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Filed Pursuant to Rule 424(b)(3)
File No. 333-16481
JEFFERSON BANCORP, INC.
301 ARTHUR GODFREY ROAD
MIAMI BEACH, FLORIDA 33140
(305)532-6451
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 27, 1996
---------------------
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "Special
Meeting") of Jefferson Bancorp, Inc. ("Jefferson") will be held in the sixth
floor auditorium at the office of Jefferson Bank of Florida, located at 301
Arthur Godfrey Road, Miami Beach, Florida, on December 27, 1996, at 3:00 p.m.,
local time, for the following purposes:
1. Merger. To consider and vote upon the proposed merger (the
"Merger") of Jefferson with and into The Colonial BancGroup, Inc.
("BancGroup"), in accordance with an Agreement and Plan of Merger, dated as
of October 25, 1996 between Jefferson and BancGroup (the "Agreement").
BancGroup will be the surviving corporation in the Merger. Each share of
common stock of Jefferson outstanding at the time of the Merger will be
converted into the right to receive shares of BancGroup Common Stock with a
market value at the time of the Merger of $18.90, subject to a maximum and
minimum number of shares to be issued, with cash paid in lieu of fractional
shares at the market value of such fractional shares, as described more
fully in the accompanying Joint Proxy Statement and Prospectus. The
Agreement is attached to the 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 Jefferson has fixed the close of business on
November 18, 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 Jefferson 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.
You are cordially invited to attend the Special Meeting, but whether or not
you plan to attend, please complete and sign the enclosed form of proxy and mail
it promptly in the enclosed envelope. The proxy may be revoked at any time by
filing a written revocation with the Secretary of Jefferson, by executing a
later dated proxy and delivering it to the Secretary of Jefferson, or by
attending the Special Meeting and voting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ BARTON S. GOLDBERG
BARTON S. GOLDBERG
Secretary
Miami Beach, Florida
November 27, 1996
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JOINT PROXY STATEMENT AND PROSPECTUS
THE COLONIAL BANCGROUP, INC.
COMMON STOCK
JEFFERSON BANCORP, INC.
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 27, 1996
This Joint Proxy Statement and Prospectus (the "Prospectus") relates to the
proposed merger (the "Merger") of Jefferson Bancorp, Inc., a Florida corporation
("Jefferson"), with and into The Colonial BancGroup, Inc., a Delaware
corporation ("BancGroup"). This Prospectus is being furnished to the
shareholders of Jefferson in connection with the solicitation of proxies by the
Board of Directors of Jefferson for use at a special meeting of the shareholders
of Jefferson (the "Special Meeting") to be held on December 27, 1996, at 3:00
p.m., local time, in the sixth floor auditorium at the offices of Jefferson Bank
of Florida, located at 301 Arthur Godfrey Road, Miami Beach, Florida, including
any adjournments or postponements thereof. At the Special Meeting, shareholders
of Jefferson 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 October 25, 1996 by and between BancGroup and
Jefferson (the "Agreement"). The Agreement provides that, subject to the
approval of the Agreement by the shareholders of Jefferson 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, Jefferson 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 Jefferson (the "Jefferson Common Stock"), shall be converted into
shares of the common stock, par value $2.50 per share, of BancGroup (the
"BancGroup Common Stock") with a market value of $18.90, subject to a maximum
and minimum number of shares to be issued, with the market value determined by
the average of the market price of BancGroup Common Stock for the 10 trading
days immediately preceding the Effective Date of the Merger. The shares of
BancGroup Common Stock are listed on the New York Stock Exchange ("NYSE"). The
closing price per share of the BancGroup Common Stock on the NYSE on November
25, 1996 was $40 1/4, and of the Jefferson Common Stock as reported on the
NASDAQ System was $18 1/2.
Consummation of the Merger requires, among other things, the affirmative
vote of the holders of at least a majority of the outstanding shares of
Jefferson 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 to
register shares of BancGroup Common Stock to be issued upon the exercise of
employee stock options respecting Jefferson common stock assumed by BancGroup as
part of the Merger. This document constitutes a Proxy Statement of Jefferson in
connection with the solicitation of proxies by Jefferson for the Special Meeting
and a Prospectus of BancGroup with respect to the BancGroup Common Stock to be
issued in the Merger and with respect to the BancGroup Common Stock to be issued
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 Jefferson on or about November 27, 1996.
THE BOARD OF DIRECTORS OF JEFFERSON 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 Jefferson are 301 Arthur Godfrey Road,
Miami Beach, Florida 33140 (telephone 305-532-6451), and the principal office
and mailing address of BancGroup are Colonial Financial Center, One Commerce
Street, Post Office Box 1108, Montgomery, Alabama 36192 (telephone
334-240-5000).
The date of this Prospectus is November 27, 1996.
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AVAILABLE INFORMATION
BancGroup and Jefferson are each 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 Jefferson, 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 and Jefferson, 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
Jefferson and its subsidiary has been furnished by Jefferson.
DOCUMENTS INCORPORATED BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS OF BANCGROUP AND JEFFERSON BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
ARE AVAILABLE, WITHOUT CHARGE, UPON REQUEST FROM THE PERSONS SPECIFIED BELOW. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE RECEIVED
BY BANCGROUP OR JEFFERSON 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, June 30, 1996 and September 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 employee stock 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 contained in a document
incorporated or deemed incorporated herein by reference will be
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deemed to be modified or superseded for the purpose of this Prospectus to the
extent that a statement contained herein or in another 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 Jefferson 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 Jefferson with the Commission are hereby
incorporated by reference into this Prospectus:
(1) Jefferson's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(2) Jefferson's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996; and
(3) Jefferson's Reports on Form 10-Q/A, each dated October 23, 1996,
respectively amending Jefferson's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996.
All documents filed by Jefferson pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
Special Meeting shall be deemed incorporated by reference in this Prospectus and
made part hereof from the date of filing such documents. Any statement 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 another 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.
Jefferson 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 Barton S. Goldberg, Secretary, Jefferson
Bancorp, Inc., 301 Arthur Godfrey Road, Miami Beach, Florida 33140 (telephone
305-532-6451).
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY............................................................................... 1
THE SPECIAL MEETING................................................................... 10
General............................................................................. 10
Record Date; Shares Entitled to Vote; Vote Required for the Merger.................. 10
Solicitation, Voting and Revocation of Proxies...................................... 10
Effect of Merger on Outstanding BancGroup Common Stock.............................. 11
THE MERGER............................................................................ 12
General............................................................................. 12
Background of the Merger............................................................ 12
Jefferson's Board of Directors' Reasons for Approving the Merger.................... 12
Opinions of Financial Advisors...................................................... 12
Recommendation of the Board of Directors of Jefferson............................... 21
BancGroup's Reasons for the Merger.................................................. 21
Interests of Certain Persons in the Merger.......................................... 21
Conversion of Jefferson Common Stock................................................ 22
Surrender of Jefferson Common Stock Certificates.................................... 23
Certain Federal Income Tax Consequences............................................. 23
Other Possible Consequences......................................................... 25
Conditions to Consummation of the Merger............................................ 25
Amendment or Termination............................................................ 25
Regulatory Approvals................................................................ 26
Conduct of Business Pending the Merger.............................................. 27
Commitments with Respect to Other Offers............................................ 28
Indemnification..................................................................... 29
Rights of Dissenting Shareholders................................................... 29
Resale of BancGroup Common Stock Issued in the Merger............................... 30
Accounting Treatment................................................................ 31
NYSE Reporting of BancGroup Common Stock Issued in the Merger....................... 31
Treatment of Jefferson Options...................................................... 31
COMPARATIVE MARKET PRICES AND DIVIDENDS............................................... 33
BancGroup........................................................................... 33
Jefferson........................................................................... 34
BANCGROUP CAPITAL STOCK AND DEBENTURES................................................ 35
BancGroup Common Stock.............................................................. 35
Preference Stock.................................................................... 36
1986 Debentures..................................................................... 36
Changes in Control.................................................................. 37
</TABLE>
iii
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
COMPARATIVE RIGHTS OF STOCKHOLDERS.................................................... 38
Director Elections.................................................................. 39
Removal of Directors................................................................ 39
Voting.............................................................................. 39
Preemptive Rights................................................................... 39
Directors' Liability................................................................ 39
Indemnification..................................................................... 40
Special Meetings of Stockholders; Action Without a Meeting.......................... 41
Mergers, Share Exchanges and Sales of Assets........................................ 41
Amendment of Certificate of Incorporation and Bylaws................................ 41
Rights of Dissenting Stockholders................................................... 42
Preferred Stock..................................................................... 42
Effect of the Merger on Jefferson Shareholders...................................... 42
PRO FORMA INFORMATION................................................................. 44
Condensed Pro Forma Statements of Condition (Unaudited)............................. 44
Condensed Pro Forma Statements of Income (Unaudited)................................ 46
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES......................................... 51
Pro Forma Selected Financial Data (Unaudited)....................................... 51
Selected Interim Financial Data (Unaudited)......................................... 51
Selected Financial Data............................................................. 51
JEFFERSON BANCORP, INC................................................................ 53
Selected Financial Data............................................................. 53
BUSINESS OF BANCGROUP................................................................. 54
General............................................................................. 54
Proposed Affiliate Banks............................................................ 54
Voting Securities and Principal Stockholders........................................ 55
Security Ownership of Management.................................................... 56
Management Information.............................................................. 57
Certain Regulatory Considerations................................................... 57
BUSINESS OF JEFFERSON................................................................. 59
ADJOURNMENT OF SPECIAL MEETING........................................................ 59
OTHER MATTERS......................................................................... 59
DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS................................ 59
LEGAL MATTERS......................................................................... 59
EXPERTS............................................................................... 60
APPENDIX A -- Agreement and Plan of Merger............................................ A-1
APPENDIX B -- Opinions of Financial Advisors.......................................... B-1
APPENDIX C -- Sections 607.1301, 607.1302 and 607.1320 of the Florida Business
Corporation Act Regarding Dissenters' Rights............................ C-1
</TABLE>
iv
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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 JEFFERSON.
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 JEFFERSON 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.
v
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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 Jefferson 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 Jefferson with and into BancGroup.
THE SPECIAL MEETING
The Special Meeting will be held at the office of Jefferson's subsidiary,
Jefferson Bank of Florida (the "Bank"), located at 301 Arthur Godfrey Road,
Miami Beach, Florida on December 27, 1996, at 3:00 p.m., local time, for the
purpose of considering and voting upon the Agreement. Only holders of record of
Jefferson Common Stock at the close of business on November 18, 1996 (the
"Record Date") are entitled to the notice of and to vote at the Special Meeting.
As of such date, 3,823,596 shares of Jefferson 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 wholly owned commercial 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
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 Colonial Bank, located in Lawrenceville, Georgia which operates seven
offices. In Florida, Colonial Bank operates eight offices. BancGroup has also
entered into agreements or letters of intent to acquire five additional banks.
Colonial Mortgage Company, a subsidiary of the Colonial Bank in Alabama, is a
mortgage banking company which has approximately $10 billion in residential loan
servicing and which originates residential mortgages in 29 states through 6
regional offices. At September 30, 1996, BancGroup had consolidated total assets
of $4.7 billion and consolidated stockholders' equity of $329.9 million. See
"BUSINESS OF BANCGROUP."
Jefferson. Jefferson, a bank holding company within the meaning of the
BHCA, was organized under the laws of Florida in 1969. It conducts its banking
operation through the Bank, which was chartered in 1963 as Jefferson National
Bank and changed from a federally chartered to a state-chartered member bank of
the Federal Reserve in 1993. The Bank operates nine offices in Dade, Broward and
Palm Beach Counties in South Florida and has branches in Key Biscayne, Miami
Beach, North Miami Beach, Hollywood, Fort Lauderdale and Boca Raton. It conducts
banking services usual and customary for banks of similar size and character,
including operation of a mortgage banking division and a full service trust
department. At September 30, 1996, Jefferson had consolidated assets of
approximately $458.5 million and stockholders' equity of approximately $37.5
million. See "BUSINESS OF JEFFERSON."
TERMS OF THE MERGER
The Agreement provides for the Merger of Jefferson 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 Jefferson Common
Stock shall be converted by operation of law and without any action by any
holder thereof into shares of BancGroup Common Stock with a market value of
$18.90. The number of shares of BancGroup Common Stock into which each
outstanding share of Jefferson Common Stock on the Effective Date shall be
converted shall be equal to $18.90 divided by the "Market Value" (the "Merger
Consideration"). The "Market Value" shall represent the per share market value
of the BancGroup Common
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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 10 trading days ending on the trading day immediately preceding the
Effective Date provided that the Market Value shall not be less than $30.50 nor
more than $38.50, regardless of the actual market value as calculated.
Accordingly, the maximum number of shares of BancGroup Common Stock to be issued
in the Merger shall be 2,349,202 (based upon a minimum Market Value of $30.50)
and the minimum number of shares of BancGroup Common Stock to be issued in the
Merger shall be 1,861,056 (based upon a maximum Market Value of $38.50),
assuming 3,791,040 shares of Jefferson Common Stock outstanding as of October
31, 1996 (with 231,925 shares subject to options as of such date). To the extent
that as of the Effective Date the number of shares of Jefferson Common Stock
outstanding has increased based upon the exercise of employee stock options for
Jefferson Common Stock after October 31, 1996, the number of shares of BancGroup
Common Stock to be issued in the Merger shall increase with each share of
Jefferson Common Stock outstanding at the Effective Date exchanged for a number
of shares of BancGroup Common Stock equal to $18.90 divided by the Market Value
and the minimum and maximum number of shares of BancGroup Common Stock shall
also be adjusted to take into account increases in the number of shares of
Jefferson Common Stock outstanding in excess of 3,791,040 shares as a result of
such exercises.
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, Jefferson had granted options (the
"Jefferson Options") which entitle the holders thereof to acquire up to 199,369
shares of Jefferson Common Stock. On the Effective Date, BancGroup shall assume
all Jefferson Options outstanding, and each such option shall represent the
right to acquire BancGroup Common Stock on substantially the same terms
applicable to the Jefferson Options. The number of shares of BancGroup Common
Stock to be issued pursuant to such options shall equal the number of shares of
Jefferson Common Stock subject to such Jefferson Options multiplied by the
Exchange Ratio, as defined below, provided that no fractions of shares of
BancGroup Common Stock shall be issued. The number of shares of BancGroup Common
Stock to be issued upon the exercise of Jefferson 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 Jefferson Common Stock subject to such options divided by the Exchange
Ratio, adjusted appropriately for any rounding to whole shares that may be
required. The "Exchange Ratio" shall mean the result obtained by dividing $18.90
by the Market Value.
Jefferson shareholders will be given notice of the Merger promptly after
the Effective Date of the Merger. Certificates for the shares of BancGroup
Common Stock issued will not be distributed or dividends paid on such shares
until shareholders surrender their certificates representing their shares of
Jefferson Common Stock.
See "THE MERGER -- Conversion of Jefferson Common Stock," "Surrender of
Jefferson Common Stock Certificates," and "Treatment of Jefferson Options."
For certain information concerning dissenters' rights, voting at the
Special Meeting, and management of BancGroup and Jefferson, see "THE
MERGER -- Rights of Dissenting Shareholders," "-- Conversion of Jefferson 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 OF JEFFERSON."
RECOMMENDATION OF JEFFERSON'S BOARD OF DIRECTORS
The Board of Directors of Jefferson has unanimously approved the Agreement.
THE BOARD OF DIRECTORS OF JEFFERSON BELIEVES THAT THE MERGER IS FAIR TO, AND IN
THE BEST INTERESTS OF, THE SHAREHOLDERS OF JEFFERSON, AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AGREEMENT. For a discussion of the
factors
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considered by the Board of Directors in reaching its conclusions, see "THE
MERGER -- Background of the Merger" and "Jefferson's Board of Directors' Reasons
for Approving the Merger."
OPINIONS OF FINANCIAL ADVISORS
Jefferson has received opinions from Tucker Anthony Incorporated and T.
Stephen Johnson & Associates, Inc. that the Merger is fair to the shareholders
of Jefferson from a financial point of view. See "THE MERGER -- Opinions of
Financial Advisors."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain of the directors and executive officers of Jefferson hold Jefferson
Options which entitle them to purchase, in the aggregate, up to 149,534 shares
of Jefferson Common Stock. Under the terms of the Agreement, any Jefferson
Options which are not exercised prior to the Effective Date will be assumed by
BancGroup. See "THE MERGER -- Conversion of Jefferson Common Stock" and
"Treatment of Jefferson Options."
BancGroup and Colonial Bank have entered into employment agreements with
Arthur H. Courshon, Chairman of the Board and President of Jefferson, and Barton
S. Goldberg, Secretary of Jefferson and President of the Bank. Pursuant thereto,
effective as of the Effective Date of the Merger, Mr. Courshon will be employed
for a period of one year at an annual compensation of $582,000 plus customary
employee benefits. He will perform such duties as he and Colonial Bank agree
upon. Effective as of the Effective Date of the Merger, Mr. Goldberg will be
employed as President and Chief Executive Officer of the Colonial Bank of South
Florida Region for a period of two years at an annual compensation of $400,000
plus customary employee benefits. Messrs. Courshon and Goldberg are both
restricted by the employment agreements from competing with Jefferson in Dade or
Broward Counties, Florida (and from failing to discharge their fiduciary duties
to Jefferson) prior to the Effective Date and from competing with Colonial Bank
in those counties for one year following the earlier of the termination of their
respective agreements or the termination of their employment for any reason.
In addition, each of the Directors of Jefferson has entered into an
agreement with BancGroup restricting the Director from competing with Jefferson
in Dade or Broward Counties, Florida, and from failing to discharge his
fiduciary duties to Jefferson. Each such agreement terminates on the Effective
Date of the Merger.
On the Effective Date, and subject to the existing agreements referenced
above, all employees of Jefferson shall, at BancGroup's option, either become
employees of BancGroup or its subsidiaries or be entitled to severance benefits
in accordance with Colonial Bank's severance policy as of the date of the
Agreement. For purposes of computing the longevity of service within the meaning
of that severance policy, service with Jefferson by employees working at least
30 hours per week will be deemed service with Colonial Bank. All employees of
Jefferson 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. Holders of Jefferson Options must receive 30 days' prior written
notice of termination of their employment or be permitted to exercise their
options within 30 days following such termination.
Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of Jefferson 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 Jefferson would have been permitted
under Florida 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 indicated above, none of the directors or executive officers of
Jefferson, 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 Jefferson Common Stock.
See "THE MERGER -- Interests of Certain Persons in the Merger."
3
<PAGE> 11
VOTE REQUIRED
Under Florida law, the Agreement must be approved by the affirmative vote
of the holders of at least a majority of the outstanding shares of Jefferson
Common Stock. Each share of Jefferson 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, Florida 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 Jefferson Common Stock at the close of business
on the Record Date are entitled to notice of and to vote at the Special Meeting.
