr. Allgood voluntarily terminates his
employment; and (iii) Mr. Allgood will agree not to compete with the Bank in
Whitfield County for a period of 12 months following his termination provided he
has received the lump-sum payment referenced in clause (i) above or one-half of
such payment if Mr. Allgood is terminated for cause or voluntarily terminates
his employment.
On the Effective Date, all employees of Bankshares (including its executive
officers) shall, at BancGroup's option, either become employees of BancGroup or
its subsidiaries or be entitled to severance benefits in accordance with
BancGroup's severance policy as of the date of the Agreement. All employees of
Bankshares who become employees of BancGroup or its subsidiaries on the
Effective Date shall be entitled, to the extent permitted by applicable law, to
participate in all benefit plans of BancGroup to the same extent as BancGroup's
employees. BancGroup has indicated that it currently intends to retain each of
the executive officers of Bankshares following the consummation of the Merger
(although it has no obligation to do so), on substantially the same terms and
conditions (including salary) as currently earned by such executive officers.
Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of Bankshares against certain claims and liabilities arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Date, to the fullest extent that Bankshares would have been permitted
under Georgia law, or under its Articles of Incorporation or Bylaws, to
indemnify such persons (and also to advance expenses as incurred to the fullest
extent permitted under applicable law).
Except as described above, none of the directors or executive officers of
Bankshares, and no associate of any such person, has any substantial direct or
indirect interest in the Merger, other than an interest arising from the
ownership of Bankshares Common Stock.
CONVERSION OF BANKSHARES COMMON STOCK
On the Effective Date, each share of Bankshares Common Stock outstanding
and held by Bankshares' shareholders shall be converted by operation of law and
without any action by any holder thereof into shares of BancGroup Common Stock
(the "Merger Consideration"). Specifically, each outstanding share of Bankshares
Common Stock shall be converted into a number of shares of BancGroup Common
Stock which is equal to $27.39 divided by the Market Value. The Market Value
shall represent the per share market value of the BancGroup Common Stock at the
Effective Date and shall be determined by calculating the average of the closing
prices of the Common Stock of BancGroup as reported by the NYSE on each of the
10 trading days ending on the trading day immediately preceding the Effective
Date, provided, however, that regardless of the actual Market Value as
calculated above, Market Value shall not be less than $29.75, nor more than
$37.75. Accordingly, the maximum number of shares of BancGroup Common Stock to
be issued in the Merger shall be 645,240 (based upon a minimum Market Value of
$29.75) and the minimum number of shares of BancGroup Common Stock to be issued
in the Merger shall be 508,500 (based upon a maximum Market Value of $37.75)
assuming 700,836 shares of Bankshares Common Stock outstanding.
To the extent that the number of shares of Bankshares Common Stock may
increase based upon the exercise of Bankshares Options or the conversion of the
Series A Debentures, the aggregate number of shares of BancGroup Common Stock to
be issued in the Merger shall be increased with each share of Bankshares Common
Stock outstanding at the Effective Date being exchanged for a number of shares
of BancGroup Common Stock which is equal to one share of Bankshares Common Stock
multiplied by the Exchange Ratio, i.e., $27.39 divided by the Market Value.
No fractional shares of BancGroup Common Stock will be issued in connection
with the Merger. Each shareholder of Bankshares having a fractional interest
arising upon the conversion of Bankshares Common Stock into BancGroup Common
Stock will, at the time of surrender of the certificates representing Bankshares
Common Stock, be paid by BancGroup an amount of cash equal to the value of such
fractional interest based on the fair market value of such fractional share.
Fair market value for this purpose shall be the Market Value.
16
<PAGE> 28
As an example, a shareholder of Bankshares who owns 100 shares of
Bankshares Common Stock would be entitled to receive for such shares BancGroup
Common Stock. Assuming a Market Value of BancGroup Common Stock at the Merger of
$35.05 (calculated as of September 19, 1996), then such shareholder would
receive Merger Consideration as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF SHARES OF BANCGROUP
BANKSHARES COMMON STOCK COMMON STOCK TO BE RECEIVED
----------------------------------------------------------- -----------------------------
<S> <C>
100 78(1)
</TABLE>
- ---------------
(1) Each share of Bankshares Common Stock receives an amount of BancGroup Common
Stock determined by the following formula: $27.39 / $35.05 = 0.7815. Thus,
100 shares multiplied by 0.7815 yields 78 shares of BancGroup Common Stock.
The fraction of .15 of a share would be paid in cash.
As the Market Value of the BancGroup Common Stock rises, the number of
shares of BancGroup Common Stock to be issued in the Merger will decrease, and
as the Market Value falls, the number of such shares will increase, subject to
the minimum and maximum shares to be issued as described above.
The Agreement provides that if, prior to the Effective Date, BancGroup
Common Stock shall be changed into a different number of shares or a different
class of shares by reason of any recapitalization or reclassification, stock
dividend, combination, stock split, or reverse stock split of the BancGroup
Common Stock, an appropriate and proportionate adjustment shall be made in the
number of shares of BancGroup Common Stock into which the Bankshares Common
Stock shall be converted in the Merger.
On the Effective Date, BancGroup will assume Bankshares' Series A
Debentures respecting the issuance of 64,773 shares of Bankshares Common Stock.
Such debentures shall be convertible into shares of BancGroup Common Stock, with
each share of Bankshares Common Stock that would have been issued upon
conversion of such debenture being convertible into a number of shares of
BancGroup Common Stock which is equal to one share of Bankshares Common Stock
multiplied by the Exchange Ratio -- i.e., $27.39 divided by the Market Value. No
fractions of shares of BancGroup Common Stock will be issued upon conversion of
such debentures, and any fractions to be issued shall be paid in cash, as set
forth in such debentures.
BancGroup will also assume the Bankshares Options outstanding on the
Effective Date. For a description of the assumption of such options, see
"Treatment of Bankshares Options."
SURRENDER OF BANKSHARES COMMON STOCK CERTIFICATES
Upon the Effective Date and subject to the conditions described at
"Conditions to Consummation of the Merger," Bankshares' shareholders will
automatically, and without further action by such shareholders or by BancGroup,
become owners of BancGroup Common Stock as described herein. Outstanding
certificates representing shares of the Bankshares Common Stock shall represent
shares of BancGroup Common Stock. Thereafter, upon surrender of the certificates
formerly representing shares of Bankshares Common Stock, the holders will be
entitled to receive certificates for the BancGroup Common Stock. Dividends on
the shares of BancGroup Common Stock will accumulate without interest and will
not be distributed to any former shareholder of Bankshares unless and until such
shareholder surrenders for cancellation his or her certificate for Bankshares
Common Stock. SunTrust Bank, Atlanta, Georgia, transfer agent for BancGroup
Common Stock, will act as the Exchange Agent with respect to the shares of
Bankshares Common Stock surrendered in connection with the Merger.
A detailed explanation of these arrangements will be mailed to Bankshares
shareholders promptly following the Effective Date. STOCK CERTIFICATES SHOULD
NOT BE SENT TO THE EXCHANGE AGENT UNTIL SUCH NOTICE IS RECEIVED.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a "reorganization" for federal income
tax purposes under Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"). The obligation of Bankshares and BancGroup to consummate
the Merger is conditioned on the receipt by Bankshares and
17
<PAGE> 29
BancGroup of an opinion from Miller, Hamilton, Snider & Odom, L.L.C., counsel to
BancGroup, to the effect that the Merger will constitute such a reorganization.
The opinion has been delivered to Bankshares and BancGroup. In delivering its
opinion, Miller, Hamilton, Snider & Odom, L.L.C., have received and relied upon
certain representations of BancGroup and Bankshares and certain other
information, data, documentation and other materials as it deems necessary. The
tax opinion is based upon certain assumptions, including the assumption that
Bankshares has no knowledge of any plan or intention on the part of the
Bankshares shareholders to sell or dispose of BancGroup Common Stock that would
reduce their holdings to a number of shares having in the aggregate a fair
market value of less than 50% of the total fair market value of the Bankshares
Common Stock outstanding immediately upon the Merger.
Neither Bankshares nor BancGroup intends to seek a ruling from the Internal
Revenue Service as to the federal income tax consequences of the Merger.
Bankshares' shareholders should be aware that the opinion of counsel will not be
binding on the Internal Revenue Service or the courts.
Among other things, the following discussion is based on Bankshares'
shareholders maintaining sufficient equity ownership interest in BancGroup after
the Merger. The Internal Revenue Service takes the position for purposes of
issuing an advance ruling on reorganizations that the shareholders of an
acquired corporation (i.e., Bankshares) must maintain, in the aggregate, a
continuing equity ownership interest in the acquiring corporation (i.e.,
BancGroup) equal, in terms of value, to at least 50% of their interest in such
acquired corporation. Shares of Bankshares Common Stock and BancGroup Common
Stock held by Bankshares shareholders and otherwise sold, redeemed or disposed
of prior or subsequent to the Merger may be taken into account in determining
whether the requirement with respect to continuing equity ownership of BancGroup
Common Stock is met by Bankshares' shareholders.
If the assumption stated above, that there is no plan or intention by the
Bankshares shareholders to sell or dispose of BancGroup Common Stock that would
reduce their holdings to a number of shares with an aggregate fair market value
of at least 50 percent of the total fair market value of Bankshares Common Stock
outstanding immediately before the Merger, were to be incorrect, then counsel
could not opine that the Merger is a reorganization under Section 368 of the
Code.
The tax opinion states that, provided the assumptions stated therein are
satisfied, the following federal income tax consequences will result to
Bankshares' shareholders who exchange their shares of Bankshares Common Stock
for shares of BancGroup Common Stock:
1. The Merger will qualify as a reorganization within the meaning of
Section 368(a)(1) pursuant to Section 368(a)(1)(A) of the Code.
2. No gain or loss will be recognized by Bankshares upon the transfer
of its assets and liabilities to BancGroup. No gain or loss will be
recognized by BancGroup upon the receipt of the assets and liabilities of
Bankshares.
3. The basis of the assets of Bankshares acquired by BancGroup will be
the same as the basis of the assets in the hands of Bankshares immediately
prior to the Merger.
4. The holding period of the assets of Bankshares in the hands of
BancGroup will include the period during which such assets were held by
Bankshares.
5. No gain or loss will be recognized by a Bankshares shareholder upon
the receipt of BancGroup Common Stock solely in exchange for such
shareholder's Bankshares' Common Stock; except that gain or loss resulting
from the receipt of cash by Bankshares' shareholders who dissent will be
recognized in accordance with the provisions of Section 302 of the Code as
a distribution in redemption of such shareholder's Bankshares Common Stock.
In addition, no gain or loss will be recognized by a Bankshares debenture
holder upon the assumption of such debentures by BancGroup.
6. The payment of cash to a Bankshares shareholder in lieu of a
fractional share of BancGroup Common Stock as part of the Merger will be
treated as if the fractional share was delivered to the shareholder and
then redeemed by BancGroup, with the tax effect of such deemed redemption
being determined under Section 302(b) of the Code.
18
<PAGE> 30
7. The basis of the BancGroup Common Stock (including any fractional
share) received by a Bankshares shareholder in the Merger will be the same
as the basis of the Bankshares Common Stock surrendered in exchange
therefor, decreased by the amount of cash received, and increased by the
amount treated as a dividend and the amount of gain recognized on the
exchange.
8. The holding period of the BancGroup Common Stock received by a
Bankshares shareholder in the Merger will include the holding period of the
Bankshares Common Stock surrendered in exchange therefor, provided such
shares of Bankshares Common Stock were capital assets or property described
under Section 1231 of the Code in the hands of a Bankshares shareholder on
the day of the Merger, and otherwise will begin on the date following the
date of the Merger.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF ALL MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO THE SHAREHOLDERS OF BANKSHARES,
TO BANKSHARES AND TO BANCGROUP AND DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A DECISION WHETHER TO VOTE IN
FAVOR OF APPROVAL OF THE MERGER. THE DISCUSSION DOES NOT ADDRESS THE TAX
CONSEQUENCES THAT MAY BE RELEVANT TO A PARTICULAR SHAREHOLDER SUBJECT TO SPECIAL
TREATMENT UNDER CERTAIN FEDERAL INCOME TAX LAWS, SUCH AS DEALERS IN SECURITIES,
BANKS, INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, NON-UNITED STATES PERSONS,
SHAREHOLDERS WHO DO NOT HOLD THEIR SHARES OF BANKSHARES COMMON STOCK AS "CAPITAL
ASSETS" WITHIN THE MEANING OF SECTION 1221 OF THE CODE, AND SHAREHOLDERS WHO
ACQUIRED THEIR SHARES OF BANKSHARES COMMON STOCK PURSUANT TO THE EXERCISE OF
OPTIONS OR OTHERWISE AS COMPENSATION, NOR ANY CONSEQUENCES ARISING UNDER THE
LAWS OF ANY STATE, LOCALITY OR FOREIGN JURISDICTION. THE TAX CONSEQUENCES TO
BANKSHARES EMPLOYEES UNDER EMPLOYMENT AND OTHER AGREEMENTS ARE NOT DISCUSSED.
THE TAX CONSEQUENCES TO HOLDERS OF BANKSHARES OPTIONS AND DEBENTURES ARE NOT
DISCUSSED. THE DISCUSSION IS BASED UPON THE CODE, TREASURY REGULATIONS
THEREUNDER AND ADMINISTRATIVE RULINGS AND COURT DECISIONS AS OF THE DATE HEREOF.
ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE
CONTINUING VALIDITY OF THIS DISCUSSION. BANKSHARES SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE PARTICULAR FEDERAL, STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES OF THE MERGER TO THEM.
OTHER POSSIBLE CONSEQUENCES
If the Merger is consummated, the shareholders of Bankshares, a Georgia
corporation, will become shareholders of BancGroup, a Delaware business
corporation.
For a discussion of the differences, if any, in the rights, preferences,
and privileges attaching to Bankshares Common Stock as compared with BancGroup
Common Stock, see "COMPARATIVE RIGHTS OF STOCKHOLDERS."
CONDITIONS TO CONSUMMATION OF THE MERGER
The parties' obligation to consummate the Merger is subject to the
satisfaction (or waiver, to the extent permitted by law) of various conditions
set forth in the Agreement.
The obligations of Bankshares and BancGroup to consummate the Merger are
conditioned upon, among other things, (i) the approval of the Agreement by the
holders of at least a majority of the outstanding shares of Bankshares Common
Stock; (ii) any required approvals of the Merger by the Federal Reserve and the
Georgia Department, and the approval of the merger of the Bank with Colonial
Bank by the FDIC and the Georgia Department; (iii) the absence of pending or
threatened litigation with a view to restraining or prohibiting consummation of
the Merger or in which it is sought to obtain divestiture, rescission or damages
in
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connection with the Merger, (iv) the absence of any investigation by any
governmental agency which might result in any such proceeding, (v) consummation
of the Merger no later than May 31, 1997, and (vi) receipt of opinions of
counsel regarding certain matters.
The obligation of Bankshares to consummate the Merger is further subject to
several other conditions, including: (i) the absence of any material adverse
change in the financial condition or affairs of BancGroup; (ii) the shares of
BancGroup Common Stock to be issued under the Agreement having been approved for
listing on the NYSE; (iii) the accuracy in all material respects of the
representations and warranties of BancGroup contained in the Agreement and the
performance by BancGroup of all of its covenants and agreements under the
Agreement; and (iv) receipt of the opinion of the Advisor that the Merger
Consideration is fair from a financial point of view to the shareholders of
Bankshares.
The obligation of BancGroup to consummate the Merger is subject to several
other conditions, including: (i) the absence of any material adverse change in
the financial condition or affairs of Bankshares; (ii) the accuracy in all
material respects of the representations and warranties of Bankshares contained
in the Agreement, and the performance by Bankshares of all of its covenants and
agreements under the Agreement; (iii) the receipt by BancGroup of certain
undertakings from holders of Bankshares Common Stock who may be deemed to be
"affiliates" of Bankshares pursuant to the rules of the Commission; and (iv) the
receipt of an opinion from Coopers & Lybrand L.L.P. that the Merger qualifies
for pooling of interests accounting treatment.
It is anticipated that the foregoing conditions, as well as certain other
conditions contained in the Agreement, such as the receipt of certificates of
officers of each party as to compliance with the Agreement, will be satisfied.
The Agreement provides that Bankshares and BancGroup may waive all conditions to
their obligations to consummate the Merger, other than the receipt of the
requisite approvals of regulatory authorities and Bankshares shareholder
approval of the Merger. In making any decision regarding a waiver of one or more
conditions to consummation of the Merger or an amendment of the Agreement, the
Boards of Directors of Bankshares and BancGroup would be subject to fiduciary
duty standards imposed upon such boards by relevant law that would require such
boards to act in the best interests of their respective shareholders.
AMENDMENT OR TERMINATION
The Boards of Directors of BancGroup and Bankshares may agree to amend or
terminate the Agreement before or after approval by the shareholders of
Bankshares. However, the Board of Directors of Bankshares shall not agree to any
amendments to the Agreement which would alter the Merger Consideration or which
in the opinion of the Board of Directors of Bankshares would adversely affect
the rights of the shareholders of Bankshares, unless such amendments are
approved by the holders of a majority of the outstanding Bankshares Common
Stock. Such amendments may require the filing of an amendment of the
Registration Statement, of which this Prospectus forms a part, with the
Commission. See "Conditions to Consummation of the Merger."
REGULATORY APPROVALS
Prior to the Merger, a 30-day prior notification to the Federal Reserve
will be provided pursuant to Section 3 of the BHCA and the regulations
promulgated pursuant thereto. Approval of the Georgia Department under the
Financial Institutions Code of Georgia must also be obtained. It is contemplated
that the Merger will occur simultaneously with the merger of the Bank with and
into BancGroup's wholly-owned subsidiary Colonial Bank, Lawrenceville, Georgia
(the "Bank Merger"). The approval of the FDIC and the Georgia Department must be
obtained prior to the Bank Merger. It is anticipated that BancGroup will file
the notification with the Federal Reserve and the applications with the FDIC and
the Georgia Department on or about , 1996, and the regulatory approval
process is expected to take approximately three months from that date.
Federal Reserve Notification. Under limited circumstances, approval of the
Merger by the Federal Reserve under Section 3 of the BHCA is not required. More
specifically, the Merger would not require Federal Reserve approval if: (1) the
Bank is merged into a BancGroup bank subsidiary simultaneously with
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the Merger; (2) the Bank's merger into a BancGroup bank subsidiary requires the
prior approval of a federal supervisory agency under the Bank Merger Act; (3)
the transaction does not involve an acquisition subject to Section 4 of the
BHCA; (4) both before and after the transaction, BancGroup meets the Federal
Reserve's capital adequacy guidelines; and (5) BancGroup provides written notice
of the transaction to the Federal Reserve at least thirty days prior to the
transaction, and during that period, the Federal Reserve does not require an
application under Section 3 of the Bank Holding Company Act. It is anticipated
that BancGroup will satisfy the foregoing requirements, and, absent Federal
Reserve action pursuant to item 5 above, an application with the Federal Reserve
will not be required.
In the event the Federal Reserve requires an application pursuant to
Section 3 of the BHCA, approval of the Federal Reserve would be required prior
to the Merger. Pursuant to Section 3 of the BHCA, and the regulations
promulgated pursuant thereto, the Federal Reserve must withhold approval of the
Merger if it finds that the transaction will 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. In
addition, the Federal Reserve may not approve the Merger if it finds that the
effect thereof may be substantially to lessen competition in any section of the
country, or tend to create a monopoly, or would in any other manner be in
restraint of trade, unless it finds that the anti-competitive effects of the
Merger are clearly outweighed by the probable effect of the Merger in meeting
the convenience and needs of the communities to be served. The Federal Reserve
will also take into consideration the financial condition and managerial
resources of BancGroup, its subsidiaries, any banks related to BancGroup through
common ownership or management, and the Bank. Finally, the Federal Reserve will
consider the compliance records of BancGroup's subsidiaries under the Community
Reinvestment Act.
The BHCA provides for the publication of notice and public comment on the
application and authorizes the Federal Reserve to permit interested parties to
intervene in the proceedings. If an interested party is permitted to intervene,
such intervention could delay the regulatory approvals required for consummation
of the Merger. Section 11 of the BHCA imposes a waiting period which prohibits
the consummation of the Merger, in ordinary circumstances, for a period ranging
from 15-30 days following the Federal Reserve's approval of the Merger. During
such period, the U.S. Department of Justice, should it object to the Merger for
antitrust reasons, may challenge the consummation of the Merger.
Georgia Department. The Georgia Department must also approve the Merger
and the Bank Merger pursuant to applicable provisions of the Financial
Institutions Code of Georgia. The Commissioner of the Georgia Department is
prohibited from approving the Merger 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 state of Georgia. In
addition, the Commissioner is prohibited from approving the Merger if it
determines that the effect of the Merger, in any section of the state, would be
substantially to lessen competition, or tend to create a monopoly, or which in
any other manner would be in restraint of trade, unless it finds that the
anti-competitive effects of the proposed transaction are clearly outweighed in
the public interests by the probable effect of the transaction in meeting the
convenience and needs of the community to be served. As part of the Georgia
Department's review of the Merger, the Commissioner is required to take into
consideration the financial and managerial resources and future prospects of the
company or companies and the banks concerned and the convenience and needs of
the community to be served. Prior to granting approval, the Commissioner is
required to provide reasonable notice of the Merger in the area affected and
afford the public an opportunity to submit information, objections, and opinions
of the Merger for the Commissioner's consideration.
Prior to approving the Bank Merger, the Georgia Department must determine
that the applicable requirements of the Financial Institutions Code of Georgia
have been satisfied, that the plan of merger and any modification thereof
adequately protect the interests of depositors, other creditors, and
shareholders, that the requirements for the Bank Merger under all applicable
laws have been satisfied and the resulting bank would satisfy the requirements
of the Financial Institutions Code of Georgia applicable to it, and the Bank
Merger would be consistent with adequate and sound banking or fiduciary practice
and in the public interest on the basis of the financial history and condition
of the parties to the plan of merger, their prospects, the
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<PAGE> 33
character of their management, and the convenience and needs of the area
primarily to be served by the resulting institution.
Federal Deposit Insurance Corporation. Pursuant to the requirements of the
Federal Deposit Insurance Act, the FDIC must approve the Bank Merger. The FDIC
is prohibited from approving the Bank Merger if it would result in a monopoly or
would be in furtherance of any combination or conspiracy to monopolize or to
attempt to monopolize the business of banking in any part of the United States.
In addition, the FDIC is prohibited from approving the Bank Merger if its
effect, in any section of the country, would be substantially to lessen
competition, or to tend to create a monopoly, or which in any other manner would
be in restraint of trade, unless it finds that the anti-competitive effects of
the Bank Merger are clearly outweighed in the public interest by the probable
effect of the Bank Merger in meeting the convenience and needs of the community
to be served. The FDIC is required to take into consideration the financial and
managerial resources and future prospects of the existing and proposed
institutions, and the convenience and needs of the community to be served.
The Bank Merger Act imposes a waiting period which prohibits consummation
of the Bank Merger, in ordinary circumstances, for a period ranging from 15-30
days following the FDIC's approval of the Bank Merger. During such period, the
United States Department of Justice, should it object to the Bank Merger for
antitrust reasons, may challenge the consummation of the Bank Merger.
The Agreement provides that the obligation of each of BancGroup and
Bankshares to consummate the Merger is conditioned upon the receipt of all
necessary regulatory approvals. There can be no assurance that any regulatory
agency will approve BancGroup's applications to acquire Bankshares, and, if such
approvals are received, that such approvals will not be conditioned upon terms
and conditions that would cause the parties to abandon the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER
The Agreement contains certain restrictions on the conduct of the business
of Bankshares pending consummation of the Merger. The Agreement prohibits
Bankshares from taking any of the following actions, prior to the Effective
Date, subject to certain limited exceptions previously agreed to by the parties,
without the prior written approval of BancGroup:
(i) Issuing, delivering or agreeing to issue or deliver any stock,
bonds or other corporate securities (whether authorized and unissued or
held in the treasury), except shares of Bankshares Common Stock issued upon
the exercise of Bankshares Options or the conversion of the Series A
Debentures;
(ii) Borrowing or agreeing to borrow any funds or incurring or
becoming subject to, any liability (absolute or contingent) except
borrowings, obligations and liabilities incurred in the ordinary course of
business and consistent with past practice;
(iii) Paying any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent balance sheet and current liabilities incurred since that date
in the ordinary course of business and consistent with past practice;
(iv) Declaring or making or agreeing to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
shareholders, or purchasing or redeeming or agreeing to purchase or redeem,
any of its outstanding securities;
(v) Except in the ordinary course of business, selling or transferring
or agreeing to sell or transfer, any of its assets, or canceling, or
agreeing to cancel, any debts or claims;
(vi) Except in the ordinary course of business, entering or agreeing
to enter into any agreement or arrangement granting any preferential rights
to purchase any of its assets, or requiring the consent of any party to the
transfer and assignment of any of its assets;
(vii) Suffering any losses or waiving any rights of value which in the
aggregate are material;
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(viii) Except in the ordinary course of business, making or permitting
any amendment or termination of any contract, agreement or license to which
it is a party if such amendment or termination is material considering its
business as a whole;
(ix) Except in accordance with normal and usual practice, making any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee;
(x) Except in accordance with normal and usual practice, increasing
the rate of compensation payable to or to become payable to any of its
officers or employees or making any material increase in any
profit-sharing, bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made to,
for or with any of its officers or employees;
(xi) Failing to operate its business in the ordinary course so as to
preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations; and
(xii) Entering into any other material transaction other than in the
ordinary course of business.
The Agreement provides that prior to the Effective Date, no director or
officer (vice president and above) of Bankshares or any of its subsidiaries
shall, directly or indirectly own, manage, operate, join, control, be employed
by or participate in the ownership, proposed ownership, management, operation or
control of or be connected in any manner with, any business, corporation or
partnership which is competitive to the business of Bankshares or its
subsidiaries.
The Agreement also provides that, at the request of BancGroup, (i)
Bankshares will inform BancGroup concerning loan requests over $250,000 that are
not single-family residential loans and other loan requests outside the ordinary
course of business and (ii) Bankshares will consult with BancGroup to coordinate
various other business issues on a basis mutually satisfactory to Bankshares and
BancGroup. Bankshares and the Bank shall not be required to undertake any of
such activities, however, except as such activities may be in compliance with
existing law.
COMMITMENTS WITH RESPECT TO OTHER OFFERS
Until the termination of the Agreement, neither Bankshares nor any of its
directors or officers (or any person representing any of the foregoing) shall
solicit or encourage inquiries or proposals with respect to, furnish any
information relating to or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or of a substantial portion of
the assets of, or of a substantial equity interest in, Bankshares or any
business combination involving Bankshares other than as contemplated by the
Agreement. Bankshares will notify BancGroup immediately if any such inquiries or
proposals are received by Bankshares, if any such information is requested from
Bankshares, or if any such negotiations or discussions are sought to be
initiated with Bankshares. Bankshares shall instruct its officers, directors,
agents or affiliates or their subsidiaries to refrain from doing any of the
above; provided, however, that Bankshares may communicate information about any
such acquisition proposal to its shareholders if and to the extent that legal
counsel provides a written opinion to Bankshares that it is required to do so in
order to comply with its legal obligations.
INDEMNIFICATION
BancGroup has agreed to indemnify present and former directors and officers
of Bankshares and the Bank against liabilities arising out of actions or
omissions occurring at or prior to the Effective Date to the extent provided
under Georgia law and Bankshares' Articles of Incorporation and Bylaws.
RIGHTS OF DISSENTING SHAREHOLDERS
Article 13 of the Georgia Business Corporation Code provides for rights of
appraisal for the value of the shares of a shareholder who (i) has delivered
notice in writing to Bankshares before the vote is taken that the stockholder
intends to demand payment for his or her shares if the Merger is consummated and
(ii) either votes against the Merger or refrains from voting on the Merger. The
notice must be delivered to D/W Bankshares, Inc., attention Corporate Secretary,
401 South Thornton Avenue, Dalton, Georgia 30720. If a shareholder votes against
the Merger or refrains from voting on the Merger, but does not also deliver the
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notice in writing to Bankshares before the shareholder vote on the Merger
occurs, such shareholder will lose his or her appraisal rights.
Within ten (10) days after the Effective Date of the Merger, BancGroup, as
the corporation surviving the Merger, will send to each Bankshares shareholder
who has given such notice a written dissenter's notice (the "Dissenter's
Notice") stating, among other things, a date not less than thirty (30) days nor
more than sixty (60) days after the date of the Dissenter's Notice by which the
shareholder must submit a written payment demand. The Dissenter's Notice will
also include where and when stock certificates for shares of Bankshares Common
Stock must be deposited. A Bankshares shareholder who does not demand payment or
deposit stock certificates where required by the date set in the Dissenter's
Notice shall lose his or her right to dissent and will not be entitled to
payment for his or her shares.
Within ten (10) days of the later of the Effective Date or receipt of a
payment demand by the dissenting shareholders, BancGroup will offer to pay each
dissenting shareholder who has complied with the requirements of the Georgia
Business Corporation Code the amount which BancGroup estimates to be the fair
value of the shares, plus accrued interest. A shareholder may agree to accept
such offer.
If a dissenting shareholder is dissatisfied with BancGroup's offer of
payment, the shareholder may notify BancGroup in writing within thirty (30) days
of the offer of his or her own estimate of the fair value plus interest and
demand that such payment be made. A dissenting shareholder waives his or her
right to demand payment of a different amount than that offered by BancGroup and
is deemed to have accepted BancGroup's offer unless such written notification is
provided to BancGroup within such period.
In the event a dissenting shareholder's second payment demand remains
unsettled within sixty (60) days after BancGroup receives such demand, BancGroup
will commence a nonjury equitable valuation proceeding in the Whitfield County
Superior Court to determine the fair value of the shares and accrued interest.
BancGroup will make all dissenting shareholders whose second payment demand
remains unsettled parties to the court proceeding. In the proceeding, the court
will fix a value of the shares and may appoint one or more appraisers to receive
evidence and recommend a decision on the question of fair value. If BancGroup
does not commence the proceeding within sixty (60) days after receiving the
dissenting shareholder's second payment demand, BancGroup shall pay each
dissenting shareholder whose second payment demand remains unsettled the amount
demanded by each such dissenting shareholder in his or her second payment
demand.
The determination of a "fair value" necessarily involves matters of
judgment upon which reasonable persons may disagree. No allowance is permitted
for any increase or decrease in the value of the Bankshares Common Stock which
may be attributed to the proposed Merger.
A record shareholder may assert dissenters' rights as to fewer than all
shares registered in such holder's name, but only if the record holder dissents
with respect to all shares beneficially owned by any one beneficial shareholder
and provides written notice to Bankshares of the name and address of each person
on whose behalf the dissenting rights are asserted. A "beneficial shareholder"
is defined in the Georgia Business Corporation Code as a "person who is a
beneficial owner of shares held in a voting trust or by a nominee as the record
shareholder." The rights of a partial dissenter are determined as if the shares
as to which such holder dissents and other shares held by the holder are
registered in different names of shareholders. Thus, if a beneficial shareholder
holds shares of Bankshares Common Stock through a bank, broker, or other
nominee, such beneficial holder may assert dissenters' rights, but only if the
nominee dissents with respect to all shares beneficially owned by such
shareholder through the bank, broker or nominee and provides Bankshares with the
name and address of each such person wishing to assert dissenters' rights. A
person holding Bankshares Common Stock through a bank, broker or other nominee
should act promptly to cause such bank, broker or nominee to follow the proper
procedures to perfect any dissenters' rights on behalf of such person.
A dissenting shareholder may not challenge the Merger unless Bankshares
fails to comply with appropriate procedures under Georgia law or Bankshares'
Articles of Incorporation and Bylaws or unless the shareholder vote to approve
the Merger was obtained by fraudulent and deceptive means.
FAILURE OF A SHAREHOLDER TO COMPLY WITH ANY REQUIREMENTS OF THE PROVISIONS
RELATING TO DISSENTER'S RIGHTS OF APPRAISAL WILL RESULT IN A FORFEITURE BY SUCH
SHAREHOLDER OF APPRAISAL RIGHTS. ANY HOLDER OF BANKSHARES
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COMMON STOCK WHO DESIRES TO EXERCISE DISSENTERS' RIGHTS IS URGED TO CONSULT A
LEGAL ADVISOR BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
References herein to applicable statutes are summaries of portions thereof
and do not purport to be complete and are qualified in their entirety by
reference to applicable law. Article 13 of the Georgia Business Corporation Code
is attached hereto as Appendix B. SHAREHOLDERS SHOULD READ APPENDIX B CAREFULLY.
RESALE OF BANCGROUP COMMON STOCK ISSUED IN THE MERGER
The issuance of the shares of BancGroup Common Stock pursuant to the Merger
(including any shares to be issued pursuant to Bankshares Options) has been
registered under the Securities Act of 1933 (the "Securities Act"). As a result,
shareholders of Bankshares who are not "affiliates" of Bankshares (as such term
is defined under the Securities Act) may resell, without restriction, all shares
of BancGroup Common Stock which they receive in connection with the Merger.
Under the Securities Act, affiliates of Bankshares are subject to restrictions
on the resale of the BancGroup Common Stock which they receive in the Merger.
The BancGroup Common Stock received by affiliates of Bankshares who do not
also become affiliates of BancGroup after the consummation of the Merger may not
be sold except pursuant to an effective Registration Statement under the
Securities Act covering such shares or in compliance with Rule 145 promulgated
under the Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Generally, Rule 145 permits BancGroup Common
Stock held by such shareholders to be sold in accordance with certain provisions
of Rule 144 under the Securities Act. In general, these provisions of Rule 144
permit a person to sell on the open market in brokers transactions within any
three month-period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of BancGroup Common Stock or the average weekly
trading volume in BancGroup Common Stock reported on NYSE during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to the
availability of current public information about BancGroup which BancGroup has
agreed to make available. The restrictions on sales will cease to apply under
most circumstances once the former Bankshares affiliate has held the BancGroup
Common Stock for at least two years. BancGroup Common Stock held by affiliates
of Bankshares who become affiliates of BancGroup will be subject to additional
restrictions on the ability of such persons to resell such shares.
Bankshares will provide BancGroup with such information as may be
reasonably necessary to determine the identity of those persons (primarily
officers, directors and principal shareholders) who may be deemed to be
affiliates of Bankshares. Bankshares will also obtain from each such person a
written undertaking to the effect that no sale or transfer will be made of any
shares of BancGroup Common Stock by such person except pursuant to Rule 145 or
pursuant to an effective registration statement or an exemption from
registration under the Securities Act. Receipt of such an undertaking is a
condition to BancGroup's obligation to close the Merger. If such undertakings
are not received and BancGroup waives receipt of such condition, the
certificates for the shares of BancGroup Common Stock to be issued to such
person will contain an appropriate restrictive legend and appropriate stock
transfer orders will be given to BancGroup's stock transfer agent.
The undertaking from each Bankshares affiliate will also provide that,
notwithstanding the permissible sale of stock described above, each affiliate of
Bankshares may not sell or in any other way reduce his or her risk relative to
any shares of Bankshares Common Stock or of BancGroup Common Stock during the
period commencing thirty days prior to the Effective Date and ending on the date
on which financial results covering at least thirty days of post-Merger combined
operations of BancGroup and Bankshares have been published.
ACCOUNTING TREATMENT
BancGroup will account for the Merger as a pooling-of-interests transaction
in accordance with generally accepted accounting principles, which, among other
things, requires that the number of shares of Bankshares Common Stock acquired
for cash pursuant to the exercise of dissenters' rights or in lieu of fractional
shares not exceed 10% of the outstanding shares of Bankshares Common Stock.
Under this accounting treatment, assets and liabilities of Bankshares would be
added to those of BancGroup at their recorded book values, and
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the shareholders' equity of the two companies would be combined in BancGroup's
consolidated balance sheet. Financial statements of BancGroup issued after the
Effective Date of the Merger will be restated to reflect the consolidated
operations of BancGroup and Bankshares as if the Merger had taken place prior to
the periods covered by the financial statements.
NYSE REPORTING OF BANCGROUP COMMON STOCK ISSUED IN THE MERGER
Sales of BancGroup Common Stock to be issued in the Merger in exchange for
Bankshares Common Stock will be reported on the NYSE.
TREATMENT OF BANKSHARES OPTIONS
Assumption of Options. As of the date of this Prospectus, Bankshares had
granted Bankshares Options to its directors and certain executive officers which
entitled the holders thereof to acquire up to 46,750 shares of Bankshares Common
Stock. On the Effective Date, BancGroup shall assume all Bankshares Options
outstanding, and each such option shall represent the right to acquire BancGroup
Common Stock on substantially the same terms as are applicable to the Bankshares
Options except as specified below. The registration statement registering the
shares of BancGroup Common Stock issued pursuant to the Merger also registers
the shares of BancGroup Common Stock to be issued pursuant to the exercise of
Bankshares Options assumed by BancGroup. The number of shares of BancGroup
Common Stock to be issued pursuant to such options shall equal the number of
shares of Bankshares Common Stock subject to such Bankshares Options multiplied
by the Exchange Ratio, provided that no fractional shares of BancGroup Common
Stock shall be issued and the number of shares of BancGroup Common Stock to be
issued upon the exercise of Bankshares Options, if a fractional share exists,
shall equal the number of whole shares obtained by rounding to the nearest whole
number, taking into account such fraction. The exercise price for the
acquisition of BancGroup Common Stock shall be the exercise price for each share
of Bankshares Common Stock subject to such options divided by the Exchange
Ratio, adjusted appropriately for any rounding to whole shares that may be done.
For these purposes, the "Exchange Ratio" shall mean the result obtained by
dividing $27.39 by the Market Value.
The Bankshares Options were issued pursuant to a plan adopted by the Board
of Directors of Bankshares (the "Option Plan"). The Option Plan is not qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended, nor is it
subject to the Employee Retirement Income Security Act of 1974. Bankshares
Options are not transferrable except under the laws of descent and distribution.
Purpose of the Option Plan. The purpose of the Option Plan is to assist
the Bank in retaining the employment of valued employees by offering them a
greater stake in the Bank's success and a closer identity with it, and to aid in
obtaining the services of individuals whose employment would be helpful to the
Bank and would contribute to its success. BancGroup believes that its assumption
of the Bankshares Options will be consistent with this purpose. No further
options will be granted under the Option Plan after the Merger.
Tax Consequences -- Incentive Options. BancGroup believes, after
consultation with legal counsel, that if the options issued under the Option
Plan as incentive options qualified as such at the time of grant, the option
after assumption by BancGroup will continue to qualify as "incentive stock
options," under Section 422 of the Internal Revenue Code of 1986, as amended.
Under the Internal Revenue Code no income will result to a grantee of any such
option upon the granting or exercising of an option by the grantee, and
BancGroup will not be entitled to a tax deduction by reason of such grant or
exercise.
If, after exercising the option, the employee holds the stock obtained
through exercise for at least two years after the date of option grant and at
least one year after the stock was obtained, the employee's gain (if any) on
selling the stock will generally be treated as a long term capital gain.
Generally, the employee's alternative minimum taxable income for minimum tax
purposes will be increased by the difference between the option price and the
fair market value of the stock on the date of exercise.
If the holding period requirements just stated are not met, then any gain
on the sale of the stock will be taxed partly or entirely at ordinary income tax
rates. If the stock is held for less than the required holding
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<PAGE> 38
period, then the difference between the option exercise price and the fair
market value of the stock on the date of exercise will be taxed at ordinary
income tax rates. The gain equal to the increase in the fair market value of the
stock after the date of exercise of the option will generally be taxed as
capital gain.
It should be understood that the holding periods discussed above relate
only to federal income tax treatment and not to securities law restrictions on
the sale of shares obtained through an option.
The foregoing statements concerning federal income tax treatment are
necessarily general and may not apply in a particular instance. No legal opinion
has been received by BancGroup or Bankshares respecting the effect of the Merger
on holders of Bankshares Options or of the exercise of such options. Option
holders should contact their own professional tax advisors for advice concerning
their particular tax situation and any changes in the tax law since the date of
this Prospectus.
Administration. The shares of stock to be delivered upon the exercise of
Bankshares Options under the Option Plan shall be made available after the
Merger, from the authorized but unissued shares of BancGroup's Common Stock.
The Option Plan is to be administered, after the Merger, by the Personnel
and Compensation Committee (the "Committee") of the board of directors of
BancGroup. All members of the Committee are directors of BancGroup. The Chairman
of the Committee, John C. H. Miller, Jr., receives employee-related compensation
from BancGroup and holds options under BancGroup's stock option plans. Mr.
Miller is a member of a law firm that performs legal services for BancGroup. See
"LEGAL OPINIONS." Another member of the Committee, Jack H. Rainer, is Chairman
of Bankers Credit Life Insurance Company, which provides credit life insurance
on certain loans made by Colonial Bank, BancGroup's Alabama bank subsidiary. The
members of the Committee serve at the pleasure of the board of directors of
BancGroup. The Committee shall interpret the Option Plan and resolve questions
presented by holders of options under the Option Plan. Requests for information
or questions about the Option Plan should be directed to BancGroup's Corporate
Secretary, at the offices of BancGroup, Post Office Box 1108, One Commerce
Street, Montgomery, Alabama 36102, telephone: (334) 240-5000.
Exercise of Options. After a Bankshares Option becomes exercisable in
accordance with its terms, it may be exercised by the holder by giving written
notice to BancGroup on a form provided by BancGroup and, by paying to BancGroup
in cash the exercise price of the shares to be acquired under a Bankshares
Option. Payment may be made to BancGroup by cash, check, bank draft, or money
order, or, if the Committee agrees in a particular instance, by delivering
BancGroup stock already owned by the option holder. All Bankshares Options must
be exercised within 90 days after the Effective Date or such options will be
forfeited.
Amendment and Other Matters. BancGroup's board of directors may at any
time amend the Option Plan, except that no amendment may make any change in any
option already granted which would adversely affect the rights of any
participant.
It is not anticipated that BancGroup will make any reports to option
holders regarding the amount or status of Bankshares Options held. Option
holders may obtain such information from BancGroup at the address given above.
The shares subject to options will be obtained by BancGroup from authorized
but unissued shares. BancGroup has reserved sufficient authorized but unissued
shares for issuance pursuant to options under the Option Plan and does not
anticipate acquiring any shares in the open market for such purposes.
TREATMENT OF SERIES A DEBENTURES
As of the date of this Prospectus, Bankshares had outstanding Series A
Debentures which are convertible into 64,773 shares of Bankshares Common Stock.
On the Effective Date, BancGroup shall assume all outstanding Series A
Debentures and such Debentures shall be convertible into shares of BancGroup
Common Stock, with each share of Bankshares Common Stock that would have been
issued upon conversion of such Debenture being convertible into such number of
shares of BancGroup Common Stock equal to one share of Bankshares Common Stock
multiplied by the Exchange Ratio. No fractional shares of BancGroup
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<PAGE> 39
Common Stock shall be issued upon conversion of the Series A Debentures,
however, and any fractions to be issued shall be paid in cash to the holder of
the Debenture.
COMPARATIVE MARKET PRICES AND DIVIDENDS
BANCGROUP
BancGroup Common Stock is listed for trading on the NYSE. The Common Stock
was first listed on the NYSE on February 24, 1995. Prior to February 21, 1995,
BancGroup had two classes of common stock outstanding, Class A and Class B. The
Class B was not publicly traded. The Class A Common Stock was traded in the
over-the-counter market and quoted on the NASDAQ National Market System. The
BancGroup Class A Common Stock had more limited voting rights than the BancGroup
Class B Common Stock. The Class A and Class B Common Stock were reclassified
into one class of Common Stock on February 21, 1995, and the Class A Common
Stock ceased to be quoted on NASDAQ on February 24, 1995.
The following table shows the dividends paid per share and indicates the
high and low closing prices for the BancGroup Class A Common Stock as reported
by the NASDAQ National Market System up to February 24, 1995, and the same
information reported by the NYSE for the BancGroup Common Stock commencing
February 24, 1995.
<TABLE>
<CAPTION>
PRICE AND
DIVIDENDS
PAID
------------ DIVIDENDS
HIGH LOW (PER SHARE)
---- --- -----------
<S> <C> <C> <C>
1994
1st Quarter...................................................... $20 1/4 $18 $0.20
2nd Quarter...................................................... 25 19 1/4 0.20
3rd Quarter...................................................... 24 3/4 22 0.20
4th Quarter...................................................... 23 3/4 19 1/2 0.20
1995
1st Quarter...................................................... 23 5/8 19 1/2 0.225
2nd Quarter...................................................... 27 1/2 23 1/8 0.225
3rd Quarter...................................................... 29 7/8 27 1/2 0.225
4th Quarter...................................................... 32 7/8 28 1/2 0.225
1996
1st Quarter...................................................... 36 1/2 30 0.27
2nd Quarter...................................................... 36 1/8 31 1/4 0.27
3rd Quarter...................................................... 35 7/8 31 1/4 0.27
4th Quarter (through October 31)................................. 37 7/8 34 3/4 0.27
</TABLE>
On August 2, 1996, the business day immediately prior to the public
announcement of the Merger, the closing price as reported on the NYSE of the
BancGroup Common Stock was $33 1/4 per share.
At June 30, 1996, BancGroup's subsidiaries accounted for approximately 98%
of BancGroup's consolidated assets. BancGroup derives substantially all of its
income from dividends received from its subsidiaries. Various statutory
provisions and regulatory policies limit the amount of dividends the subsidiary
banks may pay without regulatory approval. In addition, federal statutes
restrict the ability of subsidiary banks to make loans to BancGroup, and
regulatory policies may also restrict such dividends.
BANKSHARES
Bankshares Common Stock, $1.00 par value, is not traded on an established
trading market and there is only very limited trading. The following sets forth
high and low bid information for Bankshares Common Stock for each of the
quarters in which trading has occurred since January 1, 1994. The prices set
forth below reflect only information that has come to management's attention and
do no include retail mark-ups, mark-downs or commissions and may not represent
actual transactions.
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<PAGE> 40
<TABLE>
<CAPTION>
QUARTER ENDED HIGH BID LOW BID
- --------------------------------------------------------------------------- -------- -------
<S> <C> <C>
September 30, 1994......................................................... $18.50 $16.50
December 31, 1994.......................................................... 17.50 16.50
March 31, 1995............................................................. 18.00 18.00
June 30, 1995.............................................................. 18.00 18.00
March 31, 1996............................................................. 20.00 20.00
</TABLE>
Because Bankshares and the Bank are relatively new operations, the
directors of Bankshares and the Bank have opted to retain earnings in order to
insure the success of the entities' operations and have not initiated the
payment of cash dividends.
Immediately prior to the public announcement of the Merger on August 2,
1996, Bankshares Common Stock was trading at $20.00. On [February 24], 1996, the
last sales price per share reported for Bankshares Common Stock was $[20.00].
The Agreement restricts Bankshares' ability to pay dividends prior to the
Effective Date. See "THE MERGER -- Conduct of Business Pending the Merger."
BANCGROUP CAPITAL STOCK AND DEBENTURES
BancGroup's authorized capital stock consists of 44,000,000 shares of
BancGroup Common Stock, par value $2.50 per share, and 1,000,000 shares of its
Preference Stock, par value $2.50 per share. As of September 19, 1996, there
were issued and outstanding a total of 16,296,558 shares of BancGroup Common
Stock. No shares of Preference Stock are issued and outstanding. BancGroup
issued in 1986 $28,750,000 in principal amount of its 7 1/2% Convertible
Subordinated Debentures due 2011 (the "1986 Debentures") of which $8,082,000 are
currently outstanding and are convertible at any time into 277,177 shares of
BancGroup Common Stock, subject to adjustment. There are 767,571 shares of
BancGroup Common Stock subject to issue upon exercise of options under
BancGroup's stock option plans. In addition to BancGroup Common Stock to be
issued in the Merger, BancGroup will issue additional shares of its Common Stock
in pending acquisitions. See "BUSINESS OF BANCGROUP -- Proposed Affiliate
Banks."
The following statements with respect to BancGroup Common Stock and
Preference Stock are brief summaries of material provisions of Delaware law, the
Restated Certificate of Incorporation (the "Certificate"), as amended, and
bylaws of BancGroup, do not purport to be complete and are qualified in their
entirety by reference to the foregoing.
BANCGROUP COMMON STOCK
Dividends. Subject to the rights of holders of BancGroup's Preference
Stock, if any, to receive certain dividends prior to the declaration of
dividends on shares of BancGroup Common Stock, when and as dividends, payable in
cash, stock or other property, are declared by the BancGroup Board of Directors,
the holders of BancGroup Common Stock are entitled to share ratably in such
dividends.
Voting Rights. Each holder of BancGroup Common Stock has one vote for each
share held on matters presented for consideration by the stockholders.
Preemptive Rights. The holders of BancGroup Common Stock have no
preemptive rights to acquire any additional shares of BancGroup.
Issuance of Stock. The BancGroup Certificate authorizes the BancGroup
Board to issue authorized shares of BancGroup Common Stock without stockholder
approval. However, BancGroup's Common Stock is listed on the NYSE, which
requires stockholder approval of the issuance of additional shares of BancGroup
Common Stock under certain circumstances.
Liquidation Rights. In the event of liquidation, dissolution or winding-up
of BancGroup, whether voluntary or involuntary, the holders of BancGroup Common
Stock will be entitled to share ratably in any of
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<PAGE> 41
its assets or funds that are available for distribution to its stockholders
after the satisfaction of its liabilities (or after adequate provision is made
therefor) and after preferences of any outstanding Preference Stock.
PREFERENCE STOCK
BancGroup's Preference Stock may be issued from time to time as a class
without series, or if so determined by the BancGroup Board of Directors, either
in whole or in part in one or more series. The voting rights, and such
designations, preferences and relative, participating, optional or other special
rights, if any, and the qualifications, limitations or restrictions thereof, if
any, including, but not limited to, the dividend rights, conversion rights,
redemption rights and liquidation preferences, if any, of any wholly unissued
series of BancGroup Preference Stock (or of the entire class of BancGroup
Preference Stock if none of such shares has been issued), the number of shares
constituting any such series and the terms and conditions of the issue thereof
may be fixed by resolution of the BancGroup Board of Directors. BancGroup
Preference Stock may have a preference over the BancGroup Common Stock with
respect to the payment of dividends and the distribution of assets in the event
of the liquidation or winding-up of BancGroup and such other preferences as may
be fixed by the BancGroup Board.
1986 DEBENTURES
BancGroup issued in 1986 its 7 1/2% Convertible Subordinated Debentures due
2011 (the "1986 Debentures") in the total principal amount of $28,750,000. The
1986 Debentures were issued under a trust indenture (the "1986 Indenture")
between BancGroup and SunTrust Bank, Atlanta, Georgia, as trustee.
The 1986 Debentures will mature on March 31, 2011, and are convertible at
any time into shares of BancGroup Common Stock at the option of a holder
thereof, at the conversion price of $28 principal amount of the 1986 Debentures
for each share of BancGroup Common Stock. The conversion price is, however,
subject to adjustment upon the occurrence of certain events as described in the
1986 Indenture. In the event all of the outstanding 1986 Debentures are
converted into shares of BancGroup Common Stock in accordance with the 1986
Indenture, a total of 277,177 shares of such BancGroup Common Stock will be
issued. The 1986 Debentures are redeemable, in whole or in part, at the option
of BancGroup at certain premiums until 1996, when the redemption price shall be
equal to 100% of the face amount of the 1986 Debentures plus accrued interest.
The payment of principal and interest on the 1986 Debentures is subordinate, to
the extent provided in the 1986 Indenture, to the prior payment when due of all
Senior Indebtedness of BancGroup. "Senior Indebtedness" is defined as any
indebtedness of BancGroup for money borrowed, or any indebtedness incurred in
connection with an acquisition or with a merger or consolidation, outstanding on
the date of execution of the 1986 Indenture as originally executed, or
thereafter created, incurred or assumed, and any renewal, extension,
modification or refunding thereof, for the payment of which BancGroup (which
term does not include BancGroup's consolidated or unconsolidated subsidiaries)
is at the time of determination responsible or liable as obligor, guarantor or
otherwise. Senior Indebtedness does not include (i) indebtedness as to which, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right of
payment to any other indebtedness of BancGroup, and (ii) indebtedness which by
its terms states that such indebtedness is subordinate to or equally subordinate
with the 1986 Debentures.
At June 30, 1996, BancGroup's Senior Indebtedness as defined in the 1986
Indenture aggregated approximately $716 million. Such debt includes all
short-term debt consisting of federal funds purchased, securities purchased
under repurchase agreements and borrowings with the Federal Home Loan Bank but
excludes all federally-insured deposits. BancGroup may from time to time incur
additional indebtedness constituting Senior Indebtedness. The 1986 Indenture
does not limit the amount of Senior Indebtedness which BancGroup may incur, nor
does such indenture prohibit BancGroup from creating liens on its property for
any purpose.
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<PAGE> 42
CHANGES IN CONTROL
Certain provisions of the BancGroup Certificate and bylaws may have the
effect of preventing, discouraging or delaying any change in control of
BancGroup. The authority of the BancGroup Board of Directors to issue BancGroup
Preference Stock with such rights and privileges, including voting rights, as it
may deem appropriate may enable the BancGroup Board to prevent a change in
control despite a shift in ownership of the BancGroup Common Stock. See
"General" and "Preference Stock." In addition, the power of BancGroup's Board to
issue additional shares of BancGroup Common Stock may help delay or deter a
change in control by increasing the number of shares needed to gain control. See
"BancGroup Common Stock." The following provisions also may deter any change in
control of BancGroup.
Classified Board. BancGroup's Board of Directors is classified into three
classes, as nearly equal in number as possible, with the members of each class
elected to three-year terms. Thus, one-third of BancGroup's Board of Directors
is elected by stockholders each year. With this provision, two annual elections
are required in order to change a majority of the Board of Directors. There are
currently 19 directors of BancGroup. This provision of BancGroup's Certificate
also stipulates that (i) directors can be removed only for cause upon a vote of
80% of the voting power of the outstanding shares entitled to vote in the
election of directors, voting as a class, (ii) vacancies in the Board may only
be filled by a majority vote of the directors remaining in office, (iii) the
maximum number of directors shall be fixed by resolution of the Board of
Directors, and (iv) the provisions relating to the classified Board can only be
amended by the affirmative vote of the holders of at least 80% of the voting
power of the outstanding shares entitled to vote in the election of directors,
voting as a class.
Business Combinations. Certain "Business Combinations" of BancGroup with a
"Related Person" may only be undertaken with the affirmative vote of at least
75% of the outstanding shares of "Voting Stock," plus the affirmative vote of at
least 67% of the outstanding shares of Voting Stock, not counting shares owned
by the Related Person, unless the Continuing Directors of BancGroup approve such
Business Combination. A "Related Person" is a person, or group, who owns or
acquires 10% or more of the outstanding shares of BancGroup Common Stock,
provided that no person shall be a Related Person if such person would have been
a Related Person on the date of approval of this provision by BancGroup's Board
of Directors, i.e., April 20, 1994. An effect of this provision may be to
exclude Robert E. Lowder, the current Chairman and President of BancGroup, and
certain members of his family from the definition of Related Person. A
"Continuing Director" is a director who was a member of the Board of Directors
immediately prior to the time a person became a Related Person. This provision
may not be amended without the affirmative vote of the holders of at least 75%
of the outstanding shares of Voting Stock, plus the affirmative vote of the
outstanding shares of at least 67% of the outstanding Voting Stock, excluding
shares held by a Related Person. This provision may have the effect of giving
the incumbent Board of Directors a veto over a merger or other Business
Combination that could be desired by a majority of BancGroup's stockholders. The
current Board of Directors of BancGroup owns approximately 13% of the
outstanding shares of BancGroup Common Stock.
Board Evaluation of Mergers. BancGroup's Certificate permits the Board of
Directors to consider certain factors such as the character and financial
stability of the other party, the projected social, legal, and economic effects
of a proposed transaction upon the employees, suppliers, regulatory agencies and
customers and communities of BancGroup, and other factors when considering
whether BancGroup should undertake a merger, sale of assets, or other similar
transaction with another party. This provision may not be amended except by the
affirmative vote of at least 80% of the outstanding shares of BancGroup Common
Stock. This provision may give greater latitude to the Board of Directors in
terms of the factors which the board may consider in recommending or rejecting a
merger or other Business Combination of BancGroup.
Director Authority. BancGroup's Certificate prohibits stockholders from
calling special stockholders' meetings and acting by written consent. It also
provides that only BancGroup's Board of Directors has the authority to undertake
certain actions with respect to governing BancGroup such as appointing
committees, electing officers, and establishing compensation of officers, and it
allows the Board to act by majority vote.
Bylaw Provisions. BancGroup's bylaws provide that stockholders wishing to
propose nominees for the Board of Directors or other business to be taken up at
an annual meeting of BancGroup stockholders must
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<PAGE> 43
comply with certain advance written notice provisions. These bylaw provisions
are intended to provide for the more orderly conduct of stockholder meetings but
could make it more difficult for stockholders to nominate directors or introduce
business at stockholder meetings.
Delaware Business Combination Statute. Subject to some exceptions,
Delaware law prohibits BancGroup from entering into certain "business
combinations" (as defined) involving persons beneficially owning 15% or more of
the outstanding BancGroup Common Stock (or who is an affiliate of BancGroup and
has over the past three years beneficially owned 15% or more of such stock)
(either, for the purpose of this paragraph, an "Interested Stockholder"), unless
the BancGroup Board has approved either (i) the business combination or (ii)
prior to the stock acquisition by which such person's beneficial ownership
interest reached 15% (a "Stock Acquisition"), the Stock Acquisition. The
prohibition lasts for three years from the date of the Stock Acquisition.
Notwithstanding the preceding, Delaware law allows BancGroup to enter into a
business combination with an Interested Stockholder if (i) the business
combination is approved by the BancGroup Board of Directors and authorized by an
affirmative vote of at least 66 2/3% of the outstanding voting stock of
BancGroup which is not owned by the Interested Stockholder or (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
Interested Stockholder, such stockholder owned at least 85% of the outstanding
stock of BancGroup (excluding BancGroup stock held by officers and directors of
BancGroup or by certain BancGroup stock plans). These provisions of Delaware law
apply simultaneously with the provisions of BancGroup's Certificate relating to
business combinations with a related person, described above at "Business
Combinations," but they are generally less restrictive than BancGroup's
Certificate.
Control Acquisitions. As it relates to BancGroup, the Change in Bank
Control Act of 1978 prohibits a person or group of persons from acquiring
"control" of a bank holding company unless the Federal Reserve has been given 60
days' prior written notice of such proposed acquisition and within that time
period the Federal Reserve has not issued a notice disapproving the proposed
acquisition or extending for up to another 30 days the period during which such
a disapproval may be issued. An acquisition may be made prior to the expiration
of the disapproval period if the Federal Reserve issues written notice of its
intent not to disapprove the action. Under a rebuttable presumption established
by the Federal Reserve, the acquisition of more than 10% of a class of voting
stock of a bank holding company with a class of securities registered under
Section 12 of the Exchange Act, such as BancGroup, would, under the
circumstances set forth in the presumption, constitute the acquisition of
control. The receipt of revocable proxies, provided the proxies terminate within
a reasonable time after the meeting to which they relate, is not included in
determining percentages for change in control purposes.
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<PAGE> 44
COMPARATIVE RIGHTS OF STOCKHOLDERS
If the Merger is consummated, all shareholders of Bankshares will become
holders of BancGroup Common Stock. The rights of the holders of the Bankshares
Common Stock who become holders of the BancGroup Common Stock following the
Merger will be governed by BancGroup's Certificate and bylaws, as well as the
laws of Delaware, the state in which BancGroup is incorporated.
The following summary compares the rights of the shareholders of Bankshares
Common Stock with the rights of the holders of the BancGroup Common Stock. For a
more complete description of the rights of the holders of BancGroup Common
Stock, see "BANCGROUP CAPITAL STOCK AND DEBENTURES."
The following information is qualified in its entirety by BancGroup's
Certificate and bylaws, and Bankshares' Articles of Incorporation and bylaws,
the Delaware General Corporation Law (the "Delaware GCL") and the Georgia
Business Corporation Code ("GBCC").
DIRECTOR ELECTIONS
BancGroup. BancGroup's directors are elected to terms of three years with
approximately one-third of the Board to be elected annually. There is no
cumulative voting in the election of directors. See "BANCGROUP CAPITAL STOCK AND
DEBENTURES -- Changes in Control -- Classified Board."
Bankshares. Like BancGroup, Bankshares' Articles of Incorporation provide
for a classified Board of Directors with three classes and provide that voting
stock does not have cumulative voting rights.
REMOVAL OF DIRECTORS
BancGroup. The BancGroup Certificate provides that a director may be
removed from office, but only for cause and by the affirmative vote of the
holders of at least 80% of the voting shares then entitled to vote at an
election of directors.
Bankshares. Bankshares' Articles of Incorporation provide that directors
of Bankshares may be removed during their terms for cause only by the
affirmative vote of the holders of a majority of the outstanding shares of
Bankshares Common Stock; or without cause only by the affirmative vote of
holders of at least two-thirds of the outstanding shares.
VOTING
BancGroup. Each stockholder of BancGroup is entitled to one vote for each
share of BancGroup Common Stock held, and such holders are not entitled to
cumulative voting rights in the election of directors.
Bankshares. Like BancGroup, each stockholder of Bankshares is entitled to
one vote for each share of Bankshares Common Stock held and such holders are not
entitled to cumulative voting rights in the election of directors.
PREEMPTIVE RIGHTS
BancGroup. The holders of BancGroup Common Stock have no preemptive rights
to acquire any additional shares of BancGroup Common Stock or any other shares
of BancGroup capital stock.
Bankshares. Like BancGroup, the holders of Bankshares Common Stock have no
preemptive rights to acquire any additional shares of Bankshares Common Stock.
DIRECTORS' LIABILITY
BancGroup. The BancGroup Certificate provides that a director of BancGroup
will have no personal liability to BancGroup or its stockholders for monetary
damages for breach of fiduciary duty as a director except (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for the payment of certain unlawful dividends
and the making of certain stock purchases or redemptions, or (iv) for
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<PAGE> 45
any transaction from which the director derived an improper personal benefit.
This provision would absolve directors of personal liability for negligence in
the performance of duties, including gross negligence. It would not permit a
director to be exculpated, however, for liability for actions involving
conflicts of interest or breaches of the traditional "duty of loyalty" to
BancGroup and its stockholders, and it would not affect the availability of
injunctive or other equitable relief as a remedy.
Bankshares. Bankshares' Articles of Incorporation eliminate the potential
personal liability of a director for monetary damages to Bankshares or its
shareholders for breach of duty as a director with certain exceptions. There is
no elimination of liability for (a) a breach of duty involving appropriation of
a business opportunity of Bankshares, (b) an act or omission not in good faith
or involving intentional misconduct or knowing violation of law, (c) a
transaction from which the director derives an improper material tangible
personal benefit, or (d) as to the types of liability set forth in Section
14-2-832 of the Georgia Business Corporation Code dealing with unlawful
distribution of corporate assets to shareholders. This limitation does not
eliminate the right of Bankshares or its shareholders to seek injunctive or
other equitable relief not involving monetary damages.
INDEMNIFICATION
BancGroup. Section 145 of the Delaware GCL contains detailed and
comprehensive provisions providing for indemnification of directors and officers
of Delaware corporations against expenses, judgments, fines and settlements in
connection with litigation. Under the Delaware GCL, other than an action brought
by or in the right of BancGroup, such indemnification is available if it is
determined that the proposed indemnitee acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of
BancGroup and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In actions brought by or
in the right of BancGroup, such indemnification is limited to expenses
(including attorneys' fees) actually and reasonably incurred in the defense or
settlement of such action if the indemnitee acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
BancGroup and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person has been adjudged to be liable to
BancGroup unless and only to the extent that the Delaware Court of Chancery or
the court in which the action was brought determines upon application that in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
To the extent that the proposed indemnitee has been successful on the
merits or otherwise in defense of any action, suit or proceeding (or any claim,
issue or matter therein), he or she must be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
BancGroup maintains an officers' and directors' insurance policy and a
separate indemnification agreement pursuant to which officers and directors of
BancGroup would be entitled to indemnification against certain liabilities,
including reimbursement of certain expenses that extends beyond the minimum
indemnification provided by Section 145 of the Delaware GCL.
Bankshares. Bankshares' bylaws contain certain provisions which provide
indemnification to directors and officers of Bankshares that is broader than the
protection expressly mandated in Sections 14-2-850 et seq.
of the Georgia Business Corporation Code. These sections expressly allow
Bankshares to provide these broader indemnification rights to its directors and
officers, subject to shareholder approval.
The indemnification provisions of its bylaws require Bankshares to
indemnify persons who are parties to any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that such person
was or is a director, officer, employee or agent of Bankshares. Except as noted
below, these persons would be indemnified against expenses and against any
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by them. These persons may also be entitled to have Bankshares advance
any such expenses (including, but not limited to, attorneys' fees and court
costs) prior to the final disposition of the proceeding upon an undertaking to
repay Bankshares if it is ultimately determined that they are not entitled to
indemnification. Under its bylaws, Bankshares shall indemnify a director,
officer, employee or agent if the individual acted in a manner he or she
believed in good faith to be in or not opposed to the best interests
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<PAGE> 46
of Bankshares and, in the case of a criminal proceeding, if the individual had
no reasonable cause to believe his or her conduct was unlawful.
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION WITHOUT A MEETING
BancGroup. Under the BancGroup Certificate, a special meeting of
BancGroup's stockholders may only be called by a majority of the BancGroup Board
of Directors or by the chairman of the Board of Directors of BancGroup. Holders
of BancGroup Common Stock may not call special meetings or act by written
consent.
Bankshares. A special meeting of shareholders may be called by Bankshares'
Board of Directors, its President or by the written request of any one or more
shareholders owning an aggregate of not less than 25% of Bankshares Common
Stock. Any action which may be taken at a meeting of shareholders may also be
taken without a meeting if a consent in writing, setting forth the action, is
signed by those persons who would be entitled to vote at a meeting having voting
power to cast not less than the minimum number of votes that would be necessary
to authorize such action at a meeting at which all shares entitled to vote were
present and voted.
MERGERS, SHARE EXCHANGES AND SALES OF ASSETS
BancGroup. The Delaware GCL provides that mergers and sales of
substantially all of the assets of Delaware corporations must be approved by a
majority of the outstanding stock of the corporation entitled to vote thereon.
The Delaware GCL law also provides, however, that the stockholders of the
corporation surviving a merger need not approve the transaction if: (i) the
agreement of merger does not amend in any respect the certificate of
incorporation of such corporation; (ii) each share of stock of such corporation
outstanding immediately prior to the effective date of the merger is to be an
identical outstanding or treasury share of the surviving corporation after the
effective date of the merger; and (iii) either no shares of common stock of the
surviving corporation and no shares, securities or obligations convertible into
such stock are to be issued or delivered under the plan of merger, or the
authorized unissued shares or the treasury shares of common stock of the
surviving corporation to be issued or delivered under the plan of merger plus
those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of common stock of such corporation outstanding immediately prior to the
effective date of the merger. See also "BANCGROUP CAPITAL STOCK AND
DEBENTURES -- Changes in Control" for a description of the statutory provisions
and the provisions of the BancGroup Certificate relating to changes of control
of BancGroup. See "Antitakeover Statutes" for a description of additional
restrictions on business combination transactions.
Bankshares. Bankshares' Articles of Incorporation provide that, with
certain exceptions, any merger or consolidation involving Bankshares or any sale
or other disposition of all or substantially all of its assets will require the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Bankshares Common Stock. However, exceptions to this rule exist where (a)
two-thirds of the Board has approved a merger or similar transaction prior to
its consummation or (b) Bankshares is engaged in a merger or similar transaction
with a subsidiary. In cases where one of these exceptions applies, the
applicable provisions of the Georgia Business Corporation Code govern and
shareholder approval of the transaction would require a favorable vote by a
majority of all the votes entitled to be cast.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
BancGroup. Under the Delaware GCL, a Delaware corporation's certificate of
incorporation may be amended by the affirmative vote of the holders of a
majority of the outstanding shares entitled to vote thereon, and a majority of
the outstanding stock of each class entitled to vote as a class, unless the
certificate requires the vote of a larger portion of the stock. The BancGroup
Certificate requires "supermajority" stockholder approval to amend or repeal any
provision of, or adopt any provision inconsistent with, certain provisions in
the BancGroup Certificate governing (i) the election or removal of directors,
(ii) business combinations between BancGroup and a Related Person, and (iii)
board of directors evaluation of business combination procedures. See "BANCGROUP
CAPITAL STOCK AND DEBENTURES -- Changes in Control."
35
<PAGE> 47
As is permitted by the Delaware GCL, the Certificate gives the Board of
Directors the power to adopt, amend or repeal the bylaws. The stockholders
entitled to vote have concurrent power to adopt, amend or repeal the BancGroup
bylaws.
Bankshares. The Georgia Business Corporation Code generally provides that
a Georgia corporation's articles of incorporation may be amended by the
affirmative vote of a majority of the shares entitled to vote thereon unless the
articles of incorporation provide for a higher or lower voting requirement.