As of such date, 3,823,596 shares of Jefferson Common Stock were issued and
outstanding. As of the Record Date, Jefferson's directors and executive officers
held approximately 45.26% of the outstanding shares of Jefferson Common Stock.
As of the same date, the directors, executive officers and affiliates of
BancGroup held no shares of Jefferson Common Stock. See "THE SPECIAL MEETING."
The directors of Jefferson own 1,718,739 shares of Jefferson Common Stock
representing approximately 44.95% of the outstanding shares and have agreed with
BancGroup to vote their shares in favor of 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 Jefferson in the envelope enclosed herewith.
Shareholders of Jefferson submitting proxies may revoke their proxies (i) by
giving notice of such revocation in writing to the Secretary of Jefferson at or
prior to the Special Meeting, (ii) by executing and delivering a proxy bearing a
later date to the Secretary of Jefferson 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 Jefferson 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
Holders of Jefferson Common Stock as of the Record Date are entitled to
dissenters' rights of appraisal pursuant to Sections 607.1301, 607.1302 and
607.1320 of the FBCA. The FBCA, as explained more fully in "THE MERGER -- Rights
of Dissenting Shareholders", below, permits a shareholder to dissent from the
Merger and obtain payment for the fair value of his shares. Such "fair value"
may be determined in a judicial proceeding, the result of which cannot be
predicted. Failure to take any steps required by Sections 607.1301, 607.1302 and
607.1320 of the FBCA on a timely basis may result in the loss of appraisal
rights.
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 Jefferson Common
Stock; (ii) the approval of the Merger by the Florida Department of Banking and
Finance (the "Florida Department") and The Board of Governors of the Federal
Reserve System (the "Federal Reserve"); (iii) the absence of any pending or
threatened litigation which seeks to restrain or prohibit the Merger; (iv) the
consummation of the Merger on or before June 30, 1997; and (v) receipt of
opinions of counsel as to certain matters, including tax matters.
The obligation of Jefferson 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 shall have been approved
for listing on the NYSE.
4
<PAGE> 12
The obligations 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 Jefferson; (ii) the holders of not more than
10% of the outstanding shares of Jefferson Common Stock shall have exercised
dissenters' rights with respect to their shares; and (iii) the receipt of a
letter from Coopers & Lybrand L.L.P. that the Merger will qualify for the
"pooling of interests" method of accounting under generally accepted accounting
principles.
Applications for appropriate regulatory approvals by the Federal Reserve
and the Florida Department were filed with such agencies on October 18, 1996 and
October 30, 1996, respectively. The regulatory approval process is expected to
take approximately two months from the latter date, and it is anticipated that
the Merger will be consummated in the first quarter of 1997.
See "THE MERGER -- Conditions to Consummation of the Merger" and
"Regulatory Approvals."
AMENDMENT OR TERMINATION OF AGREEMENT
The Boards of Directors of BancGroup and Jefferson may agree to amend or
terminate the Agreement at any time prior to the Effective Date. However, the
Board of Directors of Jefferson 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 Jefferson, would adversely affect the rights of the
shareholders of Jefferson, unless such amendments are approved by the holders of
a majority of the outstanding Jefferson 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 Jefferson 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 Jefferson's shareholders will be requested from the Internal Revenue Service
(the "IRS"). Jefferson has received an opinion from counsel to Jefferson, Steel
Hector & Davis LLP, Miami, Florida, that, among other things, a shareholder of
Jefferson who exchanges shares of Jefferson Common Stock for BancGroup Common
Stock shall not recognize gain except that, shareholders of Jefferson will
recognize gain to the extent such shareholders receive cash in lieu of
fractional shares of BancGroup Common Stock. See "APPROVAL OF THE
MERGER -- Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The acquisition of Jefferson will be treated as a "pooling of interests"
transaction by BancGroup for accounting purposes. See "THE MERGER -- Accounting
Treatment."
RECENT PER SHARE MARKET PRICES
Jefferson. Jefferson Common Stock is traded in the over-the-counter market
and is quoted in the NASDAQ System as a Small Capitalization Issue under the
symbol "JBNC."
5
<PAGE> 13
The following table shows the dividends paid per share and indicates the
high and low bid and asked prices for Jefferson Common Stock as reported by the
National Quotations Bureau for the periods indicated.
<TABLE>
<CAPTION>
PRICE (PER SHARE)
---------------------------------------
HIGH LOW
----------------- ----------------- DIVIDENDS PAID
BID ASKED BID ASKED (PER SHARE)
------ ------ ------ ------ --------------
<S> <C> <C> <C> <C> <C>
1994
1st Quarter................................ $10.25 $10.75 $ 9.50 $10.25 $ .125
2nd Quarter................................ 10.25 10.75 9.75 10.13 .125
3rd Quarter................................ 12.25 12.75 9.75 10.25 .125
4th Quarter................................ 11.75 12.25 10.00 10.50 .125*
1995
1st Quarter................................ 14.75 15.50 12.00 12.50 .125
2nd Quarter................................ 13.88 14.50 12.50 13.25 .125
3rd Quarter................................ 18.75 18.75 14.25 15.50 .125
4th Quarter................................ 15.75 16.50 13.25 13.75 .125
1996
1st Quarter................................ 15.00 15.50 13.25 13.75 .125
2nd Quarter................................ 14.50 15.00 12.75 13.50 .125
3rd Quarter................................ 17.50 18.00 11.75 12.25 .125
</TABLE>
- ---------------
* In addition, a 3% stock dividend was paid in the 4th quarter of 1994.
On September 11, 1996, the business day immediately prior to the public
announcement of the Merger, the closing price as reported on the NASDAQ System
of Jefferson Common Stock was $15.25 per share.
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 November 18,)...................................... 39 1/8 34 3/4
</TABLE>
- ---------------
(1) Trading on the NYSE commenced on February 24, 1995.
6
<PAGE> 14
On September 11, 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 $35 per share.
The following table presents the market value of BancGroup Common Stock on
September 11, 1996, and the market value and equivalent per share value of
Jefferson Common Stock on that date:
<TABLE>
<CAPTION>
EQUIVALENT
BANCGROUP JEFFERSON BANCGROUP
COMMON STOCK COMMON STOCK COMMON STOCK
(PER SHARE) (PER SHARE) (PER SHARE)
------------ ------------ ------------
<S> <C> <C> <C>
Comparative Market Value.................. $ 35(1) $15.25(2) $18.90(3)
</TABLE>
- ---------------
(1) Closing price as reported by the NYSE.
(2) Closing Price as reported by NASDAQ.
(3) If the Merger had closed on September 11, 1996, the Market Value would have
been $34.1875, and .5528 shares of BancGroup Common Stock would have been
exchanged for each share of the Jefferson Common Stock (i.e. $18.90 /
$34.1875).
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: (1) a
classified board of directors; (2) supermajority voting requirements for certain
"business combinations" that exceed the provisions of Delaware law described
above; (3) flexibility for the board to consider non-economic and other factors
in evaluating a "business combination;" (4) inability of stockholders to call
special meetings and act by written consent; and (5) 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 Jefferson on a
historical basis and on a pro forma equivalent basis assuming the merger with
Jefferson. 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.
7
<PAGE> 15
PER SHARE DATA
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED YEAR YEAR YEAR
SEPTEMBER 30, SEPTEMBER 30, ENDED ENDED ENDED
1996 1995 1995 1994 1993(A)
------------- ------------- ----- ----- -------
<S> <C> <C> <C> <C> <C>
BANCGROUP -- HISTORICAL:
Net Income
Primary....................................... $ 2.39 $ 2.19 $2.63 $2.00 $ 1.65
Fully diluted................................. 2.37 2.13 2.56 1.97 1.64
Book value at end of period..................... 20.24 17.71 18.65 15.62 14.40
Dividends per share:
Common Stock.................................. 0.81 0.45 0.675
Common A...................................... 0.225 0.225 0.80 0.71
Common B...................................... 0.125 0.125 0.40 0.31
JEFFERSON:
Net Income
Historical:
Primary.................................... 0.53 0.37 0.50 0.83 0.81
Fully diluted.............................. 0.53 0.37 0.50 0.83 0.81
Pro forma equivalent assuming combination with
Jefferson(b)(d):
Primary.................................... 1.17 1.05 1.28 1.02 0.84
Fully diluted.............................. 1.16 1.03 1.25 1.01 0.84
Book value at end of period
Historical.................................... 9.88 9.68 9.89 8.14 10.56
Pro forma equivalent assuming combination with
Jefferson(b)............................... 10.40 N/A N/A N/A N/A
Dividends per share
Historical.................................... 0.375 0.375 0.50 0.50 0.50
Pro forma equivalent assuming combination with
Jefferson(c)............................... 0.42 0.35 0.47 0.42 0.37
BANCGROUP -- PRO FORMA COMBINED (JEFFERSON):
Net Income
Primary(d).................................... 2.24 2.01 2.44 1.94 1.61
Fully diluted(d).............................. 2.22 1.97 2.38 1.92 1.61
Book value at end of period..................... 19.85 N/A N/A N/A N/A
</TABLE>
- ---------------
N/A Not applicable due to pro forma balance sheet being presented only at
September 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
Jefferson. For the purposes of these pro forma equivalent per share
amounts, a .5239 BancGroup common stock share conversion ratio is utilized.
The ratio is based on the 10-day average of the closing market price of
BancGroup Common Stock of $36.075 at October 31, 1996 ($18.90/36.075 =
.5239).
(c) Pro forma equivalent dividends per share are shown at BancGroup's Common
Stock dividend per share rate multiplied by the .5239 conversion ratio per
share of Jefferson 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
8
<PAGE> 16
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 $3.2
million, net of tax.
9
<PAGE> 17
THE SPECIAL MEETING
GENERAL
This Prospectus is being furnished to the shareholders of Jefferson in
connection with the solicitation of proxies by the Board of Directors of
Jefferson for use at the Special Meeting. The purpose of the Special Meeting is
to consider and vote upon the proposed Merger of Jefferson 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 JEFFERSON BELIEVES THAT THE MERGER IS IN THE BEST
INTERESTS OF JEFFERSON 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 Jefferson has fixed the close of business on
November 18, 1996, as the Record Date for determination of shareholders entitled
to vote at the Special Meeting. There were 432 record holders of Jefferson
Common Stock as of such date. On that date, there were 3,823,596 shares of
Jefferson Common Stock outstanding, each entitled to one vote per share.
Jefferson is obligated to issue an additional 199,369 shares of Jefferson Common
Stock upon the exercise of outstanding Jefferson Options.
The affirmative vote of the holders of at least a majority of the
outstanding shares of Jefferson 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, such non-votes will
have the same effect as votes cast "AGAINST" the Agreement. Each holder of
record of shares of Jefferson Common Stock is entitled to cast, for each share
registered in his or her name, one vote on the Agreement as well as on each
other matter presented to a vote of shareholders at the Special Meeting.
As of the Record Date, directors and executive officers of Jefferson and
their affiliates were the owners of 1,730,390 shares of Jefferson Common Stock,
representing approximately 45.26% of the outstanding shares of Jefferson Common
Stock.
If the Merger is approved at the Special Meeting, Jefferson 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 JEFFERSON URGES THE SHAREHOLDERS OF JEFFERSON 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 AND IN FAVOR OF THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
In addition to soliciting proxies by mail, directors, officers and other
employees of Jefferson, without receiving special compensation therefor, may
solicit proxies from Jefferson'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 Jefferson Common Stock.
Jefferson will bear the cost of assembling and mailing this Prospectus and
other materials furnished to shareholders of Jefferson. It will also pay all
other expenses of solicitation, including the expenses of brokers, custodians,
nominees, and other fiduciaries who, at the request of Jefferson, mail material
to or otherwise
10
<PAGE> 18
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 Jefferson 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 JEFFERSON COMMON STOCK
REPRESENTED BY THE PROXY WILL BE VOTED "FOR" THE PROPOSAL TO APPROVE THE
AGREEMENT AND FOR ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY. A
shareholder may revoke any proxy given pursuant to this solicitation by: (i)
delivering to the Secretary of Jefferson, prior to or at the Special Meeting, a
written notice revoking the proxy; (ii) delivering to the Secretary of
Jefferson, at or prior to the Special Meeting, a duly executed proxy relating to
the same shares and bearing a later date; or (iii) voting in person at the
Special Meeting. All written notices of revocation and other communications with
respect to the revocation of Jefferson's proxies should be addressed to:
Jefferson Bancorp, Inc.
301 Arthur Godfrey Road
Miami Beach, Florida 33140
Attention: Barton S. Goldberg, Secretary
Attendance at the Special Meeting will not, in and of itself, constitute a
revocation of a proxy.
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, however, be counted for purposes of determining
whether a quorum is present at the Special Meeting.
The Board of Directors of Jefferson 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 and 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
October 31, 1996, of $36.075, BancGroup will issue 1,986,158 shares of BancGroup
Common Stock to the shareholders of Jefferson pursuant to the Merger, not
counting any BancGroup Common Stock to be issued pursuant to Jefferson Options.
These 1,986,158 shares of BancGroup Common Stock would represent approximately
10.9% 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.
11
<PAGE> 19
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 Jefferson shareholders are urged to read the
Agreement and the Appendices in their entirety.
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,"
Jefferson will merge with and into BancGroup. Upon completion of the Merger, the
corporate existence of Jefferson will cease, and BancGroup will succeed to the
business formerly conducted by Jefferson.
BACKGROUND OF THE MERGER
Jefferson has for several years been receptive to proposals of merger with
suitable financial institutions, provided such proposals accorded sufficient
value to Jefferson's business and assets and gave Jefferson's stockholders an
appropriate return on their investment. BancGroup was interested in expanding
its operations into South Florida by acquiring a banking operation of a quality
and caliber similar to its own. Upon investigation it appeared to both parties
that the Merger was well designed to satisfy their mutual goals.
JEFFERSON'S BOARD OF DIRECTORS' REASONS FOR APPROVING THE MERGER
In the opinion of Jefferson's Board of Directors, the Merger will fairly
compensate Jefferson's stockholders for their investment, while offering them an
opportunity to become stockholders in an expanding banking operation with an
excellent record and a management of exemplary reputation. In reaching that
conclusion the Board relied in part on the opinions of its financial advisors.
OPINIONS OF FINANCIAL ADVISORS
Jefferson has received opinions that the Merger is fair to Jefferson's
stockholders from a financial point of view from Tucker Anthony Incorporated
("Tucker Anthony"), an investment banking broker/dealer founded in 1892, and T.
Stephen Johnson & Associates, Inc. ("TSJ&A"), an investment banking firm
specializing in financial institutions in the southeastern United States.
Tucker Anthony Opinion. Tucker Anthony was retained by the Board of
Directors of Jefferson in October 1996 for the purpose of rendering a fairness
opinion in connection with the proposed Merger. Jefferson selected Tucker
Anthony for a number of reasons, including its familiarity with Jefferson and
its business. Jefferson also considered Tucker Anthony's experience and
reputation in the area of valuation and financial advisory work generally, and
in relation to financial institutions specifically. Tucker Anthony makes a
market in Jefferson's Common Stock. Tucker Anthony is a nationally recognized
investment banking firm and is regularly engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, leveraged
buyouts, negotiated underwritings, private placements and valuations for
corporate and other purposes. From time to time, Tucker Anthony and its
affiliates may hold long or short positions in Jefferson Common Stock. John
Hancock Advisers, Inc., an affiliate of Tucker Anthony, is an institutional
investment adviser which beneficially owns 630,778 shares (approximately 3.9%)
of the outstanding Common Stock of BancGroup. Tucker Anthony has provided a
variety of services to Jefferson, from time to time, primarily with regard to
risk and investment portfolio management.
Tucker Anthony has rendered written opinions to the Board of Directors of
Jefferson to the effect that, as of October 25, 1996 and as of the date of this
Prospectus, the consideration per share of Jefferson Common Stock in shares of
BancGroup Common Stock to be received in the Merger is fair, from a financial
point of view, to the holders of Jefferson Common Stock. THE FULL TEXT OF THE
FAIRNESS OPINION DATED AS OF THE DATE OF THIS PROSPECTUS, SETTING FORTH THE
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND CERTAIN
LIMITATIONS ON THE REVIEW UNDERTAKEN BY TUCKER ANTHONY, IS INCLUDED IN APPENDIX
B TO
12
<PAGE> 20
THIS PROSPECTUS. HOLDERS OF THE COMMON STOCK ARE URGED TO READ THE FAIRNESS
OPINION IN ITS ENTIRETY. This opinion is directed to the Board of Directors of
Jefferson only and does not constitute a recommendation to any holder of
Jefferson Common Stock as to how such shareholder should vote at the meeting.
Tucker Anthony has advised the Board that it does not believe any person other
than the Board has the legal right to rely on the opinion and, absent any
controlling precedent, would resist any assertion otherwise. The October 25
opinion is substantially identical to the opinion attached hereto.
As compensation for the issuance of the two fairness opinions, Jefferson
has paid Tucker Anthony a fee of $185,000. Jefferson has also agreed to
reimburse Tucker Anthony for its out-of-pocket expenses and to indemnify Tucker
Anthony against certain liabilities arising out of its services.
In connection with rendering its opinion dated October 25, 1996, and
updated as of the date of this Prospectus, Tucker Anthony performed a variety of
financial analyses, including those summarized below. The summary set forth
below, which has been provided by Tucker Anthony, does not purport to be a
complete description of the analyses performed by Tucker Anthony 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 a summary description. Accordingly,
notwithstanding the separate factors summarized below, Tucker Anthony believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and factors considered by it, without considering all analyses and
factors, or attempting to ascribe relative weights to some or all of such
analyses or factors, could create an incomplete view of the evaluation process
underlying Tucker Anthony's opinion. In addition, Tucker Anthony may have used
the various analyses for different purposes and may have deemed various
assumptions more or less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described below should not be
taken to be Tucker Anthony's view of the actual value of Jefferson. The fact
that any specific analysis has been referred to in the summary below is not
meant to indicate that such analysis was given more weight than any other
analyses.
The analyses performed by Tucker Anthony are not necessarily indicative of
actual values or actual future results, which may be significantly more or less
favorable than those suggested by such analyses. Such analyses were prepared
solely as a part of Tucker Anthony's analysis of the fairness of the
consideration to be received by holders of the Jefferson Common Stock, from a
financial point of view, and were provided to Jefferson's Board of Directors in
connection with the delivery of Tucker Anthony's opinion. The analyses do not
purport to be appraisals or to reflect the prices at which Jefferson might
actually be sold or the prices at which any securities may trade at the present
time or at any time in the future. In addition, as described above, Tucker
Anthony's opinion is just one of the many factors taken into consideration by
Jefferson's Board of Directors (see "Background of the Merger"; and "Jefferson's
Board of Directors' Reasons for Approving the Merger").
In arriving at its opinion dated as of the date hereof, Tucker Anthony,
among other things, reviewed the Agreement; reviewed certain historical
financial and other information concerning Jefferson for the five fiscal years
ended December 31, 1995 and the three fiscal quarters ended March 31, June 30
and September 30, 1996, including Jefferson's reports on Forms 10-K and 10-Q;
reviewed certain historical financial and other information concerning BancGroup
for the five fiscal years ended December 31, 1995 and the three fiscal quarters
ended March 31, June 30 and September 30, 1996, including BancGroup's reports on
Forms 10-K and 10-Q; held discussions with the senior management of Jefferson
and BancGroup with respect to their past and current financial performance,
financial condition and future prospects; reviewed certain internal financial
data, projections and other information of Jefferson including financial
projections prepared by management; analyzed certain publicly available
information of other financial institutions that it deemed comparable or
otherwise relevant to its inquiry, and compared Jefferson and BancGroup from a
financial point of view with certain of these institutions; compared the
consideration to be received by the stockholders of Jefferson pursuant to the
Agreement with the consideration received by stockholders in other acquisitions
of financial institutions that it deemed comparable or otherwise relevant to its
inquiry; reviewed publicly available earnings estimates, historical trading
activity and ownership data of Jefferson Common Stock and BancGroup Common Stock
and considered the prospects for dividends and price movement in each; and
conducted such
13
<PAGE> 21
other financial studies, analyses and investigations and reviewed such other
information as it deemed appropriate to enable it to render its opinion. In its
review, it also took into account an assessment of general economic, market and
financial conditions and certain industry trends and related matters. Tucker
Anthony's opinions were necessarily based upon conditions as they existed and
could be evaluated on the date thereof and the information made available to
Tucker Anthony through the date thereof.
No limitations were imposed by the Board of Directors of Jefferson upon
Tucker Anthony with respect to the investigations made or procedures followed by
Tucker Anthony in its review and analysis. In its review and analysis and in
arriving at its opinions, Tucker Anthony assumed and relied upon the accuracy
and completeness of all the financial information publicly available or provided
to it by Jefferson and BancGroup, and did not attempt to verify any of such
information. Tucker Anthony assumed (i) that the financial projections of
Jefferson provided to it with respect to the results of operations likely to be
achieved by Jefferson through the Effective Date were prepared on a basis
reflecting the best currently available estimates and judgments of Jefferson's
management as to future financial performance and results, and (ii) that such
forecasts and estimates would be realized in the amounts and in the time periods
estimated by management. Tucker Anthony further assumed, without independent
verification, that the aggregate reserves for possible loan losses for Jefferson
and BancGroup were adequate to cover such losses. Tucker Anthony did not make or
obtain any independent evaluations or appraisals of any assets or liabilities of
Jefferson, BancGroup or any of their respective subsidiaries nor did it verify
any of Jefferson's or BancGroup's books and records or review any individual
loan credit files. In addition, Tucker Anthony did not participate in the
negotiation of the Agreement nor was Tucker Anthony engaged or authorized to
solicit, and Tucker Anthony did not solicit, any indications of interest from
any third party with respect to the purchase of all or part of the Jefferson
Common Stock or business of Jefferson, and Tucker Anthony made no recommendation
to the Board of Directors of either party as to the amount of the Merger
Consideration.
Tucker Anthony made a presentation to Jefferson's Board of Directors on
October 25, 1996 and rendered a written opinion to Jefferson's Board of
Directors just prior to the execution and public announcement of the Agreement.
Set forth below is a brief summary of the report presented to Jefferson's Board
of Directors on October 25, 1996.
Historical Financial Performance. Tucker Anthony examined the financial
performance of both Jefferson and BancGroup over the five-year period ended
December 31, 1995 and the nine-month interim periods ended September 30, 1995
and 1996. The analysis of historical performance showed among other things that:
i) the compound annual growth rate in total assets during the period was 3.2%
for Jefferson and 25.0% for BancGroup; ii) the compound annual growth rate in
net loans during the period was 9.4% for Jefferson and 27.6% for BancGroup; iii)
the compound annual growth rate in total deposits during the period was 3.8% for
Jefferson and 20.8% for BancGroup; iv) the equity to asset ratios as of
September 30, 1996 were 8.17% for Jefferson and 7.00% for BancGroup; v) the loan
to deposit ratios as of September 30, 1996 were 78.9% for Jefferson and 99% for
BancGroup; vi) the latest quarter annualized net interest margin was 4.37% for
Jefferson and 4.12% for BancGroup; vii) the latest quarter annualized return on
average assets was 0.61% for Jefferson and 1.30% for BancGroup; and viii) the
latest quarter annualized return on average equity was 7.43% for Jefferson and
19.11% for BancGroup.
Stock Trading Analysis. Tucker Anthony examined the historical trading
prices, volume, price/book value and price/earnings multiples of Jefferson's
Common Stock and BancGroup's Common Stock, and compared the historical trading
prices of Jefferson's Common Stock in relation to movements in certain stock
indices, specifically the Standard & Poor's Regional Bank Index and the NASDAQ
Composite Index. Tucker Anthony also analyzed and compared the historical
trading prices, price/book value and price/earnings multiples of Jefferson to
those of certain other publicly traded financial institutions deemed to be
comparable or otherwise relevant as described below.
Analysis of Selected Publicly Traded Comparable Commercial Banks. Tucker
Anthony compared the selected financial data and financial ratios of Jefferson
and BancGroup to the corresponding data and ratios of certain publicly traded
commercial banks located in southeastern United States with total assets
comparable to those of Jefferson and BancGroup, respectively. The commercial
banks included in the comparison to
14
<PAGE> 22
Jefferson were: 1st United Bancorp, Citi-Bancshares, Inc., Commercial
Bankshares, Inc., Republic Bankshares, Inc., Republic Security Financial
Corporation and Seacoast Banking Corporation (the "Jefferson Selected Reference
Banks"). The Jefferson Selected Reference Banks, as a group, exhibited certain
characteristics -- including asset size (assets between $300 million and $850
million in assets), geographic proximity (located in the state of Florida) and
business risk -- similar to those exhibited by Jefferson. The commercial banks
included in the comparison to BancGroup were: Bancorpsouth, Inc., Capital
Bancorp, Compass Bancshares, Inc., Deposit Guaranty Corp., First American
Corporation, Hancock Holding Corp., National Commerce Bancorp, Regions Financial
Corp., Synovus Financial Corp. and Trustmark Corporation (the "BancGroup
Selected Reference Banks"). The BancGroup Selected Reference Banks, as a group,
exhibited certain characteristics -- including assets size (assets between $2.0
billion and $18.0 billion in assets), geographic proximity (located in the
states of Alabama, Florida, Georgia, Mississippi and Tennessee) and business
risk -- similar to those exhibited by BancGroup.
The comparison of Jefferson to the Jefferson Selected Reference Banks
showed among other things that: (i) the ratio of Jefferson's net loans to assets
was 66.4% as of September 30, 1996, compared to an average of 64.0% for the
Jefferson Selected Reference Banks as of September 30, 1996; (ii) the ratio of
Jefferson's non-performing assets to total loans plus real estate owned was 1.1%
as of September 30, 1996, compared to 2.0% for the Jefferson Selected Reference
Banks as of September 30, 1996; (iii) the ratio of Jefferson's non-performing
assets to the sum of shareholders' equity and loan loss reserves was 8.6% as of
September 30, 1996, compared to an average of 14.5% for the Jefferson Selected
Reference Banks as of September 30, 1996; (iv) the ratio of Jefferson's equity
to total assets was 8.17% as of September 30, 1996, compared to an average of
9.94% for the Jefferson Selected Reference Banks as of September 30, 1996; (v)
the latest quarter annualized return on assets for Jefferson as of September 30,
1996 was 0.61%, compared to an average of 1.05% for the Jefferson Selected
Reference Banks as of September 30, 1996; (vi) the latest quarter annualized
return on equity for Jefferson as of September 30, 1996 was 7.43%, compared to
an average of 10.94% for the Jefferson Selected Reference Banks as of September
30, 1996; (vii) as of September 5, 1996 (one week prior to the announcement of
the transaction), the ratio of Jefferson's market price to its September 30,
1996 book value per common share was 144.2%, compared to the average ratio of
Jefferson's Selected Reference Banks' November 22, 1996 average market price to
September 30, 1996 book value per common share of 154.3%; (vii) as of September
5, 1996, the price/earnings ratio for Jefferson based on the twelve months ended
September 30, 1996 was 20.1x, compared to an average of 18.4x for the Jefferson
Selected Reference Banks based on a November 22, 1996 market price and latest
twelve months earnings ended September 30, 1996; and (viii) as of September 5,
1996, the average latest quarter annualized dividend yield for Jefferson was
3.5% as compared to 2.0% for the Jefferson Selected Reference Banks as of a
November 22, 1996.
The comparison of BancGroup to the BancGroup Selected Reference Banks
showed among other things that: (i) the ratio of BancGroup's net loans to assets
was 74.8% as of September 30, 1996, compared to an average of 59.6% for the
BancGroup Selected Reference Banks as of September 30, 1996; (ii) the ratio of
BancGroup's non-performing assets to total loans plus real estate owned was 0.9%
as of September 30, 1996, compared to 0.6% of the BancGroup Selected Reference
Banks as of September 30, 1996; (iii) the ratio of BancGroup's non-performing
assets to the sum of shareholders' equity and loan loss reserves was 8.1% as of
September 30, 1996, compared to an average of 3.8% for the BancGroup Selected
Reference Banks as of September 30, 1996; (iv) the ratio of BancGroup's equity
to total assets was 7.0% as of September 30, 1996, compared to an average of
8.58% of the BancGroup Selected Reference Banks as of September 30, 1996; (v)
the latest quarter annualized return on assets for BancGroup as of September 30,
1996 was 1.30%, compared to an average of 1.32% for the BancGroup Selected
Reference Banks as of September 30, 1996; (vi) the latest quarter annualized
return on equity for BancGroup as of September 30, 1996 was 19.11%, compared to
an average of 15.74% for the BancGroup Selected Reference Banks as of September
30, 1996; (vii) as of November 22, 1996, the ratio of BancGroup's market price
to its September 30, 1996 book value per common share was 193.4%, compared to an
average of 195.6% for the BancGroup Selected Reference Banks in relation to
their September 30, 1996 book value per common share; (viii) as of November 22,
1996, the price/earnings ratio for BancGroup based on the twelve months ended
September 30, 1996 was 12.1x, compared to an average of 15.1x for the BancGroup
Selected Reference Banks for the twelve months ended
15
<PAGE> 23
September 30, 1996; and (ix) as of November 22, 1996, the average latest quarter
annualized yield for BancGroup was 2.5% as compared to 2.2% for the BancGroup
Selected Reference Banks.
Analysis of Selected Comparable Merger and Acquisition
Transactions. Tucker Anthony reviewed and performed analysis on 172 unassisted
acquisitions of commercial bank institutions in the Southeast (the "Selected
Southeast Transactions") and 106 unassisted acquisitions of commercial bank
institutions in the US with a transaction size between $50 million and $150
million (the "Selected US Transactions") announced between January 1, 1993 and
November 25, 1996, comparing the target financial institutions' capital
structure and profitability with Jefferson's current results of operations and
financial condition. The Selected Southeast Transactions and Selected US
Transactions were chosen because they represented merger and acquisition
transactions which involve target financial institutions exhibiting certain
characteristics -- including asset size, geographic proximity and business
risk -- similar to those exhibited by Jefferson. Excluding the highest and
lowest ratios, the target financial institutions involved in the Selected
Southeast Transactions and the Selected US Transactions had an average return on
assets for the latest twelve months prior to announcement date of 0.78% and
0.96% and an average return on equity for the latest twelve months prior to
announcement date of 10.97% and 11.62%, respectively, as compared to 0.58% and
6.85%, respectively, for Jefferson.
Set forth below is a summary of the information presented to the Jefferson
Board of Directors with respect to the Selected Southeast Transactions and the
Selected US Transactions based upon an estimated value of $18.90 per share of
Jefferson Common Stock.
<TABLE>
<CAPTION>
SELECTED SOUTHEAST SELECTED U.S.
TRANSACTIONS TRANSACTIONS
------------------------ ------------------------
BANCGROUP BANCGROUP OFFER BANCGROUP OFFER
OFFER(1) MEDIAN PERCENTILE(2) MEDIAN PERCENTILE(2)
--------- ------ --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
Consideration/Latest Twelve Months
Earnings.............................. 28.6x 17.9x 84% 17.1x 88%
Consideration/Book Value................ 198% 195% 53% 195% 52%
Premium to Market Price(3).............. 133% 126% 66% 127% 66%
</TABLE>
- ---------------
(1) Based on value of the Merger Consideration of $18.90 per share of Jefferson
Common Stock as of November 25, 1996.
(2) Position of the BancGroup offer in relation to percentile ranking of the
Selected Southeast Transactions and the Selected U.S. Transactions,
respectively.
(3) Closing market price seven days prior to announcement, September 5, 1996.
Discounted Cash Flow Analysis. At the Board of Directors meeting on
October 25, 1996, Tucker Anthony presented the results of a discounted cash flow
analysis through the fiscal year ended December 31, 2001 designed to compare the
present value, under certain assumptions, that would be attained if Jefferson
remained independent through the year 2001. The results produced in the analysis
did not purport to be indicative of actual values or expected values of
Jefferson or the shares of Jefferson Common Stock.
For the purpose of the analysis Tucker Anthony made reference to financial
forecasts and projections prepared by Jefferson management (the "Base Case").
The projections assumed, among other things, that Jefferson would achieve annual
growth in average assets averaging approximately 10.2% per year, annual growth
in average loans averaging approximately 11.9% per year, a net interest margin
averaging approximately 4.50% per year, operating expenses as a percentage of
average assets averaging approximately 3.34% per year and annual return on
average assets averaging approximately 1.07% per year. Tucker Anthony noted that
for the five fiscal years ended December 31, 1995, average assets increased an
average of 2.0% per year, average loans increased an average of 0.8% per year,
net interest margin averaged approximately 4.52% per year, operating expenses
averaged approximately 4.69% of the average assets per year and return on
average assets averaged approximately 0.58% per year. The projections assumed an
annual dividend of $0.50 per share. The projections further assumed that
Jefferson would maintain a target equity to assets ratio of 8.00%. In addition
to the Base Case, Tucker Anthony reviewed Base Case financial forecasts and
projections revised to assume variations in net interest margin (the "Stress
Test Scenarios"). The Stress Test Scenarios were based on increases and declines
in net interest margin of up to 20 basis points.
16
<PAGE> 24
The projected cash flows of Jefferson were comprised of the dividends per
share paid in fiscal years ended December 31, 1997 through 2001 plus the
terminal value of Jefferson Common Stock at fiscal year end 2001 calculated as
described below. The cash flows were discounted at a range of rates from 12.0%
to 16.0%. Based upon Tucker Anthony's experience and judgment, Tucker Anthony
believes that holders of Jefferson Common Stock would typically seek returns
within the indicated range of discount rates, in view of Jefferson's operating
projections, historical performance, financial condition and market
capitalization, among other matters.
In estimating the appropriate terminal value of Jefferson at fiscal year
end 2001, Tucker Anthony used methods based on multiples of earnings. Tucker
Anthony applied to the fiscal year December 31, 2001 price/earnings multiples in
the range of 8.0x to 12.0x. The low end of the range of multiples reflected the
bottom of an estimated future trading range for Jefferson as an independent
entity, while the high end of the ranges of multiples were more indicative of
the top of an estimated range assuming a future sale of Jefferson to a larger
financial institution. Acquisition and trading multiples from time to time
fluctuate considerably, and no assurance can be made that future acquisition or
trading multiples will be comparable to historical levels.
Set forth below is a summary of the results of Tucker Anthony's discounted
cash flow analysis, indicating the range of derived present values per share of
Jefferson Common Stock, as presented to Jefferson's Board of Directors on
October 25, 1996 and compared to the Merger Consideration of $18.90 per
Jefferson Common Share as of that date.
<TABLE>
<CAPTION>
DISCOUNT RATE
TERMINAL ------------------------
P/E 12% 14% 16%
-------- ------ ------ ------
<S> <C> <C> <C> <C>
Base Case.................................................... 8.0x $11.52 $10.61 $ 9.79
10.0x $13.95 $12.84 $11.83
12.0x $16.38 $15.06 $13.87
NIM Up 20 Basis Points....................................... 8.0x $13.75 $12.65 $11.66
10.0x $16.74 $15.39 $14.17
12.0x $19.72 $18.12 $16.67
NIM Down 20 Basis Points..................................... 8.0x $ 9.60 $ 8.86 $ 8.18
10.0x $11.55 $10.64 $ 9.82
12.0x $13.50 $12.43 $11.45
</TABLE>
The summary of the Tucker Anthony opinion set forth above provides a
description of the main elements of Tucker Anthony's presentation to Jefferson's
Board of Directors on October 25, 1996. It does not purport to be a complete
description of the presentation of Tucker Anthony to Jefferson's Board of
Directors or of the analyses of Tucker Anthony. The preparation of a fairness
opinion is not necessarily susceptible to partial analysis or summary
description. Tucker Anthony believes that its analyses and the summary set forth
above must be considered as a whole and that selecting portions of its analyses,
without considering all analyses, or selecting part of the above summary,
without considering all factors and analyses, would create an incomplete view of
the procedures underlying the analyses set forth in the Tucker Anthony
presentation and opinion. In addition, the ranges of valuations resulting from
any particular analyses described above should not be taken to be Tucker
Anthony's opinion of the actual value of Jefferson. The fact that any specific
analysis has been referred to in the summary above is not meant to indicate that
such analysis was given more weight than any other analyses.
In performing its analyses, Tucker Anthony made numerous assumptions with
respect to industry performance, general business and economic conditions, and
other matters, many of which are beyond the control of Jefferson. The analyses
performed by Tucker Anthony are not necessarily indicative of actual value or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as a part of
Tucker Anthony's analysis of the fairness of the consideration to be received by
Jefferson's stockholders from a financial point of view and were provided to
Jefferson's Board of Directors in connection with the delivery of Tucker
Anthony's opinion. The analyses do not purport to be appraisals or to reflect
the prices at which any securities may trade at the present time or at any time
in the future. In addition, as described above, Tucker Anthony's opinion and
presentation to Jefferson's Board of
17
<PAGE> 25
Directors is just one of many factors taken into consideration by Jefferson's
Board of Directors (see "Background of the Merger"; and "Jefferson's Board of
Directors' Reasons for Approving the Merger").
TSJ&A's Opinion. T. Stephen Johnson & Associates, Inc. ("TSJ&A") is an
investment banking and financial services firm located in Atlanta, Georgia. As
part of its investment banking business, TSJ&A 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 TSJ&A nor any of its
affiliates has a material financial interest in Jefferson or BancGroup. TSJ&A
was selected to advise Jefferson's Board of Directors based upon its familiarity
with Jefferson, the regional community banking industry and its knowledge of the
banking industry as a whole. No instructions were given or limitations imposed
by the Jefferson Board of Directors upon TSJ&A regarding the scope of its
investigation or the procedures it followed in rendering its opinion.