Bankshares' Articles of Incorporation provide that any amendment to the articles
dealing with classifying the Board of Directors, changing the number of
directors, removing directors, limiting liability of directors and officers,
supermajority voting on certain transactions, and evaluating acquisition
proposals require the affirmative vote of holders of at least two-thirds of the
outstanding shares of Bankshares Common Stock unless two-thirds of the Board
approves the amendment, in which case the applicable provisions of the Georgia
Business Corporation Code would govern and the amendment would be approved by
the affirmative vote of a majority of the shares entitled to vote thereon.
Pursuant to the Georgia Business Corporation Code and Bankshares' bylaws,
its bylaws of a Georgia corporation may be amended by the Board of Directors or
by the shareholders.
RIGHTS OF DISSENTING STOCKHOLDERS
BancGroup. Under the Delaware GCL, a stockholder has the right, in certain
circumstances, to dissent from certain corporate transactions and receive the
fair value of his or her shares in cash in lieu of the consideration he or she
otherwise would have received in the transaction. For this purpose, "fair value"
may be determined by all generally accepted techniques of valuation used in the
financial community, excluding any element of value arising from the
accomplishment or expectation of the transaction, but including elements of
future value that are known or susceptible of proof. Such fair value is
determined by the Delaware Court of Chancery if a petition for appraisal is
timely filed. Appraisal rights are not available, however, to stockholders of a
corporation (i) if the shares are listed on a national securities exchange (as
is BancGroup Common Stock) or quoted on the NASDAQ National Market System, or
held of record by more than 2,000 stockholders (as is BancGroup Common Stock),
and (ii) stockholders are permitted by the terms of the merger or consolidation
to accept in exchange for their shares (a) shares of stock of the surviving or
resulting corporation, (b) shares of stock of another corporation listed on a
national securities exchange or held of record by more than 2,000 stockholders,
(c) cash in lieu of fractional shares of such stock, or (d) any combination
thereof. Stockholders are not permitted appraisal rights in a merger if such
corporation is the surviving corporation and no vote of its stockholders is
required.
Bankshares. The rights of appraisal of dissenting shareholders under
Georgia law are described above under "The Merger -- Rights of Dissenting
Shareholders."
ANTITAKEOVER STATUTES
BancGroup. As a Delaware corporation, BancGroup is subject to the business
combination statute described under the heading "BANCGROUP CAPITAL STOCK AND
DEBENTURES -- Changes in Control -- Control Acquisitions."
Bankshares. Bankshares is not subject to the business combination statute
nor to the fair price statute set forth in the Georgia Business Corporation Code
at Section 14-2-1131 through Section 14-2-1133 and Section 14-2-1110 through
Section 14-2-1113, respectively.
PREFERRED STOCK
BancGroup. The BancGroup Certificate authorizes the issuance of 1,000,000
shares of Preference Stock from time to time by resolution of the BancGroup
Board of Directors. Currently, no shares of Preference Stock are issued and
outstanding. See "BANCGROUP CAPITAL STOCK AND DEBENTURES -- Preference Stock."
Bankshares. Bankshares' Articles of Incorporation do not authorize the
issuance of preferred stock.
36
<PAGE> 48
EFFECT OF THE MERGER ON BANKSHARES SHAREHOLDERS
As of , 1996, Bankshares had [471] shareholders of record and
[700,836] outstanding shares of Bankshares Common Stock. As of that date,
BancGroup had 16,296,558 shares of BancGroup Common Stock outstanding with 5,914
stockholders of record.
Assuming no exercises of Bankshares Options at the Effective Date and a
Market Value of BancGroup Common Stock of $35.05, calculated as of September 19,
1996, an aggregate amount of 547,672 shares of BancGroup Common Stock would be
issued to the shareholders of Bankshares pursuant to the Merger. These shares
would represent approximately 3.2% of the total shares of BancGroup Common Stock
outstanding after the Merger, not counting any shares of BancGroup Common Stock
to be issued in other pending acquisitions.
The issuance of the BancGroup Common Stock pursuant to the Merger will
reduce the percentage interest of the BancGroup Common Stock currently held by
each principal stockholder and each director and officer of BancGroup. As a
group, the directors and officers of BancGroup who own 12.82% of BancGroup's
outstanding shares would own 12.42% after the Merger. See "BUSINESS OF
BANCGROUP -- Voting Securities and Principal Stockholders."
37
<PAGE> 49
THE COLONIAL BANCGROUP INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENT OF CONDITION (UNAUDITED)
(IN THOUSANDS)
The following summary includes (i) the condensed consolidated statement of
condition of BancGroup and subsidiaries as of June 30, 1996 (as restated), (ii)
the condensed consolidated statement of condition of D/W Bankshares, Inc. and
subsidiary ("Bankshares") as of June 30, 1996, (iii) the condensed consolidated
statement of condition of Jefferson Bancorp, Inc. and subsidiaries
("Jefferson"), a probable combination with BancGroup, as of June 30, 1996 (as
amended), (iv) the combined presentation of condensed consolidated statements of
condition of other probable combinations with BancGroup: First Family Financial
Corporation ("First Family"), Tomoka Bancorp, Inc. ("Tomoka"), and Fort Brooke
Bancorporation ("Fort Brooke"), ("other probable combinations") as of June 30,
1996, (v) adjustments to give effect to the proposed purchase method combination
with First Family and the proposed pooling of interests method business
combinations with Bankshares, Jefferson and the other probable combinations,
(vi) the pro forma combined condensed statement of condition of BancGroup and
subsidiaries as if such combinations had occurred on June 30, 1996.
These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of condition of
BancGroup and subsidiaries (as restated) and Bankshares, incorporated by
reference herein. These pro forma statements exclude the effects of one
immaterial purchase method combination which was completed by BancGroup on July
8, 1996. The pro forma information provided below may not be indicative of
future results.
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------------------------------------------
CONSOLIDATED
COLONIAL
BANCGROUP D/W ADJUSTMENTS/ JEFFERSON
(RESTATED)** BANKSHARES, INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC.
------------ ---------------- ------------ ---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and due from banks...................... $ 142,175 $ 5,130 $ 147,305 $ 12,027
Interest-bearing deposits.................... 2,688 2,688
Federal funds sold........................... 12,380 11,650 24,030
Securities available for sale................ 202,191 31,093 233,284 114,400
Investment securities........................ 298,183 6,515 304,698 1,108
Mortgage loans held for sale................. 165,925 165,925 654
Loans, net of unearned income................ 3,442,323 80,500 3,522,823 289,672
Less: Allowance for possible loan losses..... (43,643) (1,451) (45,094) (2,358)
---------- -------- ------- ---------- --------
Loans, net................................... 3,398,680 79,049 3,477,729 287,314
Premises and equipment,
net........................................ 70,720 3,822 74,542 4,789
Excess of cost over tangible and intangible
assets acquired, net....................... 30,114 30,114
Purchased mortgage servicing rights.......... 92,511 92,511
Other real estate owned...................... 10,342 10,342 477
Accrued interest and other assets............ 82,117 2,422 84,539 19,474
---------- -------- ------- ---------- --------
Total Assets................................. $ 4,508,026 $139,681 $ 0 $4,647,707 $ 440,243
========== ======== ======= ========== ========
<CAPTION>
JUNE 30, 1996
--------------------------------------------
OTHER PRO FORMA
PROBABLE ADJUSTMENTS/ COMBINED
COMBINATIONS (DEDUCTIONS) TOTAL
------------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:
Cash and due from banks...................... $ 10,837 $ (6,404)(2) $ 163,765
Interest-bearing deposits.................... 1,689 4,377
Federal funds sold........................... 5,385 29,415
Securities available for sale................ 23,739 371,423
Investment securities........................ 61,599 (1,600)(2) 365,805
Mortgage loans held for sale................. 1,991 168,570
Loans, net of unearned income................ 292,940 (100)(2) 4,105,335
Less: Allowance for possible loan losses..... (3,096) (50,548)
-------- -------- ----------
Loans, net................................... 289,844 (8,104) 4,054,787
Premises and equipment,
net........................................ 9,839 900(2) 90,070
Excess of cost over tangible and intangible
assets acquired, net....................... 6,211(2) 36,325
Purchased mortgage servicing rights.......... 92,511
Other real estate owned...................... 1,433 12,252
Accrued interest and other assets............ 7,992 1,127(2) 113,861
(50)(2)
779(3)
-------- -------- ----------
Total Assets................................. $414,348 $ 863 $5,503,161
======== ======== ==========
</TABLE>
38
<PAGE> 50
THE COLONIAL BANCGROUP INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENT OF CONDITION (UNAUDITED)
(IN THOUSANDS) -- (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------------------------------------------
CONSOLIDATED
COLONIAL
BANCGROUP D/W ADJUSTMENTS/ JEFFERSON
(RESTATED)** BANKSHARES, INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC.
------------ ---------------- ------------ ---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits..................................... $ 3,373,641 $126,091 $3,499,732 $ 386,306
FHLB short-term borrowings................... 565,000 565,000 13,036
Other short-term borrowings.................. 127,032 127,032
Subordinated debt............................ 8,082 1,425 9,507
Other long-term debt......................... 26,197 26,197
Other liabilities............................ 90,462 1,725 92,187 4,448
---------- -------- ------- ---------- --------
Total liabilities............................ 4,190,414 129,241 4,319,655 403,790
Common Stock................................. 40,461 700 $ (700)(1) 41,830 4,005
1,369(1)
Additional paid in capital................... 168,985 5,650 (5,650)(1) 173,966 29,401
4,981(1)
Retained earnings............................ 110,522 4,212 114,734 9,264
Treasury Stock............................... (1,862)
Unearned compensation........................ (740) (740) (782)
Unrealized gain (loss) on securities......... (1,616) (122) (1,738) (3,573)
---------- -------- ------- ---------- --------
Total equity................................. 317,612 10,440 0 328,052 36,453
Total liabilities and equity................. $ 4,508,026 $139,681 $ 0 $4,647,707 $ 440,243
========== ======== ======= ========== ========
Capital Ratios:
Capital Ratio 8.11% 8,15%
Tangible Leverage Ratio 6.66 6.69
Tier One Capital Ratio* 9.22 9.61
Total Capital Ratio* 10.73 11.19
<CAPTION>
JUNE 30, 1996
--------------------------------------------
OTHER PRO FORMA
PROBABLE ADJUSTMENTS/ COMBINED
COMBINATIONS (DEDUCTIONS) TOTAL
------------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits..................................... $371,187 $4,257,225
FHLB short-term borrowings................... 578,036
Other short-term borrowings.................. 6,740 133,772
Subordinated debt............................ 9,507
Other long-term debt......................... 26,197
Other liabilities............................ 5,012 $ 2,369(2) 109,181
5,165(3)
-------- -------- ----------
Total liabilities............................ 382,939 7,534 5,113,918
Common Stock................................. 10,077 (14,077)(2) 50,629
(5)(2)
8,342(2)
457(2)
Additional paid in capital................... 8,659 (35,187)(2) 219,506
(2,873)(2)
39,060(2)
5,947(2)
533(2)
Retained earnings............................ 13,186 (6,344)(2) 126,454
(4,386)(3)
Treasury Stock............................... 1,862(2)
Unearned compensation........................ (1,522)
Unrealized gain (loss) on securities......... (513) (5,824)
-------- -------- ----------
Total equity................................. 31,409 (6,671) 389,243
Total liabilities and equity................. $414,348 $ 863 $5,503,161
======== ======== ==========
Capital Ratios:
Capital Ratio 8.09%
Tangible Leverage Ratio 6.72
Tier One Capital Ratio* 10.91
Total Capital Ratio* 12.49
</TABLE>
- ---------------
* Based on risk weighted assets
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
39
<PAGE> 51
D/W BANKSHARES, INC.
(pooling of interests)
(1) To record the issuance of 547,672 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Bankshares.
<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Bankshares outstanding shares........................................ 700,836
Conversion ratio, determined as follows:
$27.39/$35.05 per share, the 10-day average market value of
BancGroup Common Stock on September 19, 1996.................... 0.7815
-------
Colonial Bancgroup shares to be issued............................... 547,672
Par value of 547,672 shares issued at $2.50 per share................ $ 1,369
Shares issued at par value........................................... $ 1,369
Total capital stock of Bankshares.................................... 6,350
-------
Excess recorded as an increase in contributed capital.............. 4,981
-------
6,350
To eliminate Bankshares' capital stock:
Common stock, at par value......................................... (700)
Contributed capital................................................ (5,650)
-------
(6,350)
-------
Net change in equity....................................... $ 0
=======
</TABLE>
40
<PAGE> 52
OTHER PROBABLE COMBINATIONS
(2) (pooling of interests)
To record the issuance of 3,336,998 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Jefferson, Tomoka and Fort Brooke:
<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Jefferson outstanding shares................................... 3,811,976
Conversion ratio, determined as follows:
$18.90/$35.05 per share, the 10-day average market value of
BancGroup Common Stock on September 19, 1996................. 0.5392
---------
BancGroup shares to be issued.................................. 2,055,531
Tomoka outstanding shares...................................... 405,000
Conversion ratio, determined as follows:
$32.00/$34.3375 per share, the 20-day average of the market
value of BancGroup Common Stock on September 19, 1996........ 0.9319
---------
BancGroup shares to be issued.................................. 377,430
Fort Brooke outstanding shares................................. 1,005,920
Conversion ratio, determined as follows:
$31.50/$35.05 per share, the 10-day average of the market
value of BancGroup Common Stock on September 19, 1996........ 0.8987
---------
BancGroup shares to be issued.................................. 904,037
Total BancGroup shares to be issued............................ 3,336,998
Par value of 3,336,998 shares issued at $2.50 per share........ $8,342
Shares issued at par value..................................... $ 8,342
Total capital stock of Jefferson, Tomoka and Fort Brooke....... 47,402
Excess recorded as an increase in contributed capital........ 39,060
---------
47,402
To eliminate Jefferson, Tomoka, and Fort Brooke capital stock:
Common stock, at par value................................... (14,077)
Contributed capital.......................................... (35,187)
Treasury stock............................................... 1,862
---------
(47,402)
---------
Net change in equity................................. $ 0
=========
</TABLE>
41
<PAGE> 53
OTHER PROBABLE COMBINATIONS
(2) (purchase method)
To assign the amount by which the estimated value of BancGroup's investment
in First Family is in excess of the historical carrying amount of the net assets
acquired, based on the estimated fair value of such net assets and to record the
investment in First Family by the issuance of 182,703 shares of BancGroup Common
Stock and $6,403,750 in cash for all of the outstanding 545,000 shares of First
Family as follows:
<TABLE>
<S> <C>
Equity in carrying value of net assets of First Family..................... $ 9,222
Adjustments to state assets at fair value:
Write-up of fixed assets................................................. 900
Write-down securities held to maturity................................... (1,600)
Other.................................................................... (150)
Acquisition accruals:
Severance pay............................................................ (1,013)
SAIF Premium............................................................. (1,100)
Other legal, accounting, and professional................................ (256)
Tax effect of purchase adjustments......................................... 1,127
Goodwill................................................................... 6,211
--------
Total adjustments................................................ 4,119
Adjusted equity in carrying value of net assets............................ $13,341
========
Allocated as follows:
Par Value of 182,703 shares issued for all outstanding shares of First
Family................................................................... $ 457
Estimated amount in excess of par value of 182,703 shares of BancGroup
Common Stock issued for First Family outstanding shares at an assumed
market value of $35.05 per share (10 day average at September 19,
1996).................................................................... 5,947
Stock options to be assumed by BancGroup................................... 533
Cash of $11.75 per share paid to First Family shareholders................. 6,404
--------
Total purchase price............................................. $13,341
========
</TABLE>
(3) To record nonrecurring charges expected to result from the proposed
pooling of interests combination with Jefferson:
<TABLE>
<S> <C>
Accrual of severance pay.................................................... $4,325
Accrual of discretionary bonus.............................................. 840
-------
-
Total accrual adjustments......................................... 5,165
Deferred tax................................................................ (779)
-------
-
Net charge to retained earnings................................... $4,386
========
</TABLE>
42
<PAGE> 54
CONDENSED PRO FORMA STATEMENTS OF INCOME (UNAUDITED)
The following summaries include (i) the condensed consolidated statements
of income of BancGroup and subsidiaries on a historical basis for the six months
ended June 30, 1996 and 1995 (as restated), and the years ended December 31,
1995, 1994 and 1993 (as restated), (ii) the condensed consolidated statements of
income of Bankshares for the six months ended June 30, 1996 and 1995 and the
years ended December 31, 1995, 1994 and 1993, (iii) the condensed consolidated
statements of income of Jefferson, a probable combination with BancGroup, for
the six months ended June 30, 1996 (as amended) and 1995 and the years ended
December 31, 1995, 1994, and 1993, (iv) the combined presentation of condensed
consolidated statements of income of the other probable combinations for the six
months ended June 30, 1996 and 1995 and the years ended December 31, 1995, 1994
and 1993, (v) adjustments to give effect to the pooling of interests method
combination with Bankshares and the proposed purchase method combination with
First Family and the proposed pooling of interests method combinations with
Jefferson, and the other probable combinations, and (vi) the pro forma combined
condensed consolidated statements of income of BancGroup and subsidiaries as if
such combinations had occurred on January 1, 1993. Note that for purchase method
combinations, Article 11 of Regulation S-X requires pro forma statements of
income to be presented for only the most recent fiscal year and interim period.
Accordingly, only the condensed consolidated statements of income for the six
months ended June 30, 1996 and the year ended December 31, 1995 are included in
(iv) above for First Family.
These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of income of
BancGroup and subsidiaries (as restated) and Bankshares, incorporated by
reference herein. These pro forma statements exclude the effect of two
nonrecurring charges related to Jefferson in the amount of $4.4 million net of
tax. These pro forma statements exclude the effects of one immaterial purchase
method combination which was completed by BancGroup on July 8, 1996. The pro
forma information may not necessarily be indicative of future results.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
---------------------------------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL OTHER
BANCGROUP D/W ADJUSTMENTS/ JEFFERSON PROBABLE ADJUSTMENTS/
(RESTATED)** BANKSHARES, INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC. COMBINATIONS (DEDUCTIONS)
--------------- ---------------- ------------ ----------- ------------- ------------ ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income.... $ 166,706 $ 5,298 $ 172,004 $ 16,276 $ 15,621 $ (2)(1)
Interest expense... 85,386 2,518 87,904 7,305 7,387
--------------- -------- ------------ ----------- ------------- ------------ ------------
Net interest income
before provision
for loan
losses........... 81,320 2,780 84,100 8,971 8,234 (2)
Provision for loan
losses........... 3,468 200 3,668 20 128
--------------- -------- ------------ ----------- ------------- ------------ ------------
Net interest income
after provision
for loan
losses........... 77,852 2,580 80,432 8,951 8,106 (2)
--------------- -------- ------------ ----------- ------------- ------------ ------------
Noninterest
income........... 33,311 526 33,837 2,441 1,805
Noninterest
expense.......... 69,203 1,931 71,134 9,485 6,622 $ 177(1)
--------------- -------- ------------ ----------- ------------- ------------ ------------
Income before
income taxes..... 41,960 1,175 43,135 1,907 3,289 (179)
Income taxes....... 14,910 390 15,300 602 1,102 (8)(1)
--------------- -------- ------------ ----------- ------------- ------------ ------------
Net income......... $ 27,050 $ 785 $ 0 $ 27,835 $ 1,305 $ 2,187 $ (171)
========== =========== ========= ========== ========= ========= ==========
Average primary
shares
outstanding...... 16,418,000 750,087 (750,087) 16,989,469 3,906,120 1,973,312 (5,879,432)
571,469 3,681,823
Average
fully-diluted
shares
outstanding...... 16,707,000 814,860 (814,860) 17,329,139 3,906,120 1,979,858 (5,885,978)
622,139 3,682,359
Earnings per share
Net income:
Primary........ $ 1.65 $ 1.05 $ 1.64 $ 0.34 $ 1.11
Fully
diluted...... $ 1.63 $ 1.00 $ 1.62 $ 0.34 $ 1.10
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
--------------------
PRO FORMA
COMBINED
TOTAL
-----------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
<S> <C>
Interest income.... $ 203,899
Interest expense... 102,596
-----------
Net interest income
before provision
for loan
losses........... 101,303
Provision for loan
losses........... 3,816
-----------
Net interest income
after provision
for loan
losses........... 97,487
-----------
Noninterest
income........... 38,083
Noninterest
expense.......... 87,418
-----------
Income before
income taxes..... 48,152
Income taxes....... 16,996
-----------
Net income......... $ 31,156
==========
Average primary
shares
outstanding...... 20,671,292
Average
fully-diluted
shares
outstanding...... 21,011,498
Earnings per share
Net income:
Primary........ $ 1.51
Fully
diluted...... $ 1.50
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
43
<PAGE> 55
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995
----------------------------------------------------------------------------
CONSOLIDATED
COLONIAL
BANCGROUP D/W ADJUSTMENTS/ JEFFERSON
(RESTATED)** BANKSHARES, INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC.
------------ ---------------- ------------ ----------- -------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Interest income............................. $ 131,861 $ 4,573 $ 136,434 $ 14,735
Interest expense............................ 65,562 2,058 67,620 6,080
----------- -------- -------- ----------- ----------
Net interest income before provision for
loan losses............................... 66,299 2,515 68,814 8,655
Provision for loan losses................... 2,779 177 2,956 150
----------- -------- -------- ----------- ----------
Net interest income after provision for loan
losses.................................... 63,520 2,338 65,858 8,505
----------- -------- -------- ----------- ----------
Noninterest
income.................................... 25,725 645 26,370 2,103
Noninterest
expense................................... 56,991 1,754 58,745 9,240
----------- -------- -------- ----------- ----------
Income before income taxes.................. 32,254 1,229 33,483 1,368
Income taxes................................ 11,446 440 11,886 423
----------- -------- -------- ----------- ----------
Net income.................................. $ 20,808 $ 789 $ 0 $ 21,597 $ 945
=========== ======== ======== =========== ==========
Average primary shares
outstanding............................... 14,762,000 743,051 (743,051) 15,328,270 3,785,703
566,270
Average fully-diluted shares
outstanding............................... 15,517,000 761,711 (701,711) 16,085,754 3,785,703
568,754
Earnings per share:
Net Income:
Primary................................. $ 1.41 $ 1.06 $ 1.41 $ 0.25
Fully diluted........................... $ 1.38 $ 1.05 $ 1.38 $ 0.25
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995
----------------------------------------------
OTHER PRO FORMA
PROBABLE ADJUSTMENTS/ COMBINED
COMBINATIONS (DEDUCTIONS) TOTAL
------------ ------------ -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Interest income............................. $ 9,121 $ (2)(1) $ 160,288
Interest expense............................ 3,527 77,227
---------- ----------- -----------
Net interest income before provision for
loan losses............................... 5,594 (2) 83,061
Provision for loan losses................... 264 3,370
---------- ----------- -----------
Net interest income after provision for loan
losses.................................... 5,330 (2) 79,691
---------- ----------- -----------
Noninterest
income.................................... 864 29,337
Noninterest
expense................................... 4,196 177(1) 72,358
---------- ----------- -----------
Income before income taxes.................. 1,998 (179) 36,670
Income taxes................................ 797 (8)(1) 13,098
---------- ----------- -----------
Net income.................................. $ 1,201 $ (171) $ 23,572
========== =========== ===========
Average primary shares
outstanding............................... 1,410,920 (5,196,623) 18,757,757
3,429,487
Average fully-diluted shares
outstanding............................... 1,410,920 (5,196,623) 19,537,242
3,451,488
Earnings per share:
Net Income:
Primary................................. $ 0.85 $ 1.26
Fully diluted........................... $ 0.85 $ 1.23
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
44
<PAGE> 56
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL OTHER PRO FORMA
BANCGROUP D/W BANKSHARES, ADJUSTMENTS/ JEFFERSON PROBABLE ADJUSTMENTS/ COMBINED
(RESTATED)** INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC. COMBINATIONS (DEDUCTIONS) TOTAL
-- ---------------- ------------ ----------- ------------- ------------ ------------ -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest
income........ $287,141 $ 9,791 $ 296,932 $ 30,792 $ 30,558 $ (3)(1) $ 358,279
Interest
expense....... 146,981 4,472 151,453 13,463 14,626 179,542
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Net interest
income before
provision for
loan
losses........ 140,160 5,319 145,479 17,329 15,932 (3) 178,737
Provision for
loan losses... 7,350 781 8,131 150 1,015 9,296
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Net interest
income after
provision for
loan
losses........ 132,810 4,538 137,348 17,179 14,917 (3) 169,441
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Noninterest
income........ 54,391 1,060 55,451 4,207 3,397 63,055
Noninterest
expense....... 122,406 3,617 126,023 18,705 12,262 356(1) 157,346
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Income before
income
taxes......... 64,795 1,981 66,776 2,681 6,052 (359) 75,150
Income taxes.... 23,242 642 23,884 772 2,294 (17)(1) 26,933
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Net income...... $41,553 $ 1,339 $ 0 $ 42,892 $ 1,909 $ 3,758 $ (342) $ 48,217
=========== ======== ========= =========== ========== ========== =========== ===========
Average primary
shares
outstanding... 15,797,000 714,721 (714,721) 16,365,225 3,816,071 1,955,920 (5,771,991) 20,014,375
568,225 3,649,150
Average
fully-diluted
shares
outstanding... 16,667,000 767,474 (767,474) 17,279,254 3,816,071 1,955,920 (5,771,991) 20,957,443
612,254 3,678,189
Earnings per
share:
Net income:
Primary..... $2.63 $ 1.87 $ 2.62 $ 0.50 $ 1.92 $ 2.41
Fully
diluted... $2.56 $ 1.81 $ 2.54 $ 0.50 $ 1.92 $ 2.35
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
45
<PAGE> 57
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL OTHER PRO FORMA
BANCGROUP D/W ADJUSTMENTS/ JEFFERSON PROBABLE ADJUSTMENTS/ COMBINED
(RESTATED)** BANKSHARES, INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC. COMBINATIONS (DEDUCTIONS) TOTAL
-- ---------------- ------------ ---------- ------------- ------------ ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income.... $211,903 $ 7,136 $ 219,039 $ 25,107 $ 15,317 $ 259,463
Interest expense... 90,902 2,958 93,860 7,433 6,052 107,345
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Net interest income
before provision
for loan
losses........... 121,001 4,178 125,179 17,674 9,265 152,118
Provision for loan
losses........... 7,506 234 7,740 330 266 8,336
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Net interest income
after provision
for loan
losses........... 113,495 3,944 117,439 17,344 8,999 143,782
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Noninterest
income........... 47,752 732 48,484 4,346 1,796 54,626
Noninterest
expense.......... 115,677 3,077 118,754 18,152 9,111 146,017
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Income before
income
taxes............ 45,570 1,599 47,169 3,538 1,684 52,391
Income taxes....... 15,829 482 16,311 521 627 17,459
-----------
-------- --------- ----------- ---------- ---------- ----------- -----------
Net income......... $29,741 $ 1,117 $ 0 $ 30,858 $ 3,017 $ 1,057 $ 0 $ 34,932
=========== ======== ========= =========== ========== ========== =========== ===========
Average primary
shares
outstanding...... 14,898,000 696,719 (696,719) 15,465,292 3,637,576 1,389,711 (5,027,287) 18,874,547
567,292 3,409,255
Average
fully-diluted
shares
outstanding...... 15,665,000 696,716 (696,716) 16,232,292 3,637,576 1,389,711 (5,027,287) 19,641,547
$567,292 3,409,255
Earnings per share:
Net Income:
Primary........ $2.00 $ 1.60 $ 2.00 $ 0.83 $ 0.76 $ 1.85
Fully
diluted...... $1.97 $ 1.60 $ 1.97 $ 0.83 $ 0.76 $ 1.84
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
46
<PAGE> 58
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
-----------------------------------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL OTHER
BANCGROUP D/W BANKSHARES, ADJUSTMENTS/ JEFFERSON PROBABLE ADJUSTMENTS/
(RESTATED)** INC. (DEDUCTIONS) SUBTOTAL BANCORP, INC. COMBINATIONS (DEDUCTIONS)
------------ ---------------- ------------ ---------- ------------- ------------ ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income..... $ 160,829 $ 5,735 $ 166,564 $ 26,462 $ 14,271
Interest expense.... 66,357 2,639 68,996 7,382 6,134
----------- -------- --------- ----------- ---------- ---------- -----------
Net interest income
before provision
for loan losses... 94,472 3,096 97,568 19,080 8,137
Provision for loan
losses............ 8,850 238 9,088 2,335 406
----------- -------- --------- ----------- ---------- ---------- -----------
Net interest income
after provision
for loan
losses............ 85,622 2,858 88,480 16,745 7,731
----------- -------- --------- ----------- ---------- ---------- -----------
Noninterest
income............ 43,445 760 44,205 5,350 2,179
Noninterest
expense........... 98,501 2,338 100,839 18,750 8,337
----------- -------- --------- ----------- ---------- ---------- -----------
Income before income
taxes............. 30,566 1,280 31,846 3,345 1,573
Income taxes........ 9,780 419 10,199 528 557
----------- -------- --------- ----------- ---------- ---------- -----------
Income before
extraordinary
items and the
cumulative change
in accounting for
income taxes...... 20,786 861 21,647 2,817 1,016 0
----------- -------- --------- ----------- ---------- ---------- -----------
Extraordinary items,
net of tax........ (463) (463)
Cumulative effect of
a change in
accounting for
income taxes...... 3,650 67 3,717 36
----------- -------- --------- ----------- ---------- ---------- -----------
Net income.......... $ 23,973 $ 928 $ 0 $ 24,901 $ 2,817 $ 1,052 $ 0
=========== ======== ========= =========== ========== ========== ===========
Average primary
shares
outstanding....... 12,613,000 696,726 (696,726) 13,177,748 3,816,071 1,371,864 (5,187,935)
564,748 3,387,726
Average
fully-diluted
shares
outstanding....... 13,706,000 696,726 (696,726) 14,270,748 3,816,071 1,371,864 (5,187,935)
564,748 3,387,726
Earnings per share:
Income before
extraordinary
items and
cumulative
effect of a
change in
accounting
principle:
Primary......... $ 1.65 $ 1.24 $ 1.64 $ 0.81 $ 0.74
Fully diluted... $ 1.64 $ 1.24 $ 1.63 $ 0.81 $ 0.74
Net income:
Primary......... $ 1.90 $ 1.33 $ 1.89 $ 0.81 $ 0.76
Fully diluted... $ 1.87 $ 1.33 $ 1.86 $ 0.81 $ 0.76
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
----------------------
PRO FORMA
COMBINED
TOTAL
----------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
<S> <C>
Interest income..... $ 207,297
Interest expense.... 82,512
-----------
Net interest income
before provision
for loan losses... 124,785
Provision for loan
losses............ 11,829
-----------
Net interest income
after provision
for loan
losses............ 112,956
-----------
Noninterest
income............ 51,734
Noninterest
expense........... 127,926
-----------
Income before income
taxes............. 36,764
Income taxes........ 11,284
-----------
Income before
extraordinary
items and the
cumulative change
in accounting for
income taxes...... 25,480
-----------
Extraordinary items,
net of tax........ (463)
Cumulative effect of
a change in
accounting for
income taxes...... 3,753
-----------
Net income.......... $ 28,770
===========
Average primary
shares
outstanding....... 16,565,474
Average
fully-diluted
shares
outstanding....... 17,658,474
Earnings per share:
Income before
extraordinary
items and
cumulative
effect of a
change in
accounting
principle:
Primary......... $ 1.54
Fully diluted... $ 1.54
Net income:
Primary......... $ 1.74
Fully diluted... $ 1.72
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
47
<PAGE> 59
PRO FORMA ADJUSTMENTS
(IN THOUSANDS)
Adjustments Applicable to First Family:
(1) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 AND 1995 1995
-------------- ------------
<S> <C> <C>
Increases in income:
Amortization of other write downs (2-5 year period)............... $ 22 $ 45
Amortization of write-down on securities portfolio (5 year
period)........................................................ 160 320
Decreases in income:
Earnings foregone on $6,403,750 cash at an average interest rate
5.75%.......................................................... (184) (368)
----- -----
Total..................................................... (2) (3)
----- -----
Increase in expense:
Additional depreciation due to write-up in building and premises
(20 year period)............................................... (22) (45)
Amortization of goodwill (20 year period)......................... (155) (311)
----- -----
Total..................................................... (177) (356)
----- -----
Net decrease in income before tax................................... (179) (359)
----- -----
Tax effect of the pro forma adjustments (other than goodwill
amortization)..................................................... 8 17
----- -----
Net decrease in income.............................................. $ (171) $ (342)
----- -----
</TABLE>
48
<PAGE> 60
RECENT DEVELOPMENTS -- BANCGROUP AND BANKSHARES
BANCGROUP -- RECENT UNAUDITED RESULTS
The following table presents certain unaudited data for BancGroup for the
period ended September 30, 1996. Unaudited historical data reflect, in the
opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary to a fair presentation of such data. The unaudited
financial information is presented for informational purposes only and is not
necessarily indicative of the financial position or results of operations which
would have actually occurred if the transactions had been consummated in the
past or which may be obtained in the future.
THE COLONIAL BANCGROUP, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
% CHANGE
SEPT. 30, DEC. 31, SEPT. 30, SEPT. 30,
1996 1995 1995 1996 TO 1995
---------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF CONDITION SUMMARY
Total assets.................................... $4,713,524 $4,202,194 $3,837,969 23%
Loans, net of unearned income................... 3,570,490 3,175,506 2,848,089 25%
Total earning assets............................ 4,324,106 3,823,233 3,518,662 23%
Deposits........................................ 3,561,923 3,204,260 2,935,768 21%
Shareholders' equity............................ 329,917 289,463 260,038 27%
Book value per share............................ $ 20.24 $ 18.65 $ 17.71 14%
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30, THREE MONTHS ENDED SEPT. 30,
------------------------------ ----------------------------
% CHANGE % CHANGE
1996 1995 96 TO 95 1996 1995 96 TO 95
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Net interest income (taxable
equivalent)......................... $126,766 $104,374 21% $44,255 $36,716 21%
Provision for loan losses............. 6,023 4,155 45% 2,555 1,433 78%
Noninterest income.................... 49,854 39,291 27% 16,614 13,640 22%
Noninterest expense (excl. SAIF
special assessment)................. 104,042 87,049 20% 34,890 30,043 16%
SAIF special assessment*.............. 3,817 -- 3,817
Net income (excl. SAIF special
assessment)......................... 41,816 32,432 29% 14,766 11,665 27%
Net income............................ 39,350 32,432 21% 12,300 11,665 5%
Average primary shares outstanding.... 16,465 14,826 16,698 14,942
Average fully diluted shares
outstanding......................... 16,754 15,597 16,985 15,706
Earnings per share excluding SAIF
special assessment*:
Primary............................. $ 2.54 $ 2.19 16% $ 0.88 $ 0.78 13%
Fully diluted....................... 2.52 2.13 18% 0.88 0.76 16%
Earnings per common share:
Primary............................. $ 2.39 $ 2.19 9% $ 0.74 $ 0.78 -5%
Fully-diluted....................... 2.37 2.13 11% 0.73 0.76 -4%
</TABLE>
49
<PAGE> 61
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30, THREE MONTHS ENDED SEPT. 30,
------------------------------ ----------------------------
% CHANGE % CHANGE
1996 1995 96 TO 95 1996 1995 96 TO 95
-------- -------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Return on average assets.............. 1.20% 1.23% 1.21% 1.22%
Return on average assets (excl. SAIF
assessment)*........................ 1.26% 1.23% 1.27% 1.22%
Return on average equity.............. 17.05% 17.90% 17.25% 18.29%
Return on average equity (excl. SAIF
assessment)*........................ 17.83% 17.90% 18.01% 18.29%
Efficiency ratio (excl. SAIF
assessment)*........................ 58.91% 60.59% 57.32% 59.66%
Equity to assets...................... 7.00% 6.78%
Total capital......................... 8.04% 8.17%
Tier one leverage..................... 6.52% 6.34%
</TABLE>
- ---------------
NOTE: Restated financial results above reflect the July 3, 1996 mergers of
Colonial BancGroup with Commercial Bancorp of Georgia, Inc. and Southern
Banking Corporation. These mergers were accounted for as poolings of
interests and the financial results restated accordingly.