Outside of this engagement, TSJ&A has provided unrelated consulting
services to both Jefferson and BancGroup within the past two years for which
compensation was received by TSJ&A. TSJ&A has consulted with Jefferson regarding
strategic planning and merger/acquisition advice. Compensation received for
these services totaled $105,000.00. TSJ&A was engaged by BancGroup to make
introductions to potential merger partners located in and around the Atlanta,
Georgia metropolitan area. Total Compensation received totaled $75,000.00.
TSJ&A has rendered its opinion (the "TSJ Fairness Opinion") to the Board of
Directors of Jefferson that the consideration to be paid the holders of
Jefferson Common Stock under the Agreement is fair to such shareholders from a
financial point of view. A copy of the TSJ Fairness Opinion, which sets forth
certain assumptions made, matters considered and limitations on the review
undertaken, is attached at Appendix B-3 through B-5 to this Prospectus and
should be read in its entirety. The summary of the TSJ Fairness Opinion set
forth herein is qualified in its entirety by reference to the text of the TSJ
Fairness Opinion.
In addition to rendering the TSJ Fairness Opinion, TSJ&A was engaged to
represent Jefferson and to assist Jefferson and BancGroup in the negotiation of
a letter of intent.
In arriving at the TSJ Fairness Opinion, TSJ&A performed the merger
analyses described below. TSJ&A reviewed certain publicly available business and
financial information relating to Jefferson and BancGroup. TSJ&A also considered
certain financial and stock market data of Jefferson and BancGroup, compared
that data with similar data for certain other publicly held banks and bank
holding companies and considered the financial terms of certain other recent
comparable bank acquisition transactions, as further discussed below. TSJ&A 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, TSJ&A 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 Jefferson
management and submitted to TSJ&A were based on assumptions believed by TSJ&A to
be reasonable and to reflect currently available information, but TSJ&A did not
independently verify such information. TSJ&A did not make an independent
evaluation or appraisal of the assets of Jefferson or BancGroup. TSJ&A did not
make any recommendation as to the amount of the Merger Consideration.
In connection with rendering the TSJ Fairness Opinion, TSJ&A 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 TSJ&A 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, TSJ&A 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, TSJ&A
made numerous assumptions with respect to industry performance, business and
economic conditions and other matters, many of which are beyond Jefferson's or
BancGroup's control. The analyses performed by TSJ&A are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such
18
<PAGE> 26
analyses. No company or transaction considered as a comparison in the analyses
is identical to Jefferson, 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 to 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 Jefferson
shareholders is set at $18.90. TSJ&A 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 $30.50 per
share to $38.50 per share. BancGroup's Common Stock trades on the New York Stock
Exchange and closed at $37.75 per share on November 5, 1996. Average daily
volume for 1996 year-to-date is estimated at 8,500 shares. The current dividend
yield is 2.86%.
Comparable Transactions Analysis: TSJ&A reviewed the Merger as of October
22, 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 28 transactions that were announced between January 1,
1995 and October 21, 1996 involving selling institutions with total assets
between $300 million and $1 billion. The purchase premiums in the Merger rank
within the range of purchase premiums paid in the comparable transactions. On
average, the 28 comparable transactions reported an announced deal price to book
value of 1.899 times and an announced deal price to earnings of 17.54 times. A
listing of the comparable transactions is included in the table below.
19
<PAGE> 27
DEALS ANNOUNCED FROM JANUARY 1, 1995 TO OCTOBER 21, 1996
TARGETS WITH TOTAL ASSETS BETWEEN $300 MILLION AND $1 BILLION; EQUITY/ASSETS
< 10.00%
<TABLE>
<CAPTION>
SELLER: SELLER:
TOTAL EQTY/
BANK/ ASSETS ASSETS ANNOUNCE
BUYER ST SELLER ST THRIFT ($000) (%) DATE
- ---------------------------------------- -------------------------------------------- ---- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Valley National Bancorp NJ Midland Bancorp NJ Bank 405,027 8.36 09/13/96
Southern National Corp NC Fidelity Financial VA Bank 325,814 8.60 08/22/96
Hinesdale Financial IL Liberty Bancorp IL Thrift 661,198 9.83 08/02/96
Washington Federal WA Metropolitan Bancorp WA Thrift 761,014 6.72 07/12/96
Union Planters TN Financial Bancshares MO Bank 325,403 7.35 06/27/96
Hibennia Corporation LA Texarkana National TX Bank 413,382 8.49 06/26/96
Sovereign Bancorp PA First State Financial NJ Thrift 628,684 6.84 06/25/96
Peoples Heritage ME Family Bancorp MA Thrift 887,387 7.76 05/31/96
Habco Inc. NJ LaFayette American CT Bank 735,405 8.09 02/06/96
FNB Corporation PA Southwest Banks, Inc. FL Bank 352,091 8.27 02/05/96
NationsBank Corp NC Charter Bancshares TX Bank 840,622 6.97 01/25/96
Compass Bancshares AL CFB Bancorp FL Bank 309,590 6.16 11/27/95
Peoples Heritage Fin ME Bank of NH Corp NH Thrift 960,052 8.34 10/25/95
Washington Mutual WA Western Bank OR Thrift 738,572 8.88 10/12/95
Firstar Corp WI Harvest Financial Corp IA Bank 345,951 6.46 07/24/95
Center Financial Corp CT Great Country Bank CT Thrift 339,912 4.52 07/11/95
Summit Bancorp NJ Garden State Bancshares NJ Bank 316,253 8.41 06/14/95
First Commercial Corp AR FDH Bancshares AR Bank 386,724 5.61 05/30/95
First Union Corp NC RS Financial Corp NC Bank 809,722 8.52 05/30/95
First American Corp TN Charter Federal Bank VA Bank 744,110 6.25 05/17/95
First Commerce Corp TN Central Corporation LA Bank 820,150 8.55 05/16/95
Commercial Federal ME Railroad Financial KS Thrift 561,496 4.48 04/19/95
Bank of New York NY Putnam Trust Co CT Bank 686,406 8.22 03/27/95
Main Street Community MA Lexington Savings Bank MA Thrift 393,659 9.22 03/14/95
First American Corp TN Heritage Federal TN Bank 521,546 9.77 02/21/95
First Union Corp NC United Financial of SC SC Bank 758,783 8.01 02/21/95
Valley National Banc. NJ Lakeland First NJ Bank 661,393 7.74 05/30/95
NBD Bancorp MI DearBank Corp IL Bank 765,886 7.78 01/09/95
-- --------- ----
Averages: 28 $587,365 7.65
-- --------- ----
<CAPTION>
ANN'D
ANN'D ANN'D DEAL
DEAL DEAL PR/
VALUE CONSIDER PR/BK 4-QTR
BUYER STATUS ($M) TYPE (%) EPS (X)
- ---------------------------------------- ---------- ----- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Valley National Bancorp Pending 104.1 Com Stock 284.44 20.67
Southern National Corp Pending 16.1 Com Stock 202.00 18.02
Hinesdale Financial Pending 60.9 Com Stock 94.84 18.43
Washington Federal Pending 60.9 Com Stock 146.02 N/A
Union Planters Pending 36.2 Com Stock 149.79 19.38
Hibennia Corporation Pending 76.3 Com Stock 217.45 23.95
Sovereign Bancorp Pending 58.1 Com Stock 137.98 15.36
Peoples Heritage Pending 107.1 Com Stock 147.77 12.76
Habco Inc. Completed 137.3 Com Stock 222.35 7.19
FNB Corporation Pending 60.8 Com Stock 203.07 57.80
NationsBank Corp Completed 94.7 Com Stock 282.22 16.64
Compass Bancshares Completed 43.1 Com Stock 226.03 26.60
Peoples Heritage Fin Completed 170.7 Com Stock 213.20 15.50
Washington Mutual Completed 159.9 Com Stock 244.05 16.67
Firstar Corp Completed 35.4 Com Stock 145.47 10.11
Center Financial Corp Completed 28.2 Com Stock 183.44 N/A
Summit Bancorp Completed 69.2 Com Stock 255.24 25.47
First Commercial Corp Completed 34.9 Com Stock 160.94 13.29
First Union Corp Completed 117.8 Com Stock 161.71 19.93
First American Corp Completed 68.4 Com Stock 146.48 8.87
First Commerce Corp Completed 190.2 Com Stock 271.23 18.05
Commercial Federal Completed 37.9 Com Stock 144.96 20.06
Bank of New York Completed 141.0 Com Stock 247.55 15.27
Main Street Community Completed 33.9 Com Stock 93.38 11.68
First American Corp Completed 97.4 Com Stock 188.81 14.66
First Union Corp Completed 127.4 Com Stock 193.75 19.73
Valley National Banc. Completed 34.9 Com Stock 160.94 13.29
NBD Bancorp Completed 119.8 Com Stock 192.97 14.29
------ -----
189.93 17.54
------ -----
</TABLE>
20
<PAGE> 28
RECOMMENDATION OF THE BOARD OF DIRECTORS OF JEFFERSON
The Board of Directors of Jefferson has determined that the Merger is in
the best interests of Jefferson and its shareholders. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF JEFFERSON 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 operations in
the Florida market, and, to that end, it currently operates a commercial bank in
Orlando, and it has pending agreements to merge other banks in Florida into
BancGroup. The Board of Directors of BancGroup believes that the combination
with Jefferson 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
Jefferson, including its strong capital and good asset quality; (ii)
similarities in the philosophies of BancGroup and Jefferson, including
Jefferson's commitment to delivering high quality personalized financial
services to its customers; and (iii) Jefferson's management's knowledge of and
experience in the South Florida market.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of Jefferson hold Jefferson
Options which entitle them to purchase, in the aggregate, up to 149,534 shares
of Jefferson Common Stock. Under the terms of the Agreement, any Jefferson
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 Jefferson Common Stock" and
"Treatment of Jefferson Options."
BancGroup and Colonial Bank have entered into employment agreements with
Arthur H. Courshon, Chairman of the Board and President of Jefferson, and Barton
S. Goldberg, Secretary of Jefferson and President of the Bank. Pursuant thereto,
effective as of the Effective Date of the Merger, Mr. Courshon will be employed
for a period of one year at an annual compensation of $582,000 plus customary
employee benefits. He will perform such duties as he and Colonial Bank agree
upon. Effective as of the Effective Date of the Merger, Mr. Goldberg will be
employed as President and Chief Executive Officer of the Colonial Bank of South
Florida Region for a period of two years at an annual compensation of $400,000
plus customary employee benefits. Messrs. Courshon and Goldberg are both
restricted by the employment agreements from competing with Jefferson in Dade or
Broward Counties, Florida (and from failing to discharge their fiduciary duties
to Jefferson) prior to the Effective Date and from competing with Colonial Bank
in those counties for one year following the earlier of the termination of their
respective agreements or the termination of their employment for any reason.
In addition, each of the Directors of Jefferson has entered into an
agreement with BancGroup restricting the Director from competing with Jefferson
in Dade or Broward Counties, Florida, and from failing to discharge his
fiduciary duties to Jefferson. Each such agreement terminates on the Effective
Date of the Merger.
On the Effective Date and subject to the agreements described above, all
employees of Jefferson (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 the severance policy of Colonial Bank,
as of the date of the Agreement. For purposes of computing the longevity of
service within the meaning of that severance policy, service with Jefferson by
employees working at least 30 hours per week will be deemed service with
Colonial Bank. All employees of Jefferson 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. Holders of Jefferson Options
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must receive 30 days' prior written notice of termination of their employment or
be permitted to exercise their options within 30 days following such
termination.
Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of Jefferson 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 Jefferson would have been permitted
under Florida 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
Jefferson, 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 Jefferson Common Stock.
CONVERSION OF JEFFERSON COMMON STOCK
On the Effective Date, each share of Jefferson Common Stock outstanding and
held by Jefferson's shareholders shall be converted by operation of law and
without any action by any holder thereof into BancGroup Common Stock with a
market value of $18.90 as determined below. The number of shares, or fractions
of a share of BancGroup Common Stock into which each outstanding share of
Jefferson Common Stock on the Effective Date shall be converted shall be equal
to $18.90 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 that the
Market Value shall not be less than $30.50 nor more than $38.50, regardless of
the actual market value as calculated. Accordingly, the maximum number of shares
of BancGroup Common Stock to be issued in the Merger shall be 2,349,202 (based
upon a minimum Market Value of $30.50) and the minimum number of shares of
BancGroup Common Stock to be issued in the Merger shall be 1,861,056 (based upon
a maximum Market Value of $38.50), assuming 3,791,040 shares of Jefferson Common
Stock outstanding as of October 31, 1996 (and 231,925 shares subject to options
as of such date). To the extent that as of the Effective Date the number of
shares of Jefferson Common Stock outstanding has increased based upon the
exercise of employee stock options for Jefferson Common Stock after October 31,
1996, the number of shares of BancGroup Common Stock to be issued in the Merger
shall increase with each share of Jefferson Common Stock outstanding at the
Effective Date exchanged for a number of shares of BancGroup Common Stock equal
to $18.90 divided by the Market Value and the minimum and maximum number of
shares of BancGroup Common Stock shall also be adjusted to take into account
increases in the number of shares of Jefferson Common Stock outstanding in
excess of 3,791,040 shares as a result of such exercises.
No fractional shares of BancGroup Common Stock will be issued in the
Merger. Each shareholder of Jefferson having a fractional interest arising upon
the conversion of Jefferson Common Stock into BancGroup Common Stock will, at
the time of surrender of the certificates representing Jefferson 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.
As an example, a shareholder of Jefferson who owns 500 shares of Jefferson
Common Stock will receive BancGroup Common Stock in the Merger. Assuming a
Market Value of BancGroup Common Stock at the Merger of $36.075 (calculated as
of October 31, 1996), then such shareholder would receive 261.95 shares of
BancGroup Common Stock ($18.90 3 $36.075 multiplied by 500) with the .95 of a
share paid in cash equal to $34.27 (.95 X $36.075).
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 amounts 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
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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
Jefferson Common Stock shall be converted in the Merger.
For a description of the assumption of Jefferson Options, see "Treatment of
Jefferson Options."
SURRENDER OF JEFFERSON COMMON STOCK CERTIFICATES
Upon the Effective Date and subject to the conditions described at
"Conditions to Consummation of the Merger," Jefferson's 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 Jefferson Common Stock shall represent
shares of BancGroup Common Stock. Thereafter, upon surrender of the certificates
formerly representing shares of Jefferson 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 Jefferson unless and until such
shareholder surrenders for cancellation his certificate for Jefferson Common
Stock. SunTrust Bank, Atlanta, Georgia, transfer agent for BancGroup Common
Stock, will act as the Exchange Agent with respect to the shares of Jefferson
Common Stock surrendered in connection with the Merger.
A detailed explanation of these arrangements will be mailed to Jefferson
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 Jefferson to consummate the Merger is
conditioned on the receipt by Jefferson of an opinion from Steel Hector & Davis,
LLP, counsel to Jefferson, to the effect that the Merger will constitute such a
reorganization. The opinion has been delivered to Jefferson. In delivering its
opinion, Steel Hector & Davis LLP has received and relied upon certain
representations contained in certificates of officers of BancGroup and Jefferson
and certain other information, data, documentation and other materials as it
deems necessary. The tax opinion is based upon customary assumptions contained
therein, including the assumption that Jefferson has no knowledge of any plan or
intention on the part of the Jefferson shareholders to sell or dispose of
BancGroup Common Stock that would reduce their holdings to the number of shares
having in the aggregate a fair market value of less than 50% of the total fair
market value of the Jefferson Common Stock outstanding immediately upon the
Merger.
Neither Jefferson nor BancGroup intends to seek a ruling from the Internal
Revenue Service as to the federal income tax consequences of the Merger.
Jefferson's shareholders should be aware that the opinion will not be binding on
the Internal Revenue Service or the courts. Jefferson's shareholders also should
be aware that some of the tax consequences of the Merger are governed by
provisions of the Code as to which there are no final regulations and little or
no judicial or administrative guidance. There can be no assurance that future
legislation, administrative rulings, or court decisions will not adversely
affect the accuracy of the statements contained herein.
The tax opinion states that, provided the assumptions stated therein are
satisfied, the Merger will constitute a reorganization as defined in Section
368(a) of the Code and the following federal income tax consequences will result
to Jefferson's shareholders who exchange their shares of Jefferson Common Stock
for shares of BancGroup Common Stock:
(i) No gain or loss will be recognized by Jefferson's shareholders on
the exchange of shares of Jefferson Common Stock for shares of BancGroup
Common Stock;
(ii) The aggregate basis of BancGroup Common Stock received by each
Jefferson shareholder (including any fractional shares of BancGroup Common
Stock deemed received, but not actually
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received), will be the same as the aggregate tax basis of the shares of
Jefferson Common Stock surrendered in exchange therefor;
(iii) The holding period of the shares of BancGroup Common Stock
received by each Jefferson shareholder will include the period during which
the shares of Jefferson Common Stock exchanged therefor were held, provided
that the shares of Jefferson Common Stock were a capital asset in the
holder's hands as of the Effective Date; and
(iv) Cash payments received by each Jefferson shareholder in lieu of a
fractional share of BancGroup Common Stock will be treated for federal
income tax purposes as if the fractional share had been issued in the
exchange and then redeemed by BancGroup. Gain or loss will be recognized on
the redemption of the fractional share and generally will be capital gain
or loss if the Jefferson Common Stock is a capital asset in the hands of
the holder.
Each Jefferson shareholder will be required to report on such shareholder's
federal income tax return for the fiscal year of such shareholder in which the
Merger occurs that such shareholder has received BancGroup Common Stock in a
reorganization.
The federal income tax consequences to a Jefferson shareholder who
exercises dissenters' rights of appraisal will depend on whether the cash
received (i) is treated as a payment made in exchange for Jefferson Common
Stock, in which case the Jefferson shareholder will recognize gain or loss
measured by the amount received over the shareholder's adjusted basis in the
Jefferson Common Stock exchanged, which gain or loss will be capital if the
Jefferson Common Stock is held by the Jefferson shareholder as a capital asset,
or (ii) is treated as a dividend (determined with the application of Section 318
of the Code), in which case the Jefferson shareholder will recognize ordinary
income to the extent of the earnings and profits of Jefferson and BancGroup. The
determination of whether a cash payment will be treated as received in an
exchange for Jefferson Common Stock or as a dividend will depend on the
individual Jefferson shareholder's situation. Jefferson shareholders electing
dissenters' rights of appraisal should consult their own tax advisors with
respect to the treatment of a cash payment as an exchange or a dividend.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF ALL MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO THE SHAREHOLDERS OF
JEFFERSON AND DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF ALL
POTENTIAL TAX EFFECTS 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, STOCKHOLDERS WHO DO NOT HOLD THEIR SHARES OF
JEFFERSON COMMON STOCK AS "CAPITAL ASSETS" WITHIN THE MEANING OF SECTION
1221 OF THE CODE, AND SHAREHOLDERS WHO ACQUIRED THEIR SHARES OF JEFFERSON
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; MOREOVER, THE TAX CONSEQUENCES TO HOLDERS
OF JEFFERSON OPTIONS 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 IS SUBJECT TO CHANGE
AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS
DISCUSSION. JEFFERSON SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE MERGER TO THEM.
The Merger is also subject to BancGroup's receipt of an opinion from
Coopers & Lybrand, L.L.P., in form and substance reasonably satisfactory to
BancGroup, that the Merger will constitute a reorganization under section 368 of
the Code and no gain or loss will be recognized by BancGroup or Jefferson as a
result of the Merger.
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OTHER POSSIBLE CONSEQUENCES
If the Merger is consummated, the shareholders of Jefferson, a Florida
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 Jefferson 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 Jefferson 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 Jefferson Common
Stock; (ii) the approval of the Merger by the Florida Department and the Federal
Reserve; (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 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 June 30,
1997; and (vi) receipt of opinions of counsel regarding certain matters.
The obligation of Jefferson 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 shall have been approved
for listing on the NYSE; and (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.
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 Jefferson; (ii) the holders of not more
than 10% of the outstanding shares of Jefferson Common Stock shall have
exercised dissenters' rights with respect to their shares; (iii) the receipt of
a letter from Coopers & Lybrand L.L.P. that the Merger will qualify for the
"pooling-of-interests" method of accounting under generally accepted accounting
principles and that the Merger constitutes a reorganization for federal income
tax purposes; (iv) the accuracy in all material respects of the representations
and warranties of Jefferson contained in the Agreement, and the performance by
Jefferson of all of its covenants and agreements under the Agreement; and (v)
the receipt by BancGroup of certain undertakings from holders of Jefferson
Common Stock who may be deemed to be "affiliates" of Jefferson pursuant to the
rules of the Commission.
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, and satisfaction of
each party of all representations, warranties and covenants, will be satisfied.
The Agreement provides that Jefferson 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 Jefferson 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 Jefferson and BancGroup would be subject to the 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 Jefferson may agree to amend or
terminate the Agreement before or after approval by the shareholders of
Jefferson. However, the Board of Directors of Jefferson 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 Jefferson, would adversely affect
the rights of the shareholders of
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Jefferson, unless such amendments are approved by a majority of the outstanding
shares of Jefferson 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
The Merger is subject to prior approval of the Federal Reserve under the
BHCA and by the Florida Department under Section 658.28 of the Florida Banking
Code. It is contemplated that subsequent to the Merger, the Bank will be merged
with and into BancGroup's wholly-owned subsidiary, Colonial Bank, Orlando,
Florida (the "Bank Merger"). Applications for approval of the Merger were filed
with the Federal Reserve and the Florida Department on October 18, and October
30, 1996, respectively. Approval of the Merger by such agencies is expected to
be received on or about December 31, 1996.
Federal Reserve Approval. Under Section 3 of the BHCA, 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 geographic
area. In addition, the Federal Reserve may not approve the Merger if it finds
that the effect thereof may be substantially to lessen competition 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 and managerial resources and future prospects of BancGroup's
banking subsidiaries following the consummation of the Merger, as well as the
compliance records of such banking subsidiaries under the Community Reinvestment
Act. The Federal Reserve has indicated that it will not approve a significant
acquisition unless the resulting institution has adequate capitalization, taking
into account, among other things, asset quality.
In addition, the Federal Reserve is expressly permitted to approve
applications under Section 3 of the BHCA for a bank holding company that is
adequately capitalized and adequately managed to acquire control of a bank
located in a state other than the home state of such bank holding company (an
"Interstate Acquisition"), without regard to whether such transaction is
prohibited under the law of any state. However, if the law of the state in which
the target bank is located requires the target bank to have been in existence
for some minimum period of time, the Federal Reserve is prohibited from
approving an application by a bank holding company to acquire such target bank
if such target bank does not satisfy this state law requirement, so long as the
state law specifying such minimum period of time does not specify a period of
more than five years.
Also, the Federal Reserve is prohibited from approving an Interstate
Acquisition if the acquiring bank holding company controls, or upon consummation
of the acquisition, would control, more than 10% of the total amount of deposits
of insured depository institutions in the United States. Finally, subject to
certain exceptions, the Federal Reserve may not approve an application
pertaining to an Interstate Acquisition if, among other things, the bank holding
company, upon consummation of the acquisition, would control 30% or more of the
total amount of deposits of insured depository institutions in the state where
the target bank is located.
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 United States Department of Justice, should it object to the
Merger for antitrust reasons, may challenge the consummation of the Merger.
Florida Department of Banking and Finance. The Florida Department must
also approve the change of control of the Bank which would be effected by the
Merger. Under Section 658.28 of the Florida Banking Code, the Florida Department
shall issue a Certificate of Approval for a change of control of a Florida state
bank only after it has made an investigation and has determined that the
proposed new owner of a controlling interest is qualified by reputation,
character, experience and financial responsibility to control and operate the
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bank in a legal and proper manner and that the interest of the other
shareholders, if any, and the depositors and creditors of the bank and the
interest of the public generally will not be jeopardized by the proposed change
in ownership, controlling interest or management.
In addition, the Bank Merger must be approved by the Florida Department
pursuant to applicable provisions of the Florida Banking Code. The Florida
Department must approve the Bank Merger if it appears that the resulting state
bank meets all the requirements of state law as to the formation of a new state
bank, the agreement of merger provides an adequate capital structure, including
surplus, of the resulting state bank in relation to its activities which are to
continue or are to be undertaken, and also in relation to its deposit
liabilities, the valuation is fair, and the Bank Merger is not contrary to the
public interest.
Federal Deposit Insurance Corporation. Pursuant to the requirements of the
Federal Deposit Insurance Act, the FDIC's approval of the Bank Merger must be
obtained. 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 out-weighed 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 Merger for
antitrust reasons, may challenge the consummation of the Merger.
The Agreement provides that the obligation of each of BancGroup and
Jefferson to consummate the Merger is conditioned upon the receipt of all
necessary regulatory approvals, including the approval of the Federal Reserve
and the Florida Department. There can be no assurance that the Federal Reserve
or the Florida Department will approve BancGroup's applications to acquire
Jefferson, 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. The Merger is expected to occur in the first quarter of 1997.
CONDUCT OF BUSINESS PENDING THE MERGER
The Agreement contains certain restrictions on the conduct of the business
of Jefferson pending consummation of the Merger. The Agreement prohibits
Jefferson 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 Jefferson Common Stock issued upon
the exercise of Jefferson Options;
(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;
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(iv) Except in the ordinary course of business and consistent with
past practice, 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, property or rights 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, property or rights or requiring the consent
of any party to the transfer and assignment of any of its assets, property
or rights;
(vii) Waiving any rights of value which in the aggregate are material;
(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 past 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 past 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 of Jefferson 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 Jefferson or its subsidiaries.
The Agreement also provides that (i) Jefferson will consult with BancGroup
respecting loan requests in excess of $3,000,000 that are not single-family
residential loan requests and respecting other loan requests outside the normal
course of business, (ii) Jefferson will dispose of certain structured notes in
its investment portfolio prior to December 31, 1996, and (iii) Jefferson will
consult with BancGroup respecting ways in which operating expenses might be
reduced.
COMMITMENTS WITH RESPECT TO OTHER OFFERS
Until the termination of the Agreement, and subject to satisfaction of
their fiduciary duties, neither Jefferson 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, Jefferson or any business combination involving
Jefferson other than as contemplated by the Agreement. Jefferson will notify
BancGroup immediately if any such inquiries or proposals are received by
Jefferson, if any such information is requested from Jefferson, or if any such
negotiations or discussions are sought to be initiated with Jefferson. Jefferson
shall instruct its officers, directors, agents or affiliates or their
subsidiaries to refrain from doing any of the above. If Jefferson enters into a
binding agreement regarding a business combination with a third party prior to
the Effective Date or the termination of the Agreement for certain specified
reasons other than the fault of BancGroup, or if Jefferson receives a proposal
prior to termination of the Agreement for such specified reasons regarding such
a business combination from a third party and consummates a business combination
with such third party within
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12 months after termination of the Agreement for such specified reasons,
Jefferson shall pay to BancGroup either upon entering into the binding agreement
or upon consummation of the business combination transaction, whichever first
occurs, $2,000,000 (less any amounts otherwise payable to BancGroup for
expenses) to compensate BancGroup for its direct and indirect costs and expenses
in connection with the Merger.
INDEMNIFICATION
BancGroup has agreed to indemnify present and former directors and officers
of Jefferson and the Bank against liabilities arising out of actions or
omissions occurring at or prior to the Effective Date to the extent provided in
the Florida Business Corporation Act and Jefferson's Articles of Incorporation
and Bylaws.
RIGHTS OF DISSENTING SHAREHOLDERS
Holders of Jefferson Common Stock as of the Record Date are entitled to
dissenters' rights of appraisal under Florida law. Pursuant to Section 607.1320
of the FBCA, a Jefferson shareholder who does not wish to accept the shares of
BancGroup Common Stock to be received pursuant to the terms of the Agreement may
dissent from the Merger and elect to receive the fair value of his shares as of
the day prior to the date the Merger is approved by Jefferson shareholders.
In order to exercise appraisal rights, a dissenting shareholder of
Jefferson (a "Dissenting Shareholder") must fully comply with the statutory
procedures of Sections 607.1320, 607.1301 and 607.1302 of the FBCA, which are
summarized below. Such Sections are attached hereto as Appendix C. Shareholders
of Jefferson are urged to read such Sections in their entirety and to consult
with their legal advisors. Each shareholder of Jefferson who desires to assert
his or her appraisal rights is cautioned that failure on his or her part to
adhere strictly to the requirements of Florida law in any regard may cause a
forfeiture of any appraisal rights.
To exercise appraisal rights,
1. A Dissenting Shareholder must file with Jefferson, prior to the taking
of the vote on the Merger, a written notice of intent to demand payment for his
or her shares if the Merger is effectuated. A vote against the Merger will not
alone be deemed to be the written notice of intent to demand payment. A
Dissenting Shareholder need not vote against the Merger, but cannot vote for the
Merger.
2. Within ten days after the vote on the Merger is taken, Jefferson must
give written notice of the authorization of the Merger, if obtained, to each
Jefferson shareholder who filed notice of intent to demand payment for his
shares. Within twenty days after the giving of the foregoing notice by
Jefferson, each Dissenting Shareholder must file with Jefferson a notice of
election to dissent, stating his name and address, the number, classes and
series of shares as to which he dissents and a demand for payment of the fair
value of his shares. Any Dissenting Shareholder failing to file such election
within the period will lose his or her appraisal rights and be bound by the
terms of the Merger. A Dissenting Shareholder filing an election to dissent must
also deposit the certificate(s) representing his or her shares with Jefferson
simultaneously with the filing of the election.
3. Upon filing a notice of election to dissent, a Dissenting Shareholder
shall thereafter be entitled only to payment pursuant to the procedure set forth
in the applicable sections of FBCA and shall not be entitled to vote or to
exercise any other rights of a shareholder. A notice of election may be
withdrawn in writing by the Dissenting Shareholder at any time before an offer
is made by Jefferson to pay for shares. Upon such withdrawal, the right of the
Dissenting Shareholder to be paid the fair value of his or her shares will
cease, and he or she will be reinstated as a shareholder.
4. Within ten days after the expiration of the period in which a Dissenting
Shareholder may file notice of election to dissent, or within ten days after the
Effective Date of the Merger, whichever is later (but in no event later than
ninety days after the Merger is approved), Jefferson (or BancGroup after the
Effective Date) must make a written offer to each Dissenting Shareholder who has
made demand for appraisal for his or her shares at a price deemed by Jefferson
to be the fair value thereof.
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<PAGE> 37
5. If, within thirty days after the making of such offer, the Dissenting
Shareholder accepts the offer, payment for the shares of the Dissenting
Shareholder is to be made within ninety days after the making of such offer or
the effective date of the Merger, whichever is later. Upon payment of the agreed
value, the Dissenting Shareholder will cease to have any interest in such
shares.
6. If Jefferson (or BancGroup, if appropriate) fails to make such offer
within the period specified above or if it makes an offer and a Dissenting
Shareholder fails to accept the same within a period of 30 days thereafter, then
Jefferson, within 30 days after receipt of written demand from any Dissenting
Shareholder given within 60 days after the date on which the Merger was
effected, shall, or at its election at any time within such period of 60 days
may, file an action in any court of competent jurisdiction in Dade County
requesting that the fair value of such shares be determined by the Court.
If Jefferson fails to institute such proceeding within the above-prescribed
period, any Dissenting Shareholder may do so in the name of Jefferson. A copy of
the initial pleading will be served on each Dissenting Shareholder. Jefferson is
required to pay each Dissenting Shareholder the amount found to be due within
ten days after final determination of the proceedings. Upon payment of the
judgment, the Dissenting Shareholder ceases to have any interest in such shares.
7. The costs and expenses of the court proceeding are determined by the
court and will be assessed against Jefferson (or BancGroup, if appropriate),
except that all or any part of such costs and expenses may be apportioned and
assessed against any Dissenting Shareholders who are parties to the proceeding
and to whom Jefferson has made an offer to pay for their shares, if the court
finds their refusal to accept such offer to have been arbitrary, vexatious or
not in good faith. Expenses include reasonable compensation for, and expenses
of, appraisers, but shall exclude the fees and expenses of counsel for, and
experts employed by, any party. If the value of the shares, as determined by the
court, materially exceeds the amount that Jefferson offered to pay for the
shares then the court may, in its discretion, award to any Dissenting
Shareholder who is a party to the proceedings, such sum as the court may
determine to be reasonable compensation to any expert(s) employed by the
Dissenting Shareholder in the proceeding.
Successful assertion by Jefferson shareholders of their dissenters'
appraisal rights is dependent upon compliance with the requirements described
above. Non-compliance with any provision may result in a failure to perfect
those rights and the loss of any opportunity to receive payment for shares
pursuant to an appraisal.
BECAUSE OF THE COMPLEXITY OF THE PROVISIONS OF THE FLORIDA LAW RELATING TO
DISSENTER'S APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM
THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISORS.
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 Jefferson Options) has been
registered under the Securities Act of 1933 (the "Securities Act"). As a result,
shareholders of Jefferson who are not "affiliates" of Jefferson (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 Jefferson 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 Jefferson 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
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<PAGE> 38
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also subject to the availability of current public information about BancGroup.
The restrictions on sales will cease to apply under most circumstances once the
former Jefferson affiliate has held the BancGroup Common Stock for at least two
years. BancGroup Common Stock held by affiliates of Jefferson who become
affiliates of BancGroup will be subject to additional restrictions on the
ability of such persons to resell such shares.
Jefferson 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
Jefferson. Jefferson 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.
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, require that the number of shares of Jefferson 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 Jefferson Common Stock. Under
this accounting treatment, assets and liabilities of Jefferson would be added to
those of BancGroup at their recorded book values, and 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
Jefferson 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
Jefferson Common Stock will be reported on the NYSE.
TREATMENT OF JEFFERSON OPTIONS
Assumption of Options. As of the date of this Prospectus, Jefferson had
granted Jefferson Options which entitle the holders thereof to acquire up to
199,369 shares of Jefferson Common Stock. On the Effective Date, BancGroup shall
assume all Jefferson Options outstanding, and each such option shall represent
the right to acquire BancGroup Common Stock on substantially the same terms
applicable to the Jefferson 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 upon
the exercise of the Jefferson 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 Jefferson Common Stock subject to such Jefferson Options
multiplied by the Exchange Ratio, provided that no fraction 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 Jefferson 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 Jefferson 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 $18.90 by the Market Value.
The Jefferson Options are issuable pursuant to the Jefferson Bancorp 1983,
1985 and 1987 Stock Option Plans (collectively, the "Option Plans").
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<PAGE> 39
The Option Plans are not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, nor are they subject to the Employee
Retirement Income Security Act of 1974. Jefferson Options are not transferrable
except under the laws of descent and distribution.
Purpose of the Option Plans. The purpose of the Option Plans is to assist
Jefferson in retaining the employment of valued employees and directors 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 Jefferson Options will be consistent with this
purpose. No further options will be granted under the Option Plans after the
Merger.
Tax Consequences -- Incentive Options. BancGroup believes that, if the
options issued under the Option Plans as incentive options qualified as such at
the time of grant, the options, 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 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.
Tax Consequences -- Nonqualified Options. The Jefferson Options that are
issued as nonqualified options are not "incentive stock options" under Section
422 of the Internal Revenue Code of 1986, as amended. Thus, upon the exercise of
such an option, ordinary income will result to the grantee equal to the
difference between the price of the option and the fair market value of the
stock subject to the option at the date of exercise. BancGroup, however, will be
entitled to a tax deduction equal to the amount of ordinary income accruing to
the optionee.
All of 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 Jefferson respecting the effect of the Merger
on holders of Jefferson 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
Jefferson Options granted under the Option Plans shall be made available, after
the Merger, from the authorized but unissued shares of BancGroup's Common Stock.
The Option Plans are 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.
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<PAGE> 40
The members of the Committee serve at the pleasure of the Board of Directors of
BancGroup. The Committee shall interpret the Option Plans and resolve questions
presented by holders of options under the Option Plans. Requests for information
or questions about the Option Plans 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 Jefferson 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 the 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.
Amendment and Other Matters. BancGroup's Board of Directors may at any
time amend the Option Plans, 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 Jefferson 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 Plans and does not
anticipate acquiring any shares in the open market for such purposes.
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.
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<PAGE> 41
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
-------------- (PER
HIGH LOW 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 November 18)................................ 39 1/8 34 3/4 0.27
</TABLE>
On September 11, 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 $35 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.
JEFFERSON
Jefferson Common Stock is traded in the over-the-counter market and is
quoted in the NASDAQ System as a Small Capitalization Issue under the symbol
"JBNC".
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<PAGE> 42
The following table shows the dividends paid per share and indicates the
high and low bid and asked prices for Jefferson Common Stock as reported by the
National Quotations Bureau for the periods indicated.
<TABLE>
<CAPTION>
PRICE (PER SHARE)
-------------------------------------
HIGH LOW
---------------- ---------------- DIVIDENDS PAID
BID ASKED BID ASKED (PER SHARE)
------ ------ ------ ------ --------------
<S> <C> <C> <C> <C> <C>
1994
1st Quarter................................. $10.25 $10.75 $ 9.50 $10.25 $.125
2nd Quarter................................. 10.25 10.75 9.75 10.13 .125
3rd Quarter................................. 12.25 12.75 9.75 10.25 .125
4th Quarter................................. 11.75 12.25 10.00 10.50 .125*
1995
1st Quarter................................. 14.75 15.50 12.00 12.50 .125
2nd Quarter................................. 13.88 14.50 12.50 13.25 .125
3rd Quarter................................. 18.75 18.75 14.25 15.50 .125
4th Quarter................................. 15.75 16.50 13.25 13.75 .125
1996
1st Quarter................................. 15.00 15.50 13.25 13.75 .125
2nd Quarter................................. 14.50 15.00 12.75 13.50 .125
3rd Quarter................................. 17.50 18.00 11.75 12.25 .125
</TABLE>
- ---------------
* In addition, a 3% stock dividend was paid in the 4th quarter of 1994.