* Legislation approving a one-time special assessment on SAIF deposits resulted
in $3,817,000 in expense before income taxes and $2,466,000 net of applicable
income taxes in the third quarter.
Net income for the the nine months ended September 30, 1996 was $39,350,000
compared to $32,432,000 for the previous period, a 21% increase. Earnings per
share for the nine months were $2.37 on a fully diluted basis, an 11% increase
over 1995. The company's return on average equity was 17.05% compared to 17.90%
in 1995. Return on average assets was 1.20% compared to 1.23% in 1995.
Net income for the third quarter of 1996 was $12,300,000 compared to
$11,665,000 in 1995, a 5% increase. Earnings per share for the third quarter of
1996 were $.73 compared to $.76 for the same period in 1995, a 4% decrease.
BANKSHARES UNAUDITED RESULTS OF OPERATIONS AND FINANCIAL HIGHLIGHTS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996
Bankshares unaudited results for the nine months ended September 30, 1996
reported net income of $1,213,000 or $1.73 per share, versus $1,104,000 or $1.58
per share for the prior year.
Bankshares unaudited results for the quarter ended September 30, 1996
reported net income of $402,002 or $.57 per share, versus $315,000 or $.45 per
share for the prior year.
50
<PAGE> 62
Set forth below are selected financial highlights for D/W Bankshares, Inc.
for the periods indicated (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Total interest income.......................................... $ 7,999 $ 7,041
Total interest expense......................................... 3,763 3,269
-------- --------
Net interest income............................................ 4,236 3,772
Provision for loan losses...................................... 205 399
-------- --------
Net interest income after provision for loan losses............ 4,031 3,373
Total other income............................................. 770 1,007
Total other expenses........................................... 2,984 2,649
-------- --------
Income (loss) before taxes..................................... 1,817 1,732
Income tax..................................................... 605 628
-------- --------
Net income (loss).............................................. $ 1,213 $ 1,104
Net income (loss) per share.................................... $ 1.73 $ 1.58
Average shares outstanding..................................... 700,836 700,149
Total Assets................................................... $130,112 $125,265
Deposits....................................................... 116,129 112,658
Loans receivable, net.......................................... 74,621 77,410
Allowances for loan losses..................................... 1,433 1,175
Securities..................................................... 36,528 33,155
Real estate owned.............................................. 2,728 2,046
Stockholders' equity........................................... 10,927 9,538
Stockholders' equity per share................................. $ 15.59 $ 13.62
</TABLE>
51
<PAGE> 63
SELECTED FINANCIAL AND OPERATING INFORMATION
The following table sets forth selected financial information on a
historical (as restated) and pro forma basis for BancGroup for the year ended
December 31, 1995 and as of and for the six months ended June 30, 1996, and on a
historical (as restated) basis for BancGroup as of and for the five years ended
December 31, 1995, 1994, 1993, 1992 and 1991.
The pro forma information includes consolidated restated BancGroup and
subsidiaries, consolidated First Family, consolidated Jefferson, consolidated
Bankshares, consolidated Tomoka and Fort Brooke. The pro forma balance sheet
data give effect to the combinations as if they had occurred on June 30, 1996
and the pro forma operating data give effect to the combinations as if they had
occurred at the beginning of the earliest period presented.
The following selected financial information should be read in conjunction
with the discussion set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and all of the financial
statements included incorporated by reference in this prospectus. In the opinion
of BancGroup, all adjustments necessary for a fair presentation of the results
of the interim periods have been included, and all adjustments are of a normal
and recurring nature. The results of operations for the interim period ended
June 30, 1996 are not necessary indicative of the results obtained for the full
year.
SELECTED FINANCIAL DATA
COLONIAL BANCGROUP (PRO FORMA) AND COLONIAL BANCGROUP (HISTORICAL -- AS
RESTATED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------------------------
BANCGROUP BANCGROUP BANCGROUP BANCGROUP
PRO FORMA HISTORICAL PRO FORMA HISTORICAL
1996 1996 1995 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Statement of Income:
Interest income...................................... $203,899 $166,706 $160,288 $131,861
Interest expense..................................... 102,596 85,386 77,227 65,562
--------- --------- --------- ---------
Net interest income.................................. 101,303 81,320 83,061 66,299
Provision for possible loan losses................... 3,816 3,468 3,370 2,779
--------- --------- --------- ---------
Net interest income after provision for possible loan
losses............................................. 97,487 77,852 79,691 63,520
Noninterest income................................... 38,083 33,311 29,337 25,725
Noninterest expense.................................. 87,418 69,203 72,358 56,991
--------- --------- --------- ---------
Income before income taxes........................... 48,152 41,960 36,670 32,254
Applicable income taxes.............................. 16,996 14,910 13,098 11,446
--------- --------- --------- ---------
Income before extraordinary items and the cumulative
effect of a change in accounting for income
taxes.............................................. 31,156 27,050 23,572 20,808
Extraordinary items, net of income taxes.............
Cumulative effect of change in accounting for income
taxes..............................................
--------- --------- --------- ---------
Net Income........................................... $ 31,156 $ 27,050 $ 23,572 $ 20,808
======== ======== ======== ========
Earnings Per Common Share
Income before extraordinary items and the cumulative
effect of a change in accounting for income taxes:
Primary............................................ $ 1.51 $ 1.65 1.26 $ 1.41
Fully-diluted...................................... $ 1.50 $ 1.63 1.23 $ 1.38
Net Income:
Primary............................................ $ 1.51 $ 1.65 1.26 $ 1.41
Fully-diluted...................................... $ 1.50 $ 1.63 1.23 $ 1.38
Average shares outstanding:
Primary............................................ 20,671 16,418 18,758 14,762
Fully-diluted...................................... 21,011 16,707 19,537 15,517
Cash dividends per common share:(1)
Common............................................. $ 0.54 $ 0.54 $ 0.45 $ .045
</TABLE>
- ---------------
(1) On February 21, 1995, the Class A and Class B Common Stock were reclassified
into one class of Common Stock.
52
<PAGE> 64
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------------------------------ -----------------------------------------------------
BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of
Income:
Interest income... $358,279 $259,463 $207,297 $196,374 $203,889 $287,141 $211,903 $160,829 $146,486 $150,462
Interest
expense......... 179,542 107,345 82,512 87,947 117,491 146,981 90,902 66,357 67,389 87,717
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net interest
income.......... 178,737 152,118 124,785 108,427 86,398 140,160 121,001 94,472 79,097 62,745
Provision for
possible loan
losses.......... 9,296 8,336 11,829 14,726 12,363 7,350 7,506 8,850 8,956 7,097
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net interest
income after
provision for
possible loan
losses.......... 169,441 143,782 112,956 93,701 74,035 132,810 113,495 85,622 70,141 55,648
Noninterest
income.......... 63,055 54,626 51,734 46,657 39,373 54,391 47,752 43,445 37,027 32,668
Noninterest
expense......... 157,346 146,017 127,926 113,510 95,524 122,406 115,677 98,501 85,636 72,377
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Income before
income taxes.... 75,150 52,391 36,764 26,848 17,884 64,795 45,570 30,566 21,532 15,939
Applicable income
taxes........... 26,933 17,459 11,284 8,047 5,238 23,242 15,829 9,780 5,742 4,197
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Income before
extraordinary
items and the
cumulative
effect of a
change in
accounting for
income taxes.... 48,217 34,932 25,480 18,801 12,646 41,553 29,741 20,786 15,790 11,742
Extraordinary
items, net of
income taxes.... (463 ) 831 (463 ) 831
Cumulative effect
of change in
accounting for
income taxes.... 3,753 280 184 3,650
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net Income........ $ 48,217 $ 34,932 $ 28,770 $ 19,081 $ 13,661 $ 41,553 $ 29,741 $ 23,973 $ 15,790 $ 12,573
========= ========= ========= ========= ========= ========= ========= ========= ========= =========
Earnings Per
Common Share
Income before
extraordinary
items and the
cumulative
effect of a
change in
accounting for
income taxes:
Primary......... $ 2.41 $ 1.85 $ 1.54 $ 1.14 $ .90 $ 2.63 $ 2.00 $ 1.65 $ 1.44 $ 1.15
Fully-diluted... $ 2.35 $ 1.84 $ 1.54 $ 1.14 $ .90 $ 2.56 $ 1.97 $ 1.64 $ 1.44 $ 1.15
Net Income:
Primary......... $ 2.41 $ 1.85 $ 1.74 $ 1.16 $ .97 $ 2.63 $ 2.00 $ 1.90 $ 1.44 $ 1.23
Fully-diluted... $ 2.35 $ 1.84 $ 1.72 $ 1.16 $ .97 $ 2.56 $ 1.97 $ 1.87 $ 1.44 $ 1.23
Average shares
outstanding:
Primary......... 20,014 18,875 16,565 16,498 14,104 15,797 14,898 12,613 10,996 10,219
Fully-diluted... 20,957 19,642 17,658 17,264 15,446 16,667 15,665 13,706 12,307 11,561
Cash dividends per
common share:(1)
Common.......... $ 0.675 $ 0.675
Class A......... $ 0.225 $ 0.80 $ 0.71 $ 0.67 $ 0.63 $ 0.225 $ 0.80 $ 0.71 $ 0.67 $ 0.63
Class B......... $ 0.125 $ 0.40 $ 0.31 $ 0.27 $ 0.23 $ 0.125 $ 0.40 $ 0.31 $ 0.27 $ 0.23
</TABLE>
- ---------------
(1) On February 21, 1995, the Class A and Class B Common Stock were reclassified
into one class of Common Stock.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------------------- -----------------------------------------------------------
BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP
PRO FORMA HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL HISTORICAL
1996 1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Condition
At period end:
Total assets............................... $5,503,161 $4,508,026 $4,202,195 $3,219,082 $3,104,410 $2,027,455 $1,861,980
Loans, net of unearned income.............. 4,105,335 3,442,323 3,175,560 2,352,870 1,963,052 1,330,928 1,200,443
Mortgage loans held for sale............... 175,085 165,925 110,486 60,726 361,496 144,215 105,219
Deposits................................... 4,257,225 3,373,641 3,204,198 2,504,461 2,444,418 1,697,648 1,601,973
Long-term debt............................. 35,704 34,279 29,142 69,203 57,397 22,979 27,225
Shareholders' equity....................... 389,124 317,612 289,464 224,018 198,389 123,952 111,437
Average daily balances:
Total assets............................... $5,413,500 $4,425,465 $3,659,140 $3,074,619 $2,379,628 $1,978,313 $1,779,767
Interest-earning assets.................... 4,956,982 4,038,424 3,333,887 2,768,705 2,100,674 1,730,373 1,583,046
Loans, net of unearned income.............. 3,986,157 3,340,474 2,708,633 2,138,371 1,494,053 1,273,486 1,187,081
Mortgage loans held for sale............... 175,660 175,660 97,511 131,121 241,683 118,510 65,373
Deposits................................... 3,490,161 2,717,879 2,828,864 2,471,657 1,876,026 1,665,417 1,531,672
Shareholders' equity....................... 388,839 312,630 250,826 214,543 144,216 117,822 103,330
Book value per share at period end........... $ 19.21 $ 19.62 $ 18.65 $ 15.62 $ 14.40 $ 11.04 $ 11.08
Tangible book value per share at period
end........................................ $ 17.92 $ 17.86 $ 16.82 $ 14.33 $ 13.21 $ 10.45 $ 10.39
Selected Ratios
Income before extraordinary items and the
cumulative effect of a change in
accounting for income taxes to:
Average assets........................... 0.58 0.61 1.14 0.97 0.87 0.80 0.66
Average shareholders' equity............. 8.07 8.65 16.57 13.86 14.41 13.40 11.36
Net Income to:
Average assets........................... 0.58 0.61 1.14 0.97 1.01 0.80 0.71
Average shareholders' equity............. 8.07 8.65 16.57 13.86 16.62 13.40 12.17
Efficiency ratio............................. 62.47 60.37 62.11 67.65 70.40 72.41 74.11
Dividend payout ratio........................ 27.49 27.28 25.32 24.99 20.22 26.44 30.71
Average equity to average total assets....... 7.18 7.06 6.85 6.98 6.06 5.96 5.81
Allowance for possible loan losses to total
loans (net of unearned income)............. 1.23 1.26 1.31 1.57 1.58 1.55 1.44
</TABLE>
53
<PAGE> 65
BUSINESS OF BANCGROUP
GENERAL
BancGroup is a bank holding company registered under the BHCA. It was
organized in 1974 under the laws of Delaware. BancGroup operates wholly owned
banking subsidiaries in the states of Alabama, Florida, Georgia and Tennessee,
each under the name "Colonial Bank." Colonial Bank conducts a full service
commercial banking business in the state of Alabama through 110 banking offices.
In Tennessee, Colonial Bank conducts a general commercial banking business
through four offices. In Georgia, BancGroup's federal savings bank, Colonial
Bank, FSB, operates through three offices in the Atlanta, Georgia area, and its
commercial bank subsidiary, Colonial Bank, operates seven branches in
Lawrenceville, Georgia. In Florida, Colonial Bank operates eight branches in the
Orlando area. Colonial Mortgage Company, a subsidiary of Colonial Bank, is a
mortgage banking company which services approximately $10 billion in residential
loans and which originates mortgages in 29 states through 6 regional offices.
BancGroup's commercial banking loan portfolio is comprised primarily of
commercial real estate loans (22%) and residential real estate loans (49%), a
significant portion of which is located within the State of Alabama. BancGroup's
growth in loans over the past several years has been concentrated in commercial
and residential real estate loans. The lending activities of Colonial Bank in
Alabama are dependent upon the demands within the local markets of its branches.
Based on this demand, loans collateralized by commercial and residential real
estate have been the fastest growing component of Colonial Bank's loan
portfolio.
PROPOSED AFFILIATE BANKS
BancGroup has entered into a definitive agreement dated as of July 19,
1996, to acquire Tomoka Bancorp, Inc. ("Tomoka"). Tomoka is a Florida
corporation and is a holding company for Tomoka State Bank located in Ormond
Beach, Florida. Tomoka will merge with BancGroup and following such merger
Tomoka State Bank will merge with BancGroup's existing bank subsidiary in
Orlando, Colonial Bank. Based on the market price of BancGroup Common Stock as
of September 19, 1996, a total of 377,430 shares of BancGroup Common Stock would
be issued to the stockholders of Tomoka. The actual number of shares of
BancGroup Common Stock to be issued in this transaction will depend upon the
market value of such Common Stock at the time of the merger. This transaction is
subject to, among other things, approval by the stockholders of Tomoka and
approval by appropriate regulatory authorities. At June 30, 1996, Tomoka had
assets of $72.7 million, deposits of $64.2 million and stockholders' equity of
$5.9 million.
BancGroup has entered into a definitive agreement dated as of July 19,
1996, to acquire First Family Financial Corporation ("First Family"). First
Family is a Florida corporation and is a holding company for First Family Bank,
fsb, located in Eustis, Florida. First Family will merge with BancGroup. Based
on the market price of BancGroup Common Stock as of September 19, 1996, a total
of 182,703 shares of BancGroup Common Stock and $6,403,750 would be issued to
the stockholders of First Family. The actual number of shares of BancGroup
Common Stock to be issued in this transaction will depend upon the market value
of such Common Stock at the time of the merger. This transaction is subject to,
among other things, approval by the stockholders of First Family and approval by
appropriate regulatory authorities. At June 30, 1996, First Family has assets of
$155.9 million, deposits of $143.4 million and stockholders' equity of $9.2
million.
BancGroup has signed a letter of intent dated September 11, 1996, to
acquire Jefferson Bancorp, Inc. ("Jefferson"). Jefferson is a Florida
corporation and is a holding company for Jefferson Bank of Florida located in
Miami Beach, Florida. Jefferson will merge with BancGroup and following such
merger Jefferson Bank of Florida will merge with BancGroup's existing bank
subsidiary in Orlando, Colonial Bank. Based on the market price of BancGroup
Common Stock as of September 19, 1996, a total of 2,055,531 shares of BancGroup
Common Stock would be issued to the stockholders of Jefferson. The actual number
of shares of BancGroup Common Stock to be issued in this transaction will depend
upon the market value of such Common Stock at the time of the merger subject to
a maximum of 2,349,202 shares and a minimum of 1,861,056 shares to be issued.
This transaction is subject to, among other things, approval by the stockholders
of Jefferson and approval by appropriate regulatory authorities. At June 30,
1996, Jefferson had assets of $440.2 million, deposits of $386.3 million and
stockholders' equity of $36.4 million.
54
<PAGE> 66
BancGroup has signed a letter of intent dated September 20, 1996, to
acquire Fort Brooke Bancorporation ("Fort Brooke"). Fort Brooke is a Florida
corporation and is a holding company for Fort Brooke Bank located in Tampa,
Florida. Fort Brooke will merge with BancGroup and following such merger Fort
Brooke Bank will merge with BancGroup's existing bank subsidiary in Orlando,
Colonial Bank. Based on the market price of BancGroup Common Stock as of
September 19, 1996, a total of 904,037 shares of BancGroup Common Stock would be
issued to the stockholders of Fort Brooke. The actual number of shares of
BancGroup Common Stock to be issued in this transaction will depend upon the
market value of such Common Stock at the time of the merger subject to a maximum
of 990,207 shares and a minimum of 812,471 shares to be issued. This transaction
is subject to, among other things, approval by the stockholders of Fort Brooke
and approval by appropriate regulatory authorities. At June 30, 1996, Fort
Brooke had assets of $185.7 million, deposits of $163.5 million and
stockholders' equity of $16.3 million.
See "THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES -- Condensed Pro Forma
Statements of Condition (Unaudited)."
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
As of September 19, 1996, BancGroup had issued and outstanding 16,296,558
shares of BancGroup Common Stock with 5,714 stockholders of record. Each such
share is entitled to one vote. In addition, as of that date, 767,571 shares of
BancGroup Common Stock were subject to issue upon exercise of options pursuant
to BancGroup's stock option plans and up to 277,177 shares of BancGroup Common
Stock were issuable upon conversion of BancGroup's 1986 Debentures. There are
currently 44,000,000 shares of BancGroup Common Stock authorized.
On February 21, 1995, BancGroup concluded a reclassification of its Class A
and Class B Common Stock into one class of Common Stock. The reclassification
was approved by BancGroup's stockholders on December 8, 1994. On February 24,
1995, the Common Stock of BancGroup was listed for trading on the NYSE.
The following table shows those persons who are known to BancGroup to be
beneficial owners as of September 19, 1996, of more than five percent of
BancGroup's outstanding Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME AND ADDRESS STOCK OUTSTANDING(1)
- ------------------------------------------------------------------- --------- --------------
<S> <C> <C>
Robert E. Lowder(2)................................................ 1,437,409(3) 8.43%
Post Office Box 1108
Montgomery, AL 36101
James K. Lowder.................................................... 1,099,649 6.45%
Post Office Box 250
Montgomery, AL 36142
Thomas H. Lowder................................................... 1,073,053 6.29%
Post Office Box 11687
Birmingham, AL 35202
</TABLE>
- ---------------
(1) Percentages are calculated assuming the issuance of 767,571 shares of Common
Stock pursuant to BancGroup's stock option plans.
(2) Robert E. Lowder is the brother of James K. and Thomas H. Lowder. Robert E.
Lowder disclaims any beneficial ownership interest in the shares owned by
his brothers. Robert E. Lowder's mother, Catherine K. Lowder, owns 85,442
shares of Common Stock. Mr. Lowder disclaims any beneficial interest in
such shares.
(3) Includes 90,510 shares of BancGroup Common Stock subject to options under
BancGroup's stock option plans.
55
<PAGE> 67
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates for each director, executive officer, and all
executive officers and directors of BancGroup as a group the number of shares of
outstanding Common Stock of BancGroup beneficially owned as of September 19,
1996.
<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ----------------------------------------------------------------- --------- --------------
<S> <C> <C>
DIRECTORS
Young J. Boozer.................................................. 7,146(2) *
William Britton.................................................. 6,808 *
Jerry J. Chesser................................................. 73,295 *
Augustus K. Clements, III........................................ 9,476
Robert S. Craft.................................................. 5,997 *
Patrick F. Dye................................................... 18,980(3) *
Clinton O. Holdbrooks............................................ 145,932(4) *
D. B. Jones...................................................... 10,064(5) *
Harold D. King**................................................. 77,729 *
Robert E. Lowder**............................................... 1,437,409(6) 8.43%
John Ed Mathison................................................. 14,227 *
Milton E. McGregor............................................... 0 *
John C. H. Miller, Jr............................................ 15,243(7) *
Joe D. Mussafer.................................................. 10,000 *
William E. Powell, III........................................... 6,959 *
Donald J. Prewitt***............................................. 88,544(8) *
Jack H. Rainer................................................... 1,345 *
Frances E. Roper................................................. 182,034 1.07%
Ed V. Welch...................................................... 14,825 *
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Young J. Boozer, III............................................. 22,914(2)(9) *
W. Flake Oakley, IV.............................................. 16,808(9) *
Michael R. Holley................................................ 21,337(9) *
All Executive Officers and Directors as a Group.................. 2,187,008(10) 12.82%
</TABLE>
- ---------------
* Represents less than one percent.
** Executive Officer.
*** Mr. Prewitt was added as a director by resolution of the BancGroup Board on
July 17, 1996. Mr. Prewitt was the Chairman of the Board of Southern
Banking Corporation, Orlando, Florida, which was acquired by BancGroup on
July 3, 1996. Mr. Prewitt is a real estate developer and is president of
his own company, Land Sales of Central Florida, Inc., located in Orlando.
Mr. Prewitt is also a director of Colonial Bank, Orlando, Florida.
(1) Percentages are calculated assuming the issuance of 767,571 shares of
Common Stock pursuant to BancGroup's stock option plans.
(2) Includes 500 shares of Common Stock out of 1,000 shares owned by Young J.
Boozer, and Young J. Boozer, III EX U/W Phyllis C. Boozer.
(3) Includes 17,980 shares of Common Stock subject to options exercisable under
BancGroup's stock option plans.
(4) Includes 12,262 shares of Common Stock subject to options under BancGroup's
stock option plans, and 39,499 shares over which Mr. Holdbrooks serves as
trustee.
(5) Mr. Jones holds power to vote these shares as trustee.
56
<PAGE> 68
(6) These shares include 90,510 shares of Common Stock subject to options under
BancGroup's stock option plans. See the table at "Voting Securities and
Principal Stockholders."
(7) Includes 5,000 shares subject to options.
(8) Includes 35,504 shares subject to stock options.
(9) Young J. Boozer, III, Michael R. Holley, and W. Flake Oakley, IV, hold
options respecting 12,500, 10,000, and 8,000 shares of Common Stock,
respectively, pursuant to BancGroup's stock option plans.
(10) Includes shares subject to options.
MANAGEMENT INFORMATION
Certain information regarding the biographies of the directors and
executive officers of BancGroup, executive compensation and related party
transactions is included in BancGroup's Annual Report on Form 10-K for the
fiscal year ending December 31, 1995, at items 10, 11, and 13 and is
incorporated herein by reference.
CERTAIN REGULATORY CONSIDERATIONS
BancGroup is a registered bank holding company subject to supervision and
regulation by the Federal Reserve. As such, it is subject to the BHCA and many
of the Federal Reserve's regulations promulgated thereunder. It is also subject
to regulation by the OTS, as a savings and loan holding company, and by the
Georgia Department of Banking and Finance. With the exception of OTS, Bankshares
is subject to the same supervision and regulation.
BancGroup's subsidiary banks (the "Subsidiary Banks") as well as the Bank
are subject to supervision and examination by applicable federal and state
banking agencies. The deposits of the Subsidiary Banks are insured by the FDIC
to the extent provided by law. The FDIC assesses deposit insurance premiums the
amount of which may, in the future, depend in part on the condition of the
Subsidiary Banks. Moreover, the FDIC may terminate deposit insurance of the
Subsidiary Banks under certain circumstances. Both the FDIC and the respective
state regulatory authorities have jurisdiction over a number of the same
matters, including lending decisions, branching and mergers.
One limitation under the BHCA and the Federal Reserve's regulations
requires that BancGroup obtain prior approval of the Federal Reserve before
BancGroup acquires, directly or indirectly, more than five percent of any class
of voting securities of another bank. Prior approval also must be obtained
before BancGroup acquires all or substantially all of the assets of another
bank, or before it merges or consolidates with another bank holding company.
BancGroup may not engage in "non-banking" activities unless it demonstrates to
the Federal Reserve's satisfaction that the activity in question is closely
related to banking and a proper incident thereto. Because BancGroup is a
registered bank holding company, persons seeking to acquire 25 percent or more
of any class of its voting securities must receive the approval of the Federal
Reserve. Similarly, under certain circumstances, persons seeking to acquire
between 10 percent and 25 percent also may be required to obtain prior Federal
Reserve approval.
In 1989 Congress expressly authorized the acquisition of savings
associations by bank holding companies. BancGroup must obtain the prior approval
of the Federal Reserve and the OTS (among other agencies) before making such an
acquisition and must demonstrate that the likely benefits to the public of the
proposed transaction (such as greater convenience, increased competition, or
gains in efficiency) outweigh potential burdens (such as an undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices).
Following enactment in 1991 of the FDIC Improvement Act, banks now are
subject to increased reporting requirements and more frequent examinations by
the bank regulators. The agencies also now have the authority to dictate certain
key decisions that formerly were left to management, including compensation
standards, loan underwriting standards, asset growth, and payment of dividends.
Failure to comply with these new standards, or failure to maintain capital above
specified levels set by the regulators, could lead to the
57
<PAGE> 69
imposition of penalties or the forced resignation of management. If a bank
becomes critically undercapitalized, the bank agencies have the authority to
place an institution into receivership or require that the bank be sold to, or
merged with, another financial institution.
In September 1994 Congress enacted the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994. This legislation, among other things, amended
the BHCA to permit bank holding companies, subject to certain limitations, to
acquire either control or substantial assets of a bank located in states other
than that bank holding company's home state regardless of state law
prohibitions. This legislation became effective on September 29, 1995. In
addition, this legislation also amended the Federal Deposit Insurance Act to
permit, beginning on June 1, 1997 (or earlier where state legislatures provide
express authorization), the merger of insured banks with banks in other states.
The officers and directors of BancGroup and the Subsidiary Banks are
subject to numerous insider transactions restrictions, including limits on the
amount and terms of transactions involving the Subsidiary Banks, on the one
hand, and their principal stockholders, officers, directors, and affiliates on
the other. There are a number of other laws that govern the relationship between
the Subsidiary Banks and their customers. For instance, the Community
Reinvestment Act is designed to encourage lending by banks to persons in low and
moderate income areas. The Home Mortgage Disclosure Act and the Equal Credit
Opportunity Act attempt to minimize lending decisions based on impermissible
criteria, such as race or gender. The Truth-in-Lending Act and the
Truth-in-Savings Act require banks to provide full disclosure of relevant terms
related to loans and savings accounts, respectively. Anti-tying restrictions
(which prohibit, for instance, conditioning the availability or terms of credit
on the purchase of another banking product) further restrict the Subsidiary
Banks' relationships with their customers.
On September 30, 1996, Congress passed and the President signed a
continuing resolution which directed the FDIC to set a one-time special
assessment on SAIF-insured deposits in an amount sufficient to capitalize the
Savings Association Insurance Fund ("SAIF") at the reserve level previously
mandated by statute. The FDIC Board met on October 8, 1996, and set this special
assessment at $0.657 per $100 of SAIF-insured deposits. Though the special
assessment applies to SAIF-insured deposits, the special assessment, under the
legislation enacted into law on September 30, 1996, will not be applied to 20%
of those SAIF-insured deposits held by certain so-called Oakar and Sasser
institutions. Thus, the special assessment's effective rate with respect to the
SAIF-insured deposits in such institutions will be $0.525 per $100 of their
SAIF-insured deposits. In addition, the legislation enacted by Congress provides
that the annual $800-million FICO bond service will be shared by both
BIF-insured institutions and SAIF-insured institutions. Prior to this
legislation, this bond service was the obligation of SAIF members only. This
sharing of the FICO bond service obligation, coupled with the capitalization of
SAIF to the mandatory reserve level, will cause the regular SAIF deposit
insurance premium rate to fall from $0.23 per $100 of SAIF-insured deposits to
under $0.07, assuming the SAIF does not incur any large losses which would
necessitate recapitalization of the Fund. The regular BIF deposit insurance
premium rate will be under $0.02 per $100 of BIF-insured deposits. The
differential between BIF and SAIF caused by the FICO bond service will terminate
on December 31, 1999, after which time the FICO bond service will be divided on
a strictly pro rata basis and SAIF and BIF rates will be equal unless one of the
deposit insurance funds requires recapitalization. BIF and SAIF premium rates
will be approximately $0.024 per $100 of deposits after December 31, 1999. In
the event of a merger of the thrift and bank charters, the differential could be
eliminated prior to December 31, 1999. The legislation also provides for a
merger of SAIF and BIF if charter merger occurs. Such a merger of the funds,
assuming a merger of the charters has taken place, would occur on January 1,
1999. BancGroup's subsidiary banks hold deposits which are insured by both SAIF
and BIF. The SAIF-insured deposits in all of BancGroup's subsidiary institutions
total approximately $850 million, before adjusting for certain allowances such
as the 20 percent discount referenced above, which would be subject to the
special assessment.
It should be noted that supervision, regulation, and examination of
BancGroup and the Subsidiary Banks are intended primarily for the protection of
depositors, not stockholders.
58
<PAGE> 70
BUSINESS OF BANKSHARES
GENERAL
Bankshares is a bank holding company organized under the laws of Georgia
with its principal executive office located in Dalton, Georgia. Bankshares
operates principally through the Bank, which is a state-chartered commercial
bank and which provides a range of retail banking services through its three
offices in Dalton/Whitfield County, Georgia. At June 30, 1996, Bankshares had
total consolidated assets of approximately $139 million, total consolidated
deposits of approximately $126 million and total consolidated stockholders'
equity of approximately $10 million. Bankshares' principal executive office is
located at 401 South Thornton Avenue, Dalton, Georgia 30722.
Additional information with respect to Bankshares is included in documents
incorporated by reference into this Prospectus. See "DOCUMENTS INCORPORATED BY
REFERENCE."
PRINCIPAL HOLDERS OF BANKSHARES COMMON STOCK
The following table sets forth the persons who beneficially owned, at
October 1, 1996, more than five percent of outstanding shares of Bankshares
Common Stock to the best information and knowledge of Bankshares. Unless
otherwise indicated, each person is the record owner of and has sole voting and
investment powers over his or her shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
- ---------------------------------------------------------------- --------------------- --------
<S> <C> <C>
Clayton Causby.................................................. 105,545(2) 15.06%
605 Kenilworth Court
Dalton, Georgia 30720
John W. Mashburn................................................ 36,520 5.21%
1710 Rio Vista Drive
Dalton, Georgia 30720
Tom Peeples..................................................... 66,246(3) 9.45%
604 Audubon Way
Dalton, Georgia 30720.........................................
</TABLE>
- ---------------
(1) The information shown above is based upon information furnished to
Bankshares by the named persons. Information relating to beneficial
ownership of Bankshares Common Stock is based upon "beneficial ownership"
concepts set forth in rules promulgated under the Securities Act of 1934,
as amended. Under such rules a person is deemed to be a "beneficial owner"
of a security if that person has or shares "voting power," which includes
the power to dispose or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial
owner of any security of which that person has the right to acquire
beneficial ownership within sixty (60) days. Under the rules, more than one
person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he
or she has no beneficial interest. The shares of Bankshares Common Stock
issuable upon exercise of the vested portion of any outstanding options
held by the indicated named persons are assumed to be outstanding for the
purpose of determining the percentage of shares beneficially owned by those
persons.
(2) Consists of (a) 49,445 shares owned of record by Mr. Causby, (b) 55,000
shares owned of record by Mr. Causby, as Trustee for Clayton Causby Co.,
Inc. Retirement Trust, and (c) 1,100 shares owned of record by Mr. Causby's
spouse.
(3) Consists of (a) 57,396 shares owned of record by Mr. Peeples, (b) 4,425
shares owned of record by Mr. Peeples, as custodian for Willena M.
Stanfield, (c) 4,425 shares owned of record by Mr. Peeples, as custodian
for Sydni M. Peeples.