On September 11, 1996, the business day immediately prior to the public
announcement of the Merger, the closing price as reported on the NASDAQ System
of Jefferson Common Stock was $15.25 per share. The Agreement provides that
Jefferson will only pay dividends prior to the Effective Date in amounts that
are consistent with past practice. 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 October 31, 1996, there were
issued and outstanding a total of 16,309,710 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 $7,548,200 are currently
outstanding and are convertible at any time into 269,609 shares of BancGroup
Common Stock, subject to adjustment. There are 830,952 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.
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<PAGE> 43
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 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 the
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 269,609 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 September 30, 1996, BancGroup's Senior Indebtedness as defined in the
1986 Indenture aggregated approximately $708 million. Such debt includes all
short-term debt consisting of federal funds purchased,
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<PAGE> 44
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.
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.
37
<PAGE> 45
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 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.
COMPARATIVE RIGHTS OF STOCKHOLDERS
If the Merger is consummated, all shareholders of Jefferson will become
holders of BancGroup Common Stock. The rights of the holders of the Jefferson
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 Jefferson
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 Jefferson's Articles of Incorporation and bylaws,
the Delaware General Corporation Law (the "Delaware GCL") and the Florida
Business Corporation Act ("FBCA").
38
<PAGE> 46
DIRECTOR ELECTIONS
Jefferson. Jefferson'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.
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."
REMOVAL OF DIRECTORS
Jefferson. Section 607.0808 of the FBCA provides that the shareholders may
remove one or more directors, with or without cause, at a meeting of
shareholders, provided that the notice of the meeting states that the purpose,
or one of the purposes, of the meeting is the removal of the director.
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.
VOTING
Jefferson. Each stockholder of Jefferson is entitled to one vote for each
share of Jefferson Common Stock held, and such holders are not entitled to
cumulative voting rights in the election of directors.
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.
PREEMPTIVE RIGHTS
Jefferson. The holders of Jefferson Common Stock have no preemptive rights
to acquire any additional shares of Jefferson Common Stock.
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.
DIRECTORS' LIABILITY
Jefferson. Section 607.0831 of the FBCA provides that a director of
Jefferson will not be personally liable for monetary damages to Jefferson or any
other person for any statement, vote, decision or failure to act, regarding
corporate management or policy, by a director unless: (a) the director breached
or failed to perform his duties as a director, and (b) the director's breach of
or failure to perform those duties constitutes: (1) a violation of the criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful, (2) a
transaction in which the director derived an improper personal benefit, (3) a
payment of certain unlawful dividends and distributions, (4) in a proceeding by
or in the right of Jefferson to procure judgment in its favor or by or in the
right of a shareholder, conscious disregard for the best interests of Jefferson,
or willful misconduct, or (5) in a proceeding by or in the right of someone
other than Jefferson or a shareholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety or property. This provision
would absolve directors of Jefferson of personal liability for negligence in the
performance of their duties, including gross negligence. It would not permit a
director to be exculpated, however, from liability for actions involving
conflicts of interest or breaches of the traditional "duty of loyalty" to
Jefferson and its shareholders, and it would not affect the availability of
injunctive and other equitable relief as a remedy.
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
39
<PAGE> 47
payment of certain unlawful dividends and the making of certain stock purchases
or redemptions, or (iv) for 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.
INDEMNIFICATION
Jefferson. Under Section 607.0850 of the FBCA, the directors and officers
of Jefferson may be indemnified against certain liabilities which they may incur
in their capacity as officers and directors. Such indemnification is generally
available if the executive acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interest of Jefferson,
and with respect to any criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful. Indemnification may also be available unless a
court of competent jurisdiction establishes by final adjudication that the
actions or omissions of the executive are material to the cause of action so
adjudicated and constituted: (a) a violation of the criminal law, unless the
executive had reasonable cause to believe his or her conduct was lawful or had
no reasonable cause to believe his or her conduct was unlawful; (b) a
transaction from which the executive derived an improper personal benefit; or
(c) willful misconduct or conscious disregard for the best interest of Jefferson
in a proceeding by or in the right of Jefferson to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder. Jefferson's
Articles of Incorporation require Jefferson to indemnify its officers and
directors to the full extent permitted by the statute. Further, to the extent
that the proposed indemnitee is successful on the merits or otherwise in the
defense of any action, suit or proceeding (or any claim, issue or matter
therein) he or she must be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him or her in connection with such
proceeding.
Jefferson maintains a directors' and officers' insurance policy pursuant to
which officers and directors of Jefferson would be entitled to indemnification
against certain liabilities, including reimbursement of certain expenses. The
Merger Agreement requires BancGroup, subject to certain conditions, to maintain
such policy in effect for four years after the Effective Date with respect to
claims arising from facts or events which occurred before the Effective Date.
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.
40
<PAGE> 48
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION WITHOUT A MEETING
Jefferson. Jefferson's bylaws provide that special meetings of Jefferson's
stockholders may be called by the Chairman of the Board or by the President, and
shall be called by the Chairman, President or Secretary at the request of a
majority of the Board of Directors, or at the request of stockholders holding
twenty percent (20%) of the entire capital stock of Jefferson issued,
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 607.0704 of the FBCA permits any action required or permitted by
the FBCA to be taken at an annual or special meeting of stockholders to be taken
instead without meeting by written consent of stockholders having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
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.
MERGERS, SHARE EXCHANGES AND SALES OF ASSETS
Jefferson. The FBCA provides that mergers and sales of substantially all
of the property of a Florida corporation must be approved by a majority of the
outstanding shares of the corporation entitled to vote thereon. The FBCA also
provides, however, that the shareholders of a corporation surviving a merger
need not approve the transaction if: (a) the articles of incorporation of the
surviving corporation will not differ from its articles before the merger, and
(b) each shareholder of the surviving corporation whose shares were outstanding
immediately prior to the effective date of the merger will hold the same number
of shares with identical designations, preferences, limitations and relative
rights, immediately after the merger.
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 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.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
Jefferson. Section 607.1002 of the FBCA permits the Board of Directors to
amend the Articles of Incorporation in certain minor respects without
stockholder action, but Section 607.1003 requires most amendments to be adopted
by the stockholders upon recommendation of the Board of Directors. Unless the
FBCA requires a greater vote, amendments may be adopted by a majority of the
votes cast, a quorum being present.
Section 607.1020 of the FBCA permits the Board of Directors to amend or
repeal the bylaws unless the FBCA or the stockholders provide otherwise. The
stockholders entitled to vote have concurrent power to amend or repeal the
bylaws.
41
<PAGE> 49
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."
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.
RIGHTS OF DISSENTING STOCKHOLDERS
Jefferson. Holders of Jefferson Common Stock as of the Record Date are
entitled to dissenters' rights of appraisal under Florida law. For a description
of such appraisal rights, see "THE MERGER -- 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.
PREFERRED STOCK
Jefferson. Jefferson's Articles of Incorporation authorize only the
issuance of 10,000,000 shares of Common Stock, par value $1.00 per share; no
provision is made for 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."
EFFECT OF THE MERGER ON JEFFERSON SHAREHOLDERS
As of the Record Date, 1996, Jefferson had 432 holders of record and
3,823,596 outstanding shares of Jefferson Common Stock. As of October 31, 1996,
BancGroup had 16,309,710 shares of BancGroup Common Stock outstanding with 5,911
holders of record.
Assuming no exercises of Jefferson Options at the Effective Date and a
Market Value of BancGroup Common Stock of $36.075, calculated as of October 31,
1996, an aggregate amount of 1,986,158 shares of BancGroup Common Stock would be
issued to the shareholders of Jefferson pursuant to the Merger. These shares
would represent approximately 10.9% of the total shares of BancGroup Common
Stock outstanding
42
<PAGE> 50
after the Merger, not counting any shares of BancGroup Common Stock to be issued
in other pending mergers.
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 approximately 12.68% of
BancGroup's outstanding shares would own approximately 10.84% after the Merger.
See "BUSINESS OF BANCGROUP -- Voting Securities and Principal Stockholders."
43
<PAGE> 51
PRO FORMA INFORMATION
CONDENSED PRO FORMA STATEMENTS OF CONDITION
(UNAUDITED)
(IN THOUSANDS)
The following summary includes (i) the condensed consolidated statement of
condition of BancGroup and subsidiaries as of September 30, 1996, (ii) the
condensed consolidated statement of condition of Jefferson and subsidiaries, as
of September 30, 1996, (iii) adjustments to give effect to the proposed pooling
of interests method business combination with Jefferson, and (iv) the pro forma
combined condensed statement of condition of BancGroup and subsidiaries as if
such combination had occurred on September 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, incorporated by reference herein, and the statement
of condition of Jefferson, also incorporated by reference herein. The pro forma
information provided below may not be indicative of future results.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------------------------
PROFORMA
CONSOLIDATED JEFFERSON ADJUSTMENTS/ COMBINED
COLONIAL BANCGROUP BANCORP, INC. (DEDUCTIONS) TOTAL
------------------ ------------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks.................................. $ 150,320 $ 8,624 $ 158,944
Interest-bearing deposits................................ 4,977 4,977
Federal funds sold....................................... 1,600 1,600
Securities available for sale............................ 289,378 117,512 406,890
Investment securities.................................... 297,397 1,102 298,499
Mortgage loans held for sale............................. 161,864 957 162,821
Loans, net of unearned income............................ 3,570,490 306,693 3,877,183
Less: Allowance for possible loan losses................. (45,098) (2,425) (47,523)
---------- -------- ------- ----------
Loans, net............................................... 3,525,392 304,268 3,829,660
Premises and equipment, net.............................. 76,620 4,819 81,439
Excess of cost over tangible and intangible assets
acquired, net.......................................... 30,624 30,624
Purchased mortgage servicing rights...................... 95,076 95,076
Other real estate owned.................................. 9,246 543 9,789
Accrued interest and other assets........................ 72,630 19,050 $ 1,963(2) 93,643
---------- -------- ------- ----------
Total Assets..................................... $4,713,524 $ 458,475 $ 1,963 $5,173,962
========== ======== ======= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits................................................. $3,561,923 $ 385,855 $3,947,778
FHLB short-term borrowings............................... 580,000 29,069 609,069
Other short-term borrowings.............................. 134,918 134,918
Subordinated debt........................................ 7,760 7,760
Other long-term debt..................................... 24,605 24,605
Other liabilities........................................ 74,401 6,100 $ 5,165(2) 85,666
---------- -------- ------- ----------
Total liabilities................................ 4,383,607 421,024 5,165 4,809,796
Common Stock............................................. 40,742 4,018 (4,018)(1) 45,707
4,965(1)
Additional paid in capital............................... 172,413 29,511 (29,511)(1) 198,678
26,265(1)
Retained earnings........................................ 118,465 9,531 (3,202)(2) 124,794
Treasury Stock........................................... (2,299) 2,299(1)
Unearned compensation.................................... (699) (659) (1,358)
Unrealized gain (loss) on securities..................... (1,004) (2,651) (3,655)
---------- -------- ------- ----------
Total equity..................................... 329,917 37,451 (3,202) 364,166
---------- -------- ------- ----------
Total liabilities and equity..................... $4,713,524 $ 458,475 $ 1,963 $5,173,962
========== ======== ======= ==========
Capital Ratios:
Capital Ratio.......................................... 8.04% 8.65% 8.03%
Tangible Leverage Ratio................................ 6.44 8.52 6.49
Tier One Capital Ratio*................................ 9.06 9.65 9.10
Total Capital Ratio*................................... 10.54 10.28 10.56
</TABLE>
- ---------------
* Based on risk weighted assets
44
<PAGE> 52
JEFFERSON BANCORP, INC.
(pooling of interests)
(1) To record the issuance of 1,986,158 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Jefferson:
<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Jefferson outstanding shares.................................. 3,791,040
Conversion ratio, determined as follows:
$18.90/$36.075 per share, the 10-day average market value of
BancGroup Common Stock on October 31, 1996............... 0.5239
----------
Bancgroup shares to be issued................................. 1,986,158
Par value of 1,986,158 shares issued at $2.50 per share....... $ 4,965
Shares issued at par value.................................... $ 4,965
Total capital stock of Jefferson.............................. 31,230
----------
Excess recorded as an increase in contributed capital....... 26,265
----------
31,230
To eliminate Jefferson's capital stock:
Common stock, at par value.................................. (4,018)
Contributed capital......................................... (29,511)
Treasury stock.............................................. 2,299
----------
(31,230)
----------
Net change in equity................................ $ 0
==========
</TABLE>
(2) To record nonrecurring charges expected to result from the combination
with Jefferson:
<TABLE>
<S> <C> <C>
Accrual of severance pay...................................... $ 4,325
Accrual of discretionary bonus................................ 840
----------
Total accrual adjustments........................... 5,165
Deferred tax.................................................. (1,963)
----------
Net charge to retained earnings............................... $ 3,202
==========
</TABLE>
45
<PAGE> 53
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 nine
months ended September 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 Jefferson for the nine months ended September 30, 1996
and 1995 and the years ended December 31, 1995, 1994 and 1993, (iii) adjustments
to give effect to the pooling of interests method combination with Jefferson,
and (iv) the pro forma combined condensed consolidated statements of income of
BancGroup and subsidiaries as if such combination had occurred on January 1,
1993.
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), incorporated by reference herein, and
the consolidated statements of income of Jefferson, also incorporated by
reference herein. These pro forma statements exclude the effect of two
nonrecurring charges related to Jefferson in the amount of $3.2 million net of
tax. The pro forma information provided may not necessarily be indicative of
future results.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
-----------------------------------------------------------------
PROFORMA
CONSOLIDATED JEFFERSON ADJUSTMENTS/ COMBINED
COLONIAL BANCGROUP BANCORP, INC. (DEDUCTIONS) TOTAL
------------------ --------------- ------------ -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income........................ $ 257,063 $ 25,127 $ 282,190
Interest expense....................... 132,035 11,461 143,496
---------- --------- ---------- ----------
Net interest income before provision
for loan losses...................... 125,028 13,666 138,694
Provision for loan losses.............. 6,023 95 6,118
---------- --------- ---------- ----------
Net interest income after provision for
loan losses.......................... 119,005 13,571 132,576
---------- --------- ---------- ----------
Noninterest income..................... 49,854 3,308 53,162
Noninterest expense.................... 107,859 13,914 121,773
---------- --------- ---------- ----------
Income before income taxes............. 61,000 2,965 63,965
Income taxes........................... 21,650 916 22,566
---------- --------- ---------- ----------
Net Income............................. $ 39,350 $ 2,049 $ 0 $ 41,399
========== ========= ========== ==========
Average primary shares outstanding..... 16,465,000 3,901,771 (3,901,771) 18,514,334
2,049,334
Average fully-diluted shares
outstanding.......................... 16,754,000 3,901,771 (3,901,771) 18,806,112
2,052,112
Earnings per share:
Net Income:
Primary.............................. $ 2.39 $ 0.53 $ 2.24
Fully diluted........................ $ 2.37 $ 0.53 $ 2.22
</TABLE>
46
<PAGE> 54
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995
--------------------------------------------------------
CONSOLIDATED
COLONIAL PROFORMA
BANCGROUP JEFFERSON ADJUSTMENTS/ COMBINED
(RESTATED)** BANCORP, INC. (DEDUCTIONS) TOTAL
------------ ------------- ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income................................ $ 206,883 $ 22,667 $ 229,550
Interest expense............................... 104,575 9,827 114,402
---------- --------- ---------- ----------
Net interest income before provision for loan
losses....................................... 102,308 12,840 115,148
Provision for loan losses...................... 4,155 150 4,305
---------- --------- ---------- ----------
Net interest income after provision for loan
losses....................................... 98,153 12,690 110,843
---------- --------- ---------- ----------
Noninterest income............................. 39,291 2,841 42,132
Noninterest expense............................ 87,049 13,534 100,583
---------- --------- ---------- ----------
Income before income taxes..................... 50,395 1,997 52,392
Income taxes................................... 17,963 609 18,572
---------- --------- ---------- ----------
Net Income..................................... $ 32,432 $ 1,388 $ 0 $ 33,820
========== ========= ========== ==========
Average primary shares outstanding............. 14,826,000 3,800,941 (3,800,941) 16,854,122
2,028,122
Average fully-diluted shares outstanding....... 15,597,000 3,800,941 (3,800,941) 17,635,231
2,038,231
Earnings per share:
Net Income:
Primary................................... $ 2.19 $ 0.37 $ 2.01
Fully diluted............................. $ 2.13 $ 0.37 $ 1.97
</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> 55
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------
CONSOLIDATED
COLONIAL PROFORMA
BANCGROUP JEFFERSON ADJUSTMENTS/ COMBINED
(RESTATED)** BANCORP, INC. (DEDUCTIONS) TOTAL
------------ ------------- ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income................................ $ 287,141 $ 30,792 $ 317,933
Interest expense............................... 146,981 13,463 160,444
---------- --------- ---------- ----------
Net interest income before provision for loan
losses....................................... 140,160 17,329 157,489
Provision for loan losses...................... 7,350 150 7,500
---------- --------- ---------- ----------
Net interest income after provision for loan
losses....................................... 132,810 17,179 149,989
---------- --------- ---------- ----------
Noninterest income............................. 54,391 4,207 58,598
Noninterest expense............................ 122,406 18,705 141,111
---------- --------- ---------- ----------
Income before income taxes..................... 64,795 2,681 67,476
Income taxes................................... 23,242 772 24,014
---------- --------- ---------- ----------
Net Income..................................... $ 41,553 $ 1,909 $ 0 $ 43,462
========== ========= ========== ==========
Average primary shares outstanding............. 15,797,000 3,816,071 (3,816,071) 17,828,807
2,031,807
Average fully-diluted shares outstanding....... 16,667,000 3,816,071 (3,816,071) 18,713,809
2,046,809
Earnings per share:
Net Income:
Primary................................... $ 2.63 $ 0.50 $ 2.44
Fully diluted............................. $ 2.56 $ 0.50 $ 2.38
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
48
<PAGE> 56
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------
CONSOLIDATED PROFORMA
COLONIAL BANCGROUP JEFFERSON ADJUSTMENTS/ COMBINED
(RESTATED)** BANCORP, INC. (DEDUCTIONS) TOTAL
------------------ --------------- ------------ -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income........................ $ 211,903 $ 25,107 $ 237,010
Interest expense....................... 90,902 7,433 98,335
---------- --------- ---------- ----------
Net interest income before provision
for loan losses...................... 121,001 17,674 138,675
Provision for loan losses.............. 7,506 330 7,836
---------- --------- ---------- ----------
Net interest income after provision for
loan losses.......................... 113,495 17,344 130,839
---------- --------- ---------- ----------
Noninterest income..................... 47,752 4,346 52,098
Noninterest expense.................... 115,677 18,152 133,829
---------- --------- ---------- ----------
Income before income taxes............. 45,570 3,538 49,108
Income taxes........................... 15,829 521 16,350
---------- --------- ---------- ----------
Net Income............................. $ 29,741 $ 3,017 $ 0 $ 32,758
========== ========= ========== ==========
Average primary shares outstanding..... 14,898,000 3,637,576 (3,637,576) 16,916,854
2,018,854
Average fully-diluted shares
outstanding.......................... 15,665,000 3,637,576 (3,637,576) 17,683,854
2,018,854
Earnings per share:
Net Income:
Primary........................... $ 2.00 $ 0.83 $ 1.94
Fully diluted..................... $ 1.97 $ 0.83 $ 1.92
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
49
<PAGE> 57
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
--------------------------------------------------------
CONSOLIDATED
COLONIAL PROFORMA
BANCGROUP JEFFERSON ADJUSTMENTS/ COMBINED
(RESTATED)** BANCORP, INC. (DEDUCTIONS) TOTAL
------------ ------------- ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income................................ $ 160,829 $ 26,462 $ 187,291
Interest expense............................... 66,357 7,382 73,739
---------- --------- ---------- ----------
Net interest income before provision for loan
losses....................................... 94,472 19,080 113,552
Provision for loan losses...................... 8,850 2,335 11,185
---------- --------- ---------- ----------
Net interest income after provision for loan
losses....................................... 85,622 16,745 102,367
---------- --------- ---------- ----------
Noninterest income............................. 43,445 5,350 48,795
Noninterest expense............................ 98,501 18,750 117,251
---------- --------- ---------- ----------
Income before income taxes..................... 30,566 3,345 33,911
Income taxes................................... 9,780 528 10,308
---------- --------- ---------- ----------
Income before extraordinary items and the
cumulative change in accounting for income
taxes........................................ 20,786 2,817 23,603
---------- --------- ---------- ----------
Extraordinary Items, net of tax................ (463) (463)
Cumulative effect of a change in accounting for
income taxes................................. 3,650 3,650
---------- --------- ---------- ----------
Net Income..................................... $ 23,973 $ 2,817 $ 0 $ 26,790
========== ========= ========== ==========
Average primary shares outstanding............. 12,613,000 3,497,878 (3,497,878) 14,624,113
2,011,113
Average fully-diluted shares outstanding....... 13,706,000 3,497,878 (3,497,878) 15,717,113
2,011,113
Earnings per share:
Income before extraordinary items and
cumulative effect of a change in
accounting principle:
Primary................................... $ 1.65 $ 0.81 $ 1.61
Fully diluted............................. $ 1.64 $ 0.81 $ 1.61
Net Income:
Primary................................... $ 1.90 $ 0.81 $ 1.83
Fully diluted............................. $ 1.87 $ 0.81 $ 1.81
</TABLE>
- ---------------
** Restated to give effect to the July 3, 1996 pooling of interests combinations
with Southern Banking Corporation and Commercial Bancorp of Georgia, Inc.
50
<PAGE> 58
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
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 nine months ended September 30, 1996 and
1995, 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 and consolidated Jefferson. The pro forma balance sheet data give
effect to the combination as if it had occurred on September 30, 1996 and the
pro forma operating data give effect to the combination as if it 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 elsewhere in this Prospectus or incorporated by reference.
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 September 30, 1996 are not necessarily 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>
NINE MONTHS ENDED SEPTEMBER 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...................................... $282,190 $257,063 $229,550 $206,883
Interest expense..................................... 143,496 132,035 114,402 104,575
-------- -------- -------- --------
Net interest income.................................. 138,694 125,028 115,148 102,308
Provision for possible loan losses................... 6,118 6,023 4,305 4,155
-------- -------- -------- --------
Net interest income after provision for possible loan
losses............................................. 132,576 119,005 110,843 98,153
Noninterest income................................... 53,162 49,854 42,132 39,291
Noninterest expense.................................. 121,773 107,859 100,583 87,049
-------- -------- -------- --------
Income before income taxes........................... 63,965 61,000 52,392 50,395
Applicable income taxes.............................. 22,566 21,650 18,572 17,963
-------- -------- -------- --------
Income before extraordinary items and the cumulative
effect of a change in accounting for income
taxes.............................................. 41,399 39,350 33,820 32,432
Extraordinary items, net of income taxes.............
Cumulative effect of change in accounting for income
taxes..............................................
-------- -------- -------- --------
Net Income........................................... $ 41,399 $ 39,350 $ 33,820 $ 32,432
======== ======== ======== ========
Earnings Per Common Share
Net Income:
Primary............................................ $ 2.24 $ 2.39 $ 2.01 $ 2.19
Fully-diluted...................................... $ 2.22 $ 2.37 $ 1.97 $ 2.13
Average shares outstanding:
Primary............................................ 18,514 16,465 16,854 14,826
Fully-diluted...................................... 18,806 16,754 17,635 15,597
Cash dividends per common share:(1)
Common............................................. $ 0.81 $ 0.81 $ 0.675 $ 0.675
</TABLE>
- ---------------
(1) On February 21, 1995, the Class A and Class B Common Stock were reclassified
into one class of Common Stock.
51
<PAGE> 59
<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... $317,933 $237,010 $187,291 $176,211 $183,245 $287,141 $211,903 $160,829 $146,486 $150,462
Interest
expense......... 160,444 98,335 73,739 77,682 104,487 146,981 90,902 66,357 67,389 87,717
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net interest
income.......... 157,489 138,675 113,552 98,529 78,758 140,160 121,001 94,472 79,097 62,745
Provision for
possible loan
losses.......... 7,500 7,836 11,185 12,701 10,083 7,350 7,506 8,850 8,956 7,097
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net interest
income after
provision for
possible loan
losses.......... 149,989 130,839 102,367 85,828 68,675 132,810 113,495 85,622 70,141 55,648
Noninterest
income.......... 58,598 52,098 48,795 43,885 36,349 54,391 47,752 43,445 37,027 32,668
Noninterest
expense......... 141,111 133,829 117,251 104,098 87,319 122,406 115,677 98,501 85,636 72,377
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Income before
income taxes.... 67,476 49,108 33,911 25,615 17,705 64,795 45,570 30,566 21,532 15,939
Applicable income
taxes........... 24,014 16,350 10,308 7,605 5,052 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.... 43,462 32,758 23,603 18,010 12,653 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.... 3,650 3,650
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net Income........ $ 43,462 $ 32,758 $ 26,790 $ 18,010 $ 13,484 $ 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......... $ 2.44 $ 1.94 $ 1.61 $ 1.38 $ 1.03 $ 2.63 $ 2.00 $ 1.65 $ 1.44 $ 1.15
Fully-diluted... $ 2.38 $ 1.92 $ 1.61 $ 1.38 $ 1.03 $ 2.56 $ 1.97 $ 1.64 $ 1.44 $ 1.15
Net Income:
Primary......... $ 2.44 $ 1.94 $ 1.83 $ 1.38 $ 1.10 $ 2.63 $ 2.00 $ 1.90 $ 1.44 $ 1.23
Fully-diluted... $ 2.38 $ 1.92 $ 1.81 $ 1.38 $ 1.10 $ 2.56 $ 1.97 $ 1.87 $ 1.44 $ 1.23
Average shares
outstanding:
Primary......... 17,829 16,917 14,624 13,007 12,230 15,797 14,898 12,613 10,996 10,219
Fully-diluted... 18,714 17,684 15,717 14,318 13,572 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>
SEPTEMBER 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............................... $5,172,778 $4,713,524 $4,202,195 $3,219,082 $3,104,410 $2,027,455 $1,861,980
Loans, net of unearned income.............. 3,877,183 3,570,490 3,175,560 2,352,870 1,963,052 1,330,928 1,200,443
Mortgage loans held for sale............... 162,821 161,864 110,486 60,726 361,496 144,215 105,219
Deposits................................... 3,947,778 3,561,923 3,204,198 2,504,461 2,444,418 1,697,648 1,601,973
Long-term debt............................. 32,365 32,365 29,142 69,203 57,397 22,979 27,225
Shareholders' equity....................... 362,982 329,917 289,464 224,018 198,389 123,952 111,437
Average daily balances:
Total assets............................... $4,906,788 $4,447,621 $3,659,140 $3,074,619 $2,379,628 $1,978,313 $1,779,767
Interest-earning assets.................... 4,478,224 4,059,163 3,333,887 2,768,705 2,100,674 1,730,373 1,583,046
Loans, net of unearned income.............. 3,676,978 3,370,975 2,708,633 2,138,371 1,494,053 1,273,486 1,187,081
Mortgage loans held for sale............... 139,982 139,035 97,511 131,121 241,683 118,510 65,373
Deposits................................... 4,534,034 3,333,913 2,828,864 2,471,657 1,876,026 1,665,417 1,531,672
Shareholders' equity....................... 346,224 313,218 250,826 214,543 144,216 117,822 103,330
Book value per share at period end........... $ 19.85 $ 20.24 $ 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........................... 1.14 1.20 1.14 0.97 0.87 0.80 0.66
Average shareholders' equity............. 16.21 17.05 16.57 13.86 14.41 13.40 11.36
Net Income to:
Average assets........................... 1.14 1.20 1.14 0.97 1.01 0.80 0.71
Average shareholders' equity............. 16.21 17.05 16.57 13.86 16.62 13.40 12.17
Efficiency ratio............................. 63.47 58.91 62.11 67.65 70.40 72.41 74.11
Dividend payout ratio........................ 28.42 29.91 25.32 24.99 20.22 26.44 30.71
Average equity to average total assets....... 7.06 7.04 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>
52
<PAGE> 60
JEFFERSON BANCORP, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------------- ------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Results of operations:
Interest income and
fees................... $ 25,127,207 $ 22,667,292 $ 30,792,365 $ 25,106,729 $ 26,461,773 $ 28,786,830 $ 32,388,281
Tax equivalent
adjustment............. 88,450 127,194 159,992 581,122 928,513 937,809 394,560
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total interest
income*........ 25,215,657 22,794,486 30,952,357 25,687,851 27,390,286 29,724,639 32,782,841
Interest expense......... 11,460,933 9,826,820 13,462,921 7,433,107 7,382,295 10,293,168 16,769,810
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net interest
income*........ 13,754,724 12,967,666 17,489,436 18,254,744 20,007,991 19,431,471 16,013,031
Provision for credit
losses................. (95,000) (150,000) (150,000) (330,000) (2,335,000) (3,744,493) (2,986,189)
Provision for security
losses................. -- -- -- -- -- -- (816,000)
Securities
transactions........... 6,031 323,985 627,600 1,565,407 2,452,445 3,759,254 1,614,983
Other noninterest
income................. 3,301,916 2,516,535 3,579,806 2,780,759 2,898,260 3,098,778 2,882,518
Total other expenses..... (13,914,159) (13,533,982) (18,705,579) (18,151,995) (18,749,941) (18,461,949) (14,942,098)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income before
income
taxes*......... 3,053,512 2,124,204 2,841,263 4,118,915 4,273,755 4,083,061 1,766,245
Income tax............... 916,100 608,700 772,239 520,559 528,000 925,500 460,537
Tax equivalent
adjustment............. (88,450) (127,194) (159,992) (581,122) (928,513) (937,809) (394,560)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income....... $ 2,048,962 $ 1,388,310 $ 1,909,032 $ 3,017,234 $ 2,817,242 $ 2,219,752 $ 911,148
============ ============ ============ ============ ============ ============ ============
Net income per
common
share**........ $ 0.53 $ 0.37 $ 0.50 $ 0.83 $ 0.81 $ 0.64 $ 0.26
============ ============ ============ ============ ============ ============ ============
Balance sheet data:
At year end:
Total assets........... $458,474,577 $422,636,388 $433,002,786 $364,275,780 $352,851,007 $388,475,390 $394,084,986
Loans, net and loans
held for sale........ 307,649,558 231,962,330 265,882,297 199,045,675 168,541,024 174,407,682 198,952,434
Investment securities
and securities
available for sale... 118,614,000 148,713,912 119,197,107 123,885,239 145,929,519 158,563,931 115,949,460
Deposits............... 385,854,725 365,868,697 371,287,015 306,869,402 297,571,707 334,598,486 324,024,083
Stockholders'
equity(1)............ 37,450,534 35,051,696 37,623,790 29,370,293 37,650,105 34,397,133 33,860,665
Stockholders' equity
excluding unrealized
gains (losses) on
securities available
for sale............. 40,101,477 37,969,608 39,372,553 37,530,402 36,028,047 34,397,133 33,860,665
Book value per common
share**.............. 9.88 9.68 9.89 8.14 10.56 9.83 9.70
Book value per common
share excluding
unrealized gains
(losses) on
securities available
for sale**........... 10.58 10.49 10.34 10.41 10.11 9.83 9.70
Performance ratios:
Return on average
assets............... 0.63% .44% 0.46% .84% .75% .59% .24%
Return on average
stockholders'
equity............... 7.34% 5.62% 5.65% 8.98% 7.88% 6.22% 3.07%
Return on average
stockholders' equity
excluding unrealized
gains (losses) on
securities available
for sale............. 6.89% 4.83% 5.13% 8.29% 7.90% 6.22% 3.07%
Net yield on average
earning assets*........ 4.45% 4.37% 4.51% 5.37% 5.28% 5.03% 4.58%
</TABLE>
- ---------------
(1) Includes net unrealized loss of $1,748,024 and $8,160,109, net of applicable
income taxes, in 1995 and 1994, respectively. The changes in securities
available for sale are adjusted to stockholders' equity as required by FASB
115. It should be noted that unless there were a permanent impairment, the
unrealized gains and losses from securities available for sale do not
impact the consolidated statement of income until the securities are sold.
* On a fully taxable equivalent basis
** Restated for stock dividends
53
<PAGE> 61
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
commercial 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 three offices. In Georgia, BancGroup's federal savings bank,
Colonial Bank, FSB, operates through four 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 (21%) and residential real estate loans (47%), 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 merge Tomoka Bancorp, Inc. ("Tomoka") into BancGroup. 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 September 30, 1996, Tomoka
had assets of $71.5 million, deposits of $63.5 million and stockholders' equity
of $6.1 million.
BancGroup has entered into a definitive agreement dated as of September 12,
1996, to merge D/W Bancshares, Inc. ("Bancshares") into BancGroup. Bancshares is
a Georgia corporation and is a holding company for Dalton/Whitfield Bank & Trust
located in Dalton, Georgia. Bancshares will merge with BancGroup and following
such merger Bancshares' subsidiary bank will merge with BancGroup's subsidiary
Colonial Bank, headquartered in Lawrenceville, Georgia. Based on the market
price of BancGroup Common Stock as of September 19, 1996, a total of 547,672
shares of BancGroup Common Stock would be issued to the stockholders of
Bancshares. 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 Bancshares, and approval by appropriate
regulatory authorities. At September 30, 1996, Bancshares has assets of $130.1
million, deposits of $116.1 million and stockholders' equity of $10.9 million.
BancGroup has entered into a definitive agreement dated as of July 19,
1996, to merge First Family Financial Corporation ("First Family") into
BancGroup. 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 and following such merger First Family Bank will be operated by
BancGroup as a subsidiary federal savings bank under the name "Colonial Bank,
FSB." 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 $6.4 million in
cash 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
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<PAGE> 62
approval by appropriate regulatory authorities. At September 30, 1996, First
Family has assets of $170.6 million, deposits of $157.9 million and
stockholders' equity of $8.7 million.
BancGroup has signed a letter of intent dated September 20, 1996, to merge
Fort Brooke Bancorporation ("Fort Brooke") into BancGroup. 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 subsidiary, Colonial Bank,
headquartered in Orlando. 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 September 30,
1996, Fort Brooke has assets of $192.6 million, deposits of $173.8 million and
stockholders' equity of $16.1 million.
See "PRO FORMA INFORMATION."
BancGroup has also entered into a definitive agreement dated as of November
1, 1996, to acquire The Union Bank in Evergreen, Alabama. Pursuant to that
agreement, BancGroup will make a cash offer to purchase all of the outstanding
shares of that bank's holding company for an aggregate cash price of
$11,782,000, subject to regulatory approval and other conditions. As of
September 30, 1996 The Union Bank had total assets of approximately $53 million
and stockholders' equity of $7.8 million.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
As of October 31, 1996, BancGroup had issued and outstanding 16,309,710
shares of BancGroup Common Stock with 5,911 holders of record. Each such share
is entitled to one vote. In addition, as of that date, 830,952 shares of
BancGroup Common Stock were subject to issue upon exercise of options pursuant
to BancGroup's stock option plans and up to 269,609 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 October 31, 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) 8.39%
Post Office Box 1108
Montgomery, AL 36101
James K. Lowder.................................................. 1,099,649 6.42%
Post Office Box 250
Montgomery, AL 36142
Thomas H. Lowder................................................. 1,073,053 6.26%
Post Office Box 11687
Birmingham, AL 35202
</TABLE>
- ---------------
(1) Percentages are calculated assuming the issuance of 830,952 shares of Common
Stock pursuant to BancGroup's stock option plans.
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<PAGE> 63
(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.
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 October 31, 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) 8.39%
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 *
J. Donald Prewitt***............................................. 88,544(8) *
Jack H. Rainer................................................... 1,345 *
Frances E. Roper................................................. 182,034 1.06%
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) *
All Executive Officers and Directors as a Group.................. 2,165,671(10) 12.68%
</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.
(1) Percentages are calculated assuming the issuance of 830,952 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.
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<PAGE> 64
(5) Mr. Jones holds power to vote these shares as trustee.
(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 and W. Flake Oakley, IV, hold options respecting
12,500 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.
BancGroup's subsidiary banks (the "Subsidiary Banks") 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> 65
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> 66
BUSINESS OF JEFFERSON
Jefferson, a bank holding company within the meaning of the BHCA, was
organized under the laws of Florida in 1969. It conducts its banking operation
through the Bank, which was chartered in 1963 as Jefferson National Bank and
changed from a federally chartered to a state-chartered member bank of the
Federal Reserve in 1993. The Bank operates nine offices in Dade, Broward and
Palm Beach Counties in South Florida and has branches in Key Biscayne, Miami
Beach, North Miami Beach, Hollywood, Fort Lauderdale and Boca Raton. It conducts
banking services usual and customary for banks of similar size and character,
including operation of a mortgage banking division and a full service trust
department. At September 30, 1996, Jefferson had consolidated assets of
approximately $458.5 million and stockholders' equity of approximately $37.5
million.
ADJOURNMENT OF SPECIAL MEETING
Approval of the Merger by Jefferson's 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
Jefferson Common Stock present in person or by proxy at the Special Meeting to
approve the Merger, Jefferson's Board of Directors intends to adjourn the
Special Meeting to a later date provided a majority of the shares present and
voting on the motion have voted in favor of such adjournment. The place and date
to which the Special Meeting would be adjourned would be announced at the
Special Meeting. Proxies voted against the Merger and abstentions will not be
voted to adjourn the Special Meeting. Abstensions and broker non-votes will not
be voted on the motion to adjourn and will not count as "no votes." 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 the shareholders,
other than an announcement made at the Special Meeting.