59
<PAGE> 71
BANKSHARES COMMON STOCK OWNED BY MANAGEMENT
The following table sets forth the number and percentage ownership of
shares of Bankshares Common Stock beneficially owned by each director of
Bankshares and by all directors and executive officers as a group, at October 1,
1996. Unless otherwise indicated, each person is the record owner of and has
sole voting and investment powers over his or her shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME OF DIRECTOR BENEFICIALLY OWNED(1) OF TOTAL
- -------------------------------------------------------------- ---------------------- ----------
<S> <C> <C>
Charles Y. Allgood............................................ 23,282(2) 3.24%
J. Raymond Bates, Jr.......................................... 8,322(3) 1.18%
G. Thomas Boggs............................................... 11,000(4) 1.57%
Clayton Causby................................................ 105,545(5) 15.06%
Robert S. Goodroe............................................. 11,000(6) 1.57%
Neil F. Houston............................................... 5,500(7) 0.78%
Lowell D. Kirkman............................................. 6,600(8) 0.94%
Stuart McFarland.............................................. 5,022(9) 0.71%
Rick D. Myers................................................. 3,300(10) 0.47%
Tom Peeples................................................... 66,246(11) 9.45%
Jackson P. Turner............................................. 9,310(12) 1.31%
All directors and executive officers as a group (15
persons).................................................... 277,247 39.39%
</TABLE>
- ---------------
(1) The information shown above is based upon information furnished to
Bankshares by the named persons. Information relating to beneficial
ownership of Bankshares Common Stock is based upon "beneficial ownership"
concepts set forth in rules promulgated under the Securities Act of 1934,
as amended. Under such rules a person is deemed to be a "beneficial owner"
of a security if that person has or shares "voting power," which includes
the power to dispose or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial
owner of any security of which that person has the right to acquire
beneficial ownership within sixty (60) days. Under the rules, more than one
person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he
or she has no beneficial interest. The shares of Bankshares Common Stock
issuable upon exercise of the vested portion of any outstanding options
held by the indicated named persons are assumed to be outstanding for the
purpose of determining the percentage of shares beneficially owned by those
persons.
(2) Consists of (a) 5,500 shares owned of record by Mr. Allgood, (b) 110 shares
owned of record by Mr. Allgood's spouse, (c) options to purchase an
additional 15,400 shares, and (d) debentures convertible into an additional
2,272 shares. Mr. Allgood's address is 133 Huntington Road, Dalton, Georgia
30720.
(3) Consists of (a) 2,750 shares owned of record by Mr. Bates, (b) 3,300 shares
owned of record by Hardwick Bank, for the benefit of J. Raymond Bates, Jr.
IRA, and (c) debentures convertible into an additional 2,272 shares. Mr.
Bates' address is 505 W. Walnut Avenue, Dalton, Georgia 30720.
(4) Consists of (a) 9,000 shares owned of record by Mr. Boggs, (b) 1,000 shares
owned of record by Mr. Boggs, as custodian for Matthew J. Boggs, and (c)
1,000 shares owned of record by Mr. Boggs, as custodian for Mitchell T.
Boggs. Mr. Boggs' address is 901 W. Walnut Avenue, Dalton, Georgia 30720.
(5) Consists of (a) 49,445 shares owned of record by Mr. Causby, (b) 55,000
shares owned of record by Mr. Causby, as Trustee for Clayton Causby Co.,
Inc. Retirement Trust, and (c) 1,100 shares owned of record by Mr. Causby's
spouse. Mr. Causby's address is 605 Kenilworth Court, Dalton, Georgia
30720.
(6) Mr. Goodroe's address is 400 W. Mt. Haven Drive, Dalton, Georgia 30720.
(7) Mr. Houston's address is 1925 Tiffany Lane, Dalton, Georgia 30720.
(8) Mr. Kirkman's address is 712 Mt. Sinai Road, S., Dalton, Georgia 30720.
60
<PAGE> 72
(9) Consists of (a) 2,750 shares owned of record by Mr. McFarland jointly with
his spouse, and (b) debentures owned jointly with Mr. McFarland's spouse
convertible into an additional 2,272 shares. Mr. McFarland's address is 417
W. Mt. Haven Drive, Dalton, Georgia 30720.
(10) Mr. Myers' address is 606 Valley Drive, Dalton, Georgia 30720.
(11) Consists of (a) 57,396 shares owned of record by Mr. Peeples, (b) 4,425
shares owned of record by Mr. Peeples, as custodian for Willena M.
Stanfield, (c) 4,425 shares owned of record by Mr. Peeples, as custodian
for Sydni M. Peeples. Mr. Peeple's address is 604 Audubon Way, Dalton,
Georgia 30720.
(12) Consists of (a) 220 shares owned of record by Mr. Turner, (b) debentures
convertible into an additional 4,545 shares, and (c) debentures owned by
Mr. Turner's spouse convertible into an additional 4,545 shares. Mr.
Turner's address is 405 Valley Drive, Dalton, Georgia.
ADJOURNMENT OF SPECIAL MEETING
Approval of the Merger by Bankshares' shareholders requires the affirmative
vote of at least a majority of the total votes eligible to be cast at the
Special Meeting. In the event there are an insufficient number of shares of
Bankshares Common Stock present in person or by proxy at the Special Meeting to
approve the Merger, Bankshares' Board of Directors in its discretion may adjourn
the Special Meeting to a later date provided a majority of the shares present at
the Special Meeting have voted in favor of adjournment. The place and date to
which the Special Meeting would be adjourned would be announced at the Special
Meeting. If it is necessary to adjourn the Special Meeting and the adjournment
is for a period of less than 120 days from the original date of the Special
Meeting, no notice of the time and place of the adjourned meeting need be given
to shareholders other than an announcement made at the Special Meeting. Proxies
voted against the Merger and abstentions will not be voted to adjourn the
Special Meeting.
The effect of any such adjournment would be to permit Bankshares to solicit
additional proxies for approval of the Merger. While such an adjournment would
not invalidate any proxies previously filed, including those filed by
shareholders voting against the Merger, it would afford Bankshares the
opportunity to solicit additional proxies in favor of the Merger.
OTHER MATTERS
The Board of Directors of Bankshares is not aware of any business to come
before the Special Meeting other than those matters described above in this
Prospectus. If, however, any other matters not now known should properly come
before the Special Meeting, the proxy holders named in the accompanying proxy
will vote such proxy on such matters as determined by a majority of the Board of
Directors of Bankshares.
DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in BancGroup's proxy solicitation
materials for its 1997 annual meeting of stockholders, any stockholder proposal
to take action at such meeting must be received at BancGroup's main office at
One Commerce Street, Post Office Box 1108, Montgomery, Alabama 36192, no later
than 120 calendar days in advance of the date of March 18, 1997.
LEGAL MATTERS
Certain legal matters regarding the shares of BancGroup Common Stock of
BancGroup offered hereby are being passed upon by the law firm of Miller,
Hamilton, Snider & Odom, L.L.C., Mobile, Alabama, of which John C. H. Miller,
Jr., a director of BancGroup and of Colonial Bank, is a partner. Such firm
received fees for legal services performed in 1995 of $1,305,633. John C. H.
Miller, Jr. owns 10,243 shares of Common Stock. Mr. Miller also received
employee-related compensation from BancGroup in 1995 of $58,070.
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EXPERTS
Coopers & Lybrand L.L.P. serves as the independent accountants for
Bancgroup. The consolidated financial statements of Bancgroup and the
supplemental consolidated financial statements of BancGroup, both as of December
31, 1995 and 1994 and for each of the three years ended December 31, 1995, are
incorporated by reference in this Prospectus in reliance upon the report of such
firm, given on the authority of that firm as experts in accounting and auditing.
It is not expected that a representative of such firm will be present at the
Special Meeting.
Porter, Keadle and Moore serves as the independent accountants for
Bankshares. The consolidated financial statements of Bankshares as of December
31, 1995 and 1994 and for each of the three years ended December 31, 1995 that
are incorporated by reference in this Prospectus in reliance upon the report of
such firm, are given on the authority of that firm as experts in accounting and
auditing. It is not expected that a representative of such firm will be present
at the Special Meeting.
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY
GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF BANKSHARES PRIOR TO THE
SPECIAL MEETING, BY EXECUTING A LATER DATED PROXY AND DELIVERING IT TO THE
SECRETARY OF BANKSHARES PRIOR TO THE SPECIAL MEETING OR BY ATTENDING THE SPECIAL
MEETING VOTING IN PERSON.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE COLONIAL BANCGROUP, INC.,
AND
D/W BANKSHARES, INC.
DATED AS OF
SEPTEMBER 12, 1996
<PAGE> 75
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CAPTION PAGE
- ------- ----
<C> <S> <C>
ARTICLE 1 -- NAME
1.1 Name.......................................................................... A-1
ARTICLE 2 -- MERGER -- TERMS AND CONDITIONS
2.1 Applicable Law................................................................ A-1
2.2 Corporate Existence........................................................... A-1
2.3 Articles of Incorporation and Bylaws.......................................... A-1
2.4 Resulting Corporation's Officers and Board.................................... A-2
2.5 Stockholder Approval.......................................................... A-2
2.6 Further Acts.................................................................. A-2
2.7 Effective Date and Closing.................................................... A-2
2.8 Subsidiary Bank Merger........................................................ A-2
ARTICLE 3 -- CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock...................................... A-2
3.2 Surrender of Acquired Corporation Stock....................................... A-3
3.3 Fractional Shares............................................................. A-4
3.4 Adjustments................................................................... A-4
3.5 BancGroup Stock............................................................... A-4
3.6 Dissenting Rights............................................................. A-4
ARTICLE 4 -- REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
4.1 Organization.................................................................. A-4
4.2 Capital Stock................................................................. A-4
4.3 Financial Statements; Taxes................................................... A-4
4.4 No Conflict with Other Instrument............................................. A-5
4.5 Absence of Material Adverse Change............................................ A-5
4.6 Approval of Agreements........................................................ A-5
4.7 Tax Treatment................................................................. A-6
4.8 Title and Related Matters..................................................... A-6
4.9 Subsidiaries.................................................................. A-6
4.10 Contracts..................................................................... A-6
4.11 Litigation.................................................................... A-6
4.12 Compliance.................................................................... A-6
4.13 Registration Statement........................................................ A-7
4.14 SEC Filings................................................................... A-7
4.15 Form S-4...................................................................... A-7
4.16 Brokers....................................................................... A-7
4.17 Government Authorization...................................................... A-7
4.18 Absence of Regulatory Communications.......................................... A-7
4.19 Disclosure.................................................................... A-7
ARTICLE 5 -- REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED CORPORATION
5.1 Organization.................................................................. A-8
5.2 Capital Stock................................................................. A-8
5.3 Subsidiaries.................................................................. A-8
5.4 Financial Statements; Taxes................................................... A-8
</TABLE>
i
<PAGE> 76
<TABLE>
<CAPTION>
CAPTION PAGE
- ------- ----
<C> <S> <C>
5.5 Absence of Certain Changes or Events.......................................... A-9
5.6 Title and Related Matters..................................................... A-10
5.7 Commitments................................................................... A-10
5.8 Charter and Bylaws............................................................ A-11
5.9 Litigation.................................................................... A-11
5.10 Material Contract Defaults.................................................... A-11
5.11 No Conflict with Other Instrument............................................. A-11
5.12 Governmental Authorization.................................................... A-11
5.13 Absence of Regulatory Communications.......................................... A-11
5.14 Absence of Material Adverse Change............................................ A-12
5.15 Insurance..................................................................... A-12
5.16 Pension and Employee Benefit Plans............................................ A-12
5.17 Buy-Sell Agreement............................................................ A-12
5.18 Brokers....................................................................... A-12
5.19 Approval of Agreements........................................................ A-12
5.20 Disclosure.................................................................... A-13
5.21 Registration Statement........................................................ A-13
5.22 Loans; Adequacy of Allowance for Loan Losses.................................. A-13
5.23 Environmental Matters......................................................... A-13
5.24 Transfer of Shares............................................................ A-13
5.25 Collective Bargaining......................................................... A-14
5.26 Labor Disputes................................................................ A-14
5.27 Derivative Contracts.......................................................... A-14
ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup............................................. A-14
6.2 Additional Covenants of Acquired Corporation.................................. A-16
ARTICLE 7 -- MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation..................................................... A-18
7.2 Press Release................................................................. A-18
7.3 Mutual Disclosure............................................................. A-18
7.4 Access to Properties and Records.............................................. A-18
7.5 Notice of Adverse Changes..................................................... A-19
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval by Shareholders...................................................... A-19
8.2 Regulatory Authority Approval................................................. A-19
8.3 Litigation.................................................................... A-19
8.4 Registration Statement........................................................ A-19
8.5 Tax Opinion................................................................... A-19
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
9.1 Representations, Warranties and Covenants..................................... A-20
9.2 Adverse Changes............................................................... A-20
9.3 Closing Certificate........................................................... A-20
9.4 Opinion of Counsel............................................................ A-21
9.5 Fairness Opinion.............................................................. A-21
9.6 NYSE Listing.................................................................. A-21
9.7 Other Matters................................................................. A-21
9.8 Material Events............................................................... A-21
</TABLE>
ii
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<TABLE>
<CAPTION>
CAPTION PAGE
- ------- ----
<C> <S> <C>
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations, Warranties and Covenants..................................... A-21
10.2 Adverse Changes............................................................... A-21
10.3 Closing Certificate........................................................... A-21
10.4 Opinion of Counsel............................................................ A-22
10.5 Controlling Shareholders...................................................... A-22
10.6 Other Matters................................................................. A-22
10.7 Dissenters.................................................................... A-22
10.8 Material Events............................................................... A-22
10.9 Severance Agreement........................................................... A-22
10.10 Pooling of Interests.......................................................... A-22
ARTICLE 11 -- TERMINATION OF REPRESENTATIONS AND WARRANTIES............................. A-23
ARTICLE 12 -- NOTICES................................................................... A-23
ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1 Amendment..................................................................... A-23
13.2 Termination................................................................... A-23
13.3 Damages....................................................................... A-24
ARTICLE 14 -- DEFINITIONS............................................................... A-24
ARTICLE 15 -- MISCELLANEOUS
15.1 Expenses...................................................................... A-28
15.2 Benefit....................................................................... A-28
15.3 Governing Law................................................................. A-28
15.4 Counterparts.................................................................. A-28
15.5 Headings...................................................................... A-28
15.6 Severability.................................................................. A-28
15.7 Construction.................................................................. A-28
15.8 Return of Information......................................................... A-28
15.9 Equitable Remedies............................................................ A-28
15.10 Attorneys' Fees............................................................... A-29
15.11 No Waiver..................................................................... A-29
15.12 Remedies Cumulative........................................................... A-29
15.13 Entire Contract............................................................... A-29
</TABLE>
iii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this the
12th day of September, 1996, by and between D/W BANKSHARES, INC. ("Acquired
Corporation"), a Georgia corporation, and THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
WITNESSETH
WHEREAS, Acquired Corporation operates as a bank holding company for its
wholly owned subsidiary, Dalton/Whitfield Bank & Trust (the "Bank"), with its
principal office in Dalton, Georgia; and
WHEREAS, BancGroup is a bank holding company with subsidiary banks in
Alabama, Florida, Georgia and Tennessee; and
WHEREAS, Acquired Corporation wishes to merge with BancGroup; and
WHEREAS, it is the intention of BancGroup and Acquired Corporation that
such merger shall qualify for federal income tax purposes as a "reorganization"
within the meaning of section 368(a) of the Code, as defined herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Parties hereto agree as follows:
ARTICLE 1
NAME
1.1 Name. The name of the corporation resulting from the Merger shall be
"The Colonial BancGroup, Inc."
ARTICLE 2
MERGER -- TERMS AND CONDITIONS
2.1 Applicable Law. On the Effective Date, Acquired Corporation shall be
merged with and into BancGroup (herein referred to as the "Resulting
Corporation" whenever reference is made to it as of the time of merger or
thereafter). The Merger shall be undertaken pursuant to the provisions of and
with the effect provided in the DGCL and, to the extent applicable, the GBCC.
The offices and facilities of Acquired Corporation and of BancGroup shall become
the offices and facilities of the Resulting Corporation.
2.2 Corporate Existence. On the Effective Date, the corporate existence of
Acquired Corporation and of BancGroup shall, as provided in the DGCL and the
GBCC, be merged into and continued in the Resulting Corporation, and the
Resulting Corporation shall be deemed to be the same corporation as Acquired
Corporation and BancGroup. All rights, franchises and interests of Acquired
Corporation and BancGroup, respectively, in and to every type of property (real,
personal and mixed) and choses in action shall be transferred to and vested in
the Resulting Corporation by virtue of the Merger without any deed or other
transfer. The Resulting Corporation on the Effective Date, and without any order
or other action on the part of any court or otherwise, shall hold and enjoy all
rights of property, franchises and interests, including appointments,
designations and nominations and all other rights and interests as trustee,
executor, administrator, transfer agent and registrar of stocks and bonds,
guardian of estates, assignee, and receiver and in every other fiduciary
capacity and in every agency, and capacity, in the same manner and to the same
extent as such rights, franchises and interests were held or enjoyed by Acquired
Corporation and BancGroup, respectively, on the Effective Date.
2.3 Articles of Incorporation and Bylaws. On the Effective Date, the
certificate of incorporation and bylaws of the Resulting Corporation shall be
the restated certificate of incorporation and bylaws of BancGroup as they exist
immediately before the Effective Date.
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2.4 Resulting Corporation's Officers and Board. The board of directors and
the officers of the Resulting Corporation on the Effective Date shall consist of
those persons serving in such capacities of BancGroup as of the Effective Date.
2.5 Stockholder Approval. This Agreement shall be submitted to the
shareholders of Acquired Corporation at the Stockholders Meeting to be held as
promptly as practicable consistent with the satisfaction of the conditions set
forth in this Agreement. Upon approval by the requisite vote of the shareholders
of Acquired Corporation as required by applicable Law, this Agreement shall
become effective as soon as practicable thereafter in the manner provided in
section 2.7 hereof.
2.6 Further Acts. If, at any time after the Effective Date, the Resulting
Corporation shall consider or be advised that any further assignments or
assurances in law or any other acts are necessary or desirable (i) to vest,
perfect, confirm or record, in the Resulting Corporation, title to and
possession of any property or right of Acquired Corporation or BancGroup,
acquired as a result of the Merger, or (ii) otherwise to carry out the purposes
of this Agreement, BancGroup and its officers and directors shall execute and
deliver all such proper deeds, assignments and assurances in law and do all acts
necessary or proper to vest, perfect or confirm title to, and possession of,
such property or rights in the Resulting Corporation and otherwise to carry out
the purposes of this Agreement; and the proper officers and directors of the
Resulting Corporation are fully authorized in the name of Acquired Corporation
or BancGroup, or otherwise, to take any and all such action.
2.7 Effective Date and Closing. Subject to the terms of all requirements
of Law and the conditions specified in this Agreement, the Merger shall become
effective on the date specified in the Certificate of Merger to be issued by the
Secretary of State of the State of Delaware (such time being herein called the
"Effective Date"). The Closing shall take place at the offices of BancGroup, in
Montgomery, Alabama, at 11:00 a.m. on the date that the Effective Date occurs or
at such other place and time that the Parties may mutually agree.
2.8 Subsidiary Bank Merger. BancGroup and Acquired Corporation anticipate
that immediately after the Effective Date the Bank will merge with and into
Colonial Bank, BancGroup's Georgia subsidiary bank. The exact timing and
structure of such merger are not known at this time, and BancGroup in its
discretion will finalize such timing and structure at a later date. Acquired
Corporation will cooperate with BancGroup in the execution of appropriate
documentation relating to such merger.
ARTICLE 3
CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock.
(a) On the Effective Date, each share of common stock of Acquired
Corporation outstanding and held by Acquired Corporation's shareholders (the
"Acquired Corporation Stock"), shall be converted by operation of law and
without any action by any holder thereof into shares of BancGroup Common Stock
at a per share price of $27.39 (the "Merger Consideration") as specified below.
Specifically, each outstanding share of Acquired Corporation Stock shall
(subject to section 3.3 hereof), be converted into such number of shares of
BancGroup Common Stock equal to $27.39 divided by the Market Value. For purposes
of this Agreement, "Market Value" shall represent the per share market value of
the BancGroup Common Stock at the Effective Date and shall be determined by
calculating the average of the closing prices of the Common Stock of BancGroup
as reported by the NYSE on each of the ten (10) trading days ending on the
trading day immediately preceding the Effective Date; provided, however, that
regardless of the actual Market Value as calculated above. Market Value shall
not be less than $29.75, nor more than $37.75. Accordingly, the maximum number
of shares of BancGroup Common Stock to be issued in the Merger shall be 645,240
(based upon a minimum Market Value of $29.75) and the minimum number of shares
of BancGroup Common Stock to be issued in the Merger shall be 508,500 (based
upon a maximum Market Value of $37.75) assuming 700,836 shares of Acquired
Corporation common stock outstanding. To the extent that the number of shares of
Acquired Corporation Stock may increase based upon the exercise of Acquired
Corporation Options or the conversion of Acquired Corporation debentures, the
aggregate number of shares of BancGroup Common
A-2
<PAGE> 80
Stock to be issued in the Merger shall be increased with each share of Acquired
Corporation Stock outstanding at the Effective Date exchanged for shares of
BancGroup Common Stock equal to $27.39 divided by the Market Value.
(b)(i) On the Effective Date, BancGroup shall assume all Acquired
Corporation Options outstanding, and each such option shall cease to represent a
right to acquire Acquired Corporation common stock and shall, instead, represent
the right to acquire BancGroup Common Stock on substantially the same terms
applicable to the Acquired Corporation Options except as specified below in this
section. The number of shares of BancGroup Common Stock to be issued pursuant to
such options shall equal the number of shares of Acquired Corporation common
stock subject to such Acquired Corporation Options multiplied by the Exchange
Ratio, provided that no fractions of shares of BancGroup Common Stock shall be
issued and the number of shares of BancGroup Common Stock to be issued upon the
exercise of Acquired Corporation Options, if a fractional share exists, shall
equal the number of whole shares obtained by rounding to the nearest whole
number, giving account to such fraction. The exercise price for the acquisition
of BancGroup Common Stock shall be the exercise price for each share of Acquired
Corporation common stock subject to such options divided by the Exchange Ratio,
adjusted appropriately for any rounding to whole shares that may be done. For
purposes of this Agreement, the "Exchange Ratio" shall mean the result obtained
by dividing $27.39 by the Market Value. It is intended that the assumption by
BancGroup of the Acquired Corporation Options shall be undertaken in a manner
that will not constitute a "modification" as defined in Section 424 of the Code
as to any stock option which is an "incentive stock option." Schedule 3.1 hereto
sets forth the names of all persons holding Acquired Corporation Options, the
number of shares of Acquired Corporation common stock subject to such options,
the exercise price and the expiration date of such options.
(ii) As soon as practicable after the Effective Date, BancGroup shall file
at its expense a registration statement with the SEC on Form S-8 or such other
appropriate form with respect to the shares of BancGroup Common Stock to be
issued pursuant to such options and shall use its reasonable best efforts to
maintain the effectiveness of such registration statement for so long as such
options remain outstanding. Such shares shall also be registered or qualified
for sale under the securities laws of any state in which registration or
qualification is necessary.
(c) On the Effective Date, BancGroup will assume Acquired Corporation's
Series A 7% Convertible Subordinated Debentures (the "Series A Debentures")
respecting the issuance of 64,773 shares of Acquired Corporation common stock.
Such debentures shall be convertible into shares of BancGroup Common Stock, with
each share of Acquired Corporation common stock that would have been issued upon
conversion of such debenture being convertible into such number of shares of
BancGroup Common Stock equal to one share of Acquired Corporation common stock
multiplied by the Exchange Ratio. No fractions of shares of BancGroup Common
Stock will be issued upon conversion of such debentures, and any fractions to be
issued shall be paid in cash as set forth in such debentures.
3.2 Surrender of Acquired Corporation Stock. After the Effective Date,
each holder of an outstanding certificate or certificates which prior thereto
represented shares of Acquired Corporation Stock who is entitled to receive
BancGroup Common Stock shall be entitled, upon surrender to BancGroup of their
certificate or certificates representing shares of Acquired Corporation Stock
(or an affidavit or affirmation by such holder of the loss, theft, or
destruction of such certificate or certificates in such form as BancGroup may
reasonably require and, if BancGroup reasonably requires, a bond of indemnity in
form and amount, issued by such sureties, as BancGroup may reasonably require),
to receive in exchange therefor a certificate or certificates representing the
number of whole shares of BancGroup Common Stock into and for which the shares
of Acquired Corporation Stock so surrendered shall have been converted, such
certificates to be of such denominations and registered in such names as such
holder may reasonably request. Until so surrendered and exchanged, each such
outstanding certificate which, prior to the Effective Date, represented shares
of Acquired Corporation Stock and which is to be converted into BancGroup Common
Stock shall for all purposes evidence ownership of the BancGroup Common Stock
into and for which such shares shall have been so converted, except that no
dividends or other distributions with respect to such BancGroup Common Stock
shall be made until the certificates previously representing shares of Acquired
Corporation Stock shall have been properly tendered.
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3.3 Fractional Shares. No fractional shares of BancGroup Common Stock
shall be issued, and each holder of shares of Acquired Corporation Stock having
a fractional interest arising upon the conversion of such shares into shares of
BancGroup Common Stock shall, at the time of surrender of the certificates
previously representing Acquired Corporation Stock, be paid by BancGroup an
amount in cash equal to the Market Value of such fractional share.
3.4 Adjustments. In the event that prior to the Effective Date BancGroup
Common Stock shall be changed into a different number of shares or a different
class of shares by reason of any recapitalization or reclassification, stock
dividend, combination, stock split, or reverse stock split of the BancGroup
Common Stock, an appropriate and proportionate adjustment shall be made in the
number of shares of BancGroup Common Stock into which the Acquired Corporation
Stock shall be converted.
3.5 BancGroup Stock. The shares of Common Stock of BancGroup issued and
outstanding immediately before the Effective Date shall continue to be issued
and outstanding shares of the Resulting Corporation.
3.6 Dissenting Rights. Any shareholder of Acquired Corporation who shall
not have voted in favor of this Agreement and who has complied with the
applicable procedures set forth in the GBCC, relating to rights of dissenting
shareholders, shall be entitled to receive payment for the fair value of his
Acquired Corporation Stock. If after the Effective Date a dissenting shareholder
of Acquired Corporation fails to perfect, or effectively withdraws or loses, his
right to appraisal and payment for his shares of Acquired Corporation Stock,
BancGroup shall issue and deliver the consideration to which such holder of
shares of Acquired Corporation Stock is entitled under Section 3.1 (without
interest) upon surrender of such holder of the certificate or certificates
representing shares of Acquired Corporation Stock held by him.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
BancGroup represents, warrants and covenants to and with Acquired
Corporation as follows:
4.1 Organization. BancGroup is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. BancGroup
has the necessary corporate powers to carry on its business as presently
conducted and is qualified to do business in every jurisdiction in which the
character and location of the Assets owned by it or the nature of the business
transacted by it requires qualification or in which the failure to qualify
could, individually or in the aggregate, have a Material Adverse Effect.
4.2 Capital Stock.
(a) The authorized capital stock of BancGroup consists of (A) 44,000,000
shares of Common Stock, $2.50 par value per share, of which as of August 13,
1996, 16,264,524 shares were validly issued and outstanding, fully paid and
nonassessable and are not subject to preemptive rights (not counting additional
shares subject to issue pursuant to stock option and other plans and convertible
debentures), and (B) 1,000,000 shares of Preference Stock, $2.50 par value per
share, none of which are issued and outstanding. The shares of BancGroup Common
Stock to be issued in the Merger are duly authorized and, when so issued, will
be validly issued and outstanding, fully paid and nonassessable, will have been
registered under the 1933 Act, and will have been registered or qualified under
the securities laws of all jurisdictions in which such registration or
qualification is required, based upon information provided by Acquired
Corporation.
(b) The authorized capital stock of each Subsidiary of BancGroup is validly
issued and outstanding, fully paid and nonassessable, and each Subsidiary is
wholly owned, directly or indirectly, by BancGroup.
4.3 Financial Statements; Taxes. (a) BancGroup has delivered to Acquired
Corporation copies of the following financial statements of BancGroup.
(i) Consolidated balance sheets as of December 31, 1994, and December 31,
1995, and for the six months ended June 30, 1996;
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(ii) Consolidated statements of operations for each of the three years
ended December 31, 1993, 1994 and 1995, and for the six months ended June 30,
1996;
(iii) Consolidated statements of cash flows for each of the three years
ended December 31, 1993, 1994 and 1995, and for the six months ended June 30,
1996; and
(iv) Consolidated statements of changes in shareholders' equity for the
three years ended December 31, 1993, 1994 and 1995, and for the six months ended
June 30, 1996.
All such financial statements are in all material respects in accordance
with the books and records of BancGroup and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, all as more particularly set forth in the
notes to such statements. Each of the consolidated balance sheets presents
fairly as of its date the consolidated financial condition of BancGroup and its
Subsidiaries. Except as and to the extent reflected or reserved against in such
balance sheets (including the notes thereto), BancGroup did not have, as of the
dates of such balance sheets, any material Liabilities or obligations (absolute
or contingent) of a nature customarily reflected in a balance sheet or the notes
thereto. The statements of consolidated income, shareholders' equity and changes
in consolidated financial position present fairly the results of operations and
changes in financial position of BancGroup and its Subsidiaries for the periods
indicated. The foregoing representations, insofar as they relate to the
unaudited interim financial statements of BancGroup for the six months ended
June 30, 1996, are subject in all cases to normal recurring year-end adjustments
and the omission of footnote disclosure.
(b) All Tax returns required to be filed by or on behalf of BancGroup have
been timely filed (or requests for extensions therefor have been timely filed
and granted and have not expired), and all returns filed are complete and
accurate in all material respects. All Taxes shown on these returns to be due
and all additional assessments received have been paid. The amounts recorded for
Taxes on the balance sheets provided under section 4.3(a) are, to the Knowledge
of BancGroup, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign or other Taxes (including any interest or
penalties) of BancGroup accrued for or applicable to the period ended on the
dates thereof, and all years and periods prior thereto and for which BancGroup
may at such dates have been liable in its own right or as transferee of the
Assets of, or as successor to, any other corporation or other party. No audit,
examination or investigation is presently being conducted or, to the Knowledge
of BancGroup, threatened by any taxing authority which is likely to result in a
material Tax Liability, no material unpaid Tax deficiencies or additional
liabilities of any sort have been proposed by any governmental representative
and no agreements for extension of time for the assessment of any material
amount of Tax have been entered into by or on behalf of BancGroup. BancGroup has
withheld from its employees (and timely paid to the appropriate governmental
entity) proper and accurate amounts for all periods in material compliance with
all Tax withholding provisions of applicable federal, state, foreign and local
Laws (including without limitation, income, social security and employment Tax
withholding for all types of compensation).
4.4 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in a breach of or
constitute a Default (without regard to the giving of notice or the passage of
time) under any material Contract, indenture, mortgage, deed of trust or other
material agreement or instrument to which BancGroup or any of its Subsidiaries
is a party or by which they or their Assets may be bound; will not conflict with
any provision of the restated certificate of incorporation or bylaws of
BancGroup or the articles of incorporation or bylaws of any of its Subsidiaries;
and will not violate any provision of any Law, regulation, judgment or decree
binding on them or any of their Assets.
4.5 Absence of Material Adverse Change. Since the date of the most recent
balance sheet provided under section 4.3(a)(i) above, 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 BancGroup.
4.6 Approval of Agreements. The executive committee of the board of
directors of BancGroup has approved this Agreement and the transactions
contemplated by it and has authorized the execution and delivery by BancGroup of
this Agreement, and has agreed to recommend approval of this Agreement by
BancGroup's Board of Directors. This Agreement constitutes the legal, valid and
binding obligation of
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BancGroup, enforceable against it in accordance with its terms. Approval of this
Agreement by the stockholders of BancGroup is not required by applicable law.
Subject to the matters referred to in section 8.2, BancGroup has full power,
authority and legal right to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. BancGroup has no Knowledge of any
fact or circumstance under which the appropriate regulatory approvals required
by section 8.2 will not be granted without the imposition of material conditions
or material delays.
4.7 Tax Treatment. BancGroup has no present plan to sell or otherwise
dispose of any of the Assets of Acquired Corporation, or to liquidate any
Subsidiaries, subsequent to the Merger, and BancGroup intends to continue the
historic business of Acquired Corporation.
4.8 Title and Related Matters. BancGroup has good and marketable title to
all the properties, interests in properties and Assets, real and personal,
reflected in the most recent balance sheet referred to in section 4.3(a), or
acquired after the date of such balance sheet (except properties, interests and
Assets sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes of such balance sheet, (ii) liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of BancGroup, the material structures and
equipment of BancGroup comply in all material respects with the requirements of
all applicable Laws.
4.9 Subsidiaries. Each Subsidiary of BancGroup has been duly incorporated
and is validly existing as a corporation in good standing under the Laws of the
jurisdiction of its incorporation and each Subsidiary has been duly qualified as
a foreign corporation to transact business and is in good standing under the
Laws of each other jurisdiction in which it owns or leases properties, or
conducts any business so as to require such qualification and in which the
failure to be duly qualified could have a Material Adverse Effect upon BancGroup
and its Subsidiaries considered as one enterprise; each of the banking
Subsidiaries of BancGroup has its deposits fully insured by the Federal Deposit
Insurance Corporation to the extent provided by the Federal Deposit Insurance
Act; and the businesses of the non-bank Subsidiaries of BancGroup are permitted
to subsidiaries of registered bank holding companies.
4.10 Contracts. Neither BancGroup nor any of its Subsidiaries is in
violation of its respective certificate of incorporation or bylaws or in Default
in the performance or observance of any material obligation, agreement, covenant
or condition contained in any Contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which it is a party or by which it or its
property may be bound.
4.11 Litigation. Except as disclosed in or reserved for in BancGroup's
financial statements, there is no Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to the Knowledge of BancGroup, threatened
against or affecting BancGroup or any of its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to any such Litigation) which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which is likely to have any Material Adverse Effect or prospective
Material Adverse Effect, or which is likely to materially and adversely affect
the properties or Assets thereof or which is likely to materially affect or
delay the consummation of the transactions contemplated by this Agreement; all
pending legal or governmental proceedings to which BancGroup or any Subsidiary
is a party or of which any of their properties is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material; and
neither BancGroup nor any of its Subsidiaries have any contingent obligations
which could be considered material to BancGroup and its Subsidiaries considered
as one enterprise which are not disclosed in the Registration Statement as it
may be amended or supplemented.
4.12 Compliance. BancGroup and its Subsidiaries, in the conduct of their
businesses, are to the Knowledge of BancGroup, in material compliance with all
material federal, state or local Laws applicable to their or the conduct of
their businesses.
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4.13 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders' Meeting, the Registration
Statement, including the Proxy Statement which shall constitute a part thereof,
will comply in all material respects with the requirements of the 1933 Act and
the rules and regulations thereunder, will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from the Proxy
Statement made in reliance upon and in conformity with information furnished in
writing to BancGroup by Acquired Corporation or any of its representatives
expressly for use in the Proxy Statement or information included in the Proxy
Statement regarding the business of Acquired Corporation, its operations, Assets
and capital.
4.14 SEC Filings. (a) BancGroup has heretofore delivered to Acquired
Corporation copies of BancGroup's: (i) Annual Report on Form 10-K for the fiscal
year ended December 31, 1995; (ii) 1995 Annual Report to Shareholders; (iii)
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31 and June
30, 1996; and (iv) any reports on Form 8-K, filed by BancGroup with the SEC
since December 31, 1995. Since December 31, 1995, BancGroup has timely filed all
reports and registration statements and the documents required to be filed with
the SEC under the rules and regulations of the SEC and all such reports and
registration statements or other documents have complied in all material
respects, as of their respective filing dates and effective dates, as the case
may be, with all the applicable requirements of the 1933 Act and the 1934 Act.
As of the respective filing and effective dates, none of such reports or
registration statements or other documents contained any untrue statement of a
material fact or omitted 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.
(b) The documents incorporated by reference into the Registration
Statement, at the time they were filed with the SEC, complied in all material
respects with the requirements of the 1934 Act and Regulations thereunder and
when read together and with the other information in the Registration Statement
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading at the time the Registration Statement becomes effective
or at the time of the Stockholders Meeting.
4.15 Form S-4. The conditions for use of a registration statement on SEC
Form S-4 set forth in the General Instructions on Form S-4 have been or will be
satisfied with respect to BancGroup and the Registration Statement.
4.16 Brokers. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by BancGroup
directly with Acquired Corporation and without the intervention of any other
person, either as a result of any act of BancGroup or otherwise in such manner
as to give rights to any valid claim against BancGroup for finders fees,
brokerage commissions or other like payments.
4.17 Government Authorization. BancGroup and its Subsidiaries have all
Permits that, to the Knowledge of BancGroup and its Subsidiaries, are or will be
legally required to enable BancGroup or any of its Subsidiaries to conduct their
businesses in all material respects as now conducted by each of them.
4.18 Absence of Regulatory Communications. Neither BancGroup nor any of
its Subsidiaries is subject to, or has received during the past three (3) years,
any written communication directed specifically to it from any Agency to which
it is subject or pursuant to which such Agency has imposed or has indicated it
may impose any material restrictions on the operations of it or the business
conducted by it or in which such Agency has raised a material question
concerning the condition, financial or otherwise, of such company.
4.19 Disclosure. No representation or warranty, or any statement or
certificate furnished or to be furnished to Acquired Corporation by BancGroup,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
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ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED CORPORATION
Acquired Corporation represents, warrants and covenants to and with
BancGroup, as follows:
5.1 Organization. Acquired Corporation is a Georgia corporation, and the
Bank is a Georgia state bank. Each Acquired Corporation Company is duly
organized, validly existing and in good standing under the respective Laws of
its jurisdiction of incorporation and has all requisite power and authority to
carry on its business as it is now being conducted and is qualified to do
business in every jurisdiction in which the character and location of the Assets
owned by it or the nature of the business transacted by it requires
qualification or in which the failure to qualify could, individually, or in the
aggregate, have a Material Adverse Effect.
5.2 Capital Stock. (i) As of August 26, 1996, the authorized capital stock
of Acquired Corporation consisted of 10,000,000 shares of common stock, $1.00
par value per share, 700,836 shares of which were issued and outstanding. All of
such shares which are outstanding are validly issued, fully paid and
nonassessable and not subject to preemptive rights. Acquired Corporation has
46,750 shares of its common stock which may be purchased at any time pursuant to
stock options under its stock option plans and 64,773 shares of its common stock
which may be issued upon the conversion of its Series A Debentures. Except for
the foregoing, Acquired Corporation does not have any other arrangements or
commitments obligating it to issue shares of its capital stock or any securities
convertible into or having the right to purchase shares of its capital stock.
5.3 Subsidiaries. Acquired Corporation has no direct Subsidiaries other
than the Bank, and there are no operating subsidiaries of the Bank. Acquired
Corporation owns all of the issued and outstanding capital stock of the Bank
free and clear of any liens, claims or encumbrances of any kind. All of the
issued and outstanding shares of capital stock of the Subsidiaries have been
validly issued and are fully paid and non-assessable. As of August 26, 1996,
there were 5,000,000 shares of the common stock, par value $1.00 per share,
authorized of the Bank, 633,387 of which were issued and outstanding and wholly
owned by Acquired Corporation.
5.4 Financial Statements; Taxes. (a) Acquired Corporation has delivered to
BancGroup copies of the following financial statements of Acquired Corporation:
(i) Consolidated statements of financial condition as of December 31,
1995 and 1994, and for the six months ended June 30, 1996;
(ii) Consolidated statements of income for each of the three years
ended December 31, 1995, 1994 and 1993, and for the six months ended June
30, 1996;
(iii) Consolidated statements of stockholders' equity for each of the
three years ended December 31, 1995, 1994, and 1993, and for the six months
ended June 30, 1996; and
(iv) Consolidated statements of cash flows for the three years ended
December 31, 1995, 1994 and 1993, and for the six months ended June 30,
1996.
All of the foregoing financial statements are in all material respects in
accordance with the books and records of Acquired Corporation and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except for changes required
by GAAP, all as more particularly set forth in the notes to such statements.
Each of such balance sheets presents fairly as of its date the financial
condition of Acquired Corporation. Except as and to the extent reflected or
reserved against in such balance sheets (including the notes thereto), Acquired
Corporation did not have, as of the date of such balance sheets, any material
Liabilities or obligations (absolute or contingent) of a nature customarily
reflected in a balance sheet or the notes thereto. The statements of income,
stockholders' equity and cash flows present fairly the results of operation,
changes in shareholders equity and cash flows of Acquired Corporation for the
periods indicated. The foregoing representations, insofar as they relate to the
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unaudited interim financial statements of Acquired Corporation for the six
months ended June 30, 1996, are subject in all cases to normal recurring
year-end adjustments and the omission of footnote disclosure.
(b) All Tax returns required to be filed by or on behalf of Acquired
Corporation have been timely filed (or requests for extensions therefor have
been timely filed and granted and have not expired), and all returns filed are
complete and accurate in all material respects. All Taxes shown on these returns
to be due and all additional assessments received have been paid. The amounts
recorded for Taxes on the balance sheets provided under section 5.4(a) are, to
the Knowledge of Acquired Corporation, sufficient in all material respects for
the payment of all unpaid federal, state, county, local, foreign and other Taxes
(including any interest or penalties) of Acquired Corporation accrued for or
applicable to the period ended on the dates thereof, and all years and periods
prior thereto and for which Acquired Corporation may at such dates have been
liable in its own right or as a transferee of the Assets of, or as successor to,
any other corporation or other party. No audit, examination or investigation is
presently being conducted or, to the Knowledge of Acquired Corporation,
threatened by any taxing authority which is likely to result in a material Tax
Liability, no material unpaid Tax deficiencies or additional liability of any
sort have been proposed by any governmental representative and no agreements for
extension of time for the assessment of any material amount of Tax have been
entered into by or on behalf of Acquired Corporation. Acquired Corporation has
not 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) Each Acquired Corporation Company has withheld from its employees (and
timely paid to the appropriate governmental entity) proper and accurate amounts
for all periods in material compliance with all Tax withholding provisions of
applicable federal, state, foreign and local Laws (including without limitation,
income, social security and employment Tax withholding for all types of
compensation). Each Acquired Corporation Company is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under section 3406 of the Code.
5.5 Absence of Certain Changes or Events. Except as set forth on Schedule
5.5, since the date of the most recent balance sheet provided under section
5.4(a)(i) above, no Acquired Corporation Company has
(a) issued, delivered or agreed to issue or deliver any stock, bonds or
other corporate securities (whether authorized and unissued or held in the
treasury) except shares of common stock issued upon the exercise of Acquired
Corporation Options, the Acquired Corporation's Series A Debentures;
(b) borrowed or agreed to borrow any funds or incurred, or become subject
to, any Liability (absolute or contingent) except borrowings, obligations
(including purchase of federal funds) and Liabilities incurred in the ordinary
course of business and consistent with past practice;
(c) paid any material obligation or Liability (absolute or contingent)
other than current Liabilities reflected in or shown on the most recent balance
sheet referred to in section 5.4(a)(i) and current Liabilities incurred since
that date in the ordinary course of business and consistent with past practice;
(d) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any Assets of any kind whatsoever to shareholders,
or purchased or redeemed, or agreed to purchase or redeem, any of its
outstanding securities;
(e) except in the ordinary course of business, sold or transferred, or
agreed to sell or transfer, any of its Assets, or canceled, or agreed to cancel,
any debts or claims;
(f) except in the ordinary course of business, entered or agreed to enter
into any agreement or arrangement granting any preferential rights to purchase
any of its Assets, or requiring the consent of any party to the transfer and
assignment of any of its Assets;
(g) suffered any Losses or waived any rights of value which in either event
in the aggregate are material considering its business as a whole;
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(h) except in the ordinary course of business, made or permitted any
amendment or termination of any Contract, agreement or license to which it is a
party if such amendment or termination is material considering its business as a
whole;
(i) except in accordance with normal and usual practice, made any accrual
or arrangement for or payment of bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer or employee;
(j) except in accordance with normal and usual practice, increased the rate
of compensation payable to or to become payable to any of its officers or
employees or made any material increase in any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement or other employee benefit
plan, payment or arrangement made to, for or with any of its officers or
employees;
(k) received notice or had Knowledge or reason to believe that any of its
substantial customers has terminated or intends to terminate its relationship,
which termination would have a Material Adverse Effect on its financial
condition, results of operations, business, Assets or properties;
(l) failed to operate its business in the ordinary course so as to preserve
its business intact and to preserve the goodwill of its customers and others
with whom it has business relations;
(m) entered into any other material transaction other than in the ordinary
course of business; or
(n) agreed in writing, or otherwise, to take any action described in
clauses (a) through (m) above.
Between the date hereof and the Effective Date, no Acquired Corporation
Company, without the express written approval of the chief financial officer of
BancGroup, will do any of the things listed in clauses (a) through (n) of this
section 5.5 except as permitted therein or as contemplated in this Agreement,
and no Acquired Corporation Company will enter into or amend any material
Contract, other than loans or renewals thereof entered into in the ordinary
course of business, without the express written consent of BancGroup.
5.6 Title and Related Matters.
(a) Title. Acquired Corporation has good and marketable title to all the
properties, interest in properties and Assets, real and personal, reflected in
the most recent balance sheet referred to in section 5.4(a)(i), or acquired
after the date of such balance sheet (except properties, interests and Assets
sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes to such balance sheet, (ii) Liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of Acquired Corporation, the material
structures and equipment of each Acquired Corporation Company comply in all
material respects with the requirements of all applicable Laws.
(b) Leases. Schedule 5.6(b) sets forth a list and description of all real
and personal property owned or leased by any Acquired Corporation Company,
either as lessor or lessee.
(c) Personal Property. Schedule 5.6(c) sets forth a depreciation schedule
of each Acquired Corporation Company's fixed Assets as of June 30, 1996.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a description
of all agreements relating to data processing computer software and hardware now
being used in the business operations of any Acquired Corporation Company.
Acquired Corporation is not aware of any defects, irregularities or problems
with any of its computer hardware or software which renders such hardware or
software unable to satisfactorily perform the tasks and functions to be
performed by them in the business of any Acquired Corporation Company.
5.7 Commitments. Except as set forth in Schedule 5.7, no Acquired
Corporation Company is a party to any oral or written (i) Contracts for the
employment of any officer or employee which is not terminable on 30 days' (or
less) notice, (ii) profit sharing, bonus, deferred compensation, savings, stock
option, severance
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pay, pension or retirement plan, agreement or arrangement, (iii) loan agreement,
indenture or similar agreement relating to the borrowing of money by such party,
(iv) guaranty of any obligation for the borrowing of money or otherwise,
excluding endorsements made for collection, and guaranties made in the ordinary
course of business, (v) consulting or other similar material Contracts, (vi)
collective bargaining agreement, (vii) agreement with any present or former
officer, director or shareholder of such party, or (viii) other Contract,
agreement or other commitment which is material to the business, operations,
property, prospects or Assets or to the condition, financial or otherwise, of
any Acquired Corporation Company. Complete and accurate copies of all Contracts,
plans and other items so listed have been made or will be made available to
BancGroup for inspection.
5.8 Charter and Bylaws. Schedule 5.8 contains true and correct copies of
the articles of incorporation and bylaws of each Acquired Corporation Company,
including all amendments thereto, as currently in effect. There will be no
changes in such articles of incorporation or bylaws prior to the Effective Date,
without the prior written consent of BancGroup.
5.9 Litigation. There is no Litigation (whether or not purportedly on
behalf of Acquired Corporation) pending or, to the Knowledge of Acquired
Corporation, threatened against or affecting any Acquired Corporation Company
(nor is Acquired Corporation aware of any facts which are likely to give rise to
any such Litigation) at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involves the possibility of
any judgment or Liability not fully covered by insurance in excess of a
reasonable deductible amount or which may have a Material Adverse Effect on
Acquired Corporation, and no Acquired Corporation Company is in Default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality, which Default would have a Material
Adverse Effect on Acquired Corporation. To the Knowledge of Acquired
Corporation, each Acquired Corporation Company has complied in all material
respects with all material applicable Laws and Regulations including those
imposing Taxes, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and Agencies, in respect of the
ownership of its properties and the conduct of its business, which, if not
complied with, would have a Material Adverse Effect on Acquired Corporation.
5.10 Material Contract Defaults. No Acquired Corporation Company is in
Default in any material respect under the terms of any material Contract,
agreement, lease or other commitment which is or may be material to the
business, operations, properties or Assets, or the condition, financial or
otherwise, of such company and, to the Knowledge of Acquired Corporation, there
is no event which, with notice or lapse of time, or both, may be or become an
event of Default under any such material Contract, agreement, lease or other
commitment in respect of which adequate steps have not been taken to prevent
such a Default from occurring.
5.11 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of or constitute a Default under any material Contract,
indenture, mortgage, deed of trust or other material agreement or instrument to
which any Acquired Corporation Company is a party and will not conflict with any
provision of the charter or bylaws of any Acquired Corporation Company.
5.12 Governmental Authorization. Each Acquired Corporation Company has all
Permits that, to the Knowledge of Acquired Corporation, are or will be legally
required to enable any Acquired Corporation Company to conduct its business in
all material respects as now conducted by each Acquired Corporation Company.
5.13 Absence of Regulatory Communications. No Acquired Corporation Company
is subject to, nor has any Acquired Corporation Company received during the past
three years, any written communication directed specifically to it from any
Agency to which it is subject or pursuant to which such Agency has imposed or
has indicated it may impose any material restrictions on the operations of it or
the business conducted by it or in which such Agency has raised any material
question concerning the condition, financial or otherwise, of such company.
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5.14 Absence of Material Adverse Change. To the Knowledge of Acquired
Corporation, since the date of the most recent balance sheet provided under
section 5.4(a)(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 any Acquired Corporation Company.
5.15 Insurance. Each Acquired Corporation Company has in effect insurance
coverage and bonds with reputable insurers which, in respect to amounts, types
and risks insured, management of Acquired Corporation reasonably believes to be
adequate for the type of business conducted by such company. No Acquired
Corporation Company is liable for any material retroactive premium adjustment.
All insurance policies and bonds are valid, enforceable and in full force and
effect, and no Acquired Corporation Company has received any notice of any
material premium increase or cancellation with respect to any of its insurance
policies or bonds. Within the last three years, no Acquired Corporation Company
has been refused any insurance coverage which it has sought or applied for, and
it has no reason to believe that existing insurance coverage cannot be renewed
as and when the same shall expire, upon terms and conditions as favorable as
those presently in effect, other than possible increases in premiums that do not
result from any extraordinary loss experience. All policies of insurance
presently held or policies containing substantially equivalent coverage will be
outstanding and in full force with respect to each Acquired Corporation Company
at all times from the date hereof to the Effective Date.
5.16 Pension and Employee Benefit Plans.
(a) To the Knowledge of Acquired Corporation, all employee benefit plans of
each Acquired Corporation Company have been established in compliance with, and
such plans have been operated in material compliance with, all applicable Laws.
No Acquired Corporation Company sponsors or otherwise maintains a "pension plan"
within the meaning of section 3(2) of ERISA or any other retirement plan other
than the Dalton/Whitfield Bank & Trust 401(k) Profit Sharing Plan that is
intended to qualify under section 401 of the Code, nor do any unfunded
Liabilities exist with respect to any employee benefit plan, past or present. To
the Knowledge of Acquired Corporation, no employee benefit plan, any trust
created thereunder or any trustee or administrator thereof has engaged in a
"prohibited transaction," as defined in section 4975 of the Code, which may have
a Material Adverse Effect on the condition, financial or otherwise, of any
Acquired Corporation Company.
(b) To the Knowledge of Acquired Corporation, no amounts payable to any
employee of any Acquired Corporation Company will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code and
regulations thereunder.
5.17 Buy-Sell Agreement. To the Knowledge of Acquired Corporation, there
are no agreements among any of its shareholders granting to any person or
persons a right of first refusal in respect of the sale, transfer, or other
disposition of shares of outstanding securities by any shareholder of Acquired
Corporation, any similar agreement or any voting agreement or voting trust in
respect of any such shares.
5.18 Brokers. T. Stephen Johnson & Associates, Inc. has represented the
Acquired Corporation in connection with the transactions contemplated by this
Agreement. Apart from the foregoing, all negotiations relative to this Agreement
and the transactions contemplated by this Agreement have been carried on by
Acquired Corporation directly with BancGroup and without the intervention of any
other person, either as a result of any act of Acquired Corporation, or
otherwise, in such manner as to give rise to any valid claim against Acquired
Corporation for a finder's fee, brokerage commission or other like payment.
5.19 Approval of Agreements. The board of directors of Acquired
Corporation has approved this Agreement and the transactions contemplated by
this Agreement and has authorized the execution and delivery by Acquired
Corporation of this Agreement. Subject to the matters referred to in section
8.2, Acquired Corporation has full power, authority and legal right to enter
into this Agreement, and, upon appropriate vote of the shareholders of Acquired
Corporation in accordance with this Agreement, Acquired Corporation shall have
full power, authority and legal right to consummate the transactions
contemplated by this Agreement.
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5.20 Disclosure. No representation or warranty, nor any statement or
certificate furnished or to be furnished to BancGroup by Acquired Corporation,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
5.21 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders Meeting, the Registration
Statement, including the Proxy Statement which shall constitute part thereof,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this section shall only apply to
statements in or omissions from the Proxy Statement relating to descriptions of
the business of Acquired Corporation, its Assets, properties, operations, and
capital stock or to information furnished in writing by Acquired Corporation or
its representatives expressly for inclusion in the Proxy Statement.
5.22 Loans; Adequacy of Allowance for Loan Losses. All reserves for loan
losses shown on the most recent financial statements furnished by Acquired
Corporation have been calculated in accordance with prudent and customary
banking practices and are adequate in all material respects to reflect the risk
inherent in the loans of Acquired Corporation. Acquired Corporation has no
Knowledge of any fact which is likely to require a future material increase in
the provision for loan losses or a material decrease in the loan loss reserve
reflected in such financial statements. Each loan reflected as an Asset on the
financial statements of Acquired Corporation is the legal, valid and binding
obligation of the obligor of each loan, enforceable in accordance with its terms
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and to general
equitable principles. Acquired Corporation does not have in its portfolio any
loan exceeding its legal lending limit, and except as disclosed on Schedule
5.22, Acquired Corporation has no known significant delinquent, substandard,
doubtful, loss, nonperforming or problem loans.
5.23 Environmental Matters. To the Knowledge of Acquired Corporation, each
Acquired Corporation Company is in material compliance with all Laws and other
governmental requirements relating to the generation, management, handling,
transportation, treatment, disposal, storage, delivery, discharge, release or
emission of any waste, pollution, or toxic, hazardous or other substance (the
"Environmental Laws"), and Acquired Corporation has no Knowledge that any
Acquired Corporation Company has not complied with all regulations and
requirements promulgated by the Occupational Safety and Health Administration
that are applicable to any Acquired Corporation Company. To the Knowledge of
Acquired Corporation, there is no Litigation pending or threatened with respect
to any violation or alleged violation of the Environmental Laws. To the
Knowledge of Acquired Corporation, with respect to Assets of or owned by any
Acquired Corporation Company, including any Loan Property, (i) there has been no
spillage, leakage, contamination or release of any substances for which the
appropriate remedial action has not been completed; (ii) no owned or leased
property is contaminated with or contains any hazardous substance or waste; and
(iii) there are no underground storage tanks on any premises owned or leased by
any Acquired Corporation Company. Acquired Corporation has no Knowledge of any
facts which might suggest that any Acquired Corporation Company has engaged in
any management practice with respect to any of its past or existing borrowers
which could reasonably be expected to subject any Acquired Corporation Company
to any Liability, either directly or indirectly, under the principles of law as
set forth in United States v. Fleet Factors Corp., 901 F.2d 1550 (11th Cir.
1990) or any similar principles. Moreover, to the Knowledge of Acquired
Corporation, no Acquired Corporation Company has extended credit, either on a
secured or unsecured basis, to any person or other entity engaged in any
activities which would require or requires such person or entity to obtain any
Permits which are required under any Environmental Law which have not been
obtained.
5.24 Transfer of Shares. Acquired Corporation has no Knowledge of any plan
or intention on the part of Acquired Corporation's shareholders to sell or
otherwise dispose of any of the BancGroup Common Stock to be received by them in
the Merger that would reduce such shareholders' ownership to a number of shares
having, in the aggregate, a fair market value of less than fifty (50%) percent
of the total fair market value of Acquired Corporation common stock outstanding
immediately before the Merger.
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5.25 Collective Bargaining. There are no labor contracts, collective
bargaining agreements, letters of undertakings or other arrangements, formal or
informal, between any Acquired Corporation Company and any union or labor
organization covering any of Acquired Corporation Company's employees and none
of said employees are represented by any union or labor organization.
5.26 Labor Disputes. To the Knowledge of Acquired Corporation, each
Acquired Corporation Company is in material compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, wages and hours. No Acquired Corporation Company is or has been
engaged in any unfair labor practice, and, to the Knowledge of Acquired
Corporation, no unfair labor practice complaint against any Acquired Corporation
Company is pending before the National Labor Relations Board. Relations between
management of each Acquired Corporation Company and the employees are amicable
and there have not been, nor to the Knowledge of Acquired Corporation, are there
presently, any attempts to organize employees, nor to the Knowledge of Acquired
Corporation, are there plans for any such attempts.
5.27 Derivative Contracts. No Acquired Corporation Company is a party to
or has agreed to enter into a swap, forward, future, option, cap, floor or
collar financial contract, or any other interest rate or foreign currency
protection contract or derivative security not included in Acquired
Corporation's financial statements delivered under section 5.4 hereof which is a
financial derivative contract (including various combinations thereof).
ARTICLE 6
ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup. BancGroup covenants to and with
Acquired Corporation as follows:
(a) Registration Statement and Other Filings. BancGroup shall prepare
and file promptly with the SEC the Registration Statement on Form S-4 (or
such other form as may be appropriate) and all amendments and supplements
thereto, in form reasonably satisfactory to Acquired Corporation and its
counsel, with respect to the Common Stock to be issued pursuant to this
Agreement. BancGroup shall prepare and file promptly all necessary filings
with any Agencies which may be necessary for approval to consummate the
transactions contemplated by this Agreement.
(b) Blue Sky Permits. BancGroup shall use its best efforts to obtain,
prior to the effective date of the Registration Statement, all necessary
state securities Law or "blue sky" Permits and approvals required to carry
out the transactions contemplated by this Agreement.
(c) Financial Statements. BancGroup shall furnish to Acquired
Corporation:
(i) As soon as practicable and in any event within forty-five (45)
days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of
operations of BancGroup for such period and for the period beginning at
the commencement of the fiscal year and ending at the end of such
quarterly period, and a consolidated statement of financial condition of
BancGroup as of the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding periods ending in
the preceding fiscal year, subject to changes resulting from year-end
adjustments;
(ii) Promptly upon receipt thereof, copies of all audit reports
submitted to BancGroup by independent auditors in connection with each
annual, interim or special audit of the books of BancGroup made by such
accountants;
(iii) As soon as practicable, copies of all such financial
statements and reports as it shall send to its stockholders and of such
regular and periodic reports as BancGroup may file with the SEC or any
other Agency; and
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(iv) With reasonable promptness, such additional financial data as
Acquired Corporation may reasonably request.
(d) No Control of Acquired Corporation by BancGroup. Notwithstanding
any other provision hereof, until the Effective Date, the authority to
establish and implement the business policies of Acquired Corporation shall
continue to reside solely in Acquired Corporation's officers and board of
directors.
(e) Listing. Prior to the Effective Date, BancGroup shall use its
reasonable efforts to list the shares of BancGroup Common Stock to be
issued in the Merger on the NYSE or other quotations system on which such
shares are primarily traded.
(f) Employee Benefit Matters. On the Effective Date, all employees of
any Acquired Corporation Company shall, at BancGroup's option, either
become employees of the Resulting Corporation or its Subsidiaries or be
entitled to severance benefits in accordance with Colonial Bank's severance
policy as of the date of this Agreement. All employees of any Acquired
Corporation Company who become employees of the Resulting Corporation or
its Subsidiaries on the Effective Date shall be entitled, to the extent
permitted by applicable Law, to participate in all benefit plans of
Colonial Bank to the same extent as Colonial Bank employees except as
stated otherwise in this section. Employees of any Acquired Corporation
Company who become employees of the Resulting Corporation or its
Subsidiaries shall be allowed to participate as of the Effective Date in
the medical and dental benefits plan of Colonial Bank as new employees of
Colonial Bank, and the time of employment of such employees who are
employed at least 30 hours per week with any Acquired Corporation Company
at Closing shall be counted as employment under such dental and medical
plans of Colonial Bank for purposes of calculating any 30 day waiting
period and pre-existing condition limitations. To the extent permitted by
applicable Law, the period of service with the appropriate Acquired
Corporation Company of all employees who become employees of the Resulting
Corporation or its Subsidiaries on the Effective Date shall be recognized
only for vesting and eligibility purposes under Colonial Bank's benefit
plans. In addition, if the Effective Date falls within an annual period of
coverage under any group health plan or group dental plan of the Resulting
Corporation and its Subsidiaries, each such Acquired Corporation Company
employee shall be given credit for covered expenses paid by that employee
under comparable employee benefit plans of the Acquired Corporation Company
during the applicable coverage period through the Effective Date towards
satisfaction of any annual deductible limitation and out-of-pocket maximum
that may apply under that group health plan or group dental plan of the
Resulting Corporation and its Subsidiaries. BancGroup shall be responsible
for the provision of any continuation coverage to which an employee of any
Acquired Corporation Company becomes entitled under section 4980B of the
Code by virtue of a qualifying event occurring on or before the Effective
Date until the earliest date that the coverage would cease under section
4980B(f)(2)(B) of the Code, with the understanding for purposes of making
that determination that the Colonial Bank medical and dental plans are
successor plans within the meaning of section 1.162-26, Q&A 38, Proposed
Treasury Regulations.
(g) Indemnification. (i) For a period of two years after the
Effective Date, BancGroup shall indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of the
Acquired Corporation Companies (each, an "Indemnified Party") against all
Liabilities arising out of actions or omissions occurring at or prior to
the Effective Date (including the transactions contemplated by this
Agreement) to the full extent permitted under Georgia Law and by Acquired
Corporation's Articles of Incorporation and Bylaws as in effect on the date
hereof including provisions relating to advances of expenses incurred in
the defense of any Litigation.
(ii) BancGroup shall use its reasonable efforts to maintain
Acquired Corporation's existing director's and officers' liability
insurance policy (or a policy, including BancGroup's existing policy,
providing at least comparable coverage) covering persons who are
currently covered by such insurance for a period of three years after
the Effective Date on terms no less favorable than those in effect on
the date hereof, provided that BancGroup shall not be obligated to make
annual premium payments in respect of such policy (or coverage replacing
such policy) which exceed, for the portion
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related to Acquired Corporation's directors and officers, 150% of the
annual premium payments on Acquired Corporation's current policy in
effect as of the date of this Agreement.
(iii) Any Indemnified Party wishing to claim indemnification under
paragraph (i), upon learning of any such Liability or Litigation, shall
promptly notify BancGroup thereof. In the event of any such Litigation
(whether arising before or after the Effective Date), (1) BancGroup
shall have the right to assume the defense thereof and BancGroup shall
not be liable to such Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if BancGroup
elects not to assume such defense or counsel for the Indemnified Parties
advises that there are substantive issues which raise conflicts of
interest between BancGroup and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and BancGroup shall pay
all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; provided, however,
that BancGroup shall be obligated pursuant to this paragraph (iii) to
pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (2) the Indemnified Parties will cooperate in the defense
of any such Litigation, and (3) BancGroup shall not be liable for any
settlement effected without its prior written consent; and provided
further that BancGroup shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
(iv) If BancGroup or any of its successors or assigns shall
consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and
in each case, proper provision shall be made so that the successors and
assigns of BancGroup shall assume the obligations set forth in this
Section 6.1(g).
(v) In consideration of the indemnification obligations provided by
BancGroup in this section 6.1(g), each director, former director and
officer of the Acquired Corporation Companies shall have delivered to
BancGroup a letter dated the date of this Agreement in form reasonably
satisfactory to BancGroup concerning claims such directors and officers
may have against any Acquired Corporation Company. In the letter, the
directors, former directors and officers shall: (i) acknowledge the
assumption by BancGroup of all Liability (to the extent Acquired
Corporation is so liable) for claims for indemnification arising under
section 6.1(g)(i) hereof; (ii) affirm that they do not have nor are they
aware of any claims they might have (other than those referred to in the
foregoing clause (i)) against Acquired Corporation; (iii) identify any
claims or any facts or circumstances of which they are aware that could
give rise to a claim for indemnification under section 6.1(g)(i) hereof;
and (iv) release as of the Effective Date any and all claims that they
may have against any Acquired Corporation Company other than those
referred to in the foregoing clause (i).
(vi) Acquired Corporation hereby represents and warrants to
BancGroup that it has no Knowledge of any claim, pending or threatened,
or of any facts or circumstances that could give rise to any obligation
by BancGroup to provide the indemnification required by this section
6.1(g).
6.2 Additional Covenants of Acquired Corporation. Acquired Corporation
covenants to and with BancGroup as follows:
(a) Operations. Acquired Corporation will conduct its business and
the business of each Acquired Corporation Company in a proper and prudent
manner and will use its best efforts to maintain its relationships with its
depositors, customers and employees. No Acquired Corporation Company will
engage in any material transaction outside the ordinary course of business
or make any material change in its accounting policies or methods of
operation, nor will Acquired Corporation permit the occurrence of any
change or event which would render any of the representations and
warranties in Article 5 hereof untrue in any material respect at and as of
the Effective Date with the same effect as though such representations and
warranties had been made at and as of such Effective Date. Acquired
Corporation
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will take no action that would prevent or impede the Merger from qualifying
(i) for pooling of interests accounting treatment or (ii) as a
reorganization with the meaning of Section 368 of the Code.
(b) Stockholders Meeting; Best Efforts. Acquired Corporation will
cause the Stockholders Meeting to be held for the purpose of approving the
Merger as soon as practicable after the effective date of the Registration
Statement, and will use its best efforts to bring about the transactions
contemplated by this Agreement, including stockholder approval of this
Agreement, as soon as practicable unless this Agreement is terminated as
provided herein.
(c) Prohibited Negotiations. Until the termination of this Agreement,
neither Acquired Corporation nor any of Acquired Corporation's directors or
officers (or any person representing any of the foregoing) shall solicit or
encourage inquiries or proposals with respect to, furnish any information
relating to or participate in any negotiations or discussions concerning,
an Acquisition Proposal other than as contemplated by this Agreement.
Acquired Corporation will notify BancGroup immediately if any such
Acquisition Proposal is received by Acquired Corporation, if any such
information is requested from Acquired Corporation, or if any such
negotiations or discussions are sought to be initiated with Acquired
Corporation, and Acquired Corporation shall instruct Acquired Corporation's
officers, directors, agents or affiliates or their subsidiaries to refrain
from doing any of the above; provided, however, that Acquired Corporation
may communicate information about such an Acquisition Proposal to its
shareholders if and to the extent that legal counsel provides a written
opinion to Acquired Corporation that it is required to do so in order to
comply with its legal obligations. Acquired Corporation shall immediately
cease and cause to be terminated any existing activities, discussions, or
negotiations with any Persons other than BancGroup conducted hereto with
respect to any of the foregoing.
(d) Director Recommendation. The members of the Board of Directors of
Acquired Corporation agree to support publicly the Merger, provided,
however, that nothing contained herein shall be deemed to prohibit any
officer or director of Acquired Corporation from fulfilling his fiduciary
duty or from taking any action that is required by Law.
(e) Shareholder Voting. Acquired Corporation shall on the date of
execution of this Agreement obtain and submit to BancGroup an agreement
from certain of its shareholders substantially in the form set forth in
Exhibit A.
(f) Financial Statements. Acquired Corporation shall furnish to
BancGroup:
(i) As soon as practicable and in any event within 45 days after
the end of each quarterly period (other than the last quarterly period)
in each fiscal year, consolidated statements of operations of Acquired
Corporation for such period and for the period beginning at the
commencement of the fiscal year and ending at the end of such quarterly
period, and a consolidated statement of financial condition of Acquired
Corporation as of the end of such quarterly period, setting forth in
each case in comparative form figures for the corresponding periods
ending in the preceding fiscal year, subject to changes resulting from
year-end adjustments;
(ii) Promptly upon receipt thereof, copies of all audit reports
submitted to Acquired Corporation by independent auditors in connection
with each annual, interim or special audit of the books of Acquired
Corporation made by such accountants;
(iii) As soon a practicable, copies of all such financial
statements and reports as it shall send to its stockholders and of such
regular and periodic reports as Acquired Corporation may file with the
SEC or any other Agency; and
(iv) With reasonable promptness, such additional financial data as
BancGroup may reasonably request.
(g) Fiduciary Duties. Prior to the Effective Date, (i) no director or
officer (i.e., vice presidents and above) (each an "Executive") of any
Acquired Corporation Company shall, directly or indirectly, own, manage,
operate, join, control, be employed by or participate in the ownership,
proposed ownership, management, operation or control of or be connected in
any manner with, any business, corporation or
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partnership which is competitive to the business of any Acquired
Corporation Company, (ii) all Executives, at all times, shall honor their
fiduciary duties to Acquired Corporation and its Subsidiaries, and (iii)
such Executives shall not (except as required in the course of his or her
employment with any Acquired Corporation Company) communicate or divulge
to, or use for the benefit of himself or herself or any other person, firm,
association or corporation, without the express written consent of Acquired
Corporation, any confidential information which is possessed, owned or used
by or licensed by or to any Acquired Corporation Company or confidential
information belonging to third parties which any Acquired Corporation
Company shall be under obligation to keep secret or which may be
communicated to, acquired by or learned of by the Executive in the course
of or as a result of his or her employment with any Acquired Corporation
Company.
(h) Certain Practices. At the request of BancGroup, (i) Acquired
Corporation shall inform BancGroup through its bank Subsidiary in Georgia
regarding all of the Bank's loan requests over $250,000 that are not single
family residential loans or any other loan request outside the normal
course of business, and (ii) Acquired Corporation will consult with
BancGroup to coordinate various business issues on a basis mutually
satisfactory to Acquired Corporation and BancGroup. Acquired Corporation
and the Bank shall not be required to undertake any of such activities,
however, except as such activities may be in compliance with existing Law
and Regulations.
ARTICLE 7
MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation. Subject to the terms and conditions herein
provided, BancGroup and Acquired Corporation each agrees to use its best efforts
promptly to take, or cause to be taken, all actions and do, or cause to be done,
all things necessary, proper or advisable under applicable Laws or otherwise,
including, without limitation, promptly making required deliveries of
stockholder lists and stock transfer reports and attempting to obtain all
necessary Consents and waivers and regulatory approvals, to consummate and make
effective, as soon as practicable, the transactions contemplated by this
Agreement. The officers of each Party to this Agreement shall fully cooperate
with officers and employees, accountants, counsel and other representatives of
the other Parties not only in fulfilling the duties hereunder of the Party of
which they are officers but also in assisting, directly or through direction of
employees and other persons under their supervision or control, such as stock
transfer agents for the Party, the other Parties requiring information which is
reasonably available from such Party.
7.2 Press Release. Each Party hereto agrees that, unless approved by the
other Parties in advance, such Party will not make any public announcement,
issue any press release or other publicity or confirm any statements by any
person not a party to this Agreement concerning the transactions contemplated
hereby. Notwithstanding the foregoing, each Party hereto reserves the right to
make any disclosure if such Party, in its reasonable discretion, deems such
disclosure required by Law. In that event, such Party shall provide to the other
Party the text of such disclosure sufficiently in advance to enable the other
Party to have a reasonable opportunity to comment thereon.
7.3 Mutual Disclosure. Each Party hereto agrees to promptly furnish to
each other Party hereto its public disclosures and filings not precluded from
disclosure by Law including but not limited to call reports, Form 8-K, Form 10-Q
and Form 10-K filings, Y-3 applications, reports on Form Y-6, quarterly or
special reports to shareholders, Tax returns, Form S-8 registration statements
and similar documents.
7.4 Access to Properties and Records. Each Party hereto shall afford the
officers and authorized representatives of the other Party full access to the
Assets, books and records of such Party in order that such other Parties may
have full opportunity to make such investigation as they shall desire of the
affairs of such Party and shall furnish to such Parties such additional
financial and operating data and other information as to its businesses and
Assets as shall be from time to time reasonably requested. All such information
that may be obtained by any such Party will be held in confidence by such party,
will not be disclosed by such Party or any
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of its representatives except in accordance with this Agreement, and will not be
used by such Party for any purpose other than the accomplishment of the Merger
as provided herein.
7.5 Notice of Adverse Changes. 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.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligations of BancGroup and Acquired Corporation to cause the
transactions contemplated by this Agreement to be consummated shall be subject
to the satisfaction, in the sole discretion of the Party relying upon such
conditions, on or before the Effective Date of all the following conditions,
except as such Parties may waive such conditions in writing:
8.1 Approval by Shareholders. At the Stockholders Meeting, this Agreement
and the matters contemplated by this Agreement shall have been duly approved by
the vote of the holders of not less than the requisite number of the issued and
outstanding voting securities of Acquired Corporation as is required by
applicable Law and Acquired Corporation's articles of incorporation and bylaws.
8.2 Regulatory Authority Approval. Orders, Consents and approvals, in form
and substance reasonably satisfactory to BancGroup and Acquired Corporation,
shall have been entered by the Board of Governors of the Federal Reserve System
and other appropriate bank regulatory Agencies (i) granting the authority
necessary for the consummation of the transactions contemplated by this
Agreement and (ii) satisfying all other requirements prescribed by Law.
8.3 Litigation. There shall be no pending or threatened Litigation in any
court or any pending or threatened proceeding by any governmental commission,
board or Agency, with a view to seeking or in which it is sought to restrain or
prohibit consummation of the transactions contemplated by this Agreement or in
which it is sought to obtain divestiture, rescission or damages in connection
with the transactions contemplated by this Agreement and no investigation by any
Agency shall be pending or threatened which might result in any such suit,
action or other proceeding.
8.4 Registration Statement. The Registration Statement shall be effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement shall be in effect; no proceedings for such purpose, or
under the proxy rules of the SEC or any bank regulatory authority pursuant to
the 1934 Act, and with respect to the transactions contemplated hereby, shall be
pending before or threatened by the SEC or any bank regulatory authority; and
all approvals or authorizations for the offer of BancGroup Common Stock shall
have been received or obtained pursuant to any applicable state securities Laws,
and no stop order or proceeding with respect to the transactions contemplated
hereby shall be pending or threatened under any such state Law.
8.5 Tax Opinion. An opinion of Miller, Hamilton, Snider & Odom, L.L.C.,
counsel to BancGroup, shall have been received in form and substance reasonably
satisfactory to the Acquired Corporation and BancGroup to the effect that (i)
the Merger will constitute a "reorganization" within the meaning of section 368
of the Code; (ii) no gain or loss will be recognized by BancGroup or Acquired
Corporation; (iii) no gain or loss will be recognized to the shareholders of
Acquired Corporation who receive shares of BancGroup Common Stock except to the
extent of any taxable "boot" received by such persons from BancGroup, and except
to the extent of any dividends received from Acquired Corporation prior to the
Effective Date; (iv) the basis of the BancGroup Common Stock received in the
Merger will be equal to the sum of the basis of the shares of Acquired
Corporation common stock exchanged in the Merger and the amount of gain, if any,
which was recognized by the exchanging Acquired Corporation shareholder,
including any portion treated as a
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dividend, less the value of taxable boot, if any, received by such shareholder
in the Merger; (v) the holding period of the BancGroup Common Stock will include
the holding period of the shares of Acquired Corporation common stock exchanged
therefor if such shares of Acquired Corporation common stock were capital assets
in the hands of the exchanging Acquired Corporation shareholder; and (vi) cash
received by an Acquired Corporation shareholder in lieu of a fractional share
interest of BancGroup Common Stock will be treated as having been received as a
distribution in full payment in exchange for the fractional share interest of
BancGroup Common Stock which he or she would otherwise be entitled to receive
and will qualify as capital gain or loss (assuming the Acquired Corporation
common stock was a capital asset in his or her hands as of the Effective Date).
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
The obligations of Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction on or before the Effective Date of all the following conditions
except as Acquired Corporation may waive such conditions in writing:
9.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of Acquired Corporation, all representations
and warranties of BancGroup contained in this Agreement shall be true in all
material respects on and as of the Effective Date as if such representations and
warranties were made on and as of such Effective Date, and BancGroup shall have
performed in all material respects all agreements and covenants required by this
Agreement to be performed by it on or prior to the Effective Date.
9.2 Adverse Changes. There shall have been no changes after the date of
the most recent balance sheet provided under section 4.3(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition or affairs of BancGroup
which in their total effect constitute a Material Adverse Effect, nor shall
there have been any material changes in the Laws governing the business of
BancGroup or which would impair the rights of Acquired Corporation or its
shareholders pursuant to this Agreement.
9.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, Acquired Corporation shall have received a certificate
from the President or a Vice President and from the Secretary or Assistant
Secretary of BancGroup dated as of the Closing certifying that:
(a) the Board of Directors of BancGroup has duly adopted resolutions
approving the substantive terms of this Agreement and authorizing the
consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;
(b) each person executing this Agreement on behalf of BancGroup is an
officer of BancGroup holding the office or offices specified therein and
the signature of each person set forth on such certificate is his or her
genuine signature;
(c) the certificate of incorporation and bylaws of BancGroup
referenced in section 4.4 hereof remain in full force and effect;
(d) such persons have no knowledge of a basis for any material claim,
in any court or before any Agency or arbitration or otherwise against, by
or affecting BancGroup or the business, prospects, condition (financial or
otherwise), or Assets of BancGroup or which would prevent the performance
of this Agreement or the transactions contemplated by this Agreement or
declare the same unlawful or cause the rescission thereof;
(e) to such persons' knowledge, the Proxy Statement delivered to
Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (it being understood that such persons need not express a
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statement as to information concerning or provided by Acquired Corporation
for inclusion in such Proxy Statement); and
(f) the conditions set forth in this Article 9 insofar as they relate
to BancGroup have been satisfied.
9.4 Opinion of Counsel. Acquired Corporation shall have received an
opinion of Miller, Hamilton, Snider & Odom, L.L.C., counsel to BancGroup, dated
as of the Closing, substantially in the form set forth in Exhibit B hereto.
9.5 Fairness Opinion. Acquired Corporation shall have received prior to
the mailing of the Proxy Statement from T. Stephen Johnson & Associates, Inc. a
letter setting forth its opinion that the consideration to be received by the
shareholders of Acquired Corporation under the terms of this Agreement is fair
to them from a financial point of view, and such opinion shall not have been
withdrawn as of the Effective Date.
9.6 NYSE Listing. The shares of BancGroup Common Stock to be issued under
this Agreement shall have been approved for listing on the NYSE.
9.7 Other Matters. There shall have been furnished to such counsel for
Acquired Corporation certified copies of such corporate records of BancGroup and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
9.8 Material Events. There shall have been no determination by the board
of directors of Acquired Corporation that the transactions contemplated by this
Agreement have become impractical because of any state of war, declaration of a
banking moratorium in the United States or a general suspension of trading on
the NYSE or any other exchange on which BancGroup Common Stock may be traded.
ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BANCGROUP
The obligations of BancGroup to cause the transactions contemplated by this
Agreement to be consummated shall be subject to the satisfaction on or before
the Effective Date of all of the following conditions except as BancGroup may
waive such conditions in writing:
10.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of BancGroup, all representations and
warranties of Acquired Corporation contained in this Agreement shall be true in
all material respects on and as of the Effective Date as if such representations
and warranties were made on and as of the Effective Date, and Acquired
Corporation shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Effective Date.
10.2 Adverse Changes. There shall have been no changes after the date of
the most recent balance sheet provided under section 5.4(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition, or affairs of Acquired
Corporation which constitute a Material Adverse Effect, nor shall there have
been any material changes in the Laws governing the business of Acquired
Corporation which would impair BancGroup's rights pursuant to this Agreement.
10.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, BancGroup shall have received a certificate from
Acquired Corporation executed by the President or Vice President and from the
Secretary or Assistant Secretary of Acquired Corporation dated as of the Closing
certifying that:
(a) the Board of Directors of Acquired Corporation has duly adopted
resolutions approving the substantive terms of this Agreement and
authorizing the consummation of the transactions contemplated by this
Agreement and such resolutions have not been amended or modified and remain
in full force and effect;
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(b) the shareholders of Acquired Corporation have duly adopted
resolutions approving the substantive terms of the Merger and the
transactions contemplated thereby and such resolutions have not been
amended or modified and remain in full force and effect;
(c) each person executing this Agreement on behalf of Acquired
Corporation is an officer of Acquired Corporation holding the office or
offices specified therein and the signature of each person set forth on
such certificate is his or her genuine signature;
(d) the articles of incorporation and bylaws of Acquired Corporation
and the Bank referenced in section 5.8 hereof remain in full force and
effect and have not been amended or modified since the date hereof;
(e) to such persons' knowledge, the Proxy Statement delivered to
Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (it being understood that such persons need only express a
statement as to information concerning or provided by Acquired Corporation
for inclusion in such Proxy Statement); and
(f) the conditions set forth in this Article 10 insofar as they relate
to Acquired Corporation have been satisfied.
10.4 Opinion of Counsel. BancGroup shall have received an opinion of
Powell, Goldstein, Frazer & Murphy, counsel to Acquired Corporation, dated as of
the Closing, substantially as set forth in Exhibit C hereto.
10.5 Controlling Shareholders. Each shareholder of Acquired Corporation
who may be an "affiliate" of Acquired Corporation, within the meaning of Rule
145 of the general rules and regulations under the 1933 Act shall have executed
and delivered an agreement satisfactory to BancGroup to the effect that such
person shall not make a "distribution" (within the meaning of Rule 145) of the
Common Stock which he receives upon the Effective Date and that such Common
Stock will be held subject to all applicable provisions of the 1933 Act and the
rules and regulations of the SEC thereunder, and the undersigned will not sell
or otherwise reduce risk relative to any shares of BancGroup Common Stock
received in the Merger until financial results concerning at least 30 days of
post-Merger combined operations have been published by BancGroup within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. Acquired Corporation recognizes and acknowledges that BancGroup Common
Stock issued to such persons may bear a legend evidencing the agreement
described above.
10.6 Other Matters. There shall have been furnished to counsel for
BancGroup certified copies of such corporate records of Acquired Corporation and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
10.7 Dissenters. The number of shares as to which shareholders of Acquired
Corporation have exercised dissenters rights of appraisal under section 3.6 does
not exceed 10% of the outstanding shares of common stock of Acquired
Corporation.
10.8 Material Events. There shall have been no determination by the board
of directors of BancGroup that the transactions contemplated by this Agreement
have become impractical because of any state of war, declaration of a banking
moratorium in the United States or general suspension of trading on the NYSE or
any exchange on which BancGroup Common Stock may be traded.
10.9 Severance Agreement. A severance agreement, in form and substance
reasonably satisfactory to BancGroup, shall have been executed between BancGroup
and Charles Y. Allgood, President of the Bank.
10.10 Pooling of Interests. BancGroup shall have received the written
opinion of Coopers & Lybrand, L.L.P., that the Merger will qualify for the
pooling of interests method of accounting under generally accepted accounting
principles.
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ARTICLE 11
TERMINATION OF REPRESENTATIONS AND WARRANTIES
All representations and warranties provided in Articles 4 and 5 of this
Agreement or in any closing certificate pursuant to Articles 9 and 10 shall
terminate and be extinguished at and shall not survive the Effective Date. All
covenants, agreements and undertakings in Articles 3 and 6 required by this
Agreement to be performed by any Party hereto following the Effective Date shall
survive such Effective Date and be binding upon such Party. If the Merger is not
consummated, all representations, warranties, obligations, covenants, or
agreements hereunder or in any certificate delivered hereunder relating to the
transaction which is not consummated shall be deemed to be terminated or
extinguished, except that Section 7.2, Article 11, Article 15 and any applicable
definitions of Article 14, shall survive. Items disclosed in the Exhibits and
Schedules attached hereto are incorporated into this Agreement and form a part
of the representations, warranties, covenants or agreements to which they
relate. Information provided in such Exhibits and Schedules is provided only in
response to the specific section of this Agreement which calls for such
information.
ARTICLE 12
NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time given or mailed, first class postage prepaid:
(a) If to Acquired Corporation to Charles Y. Allgood, President D/W
Bankshares, Inc., P.O. Box 1929, Dalton, Georgia 30722-1929, facsimile
(706) 275-0123, with copies to Kathryn L. Knudson, Powell, Goldstein,
Frazer & Murphy, 191 Peachtree Street, N.E., Atlanta, Georgia 30303,
facsimile (404) 572-6999, or as may otherwise be specified by Acquired
Corporation in writing to BancGroup.
(b) If to BancGroup, to W. Flake Oakley, IV, One Commerce Street,
Suite 800, Montgomery, Alabama, 36104, facsimile (334) 240-6040, with a
copy to Michael D. Waters, Miller, Hamilton, Snider & Odom, L.L.C., One
Commerce Street, Suite 802, Montgomery, Alabama 36104, facsimile (334) 265-
4533, or as may otherwise be specified in writing by BancGroup to Acquired
Corporation.
ARTICLE 13
AMENDMENT OR TERMINATION
13.1 Amendment. This Agreement may be amended by the mutual consent of
BancGroup and Acquired Corporation before or after approval of the transactions
contemplated herein by the shareholders of Acquired Corporation.
13.2 Termination. This Agreement may be terminated at any time prior to or
on the Effective Date whether before or after action thereon by the shareholders
of Acquired Corporation, as follows:
(a) by the mutual consent of the respective boards of directors of
Acquired Corporation and BancGroup;
(b) by the board of directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a breach by the other Party of any representation or warranty
contained in this Agreement which cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching Party
of such breach and which breach would provide the non-breaching Party the
ability to refuse to consummate the Merger under the standard set forth in
section 10.1 of this Agreement in the case of BancGroup and section 9.1 of
this Agreement in the case of Acquired Corporation;
(c) by the board of directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a material breach by the other Party of any covenant or agreement
contained
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in this Agreement which cannot be or has not been cured within thirty (30)
days after the giving of written notice to the breaching Party of such
breach, or if any of the conditions to the obligations of such Party
contained in this Agreement in Article 9 as to Acquired Corporation or
Article 10 as to BancGroup shall not have been satisfied in full; or
(d) by the board of directors of either BancGroup or Acquired
Corporation if all transactions contemplated by this Agreement shall not
have been consummated on or prior to May 31, 1997, if the failure to
consummate the transactions provided for in this Agreement on or before
such date is not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this section 13.2(d).
13.3 Damages. In the event of termination pursuant to section 13.2,
Acquired Corporation and BancGroup shall not be liable for damages for any
breach of warranty or representation contained in this Agreement made in good
faith, and, in that case, the expenses incurred shall be borne as set forth in
section 15.1 hereof.
ARTICLE 14
DEFINITIONS
(a) The following terms, which are capitalized in this Agreement, shall
have the meanings set forth below for the purpose of this Agreement:
Acquired Corporation D/W Bankshares, Inc., a Georgia corporation.
Acquired Corporation Shall mean Acquired Corporation, the Bank, any
Company Subsidiary of Acquired Corporation or the Bank, or
any person or entity acquired as a Subsidiary of
Acquired Corporation or the Bank in the future and
owned by Acquired Corporation or the Bank at the
Effective Date.
Acquired Corporation Options respecting the issuance of Acquired
Options Corporation common stock pursuant to Acquired
Corporation's stock option plans.
Acquired Corporation Stock Shares of common stock, par value $1.00 per share,
of Acquired Corporation.
Acquisition Proposal Shall mean, with respect to a Party, 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.
Agencies 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, the Office of Thrift Supervision, all
state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, HUD,
the VA, the FHA, the GNMA, the FNMA, the FHLMC, the
NYSE, and the SEC.
Agreement Shall mean this Agreement and Plan of Merger and
the Exhibits and Schedules delivered pursuant
hereto and incorporated herein by reference.
Assets Of a Person shall mean all of the assets,
properties, businesses and rights of such Person of
every kind, nature, character and description,
whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business,
directly or
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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.
BancGroup The Colonial BancGroup, Inc., a Delaware
corporation with its principal offices in
Montgomery, Alabama.
Bank Dalton/Whitfield Bank & Trust, a Georgia state
bank.
Closing The closing of the transactions contemplated hereby
as described in section 2.7 of this Agreement.
Code The Internal Revenue Code of 1986, as amended.
Common Stock BancGroup's Common Stock authorized and defined in
the restated certificate of incorporation of
BancGroup, as amended.
Consent Any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any
Person pursuant to any Contract, Law, Order, or
Permit.
Contract Any written or oral 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.
DGCL The Delaware General Corporation Law.
Effective Date Means the date and time at which the Merger becomes
effective as defined in section 2.7 hereof.
Environmental Laws Means the laws, regulations and governmental
requirements referred to in section 5.23 hereof.
ERISA The Employee Retirement Income Security Act of
1974, as amended.
Exchange Ratio The ratio obtained by dividing $27.39 by the Market
Value, as set forth in section 3.1(b)(i).
Exhibits A through C, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this
Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be
referred to in this Agreement and any other related
instrument or document without being attached
hereto.
GBCC The Georgia Business Corporation Code
Knowledge Means the actual knowledge of the Chairman,
President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer, General
Counsel or any Senior or Executive Vice President
of BancGroup, in the case of
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knowledge of BancGroup, or of Acquired Corporation
and the Bank, in the case of knowledge of Acquired
Corporation.
Law 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 Agency.
Liability Any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost
or expense (including costs of investigation,
collection and defense), deficiency, guaranty or
endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary
course of business) of any type, whether accrued,
absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
Lien Any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation,
restriction, security interest, title retention or
other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever
of, on, or with respect to any property or property
interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository
institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the
ordinary course of the banking business, and (iii)
Liens in the form of easements and restrictive
covenants on real property which do not materially
adversely affect the use of such property by the
current owner thereof.
Litigation Any action, arbitration, complaint, criminal
prosecution, governmental or other examination or
investigation, hearing, inquiry, administrative or
other proceeding relating to or affecting a Party,
its business, its Assets (including Contracts
related to it), or the transactions contemplated by
this Agreement.
Loan Property Any property owned by the Party in question or by
any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where
required by the context, includes the owner or
operator of such property, but only with respect to
such property.
Loss Any and all direct or indirect payments,
obligations, recoveries, deficiencies, fines,
penalties, interest, assessments, losses,
diminution in the value of Assets, damages,
punitive, exemplary or consequential damages
(including, but not limited to, lost income and
profits and interruptions of business),
liabilities, costs, expenses (including without
limitation, reasonable attorneys' fees and
expenses, and consultant's fees and other costs of
defense or investigation), and interest on any
amount payable to a third party as a result of the
foregoing.
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 has a material adverse impact on
(i) the financial position, Assets, 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
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Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement,
provided that "material adverse impact" shall not
be deemed to include the impact of (x) changes in
banking and similar laws of general applicability
or interpretations thereof by courts or
governmental authorities, (y) changes in generally
accepted accounting principles or regulatory
accounting principles generally applicable to banks
and their holding companies, and (z) the Merger and
compliance with the provisions of this Agreement on
the operating performance of the Parties.
Merger The merger of Acquired Corporation with BancGroup
as contemplated in this Agreement.
Merger Consideration The distribution of BancGroup Common Stock for each
share of Acquired Corporation Stock as provided in
section 3.1(a) hereof.
NYSE The New York Stock Exchange.
Order Any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial
decision or award, ruling, or writ of any federal,
state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or
Agency.
Party Shall mean Acquired Corporation or BancGroup, and
"Parties" shall mean both Acquired Corporation and
BancGroup.
Permit Any federal, state, local, and foreign governmental
approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or
right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
Person 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 The proxy statement used by Acquired Corporation to
solicit the approval of its stockholders of the
transactions contemplated by this Agreement, which
shall include the prospectus of BancGroup relating
to the issuance of the BancGroup Common Stock to
the shareholders of Acquired Corporation.
Registration Statement The registration statement on Form S-4, or such
other appropriate form, to be filed with the SEC by
BancGroup, and which has been agreed to by Acquired
Corporation, to register the shares of BancGroup
Common Stock offered to stockholders of the Bank
pursuant to his Agreement, including the Proxy
Statement.
Resulting Corporation BancGroup, as the surviving corporation resulting
from the Merger.
SEC United States Securities and Exchange Commission.
Stockholders Meeting The special meeting of stockholders of Acquired
Corporation called to approve the transactions
contemplated by this Agreement.
Subsidiaries Shall mean all those corporations, banks,
associations, or other entities of which the entity
in question owns or controls 5% or more of the
outstanding equity securities either directly or
through an unbroken chain of entities as to each of
which 5% or more of the outstanding equity
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securities is owned directly or indirectly by its
parent; provided, however, 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.
Tax or Taxes Means any federal, state, county, local, foreign,
and other taxes, assessments, charges, fares, and
impositions, including interest and penalties
thereon or with respect thereto.
1933 Act The Securities Act of 1933, as amended.
1934 Act The Securities Exchange Act of 1934, as amended.
ARTICLE 15
MISCELLANEOUS
15.1 Expenses. Each Party hereto shall bear its own legal, auditing,
trustee, investment banking, regulatory and other expenses in connection with
this Agreement and the transactions contemplated hereby.
15.2 Benefit. This Agreement shall inure to the benefit of and be binding
upon Acquired Corporation and BancGroup, and their respective successors. This
Agreement shall not be assignable by any Party without the prior written consent
of the other Party.
15.3 Governing Law. Except to the extent that the laws of the State of
Georgia apply to the Merger, this Agreement shall be governed by, and construed
in accordance with the Laws of the State of Delaware without regard to any
conflict of Laws.
15.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to constitute an original. Each such counterpart shall
become effective when one counterpart has been signed by each Party thereto.
15.5 Headings. The headings of the various articles and sections of this
Agreement are for convenience of reference only and shall not be deemed a part
of this Agreement or considered in construing the provisions thereof.
15.6 Severability. Any term or provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions thereof or affecting the
validity or enforceability of such provision in any other jurisdiction, and if
any term or provision of this Agreement is held by any court of competent
jurisdiction to be void, voidable, invalid or unenforceable in any given
circumstance or situation, then all other terms and provisions, being severable,
shall remain in full force and effect in such circumstance or situation and the
term or provision shall remain valid and in effect in any other circumstances or
situation.
15.7 Construction. Use of the masculine pronoun herein shall be deemed to
refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party's counsel has drafted any portion of this Agreement.
15.8 Return of Information. In the event of termination of this Agreement
prior to the Effective Date, each Party shall return to the other, without
retaining copies thereof, all confidential or non-public documents, work papers
and other materials obtained from the other Party in connection with the
transactions contemplated in this Agreement and shall keep such information
confidential, not disclose such information to any other person or entity, and
not use such information in connection with its business.
15.9 Equitable Remedies. The parties hereto agree that, in the event of a
breach of this Agreement by either Party, the other Party may be without an
adequate remedy at law owing to the unique nature of the contemplated
transactions. In recognition thereof, in addition to (and not in lieu of) any
remedies at law that may be available to the non-breaching Party, the
non-breaching Party shall be entitled to obtain equitable
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relief, including the remedies of specific performance and injunction, in the
event of a breach of this Agreement by the other Party, and no attempt on the
part of the non-breaching Party to obtain such equitable relief shall be deemed
to constitute an election of remedies by the non-breaching Party that would
preclude the non-breaching Party from obtaining any remedies at law to which it
would otherwise be entitled.
15.10 Attorneys' Fees. If any Party hereto shall bring an action at law or
in equity to enforce its rights under this Agreement (including an action based
upon a misrepresentation or the breach of any warranty, covenant, agreement or
obligation contained herein), the prevailing Party in such action shall be
entitled to recover from the other Party its costs and expenses incurred in
connection with such action (including fees, disbursements and expenses of
attorneys and costs of investigation).
15.11 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or Default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or Default, nor shall it be construed to be a wavier of any such right,
power or remedy, or an acquiescence in any similar breach or Default; nor shall
any waiver of any single breach or Default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and be executed by the Parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.
15.12 Remedies Cumulative. All remedies provided in this Agreement, by law
or otherwise, shall be cumulative and not alternative.
15.13 Entire Contract. This Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings with respect to the subject
matter of this Agreement.
IN WITNESS WHEREOF, Acquired Corporation and BancGroup have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first above written.
ATTEST: D/W BANKSHARES, INC.
/s/ RITA B. GRAY /s/ CHARLES Y. ALLGOOD
- ------------------------------------ ----------------------------------------
By: Rita B. Gray By: Charles Y. Allgood
Its: Secretary Its: President & CEO
(CORPORATE SEAL)
ATTEST: THE COLONIAL BANCGROUP, INC.
/s/ TERESA SKIPPER /s/ W. FLAKE OAKLEY, IV
- ------------------------------------ ----------------------------------------
By: Teresa Skipper By: W. Flake Oakley, IV
Its: Assistant Secretary Its: Chief Financial Officer
(CORPORATE SEAL)
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APPENDIX B
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SEC. 14-2-1301. DEFINITIONS.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right
when and in the manner required by Code Sections 14-2-1320 through
14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action.
(6) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(8) "Shareholder" means the record shareholder or the beneficial
shareholder.
SEC. 14-2-1302. RIGHT TO DISSENT.
(a) A record shareholder of the corporation is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is required
for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
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(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
SECTION 14-2-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
SECTION 14-2-1320. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322 no later than ten days after the corporate action was taken.
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SECTION 14-2-1321. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
SECTION 14-2-1322. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
SEC. 14-2-1323. DUTY TO DEMAND PAYMENT.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his certificates in accordance
with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
SEC. 14-2-1324. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
SEC. 14-2-1325. OFFER OF PAYMENT.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
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(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
SECTION 14-2-1326. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
SECTION 14-2-1327. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest
due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his or her demand in writing under subsection (a) of
this Code section within 30 days after the corporation offered payment for his
or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of
the fair value of his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares and interest due.
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PART 3. JUDICIAL APPRAISAL OF SHARES
SECTION 14-2-1330. COURT ACTION.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title-9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
SECTION 14-2-1331. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section
14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
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SECTION 14-2-1332. LIMITATION OF ACTIONS.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
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APPENDIX C
October 18, 1996
Board of Directors
D/W Bankshares, Inc.
401 South Thornton Avenue
Dalton, Georgia 30720
Dear Directors:
T. Stephen Johnson & Associates, Inc., Roswell, Georgia ("TSJ&A") has been
asked to render an opinion as to the fairness from a financial point of view of
the consideration to be received by the shareholders of D/W Bankshares, Inc.
("Bankshares") in connection with the proposed merger of Bankshares with and
into The Colonial BancGroup, Inc. ("BancGroup"), pursuant to an Agreement and
Plan of Merger (the "Merger Agreement") dated as of September 12, 1996 (the
"Merger"). The Merger Agreement calls for each outstanding share of Bankshares'
common stock to be converted into the right to receive that number of shares of
BancGroup's common stock equal to $27.39 divided by the Market Value of that
stock as defined in the Merger Agreement.
TSJ&A is an investment banking and consulting firm that specializes in the
valuation of closely-held corporations and provides fairness opinions as part of
its practice. Because of its prior experience in the appraisal of Southeastern
financial institutions involved in mergers, it has developed an expertise in
fairness opinions related to the securities of Southeastern financial
institutions.
In performing its analysis, TSJ&A relied upon and assumed without
independent verification, the accuracy and completeness of all information
provided to it. TSJ&A has not performed any independent appraisal or evaluation
of the assets of Bankshares or of BancGroup or any of its subsidiaries. As such,
TSJ&A does not express an opinion as to the fair market value of Bankshares. The
opinion of financial fairness expressed herein is necessarily based on market,
economic and other relevant considerations as they exist and can be evaluated as
of October 15, 1996.
In arriving at its opinion, TSJ&A reviewed and analyzed audited and
unaudited financial information regarding Bankshares and BancGroup, the Merger,
the Merger Agreement, national, state and local peer group information as well
as publicly available information regarding actual comparable transactions.
The merger consideration to be received by Bankshares' shareholders is set
at $27.39 per share converted into the right to receive BancGroup common stock,
subject to the Market Value of BancGroup stock, as defined in the Merger
Agreement, being not less than $29.75 per share nor more than $37.75 per share.
BancGroup's stock has consistently traded within this range during the last 52
weeks. Options outstanding at the effective date of the merger will be converted
into options to purchase BancGroup stock on substantially the same terms,
subject to the resulting exchange ratio. Bankshares' Series A 7% convertible
subordinated debentures will be converted into BancGroup stock based upon the
conversion agreement and the resulting exchange ratio.
There are currently 700,836 shares of common stock outstanding with a book
value as of September 30, 1996 of $15.59 per share. There are options
outstanding for a total of 46,750 shares with an average exercise price of $9.09
per share. There are debentures outstanding convertible into 64,772 shares at a
conversion price of $22.00 per share. On a fully converted basis, there would be
812,358 shares outstanding with a book value of $15.73 per share. Earnings for
the first nine months totaled $1.21 million or $1.73 per share; $1.61 per share
fully diluted (782,134 shares outstanding). Earnings for the last twelve months
totaled $1.40 million or $2.00 per share; $1.79 per share fully diluted.
The deal value per share has been established at $27.39. This deal value is
1.757 times current book value and 1.741 times fully converted book value. This
deal value is 13.694 times last twelve months earnings per share and 15.283
times fully diluted earnings per share.
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TSJ&A reviewed the Merger as of October 11, 1996, for the purpose of
determining purchase premiums which could be used in comparing the Merger with
other announced transactions. TSJ&A reviewed the purchase premiums paid in 74
transactions that were announced between July 1, 1995 and October 11, 1996
involving selling commercial banks headquartered in the states of Alabama,
Florida, Georgia and Tennessee. Of these transactions, nine involved selling
institutions that have been determined to be comparable transactions. They
include institutions representing commercial bank institutions with total assets
between $100 million and $200 million. A listing of these transactions is
attached. The purchase premiums in the Merger rank within the range of purchase
premiums paid in the comparable transactions. On average, the nine comparable
transactions reported an announced deal price to book value of 1.646 times and
an announced deal price to earnings of 14.36 times.
Therefore, in consideration of the above, it is the opinion of TSJ&A that,
based on the structure of the Merger and the analyses that have been performed,
the consideration to be received by the shareholders of Bankshares is fair from
a financial point of view.
Sincerely,
T. Stephen Johnson & Associates, Inc.
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DEALS ANNOUNCED FROM 7/1/95 TO 10/11/96
TARGETS IN FLORIDA, GEORGIA, TENNESSEE AND ALABAMA
TARGETS ARE COMMERCIAL BANKS WITH TOTAL ASSETS
BETWEEN $100 MILLION AND $200 MILLION
<TABLE>
<CAPTION>
SELLER: SELLER:
TOTAL EQTY/ ANN'D DEAL
BANK/ ST ASSETS ASSETS VALUE CONSIDER
BUYER ST SELLER THRIFT ($000) (%) ANNOUNCE DATE STATUS ($M) TYPE
- ------------------------ ------------------------ --------- -------- ------ ------------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Colonial BanGroup AL Fort Brooke Bancorp FL Bank 185,443 8.61 09/24/96 NonBinding 32.8 Com Stock
Eagle Bancshares GA Southern Crescent GA Bank 122,738 7.27 08/13/96 Pending 16.1 Com Stock
United Security Bank AL First Bancshares AL Bank 186,864 9.13 07/16/96 NonBinding 15.4 Com Stock
First Liberty Financial GA Middle Georgia Bank GA Bank 112,804 8.83 01/19/96 Pending 17.0 Com Stock
ABC Bancorp, Inc. GA Southland Bancorp AL Bank 102,336 7.03 12/19/95 Completed 11.2 Mixture
Regions Financial AL Metro Financial GA Bank 198,646 6.32 08/23/95 Completed 30.0 Com Stock
1st United Bancorp FA American Bancorp FL Bank 182,539 4.86 07/27/95 Completed 11.3 Com Stock
First Union Corp NC Brentwood National TN Bank 112,799 10.79 07/18/95 Completed 24.0 Mixture
Pioneer Bancshares TN Sweetwater Valley TN Bank 168,492 12.26 07/13/95 Completed 23.0 Com Stock
AVERAGES: $152,518 8.34
<CAPTION>
ANN'D ANN'D
DEAL DEAL PR/
PR/BK 4-QTR
BUYER (%) EPS (X)
- ------------------------ ------ --------
<S> <C> <C>
Colonial BanGroup 205.46 18.94
Eagle Bancshares 180.51 13.42
United Security Bank 92.96 5.43
First Liberty Financial 170.58 10.63
ABC Bancorp, Inc. 180.00 13.21
Regions Financial 216.49 19.01
1st United Bancorp 126.97 N/A
First Union Corp 197.14 22.86
Pioneer Bancshares 111.36 11.39
AVERAGES: 164.61 14.36
</TABLE>
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to section 145 of the Delaware General Corporation Law, as
amended, and the Restated Certificate of Incorporation of the Registrant,
officers, directors, employees, and agents of the Registrant are entitled to
indemnification against liabilities incurred while acting in such capacities on
behalf of the Registrant, including reimbursement of certain expenses. In
addition, the Registrant maintains an officers and all of its directors
insurance policy pursuant to which officers and directors of the Registrant are
entitled to indemnification against certain liabilities, including
reimbursement of certain expenses, and the Registrant has indemnity agreements
("Indemnification Agreements") with certain officers and all of its directors
pursuant to which such persons may be indemnified by the Registrant against
certain liabilities, including expenses.
The Indemnification Agreements are intended to provide additional
indemnification to directors and officers of BancGroup beyond the specific
provisions of the Delaware General Corporation Law. Under the Delaware General
Corporation Law, a company may indemnify its directors and officers in
circumstances other than those under which indemnification and the advance of
expenses are expressly permitted by applicable statutory provisions.
Under the Delaware General Corporation Law, a director, officer,
employee or agent of a corporation (i) must be indemnified by the corporation
for all expenses incurred by him (including attorneys' fees) when he is
successful on the merits or otherwise in defense of any action, suit or
proceeding brought by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, (ii) may be indemnified by the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of any such proceeding (other than a proceeding by
or in the right of the corporation) even if he is not successful on the merits
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the corporation (and, in the case of a
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful), and (iii) may be indemnified by the corporation for expenses
(including attorneys' fees) incurred by him in the defense or settlement of a
proceeding brought by or in the right of the corporation, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation; provided that no indemnification may be made
under the circumstances described in clause (iii) if the director, officer,
employee or agent is adjudged liable to the corporation, unless a court
determines that, despite the adjudication of liability but in view of all of
the circumstances, he is fairly and reasonably entitled to indemnification for
the expenses which the court shall deem proper. The indemnification described
in clauses (ii) and (iii) above (unless ordered by a court) may be made only as
authorized in a specific case upon determination by (i) a majority of a quorum
of disinterested directors, (ii) independent legal counsel in a written
opinion, or (iii) the stock holders, that indemnification is proper in the
circumstances because the applicable
<PAGE> 117
standard of conduct has been met. Expenses (including attorneys' fees)
incurred by an officer or director in defending a proceeding may be advanced by
the corporation prior to the final disposition of the proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay the
advance if it is ultimately determined that he is not entitled to be
indemnified by the corporation. Expenses (including attorneys' fees) incurred
by other employees and agents may be advanced by the corporation upon terms and
conditions deemed appropriate by the board of directors.
The indemnification provided by the Delaware General Corporation Law
has at least two limitations that are addressed by the Indemnification
Agreements: (i) BancGroup is under no obligation to advance expenses to a
director or officer, and (ii) except in the case of a proceeding in which a
director or officer is successful on the merits or otherwise, indemnification
of a director or officer is discretionary rather than mandatory.
The Indemnification Agreements, therefore, cover any and all expenses
(including attorneys' fees and all other charges paid or payable in connection
therewith) incurred in connection with investigating, defending, being a
witness or participating in (including an appeal), or preparing to defend, be a
witness in or participate in, any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether civil, criminal,
administrative or otherwise, related to the fact that such director or officer
is or was a director, officer, employee or agent of BancGroup or is or was
serving at the request of BancGroup as a director, officer, employee, agent,
partner, committee member or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise, or by reason
of anything done or not done by such director or officer in any such capacity.
The Indemnification Agreements also provide for the prompt advancement
of all expenses incurred in connection with any proceeding and obligate the
director or officer to reimburse BancGroup for all amounts so advanced if it is
subsequently determined, as provided in the Indemnification Agreements, that
the director or officer is not entitled to indemnification.
The Indemnification Agreements further provide that the director or
officer is entitled to indemnification for, and advancement of, all expenses
(including attorneys' fees) incurred in any proceeding seeking to collect from
BancGroup an indemnity claim or advancement of expenses under the
Indemnification Agreements, BancGroup's Certificate of Incorporation, or the
Delaware General Corporation Law, regardless of whether the director or officer
is successful in such proceeding.
The Indemnification Agreements impose upon BancGroup the burden of
proving that the director or officer is not entitled to indemnification in any
particular case, and the Indemnification Agreements negate certain presumptions
which might otherwise be drawn against a director or officer in certain
circumstances. Further, the Indemnification Agreements provide that if
BancGroup pays a director or officer pursuant to an Indemnification Agreement,
BancGroup will be subrogated to such director's or officer's rights to recover
from third parties.
<PAGE> 118
The Indemnification Agreements stipulate that a director's or
officer's rights under such contracts are not exclusive of any other indemnity
rights a director or officer may have; however, the Indemnification Agreements
prevent double payment. The Indemnification Agreements require the maintenance
of directors' and officers' liability insurance if such insurance can be
maintained on terms, including rates, satisfactory to BancGroup.
The benefits of the Indemnification Agreements would not be available
if (i) the action with respect to which indemnification is sought was initiated
or brought voluntarily by the officer or director (other than an action to
enforce the right to indemnification under the Indemnification Agreements);
(ii) the officer or director is paid for such expense or liability under an
insurance policy; (iii) the proceeding is for an accounting of profits pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as amended; (iv) the
conduct of the officer or director is adjudged as constituting an unlawful
personal benefit, or active or deliberate dishonesty or willful fraud or
illegality; or (v) a court determines that indemnification or advancement of
expenses is unlawful under the circumstances.
The Indemnification Agreements would provide indemnification for
liabilities arising under the Securities Act of 1933, as amended. BancGroup
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in such act and is,
therefore, unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following is a list of exhibits that are included in Part
II of the Registration Statement. Such exhibits are
separately indexed elsewhere in the Registration Statement.
DESCRIPTION
Exhibit 2 Plan of acquisition, reorganization, arrangement, liquidation
of successor:
(A) Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and D/W Bankshares, Inc., dated as of September 12, 1996,
included in the Prospectus portion of this Registration
Statement at Appendix A and incorporated herein by reference.
(B) The form of Management Incentive Stock Option Agreement of D/W
Bankshares, Inc. is included as Exhibit 10.1 of D/W
Bankshares, Inc.'s, registration statement on Form S-4,
Registration No. 33-736564, and is incorporated herein by
reference.
7
<PAGE> 119
Exhibit 3 Articles of Incorporation and Bylaws:
(A) Restated Certificate of Incorporation of the Registrant, filed
as Exhibit 4.1 to the Registrant's Current Report on Form 8-K,
dated February 21, 1995, and incorporated herein by reference.
(B) Bylaws of the Registrant, filed as Exhibit 4.2 to the
Registrant's Current Report on Form 8-K, dated February 21,
1995, and incorporated herein by reference.
Exhibit 4 Instruments defining the rights of security holders:
(A) Article 4 of the Restated Certificate of Incorporation of the
Registrant filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K, dated February 21, 1995, and incorporated
herein by reference.
(B) Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.
(C) Dividend Reinvestment and Class A Common Stock Purchase Plan
of the Registrant dated January 15, 1986, and Amendment No. 1
thereto dated as of June 10, 1986, filed as Exhibit 4(C) to
the Registrant's Registration Statement on Form S-4 (File No.
33-07015), effective July 15, 1986, and incorporated herein by
reference.
(D) Trust Indenture dated as of March 25, 1986, included as
Exhibit 4 to the Registrant's Amendment No. 1 to Registration
Statement on Form S-2, file number 33- 4004, effective March
25, 1986, and incorporated herein by reference.
Exhibit 5 Opinion of Miller, Hamilton, Snider & Odom, L.L.C. as to
certain Delaware law issues of the securities being
registered.
Exhibit 8 Tax Opinion of Miller, Hamilton, Snider & Odom, L.L.C.
Exhibit 10 Material Contracts:
(A)(1) Second Amendment and Restatement of 1982 Incentive Stock Plan
of the Registrant, filed as Exhibit 4-1 to the Registrant's
Registration Statement on Form S-8 (Commission Registration
No. 33-41036), effective June 4, 1991,
8
<PAGE> 120
and incorporated herein by reference.
(A)(2) Second Amendment and Restatement to 1982 Nonqualified Stock
Option Plan of the Registrant filed as Exhibit 4-2 to the
Registrant's Registration Statement on Form S-8 (Commission
Registration No. 33- 41036), effective June 4, 1991, and
incorporated herein by reference).
(A)(3) 1992 Incentive Stock Option Plan of the Registrant, filed as
Exhibit 4-1 to Registrant's Registration Statement on Form S-8
(File No. 33-47770), effective May 8, 1992, and incorporated
herein by reference.
(A)(4) 1992 Nonqualified Stock Option Plan of the Registrant, filed
as Exhibit 4-2 to Registrant's Registration Statement on Form
S-8 (File No. 33-47770), effective May 8, 1992, and
incorporated herein by reference.
(B)(1) Residential Loan Funding Agreement between Colonial Bank and
Colonial Mortgage Company dated January 18, 1988, included as
Exhibit 10(B)(1) to the Registrant's Registration Statement as
Form S-4, file no. 33-52952, and incorporated herein by
reference.
(B)(2) Loan Agreement between the Registrant and SunBank, National
Association, dated August 29, 1995 filed as Exhibit 10(B)(2)
to the Registrant's Registration Statement on Form S-4,
registration number 33-01163 and incorporated herein by
reference.
(B)(3) 1993 Term Loan Agreement between the Registrant and SunBank,
National Association, and related Pledge Agreement filed as
Exhibit 10(B)(1) to Amendment No. 2 of the Registrant's
Registration Statement on Form S-4, registration number
33-63826 and incorporated herein by reference.
(C)(1) The Colonial BancGroup, Inc. First Amended and Restated
Restricted Stock Plan for Directors, as amended, included as
Exhibit 10(C)(1) to the Registrant's Registration Statement as
Form S-4, file no. 33-52952, and incorporated herein by
reference.
(C)(2) The Colonial BancGroup, Inc., Stock Bonus and Retention Plan,
included as Exhibit 10(C)(2) to the Registrant's Registration
Statement as Form S-4, file no. 33-52952, and incorporated
herein by reference.
(D) Stock Purchase Agreement dated as of July 20, 1994, by and
among The Colonial BancGroup, Inc., Colonial Bank, The
Colonial Company, Colonial Mortgage Company, and Robert E.,
James K. and Thomas H. Lowder, included as Exhibit 2 in
Registrant's registration statement on Form S-4, Registration
No. 33-83692 and incorporated herein by reference.
9
<PAGE> 121
Exhibit 13 Registrant's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, and June 30, 1996, and incorporated
herein by reference.
Exhibit 21 List of subsidiaries of the Registrant.
Exhibit 23 Consents of experts and counsel:
(A) Consent of Coopers & Lybrand, L.L.P.
(B) Consent of Miller, Hamilton, Snider & Odom, L.L.C.
(C) Consent of Evans, Porter, Bryan & Co.
(D) Consent of T. Stephen Johnson & Associates, Inc.
Exhibit 24 Power of Attorney, filed as Exhibit 24 to the registrant's
Registration Statement on Form S-4, Registration No.
333-01345, and incorporated herein by reference.
Exhibit 99 Additional exhibits:
(A) Form of Proxy of D/W Bankshares, Inc.
(b) Financial Statement Schedules
The financial statement schedules required to be included
pursuant to this Item are not included herein because they are
not applicable or the required information is shown in the
financial statements or notes thereto.
ITEM 22. UNDERTAKINGS.
(a) The undersigned hereby undertakes as follows as required by
Item 512 of Regulation S-K:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus
which is a part of this Registration Statement, by
any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the
issuer
10
<PAGE> 122
undertakes that such reoffering prospectus will
contain the information called for by the applicable
registration form with respect to reofferings by
persons who may be deemed underwriters, in addition
to the information called for by the other Items of
the applicable form.
(2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately above, or (ii) that
purports to meet the requirements of section 10(a)(3)
of the Act and is used in connection with an offering
of securities subject to Rule 415, will be filed as a
part of an amendment to the Registration Statement
and will not be used until such amendment is
effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such
post- effective amendment shall be deemed to be a new
Registration Statement relating to such securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) Insofar as indemnification for liabilities arising
under the Act may be permitted to directors,
officers, and controlling persons of the Registrant,
the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the
successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling
person in connection with the securities being
registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the
final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of
Form S-4, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the Registration Statement through the date of responding
to the request.
(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved
therein, that was not the subject of and
11
<PAGE> 123
included in the Registration Statement when it became
effective.
(d) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(e) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
12
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Montgomery, Alabama, on the 5th day of November, 1996.
THE COLONIAL BANCGROUP, INC.
By: /s/ Robert E. Lowder
-----------------------------
Robert E. Lowder
Its Chairman of the Board
of Directors, Chief
Executive Officer, and
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Robert E. Lowder Chairman of the Board **
- --------------------------- of Directors, President
Robert E. Lowder and Chief Executive
Officer
/s/ W. Flake Oakley, IV Chief Financial **
- --------------------------- Officer, Secretary
W. Flake Oakley, IV and Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
* Director **
- --------------------------
Young J. Boozer
* Director **
- --------------------------
William Britton
</TABLE>
14
<PAGE> 125
<TABLE>
<S> <C> <C>
* Director **
- --------------------------
Jerry J. Chesser
* Director **
- --------------------------
Augustus K. Clements, III
* Director **
- -------------------------
Robert C. Craft
Director
- -------------------------
Patrick F. Dye
* Director **
- -------------------------
Clinton O. Holdbrooks
* Director **
- -------------------------
D. B. Jones
* Director **
- -------------------------
Harold D. King
* Director **
- -------------------------
John Ed Mathison
* Director **
- -------------------------
Milton E. McGregor
</TABLE>
15
<PAGE> 126
<TABLE>
<S> <C> <C>
* Director **
- -------------------------
John C. H. Miller, Jr.
* Director **
- -------------------------
Joe D. Mussafer
* Director **
- -------------------------
William E. Powell
Director **
- -------------------------
Donald J. Prewitt
* Director **
- -------------------------
Jack H. Rainer
* Director **
- -------------------------
Frances E. Roper
* Director **
- -------------------------
Ed V. Welch
</TABLE>
* The undersigned, acting pursuant to a power of attorney, has signed
this Registration Statement on Form S-4 for and on behalf of the
persons indicated above as such persons' true and lawful
attorney-in-fact and in their names, places and stead, in the
capacities indicated above and on the date indicated below.
/s/ W. Flake Oakley, IV
- -----------------------
W. Flake Oakley, IV
Attorney-in-Fact
** Dated: November 5, 1996
15
<PAGE> 127
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________
EXHIBITS TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
THE COLONIAL BANCGROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
16
<PAGE> 128
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<S> <C> <C>
Exhibit 2 Plan of acquisition, reorganization, arrangement, liquidation
of successor:
(A) Agreement and Plan of Merger between The Colonial BancGroup,
Inc., and D/W Bankshares, Inc., dated as of September 12,
1996, included in the Prospectus portion of this registration
statement at Appendix A and incorporated herein by reference.
(B) The form of Management Incentive Stock Option Agreement of D/W
Bankshares, Inc. is included as Exhibit 10.1 of D/W
Bankshares, Inc.'s, registration statement on Form S-4,
Registration No. 33-736564, and is incorporated herein by
reference.
Exhibit 3 Articles of Incorporation and Bylaws:
(A) Restated Certificate of Incorporation of the Registrant, filed
as Exhibit 4.1 to the Registrant's Current Report on Form 8-K,
dated February 21, 1995, and incorporated herein by reference.
(B) Bylaws of the Registrant, as amended, filed as Exhibit 4.2 to
the Registrant's Current Report on Form 8-K, dated February
21, 1995, and incorporated herein by reference.
Exhibit 4 Instruments defining the rights of security holders:
(A) Article 4 of the Restated Certificate of Incorporation of the
Registrant filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K, dated February 21, 1995, and incorporated
herein by reference.
(B) Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.
(C) Dividend Reinvestment and Class A Common Stock Purchase
</TABLE>
17
<PAGE> 129
Plan of the Registrant dated January 15, 1986, and Amendment
No. 1 thereto dated as of June 10, 1986, filed as Exhibit 4(C)
to the Registrant's Registration Statement on Form S-4 (File
No. 33-07015), effective July 15, 1986, and incorporated
herein by reference.
(D) Trust Indenture dated as of March 25, 1986, included as
Exhibit 4 to the Registrant's Amendment No. 1 to Registration
Statement on Form S-2, file number 33-4004, effective March
25, 1986, and incorporated herein by reference.
Exhibit 5 Opinion of Miller, Hamilton, Snider & Odom, L.L.C. as to
certain Delaware law issues of the securities being
registered.
Exhibit 8 Tax Opinion of Miller, Hamilton, Snider & Odom, L.L.C.
Exhibit 10 Material Contracts:
(A)(1) Second Amendment and Restatement of 1982 Incentive Stock Plan
of the Registrant, filed as Exhibit 4-1 to the Registrant's
Registration Statement on Form S-8 (Commission Registration
No. 33-41036), effective June 4, 1991, and incorporated
herein by reference.
(A)(2) Second Amendment and Restatement to 1982 Nonqualified Stock
Option Plan of the Registrant filed as Exhibit 4-2 to the
Registrant's Registration Statement on Form S-8 (Commission
Registration No. 33-41036), effective June 4, 1991, and
incorporated herein by reference).
(A)(3) 1992 Incentive Stock Option Plan of the Registrant, filed as
Exhibit 4-1 to Registrant's Registration Statement on Form S-8
(File No. 33-47770), effective May 8, 1992, and incorporated
herein by reference.
(A)(4) 1992 Nonqualified Stock Option Plan of the Registrant, filed
as Exhibit 4-2 to Registrant's Registration Statement on Form
S-8 (File No. 33-47770), effective May 8, 1992, and
incorporated herein by reference.
18
<PAGE> 130
(B)(1) Residential Loan Funding Agreement between Colonial Bank and
Colonial Mortgage Company dated January 18, 1988, included as
Exhibit 10(B)(1) to the Registrant's Registration Statement as
Form S-4, file no. 33-52952, and incorporated herein by
reference.
(B)(2) Loan Agreement between the Registrant and SunBank, National
Association, dated August 29, 1995, filed as Exhibit 10(B)(2)
to the Registrant's Registration Statement on Form S-4,
registration number 33-01163 and incorporated herein by
reference.
(B)(3) 1993 Term Loan Agreement between the Registrant and SunBank,
National Association, and related Pledge Agreement filed as
Exhibit 10(B)(1) to Amendment No. 2 of the Registrant's
Registration Statement on Form S-4, registration number
33-63826 and incorporated herein by reference.
(C)(1) The Colonial BancGroup, Inc. First Amended and Restated
Restricted Stock Plan for Directors, as amended, included as
Exhibit 10(C)(1) to the Registrant's Registration Statement as
Form S-4, file no. 33-52952, and incorporated herein by
reference.
(C)(2) The Colonial BancGroup, Inc., Stock Bonus and Retention Plan,
included as Exhibit 10(C)(2) to the Registrant's Registration
Statement as Form S-4, file no. 33-52952, and incorporated
herein by reference.
(D) Stock Purchase Agreement dated as of July 20, 1994, by and
among The Colonial BancGroup, Inc., Colonial Bank, The
Colonial Company, Colonial Mortgage Company, and Robert E.,
James K. and Thomas H. Lowder, included as Exhibit 2 in
Registrant's registration statement on Form S-4, Registration
No. 33-83692 and incorporated herein by reference.
Exhibit 13 Registrant's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 and June 30, 1996, and incorporated
herein by reference.
Exhibit 21 List of subsidiaries of the Registrant.
19
<PAGE> 131
Exhibit 23 Consents of experts and counsel:
(A) Consent of Coopers & Lybrand, L.L.P.
(B) Consent of Miller, Hamilton, Snider & Odom, L.L.C.
(C) Consent of Evans, Porter, Byran & Co.
(D) Consent of T. Stephen Johnson & Associates, Inc.
Exhibit 24 Power of Attorney, filed as Exhibit 24 to the
registrant's Registration Statement on Form S-4, Registration
No. 333-01345, and incorporated herein by reference.
Exhibit 99 Additional exhibits:
(A) Form of Proxy of D/W Bankshares, Inc.
20
<PAGE> 1
EXHIBIT 5
OPINION AS TO CERTAIN DELAWARE LAW ISSUES OF THE SECURITIES
BEING REGISTERED
22
<PAGE> 2
November 1, 1996
Montgomery Office
The Colonial BancGroup, Inc.
P. O. Box 1108
Montgomery, AL 36101
Re: Registration Statement on Form S-4 relating to the issuance of
shares of Common Stock of The Colonial BancGroup, Inc., in
connection with the acquisition by merger of D/W Bankshares,
Inc. ("Merger")
Gentlemen:
We are familiar with the proceedings taken and proposed to be taken by
The Colonial BancGroup, Inc., a Delaware corporation (the "Company"), in
connection with the proposed issuance by the Company of shares of its Common
Stock, par value of $2.50 per share, in connection with the Merger and in
accordance with an Agreement and Plan of Merger, dated as of September 12, 1996
(the "Agreement"), by and between the Company and D/W Bankshares, Inc. and the
issuance by the Company of its Common Stock pursuant to stock options being
assumed by the Company in accordance with the Agreement. We have also acted as
counsel for the Company in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, of the
Registration Statement on Form S-4 referred to in the caption above. In this
connection we have reviewed such documents and matters of law as we have deemed
relevant and necessary as a basis for the opinions expressed herein.
Upon the basis of the foregoing, we are of the opinion that:
(i) The Company is a corporation duly organized and existing under
the laws of
<PAGE> 3
The Colonial BancGroup
November 1, 1996
Page 24
the State of Delaware;
(ii) The shares of Common Stock of the Company referred to above,
to the extent actually issued pursuant to the Agreement will, when so issued,
be duly and validly authorized and issued and will be fully paid and
nonassessable shares of Common Stock of the Company;
(iii) Under the laws of the State of Delaware, no personal liability
attaches to the ownership of the shares of Common Stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced registration statement. In consenting to the inclusion of our
opinion in the Registration Statement, we do not thereby admit that we are a
person whose consent is required pursuant to Section 7 of the Securities Act of
1933, as amended.
Sincerely yours,
MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
By: /s/ Michael D. Waters
---------------------
Michael D. Waters
MDW/mfm
24
<PAGE> 1
EXHIBIT 8
TAX OPINION
25
<PAGE> 2
November 1, 1996
D/W Bankshares, Inc.
401 South Thornton Avenue
Dalton, Georgia 30720
The Colonial BancGroup, Inc.
One Commerce Street
P. O. Box 1108
Montgomery, AL 36104
Re: Tax Opinion
Gentlemen:
We have acted as counsel to The Colonial BancGroup, Inc., a Delaware
corporation ("BancGroup"), in connection with the merger of D/W Bankshares,
Inc., a Georgia corporation ("Bankshares"), with and into BancGroup, pursuant
to the Agreement and Plan of Merger, dated as of September 12, 1996, (the
"Agreement") by and between BancGroup and Bankshares. This opinion is being
rendered to you pursuant to paragraph 8.5 of the Agreement.
In rendering this opinion, we have relied upon the facts, which are
not restated herein, but rather, as they have been presented to us in the
Agreement, and in a preliminary joint proxy statement-prospectus of Bankshares
and BancGroup to be filed with the Securities and Exchange Commission. We have
assumed that the merger will be consummated on the Effective Date pursuant to
the terms and conditions set forth in the
<PAGE> 3
November 1, 1996
Page 27
Agreement and as described in the preliminary joint proxy statement-prospectus.
We have assumed, with your consent, that the facts presented to us provide an
accurate and complete description of the facts and circumstances concerning the
proposed transaction. Any changes to the facts, representations, or documents
referred to in this opinion may affect the conclusions stated herein.
In connection with this opinion, we have assumed, with your consent,
the following:
(1) BancGroup does not plan to sell or otherwise dispose of any of
the stock of Dalton/Whitfield Bank & Trust (the "Bank"), a wholly owned
subsidiary of Bankshares, except that the Bank will be merged into Colonial
Bank on or after the merger.
(2) BancGroup will continue the historic business of Bankshares
and the Bank or will use a significant portion of the historic business assets
of Bankshares and the Bank in a business.
(3) Bankshares has no knowledge of any plan or intention on the
part of its shareholders to sell or otherwise dispose of the BancGroup common
stock to be received by them that would reduce their holdings to a number of
shares having, in the aggregate, a fair market value of less than fifty percent
of the total fair market value of Bankshares common stock outstanding
immediately before the merger.
(4) As a result of the merger, each share of the issued and
outstanding Bankshares common stock will be converted into the right to receive
BancGroup common stock.
(5) No fractional shares will be issued in the Merger. In the
event fractional shares result in the exchange, Bankshares shareholders
entitled to fractional shares will be paid cash by BancGroup for their
fractional shares.
(6) The fair market value of the BancGroup common stock to be
received by a Bankshares shareholder will be approximately equal to the fair
market value of the Bankshares stock exchanged therefor.
(7) The proposed merger will be effected for substantial non-tax
business purposes.
27
<PAGE> 4
November 1, 1996
Page 28
(8) Bankshares and the Bank are not under the jurisdiction of a
court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Internal Revenue Code of 1986, as amended (the "Code").
On the basis of the foregoing and our consideration of such other
matters as we have considered necessary, we advise you that, in our opinion,
for federal income tax purposes:
(1) The Merger of Bankshares with and into BancGroup in accordance
with the terms of the Agreement will constitute a reorganization within the
meaning of Section 368(a)(1)(A) of the Code. Bankshares and Bancgroup will
each be a "party to a reorganization" under Section 368(b) of the Code.
(2) No gain or loss will be recognized by Bankshares upon the
transfer of its assets and liabilities to BancGroup. Sections 357(a) and
361(a) of the Code. No gain or loss will be recognized by BancGroup upon
receipt of the assets and liabilities of Bankshares. Section 1032(a) of the
Code.
(3) The basis of the assets of Bankshares acquired by BancGroup
will be the same as the basis of the assets in the hands of Bankshares
immediately prior to the Merger. Section 362(b) of the Code.
(4) The holding period of the assets of Bankshares in the hands of
BancGroup will include the period during which such assets were held by
Bankshares. Section 1223(2) of the Code.
(5) A Bankshares shareholder who exchanges shares of Bankshares
stock solely for shares of BancGroup common stock as described in the Agreement
will not recognize gain or loss. Section 354 of the Code.
(6) A Bankshares debenture holder whose debentures are assumed by
BancGroup will not recognize gain or loss. Section 354 of the Code.
(7) A dissenting Bankshares shareholder, who is not deemed to own
any shares of BancGroup under the constructive ownership rules of Section 318
of the Code (see the discussion below of Section 318 of the Code), and who
receives only cash in exchange for his shares of Bankshares stock, will
recognize gain or loss equal to the difference between the amount of cash
received and the shareholder's basis in the shares of Bankshares stock
surrendered. Section 1001 of the Code. Such gain or loss will be capital gain
or loss if the Bankshares shares are capital assets in the hands of the
shareholder.
(8) The constructive ownership rules of Section 318 of the Code
apply in determining whether the receipt of cash has "the effect of the
distribution of a dividend" and
<PAGE> 5
November 1, 1996
Page 29
whether a dissenting Bankshares shareholder who actually has received all cash
is deemed to have received a combination of cash and BancGroup common stock.
Under these rules, shares subject to options and shares owned (or, in some
cases, constructively owned) by members of the shareholder's family, and by
related entities (such as corporations, partnerships, trusts, and estates) in
which the shareholder, a member of his family, or a related entity has an
interest, may be counted as owned by the shareholder. Similarly, an entity may
be treated as owning shares owned by related persons or entities (such as
shareholders, partners, or beneficiaries).
(9) The tax basis of the BancGroup common stock received by a
Bankshares shareholder will be the same as the adjusted tax basis of the shares
of Bankshares stock exchanged, decreased by the amount of cash received and
increased by the amount treated as a dividend and the amount of gain recognized
on the exchange. Section 358(a)(1) of the Code.
(10) The holding period of the BancGroup common stock received by a
Bankshares shareholder will include the holding period of the shares of
Bankshares stock exchanged therefor if such shares were capital assets in the
hands of the exchanging shareholder. Section 1223(1) of the Code.
(11) Cash received in lieu of a fractional share interest in
BancGroup common stock will be treated as received in payment for such
interest. Rev. Rul. 66-365, 1996 - 2 C.B. 116. The shareholder will recognize
gain or loss equal to the difference between the cash received and the basis of
such fractional share interest.
This opinion is being rendered solely to the parties to whom it is
addressed. This opinion may not be relied upon nor distributed to any other
person without the written consent of our Firm. We hereby consent to the
reference to our Firm in, and to the filing of this opinion as an exhibit to,
the joint proxy statement-prospectus.
Very truly yours,
/s/ MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
29
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARIES OF THE COLONIAL BANCGROUP, INC.
COLONIAL BANK, AN ALABAMA BANKING CORPORATION.
COLONIAL BANK, A TENNESSEE BANK.
COLONIAL BANK, FSB, DUNWOODY, GEORGIA, A FEDERAL SAVINGS BANK.
COLONIAL BANK, LAWRENCEVILLE, GEORGIA, A GEORGIA STATE BANK
COLONIAL BANK, ORLANDO, FLORIDA, A FLORIDA BANK
THE COLONIAL BANCGROUP BUILDING CORPORATION, AN ALABAMA
CORPORATION.
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF COOPERS & LYBRAND, L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
WE CONSENT TO THE INCORPORATION BY REFERENCE IN THIS REGISTRATION STATEMENT ON
FORM S-4 OF OUR REPORT DATED FEBRUARY 23, 1996, ON OUR AUDITS OF THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE COLONIAL BANCGROUP, INC., AS OF
DECEMBER 31, 1995 AND 1994 AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED
DECEMBER 31, 1995 AND OUR REPORT DATED FEBRUARY 23,1996, EXCEPT NOTES 1 AND 2
AS TO WHICH THE DATE IS JULY 3, 1996, ON OUR AUDITS OF THE SUPPLEMENTAL
CONSOLIDATED FINANCIAL STATEMENTS OF THE COLONIAL BANCGROUP INC., AS OF
DECEMBER 31, 1995 AND 1994, AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED
DECEMBER 31, 1995. WE ALSO CONSENT TO THE REFERENCE TO OUR FIRM UNDER THE
CAPTION "EXPERTS."
/S/ COOPERS & LYBRAND L.L.P.
MONTGOMERY, ALABAMA
November 5, 1996
31
<PAGE> 1
EXHIBIT 23(B)
CONSENT OF MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
CONSENT OF COUNSEL
THE COLONIAL BANCGROUP, INC.
WE HEREBY CONSENT TO USE IN THIS FORM S-4 REGISTRATION STATEMENT OF
THE COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART OF
SUCH REGISTRATION STATEMENT, UNDER THE HEADINGS "APPROVAL OF THE MERGER -
CERTAIN FEDERAL INCOME TAX CONSEQUENCES" AND "LEGAL MATTERS," TO THE
SUMMARIZATION OF OUR OPINIONS REFERENCED THEREIN, AND TO THE INCLUSION OF OUR
OPINIONS AT EXHIBITS 5 AND 8 OF THE REGISTRATION STATEMENT.
/S/ MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
NOVEMBER 4, 1996
32
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated January 12, 1996, accompanying the financial
statements of D/W Bankshares, Inc., contained in the Form S-4 Registration
Statement. We consent to the use of the aforementioned report in the
Registration Statement, and to the use of our name as it appears under the
caption "Experts".
EVANS, PORTER, BRYAN & CO.
/s/ Evans, Porter, Bryan & Co.
Atlanta, Georgia
November 4, 1996
33
<PAGE> 1
EXHIBIT 23(D)
CONSENT OF T. STEPHEN JOHNSON & ASSOCIATES, INC.
CONSENT
THE COLONIAL BANCGROUP, INC.
WE HEREBY CONSENT TO USE IN THIS FORM S-4 REGISTRATION STATEMENT OF
THE COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART OF
SUCH REGISTRATION STATEMENT, UNDER THE HEADINGS "APPROVAL OF THE MERGER -
OPINION OF FINANCIAL ADVISOR," TO THE SUMMARIZATION OF OUR OPINION REFERENCED
THEREIN, AND TO THE INCLUSION OF SUCH OPINION AT APPENDIX B TO THE PROSPECTUS.
/S/ T. STEPHEN JOHNSON & ASSOCIATES, INC.
November 5, 1996
34
<PAGE> 1
EXHIBIT 99(A)
FORM OF PROXY OF D/W BANKSHARES, INC.
<PAGE> 2
APPENDIX A
SOLICITED BY THE BOARD OF DIRECTORS
PROXY
D/W BANKSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
, 1996
The undersigned hereby appoints and
, and either of them, or such other persons as the board of
directors of D/W Bankshares, Inc. ("Bankshares"), may designate, proxies for the
undersigned, with full power of substitution, to represent the undersigned and
to vote all of the shares of common stock of Bankshares at the special meeting
of stockholders to be held on , 1996, and at any and all adjournments
thereof.
1. To ratify and approve the Agreement and Plan of Merger dated as of September
12, 1996, pursuant to which Bankshares will be merged with and into The
Colonial BancGroup, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, to vote on such other matters as may properly come
before the meeting, but which are not now anticipated, and to vote upon
matters incident to the conduct of the meeting.
(continued on reverse)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BANKSHARES
AND WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1 AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY
HOLDERS RESPECTING SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE SPECIAL
MEETING BUT WHICH ARE NOT NOW ANTICIPATED, AND TO VOTE UPON MATTERS INCIDENT TO
THE CONDUCT OF THE SPECIAL MEETING.
Dated:
-------------------------, 1996
Phone No.:
-----------------------------
--------------------------------------
(Signature of Stockholder)
--------------------------------------
(Signature of Stockholder, if more
than one)
Please sign exactly as your name
appears on the envelope in which this
material was mailed. If shares are
held jointly, each stockholder must
sign. Agents, executors,
administrators, guardians and trustees
must give full title as such.
Corporations should sign by their
president or authorized officer.