The effect of any such adjournment would be to permit Jefferson to solicit
additional proxies for approval of the Merger. While such an adjournment would
not invalidate any proxies previously filed as long as the record date for the
adjourned meeting remained the same, including proxies filed by shareholders
voting against the Merger, an adjournment would afford Jefferson the opportunity
to solicit additional proxies in favor of the Merger.
OTHER MATTERS
The Board of Directors of Jefferson 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 Jefferson.
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.
59
<PAGE> 67
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.
The consolidated financial statements of Jefferson as of December 31, 1995
and 1994 and for the three years in the period ended December 31, 1995,
incorporated in this Joint Proxy Statement and Prospectus by reference from the
Annual Report on Form 10-K of Jefferson for the year ended December 31, 1995
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated by reference, and has been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
Deloitte & Touche LLP serves as the independent accountants for Jefferson.
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 JEFFERSON PRIOR TO THE
SPECIAL MEETING, BY EXECUTING A LATER DATED PROXY AND DELIVERING IT TO THE
SECRETARY OF JEFFERSON PRIOR TO THE SPECIAL MEETING OR BY ATTENDING THE SPECIAL
MEETING VOTING IN PERSON.
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<PAGE> 68
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE COLONIAL BANCGROUP, INC.,
AND
JEFFERSON BANCORP, INC.
DATED AS OF
OCTOBER 25, 1996
<PAGE> 69
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-2
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-5
4.4 No Conflict with Other Instrument.............................................. A-5
4.5 Absence of Material Adverse Change............................................. A-6
4.6 Approval of Agreements......................................................... A-6
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-7
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-8
4.18 Absence of Regulatory Communications........................................... A-8
4.19 Disclosure..................................................................... A-8
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
5.5 Absence of Certain Changes or Events........................................... A-10
5.6 Title and Related Matters...................................................... A-11
5.7 Commitments.................................................................... A-11
5.8 Charter and Bylaws............................................................. A-11
</TABLE>
i
<PAGE> 70
<TABLE>
<CAPTION>
CAPTION PAGE
- ------- -----
<C> <S> <C>
5.9 Litigation..................................................................... A-11
5.10 Material Contract Defaults..................................................... A-12
5.11 No Conflict with Other Instrument.............................................. A-12
5.12 Governmental Authorization..................................................... A-12
5.13 Absence of Regulatory Communications........................................... A-12
5.14 Absence of Material Adverse Change............................................. A-12
5.15 Insurance...................................................................... A-12
5.16 Pension and Employee Benefit Plans............................................. A-13
5.17 Buy-Sell Agreement............................................................. A-13
5.18 Brokers........................................................................ A-13
5.19 Approval of Agreements......................................................... A-13
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-14
5.24 Transfer of Shares............................................................. A-14
5.25 Collective Bargaining.......................................................... A-14
5.26 Labor Disputes................................................................. A-14
5.27 Derivative Contracts........................................................... A-15
ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup.............................................. A-15
6.2 Additional Covenants of Acquired Corporation................................... A-18
ARTICLE 7 -- MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation...................................................... A-21
7.2 Press Release.................................................................. A-21
7.3 Mutual Disclosure.............................................................. A-21
7.4 Access to Properties and Records............................................... A-22
7.5 Notice of Adverse Changes...................................................... A-22
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval by Shareholders....................................................... A-22
8.2 Regulatory Authority Approval.................................................. A-22
8.3 Litigation..................................................................... A-22
8.4 Registration Statement......................................................... A-22
8.5 No Illegality.................................................................. A-23
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
9.1 Representations, Warranties and Covenants...................................... A-23
9.2 Adverse Changes................................................................ A-23
9.3 Closing Certificate............................................................ A-23
9.4 Opinion of Counsel............................................................. A-24
9.5 Fairness Opinion............................................................... A-24
9.6 NYSE Listing................................................................... A-24
9.7 Other Matters.................................................................. A-24
9.8 Material Events................................................................ A-24
9.9 Acquired Corporation Counsel Tax Opinion....................................... A-24
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations, Warranties and Covenants...................................... A-24
10.2 Adverse Changes................................................................ A-25
10.3 Closing Certificate............................................................ A-25
10.4 Opinion of Counsel............................................................. A-25
</TABLE>
ii
<PAGE> 71
<TABLE>
<CAPTION>
CAPTION PAGE
- ------- -----
<C> <S> <C>
10.5 Controlling Shareholders....................................................... A-25
10.6 Other Matters.................................................................. A-25
10.7 Dissenters..................................................................... A-26
10.8 Material Events................................................................ A-26
10.9 Ancillary Agreements........................................................... A-26
10.10 Pooling of Interests........................................................... A-26
10.11 Tax Opinion.................................................................... A-26
ARTICLE 11 -- TERMINATION OF REPRESENTATIONS AND WARRANTIES......................... A-26
ARTICLE 12 -- NOTICES............................................................... A-26
ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1 Amendment...................................................................... A-27
13.2 Termination.................................................................... A-27
13.3 Damages........................................................................ A-28
ARTICLE 14 -- DEFINITIONS........................................................... A-28
ARTICLE 15 -- MISCELLANEOUS
15.1 Expenses....................................................................... A-32
15.2 Benefit........................................................................ A-33
15.3 Governing Law.................................................................. A-33
15.4 Counterparts................................................................... A-33
15.5 Headings....................................................................... A-33
15.6 Severability................................................................... A-33
15.7 Construction................................................................... A-33
15.8 Return of Information.......................................................... A-33
15.9 Equitable Remedies............................................................. A-33
15.10 Attorneys' Fees................................................................ A-33
15.11 No Waiver...................................................................... A-33
15.12 Remedies Cumulative............................................................ A-34
15.13 Entire Contract................................................................ A-34
</TABLE>
iii
<PAGE> 72
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this the
25th day of October 1996, by and between JEFFERSON BANCORP, INC. ("Acquired
Corporation"), a Florida corporation, and THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
W I T N E S S E T H
WHEREAS, Acquired Corporation operates as a bank holding company for its
wholly owned subsidiary, Jefferson Bank of Florida (the "Bank") and certain
other Subsidiaries, with its principal office in Miami Beach, Florida; 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 FBCA.
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
FBCA, 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.
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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.
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 and upon satisfaction or
waiver of each of the conditions set forth in Articles 8, 9 and 10 hereof, the
Merger 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 filed with
the Secretary of State of the State of Delaware and with the Department of State
of the State of Florida (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; provided, that the
Closing shall occur not later than fifteen (15) days following the satisfaction
of each of the conditions set forth in sections 8.1 and 8.2, whichever is the
last to occur, assuming all other conditions of Articles 8, 9 and 10 have been
previously satisfied.
2.8 Subsidiary Bank Merger. BancGroup and Acquired Corporation anticipate
that shortly after the Effective Date the Bank will merge with and into Colonial
Bank, BancGroup's Florida 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, provided that the Parties acknowledge, and BancGroup agrees,
that the Merger may be concluded before such bank merger and that the Bank may
be operated as a separate bank subsidiary of BancGroup following the 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 other
than shares held by dissenting shareholders for which payment will be made
pursuant to section 3.6 hereof (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 $18.90 (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 $18.90 divided by
the Market Value. The "Market Value" shall
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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 Market Value, as
calculated above, Market Value shall not be less than $30.50, nor more than
$38.50. Accordingly, the maximum number of shares of BancGroup Common Stock to
be issued in the Merger shall be 2,349,202 (based upon a minimum Market Value of
$30.50) and the minimum number of shares of BancGroup Common Stock to be issued
in the Merger shall be 1,861,056 (based upon a maximum Market Value of $38.50),
assuming 3,791,040 shares of Acquired Corporation common stock outstanding as of
August 31, 1996. To the extent that as of the Effective Date the number of
shares of Acquired Corporation Stock has increased based upon the exercise of
Acquired Corporation Options after August 31, 1996, the number of shares of
BancGroup Common Stock to be issued in the Merger shall be increased with each
share of Acquired Corporation Stock outstanding at the Effective Date exchanged
for a number of shares of BancGroup Common Stock equal to $18.90 divided by the
Market Value and the minimum and maximum number of shares of BancGroup Common
Stock shall also be adjusted to take into account increases in the number of
shares of Acquired Corporation Stock outstanding in excess of 3,791,040 shares
as a result of such exercise.
(b)(i) On the Effective Date, BancGroup shall assume all Acquired
Corporation Options outstanding, whether or not vested or exercisable, 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 section
3.1(b)(i), the "Exchange Ratio" shall mean the result obtained by dividing
$18.90 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, BancGroup shall file at its expense a
registration statement with the SEC on Form S-8 or such other appropriate form
(including the Form S-4 to be filed in connection with the Merger) 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, at BancGroup's
expense.
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, and 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
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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.
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 and the maximum and minimum Market Values and numbers
of shares of BancGroup Common Stock to be issued in connection with the Merger
as described in section 3.1 shall be adjusted accordingly.
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 FBCA, 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 September 19,
1996, 16,296,558 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
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which such registration or qualification is required, based upon information
provided by Acquired Corporation, and will be listed on the NYSE.
(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;
(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 and its Subsidiaries 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
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 that would
have a Material Adverse Effect on 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
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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 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. This
Agreement constitutes the legal, valid and binding obligation of 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, 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
both therein and in Schedule 4.11 hereof), or which is likely to have any
Material Adverse Effect or prospective Material Adverse Effect, or which is
likely to materially and adversely
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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 both in the Registration Statement and in Schedule 4.11
hereof, 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 both in the Registration Statement and in Schedule 4.11 hereof.
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 them or the conduct of their
businesses.
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 or will be filed with the SEC, complied or will
comply 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 other than the Persons described on Schedule 5.18, if any, who are acting
on behalf of the Acquired Corporation, 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.
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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.
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 Florida corporation, and the
Bank is a Florida 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 31, 1996, the authorized capital stock
of Acquired Corporation consisted of 10,000,000 shares of common stock, $1.00
par value per share, 3,791,040 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. As of August 31, 1996,
Acquired Corporation had 231,925 shares of its common stock subject to exercise
pursuant to stock options under its stock option plans. 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,
including the granting of Acquired Corporation Options.
5.3 Subsidiaries. Except as set forth on Schedule 5.3, Acquired
Corporation has no direct Subsidiaries other than the Bank, and there are no
Subsidiaries of the Bank. Acquired Corporation owns, directly or indirectly, all
of the issued and outstanding capital stock of the Bank and each of its other
Subsidiaries 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 31,
1996, there were 200,000 shares of the common stock, par value $100 per share,
authorized of the Bank, 100,000 of which are issued and outstanding and wholly
owned by Acquired Corporation. The Bank has no 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. Neither
Acquired Corporation nor the Bank owns any investment in any entity that exceeds
5% of the outstanding securities of such entity other than investments in any
Subsidiary.
5.4 Financial Statements; Taxes. (a) Acquired Corporation has delivered to
BancGroup copies of the following financial statements of Acquired Corporation:
(i) Consolidated balance sheets as of December 31, 1994 and 1995, and
for the nine months ended September 30, 1996;
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(ii) Consolidated statements of income for each of the three years
ended December 31, 1993, 1994 and 1995, and for the nine months ended
September 30, 1996;
(iii) Consolidated statements of stockholders' equity for each of the
three years ended December 31, 1993, 1994, and 1995, and for the nine
months ended September 30, 1996; and
(iv) Consolidated statements of cash flows for the three years ended
December 31, 1993, 1994 and 1995, and for the nine months ended September
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 consolidated balance sheets presents fairly as of its date the
consolidated financial condition of Acquired Corporation and its Subsidiaries.
Except as and to the extent reflected or reserved against in such balance sheets
(including the notes thereto), Acquired Corporation and its Subsidiaries 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 consolidated income,
stockholders' equity and cash flows present fairly the results of operation,
changes in shareholders equity and cash flows of Acquired Corporation and its
Subsidiaries for the periods indicated. The foregoing representations, insofar
as they relate to the unaudited interim financial statements of Acquired
Corporation and its Subsidiaries for the nine months ended September 30, 1996,
are subject in all cases to normal recurring year-end adjustments and the
omission of footnote disclosure.
(b) Except as set forth on Schedule 5.4(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 that would have a Material
Adverse Effect on Acquired Corporation.
(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 in all
material respects, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with in all
material respects, 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.
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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) or granted any options or rights to acquire any securities except
shares of common stock issued upon the exercise of Acquired Corporation Options
existing on the date hereof and shares issued as director's qualifying shares;
(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 (including, without limitation, the current
portion of long-term 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) except in the ordinary course of business and consistent with past
practice, 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 other than as a result of actions which are taken
by any Acquired Corporation Company pursuant to sections 6.2(j) and (k) of this
Agreement or otherwise taken by any Acquired Corporation Company with the
consent or agreement of BancGroup;
(h) except in the ordinary course of business, made or permitted any
amendment or termination of any material Contract, agreement or license to which
it is a party if such amendment or termination is material;
(i) except in accordance with past practices, 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 past practices, 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 Acquired Corporation;
or
(l) failed generally 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 which failure has had a Material
Adverse Effect on Acquired Corporation; or
(m) entered into any material transaction other than in the ordinary course
of business which would have a Material Adverse Effect on Acquired Corporation;
or
(n) agreed in writing, or otherwise, to take any action described in
clauses (a) through (m) above.
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5.6 Title and Related Matters.
(a) Title. Acquired Corporation has good and marketable title to all real
property and good title to all other properties, interest in properties and
Assets 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 (or in the most recent year-end balance sheet
referred to in section 5.4(a)(i)), (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, copies of which have been delivered to BancGroup.
(c) Personal Property. Schedule 5.6(c) sets forth a depreciation schedule
of each Acquired Corporation Company's fixed Assets as of September 30, 1996.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a description
of all material agreements relating to data processing computer software and
hardware now being used in the business operations of any Acquired Corporation
Company having a cost per unit or license in excess of $5,000. 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 material 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) material profit sharing, bonus, deferred compensation,
savings, stock option, severance 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 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
Acquired Corporation and its Subsidiaries taken as a whole. 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. Schedule 5.9 sets forth the Litigation pending or, to the
Knowledge of the Acquired Corporation, threatened against or affecting any
Acquired Corporation Company as of the date of this Agreement which involves the
reasonable probability of any material judgment or Liability against any
Acquired Corporation Company. 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 reasonable
probability of any judgment or Liability not fully covered by insurance in
excess of a reasonable deductible amount which would have a Material Adverse
Effect on Acquired Corporation, and no Acquired
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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. Except as disclosed on Schedule 5.10, 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 Acquired Corporation and its Subsidiaries
taken as a whole 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 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. Except as provided in Schedule
5.13, no Acquired Corporation Company is subject to, nor has any Acquired
Corporation Company received during the past three years prior to the date of
the Agreement, 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.
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 Acquired Corporation other than events, changes or
occurrences which have occurred as a result of (i) the Bank's disposition of
structured notes or other securities in its investment portfolio as described in
section 6.2(j) hereof, (ii) any of the Acquired Corporation Companies taking any
action pursuant to section 6.2(k) hereof, and (iii) any other action taken by
any of the Acquired Corporation Companies with the consent or agreement of
BancGroup.
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 material 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
material insurance policies or bonds. Within the last three years, no Acquired
Corporation Company has been refused any material insurance coverage which it
has sought or applied for, and it has no reason to believe that existing
material insurance coverage cannot be renewed as and when the same shall expire,
upon terms and conditions which are not materially less favorable than those
presently in effect, other than possible increases in premiums that do not
result from any extraordinary loss experience of the Acquired Corporation
Companies. All material policies of insurance presently held or policies
containing substantially equivalent coverage will be
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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.
Except as set forth in Schedule 5.16, 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 that is intended to qualify under section 401
of the Code, nor do any material unfunded Liabilities exist with respect to any
employee benefit plan, past or present, which are not disclosed in the financial
statements referred to in section 5.4(a) or in Schedule 5.5. 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 material 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. Except as disclosed on Schedule 5.18, 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.
5.20 Disclosure. No representation or warranty, nor any written 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. Except as disclosed on Schedule
6.2(k), Acquired Corporation has no
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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. To the Knowledge of the Acquired
Corporation, each loan reflected as an Asset on the financial statements of
Acquired Corporation referred to in section 5.4(a) 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, as of the date of this Agreement, Acquired Corporation has no
known significant delinquent, substandard, doubtful, loss, nonperforming or
problem loans.
5.23 Environmental Matters. Except as provided in Schedule 5.23, 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. Except as disclosed on Schedule 5.23, to the Knowledge of
Acquired Corporation, as of the date of this Agreement with respect to Assets of
or owned by any Acquired Corporation Company or 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 as of
the date of this Agreement 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 material 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, as of the date of this
Agreement 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 has 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.
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, as of
the date of this Agreement, 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, as of the date of this Agreement, no unfair labor practice
complaint against any Acquired Corporation Company is pending before the
National Labor Relations Board. There have not been, nor to the Knowledge of
Acquired Corporation, are there as of the date of this Agreement, (i) any
attempts to organize employees, nor (ii) to the Knowledge of Acquired
Corporation, plans for any such attempts. As of the date of this Agreement,
Acquired Corporation has no Knowledge of any development between any Acquired
Corporation Company and its employees that could have a Material Adverse Effect
on Acquired Corporation.
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5.27 Derivative Contracts. Except as disclosed on Schedule 5.27, as of the
date of this Agreement 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. At its expense,
BancGroup shall prepare and file 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 and shall use its best efforts to cause the
Registration Statement to become effective. BancGroup shall use reasonable
good faith efforts to prepare in compliance with applicable Law and Agency
requirements and file as soon as practicable all necessary filings with any
Agencies which may be necessary for approval to consummate the Merger.
BancGroup shall use reasonable good faith efforts to make all such
necessary filings with Agencies referenced in the foregoing sentence within
forty-five (45) days following the date of the Agreement. BancGroup will
diligently pursue the issuance of the approvals of the Merger by all
required Agencies at the earliest practicable time. BancGroup will provide
Acquired Corporation with copies of each filing and all supplemental
information which is requested by any Agency with respect to any filing
and, upon request by Acquired Corporation, will advise Acquired Corporation
of the status of each Agency approval.
(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
(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.
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(e) Listing. Prior to the Effective Date, BancGroup shall use its
best 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; provided, that (i) no employee of
any Acquired Corporation Company who holds any of the Acquired Corporation
Options may be terminated without thirty (30) days' prior written notice
unless the agreement pursuant to which the Acquired Corporation Options
held by such employee were issued permits the exercise of such Acquired
Corporation Options for a period of at least thirty (30) days after the
termination of the employment of the holder of the Acquired Corporation
Options, (ii) for purposes of determining the period of employment of an
employee of an Acquired Corporation Company under the Colonial Bank
severance policy, the period of employment of any Acquired Corporation
Company employees who are employed at least 30 hours per week with any
Acquired Corporation Company shall be counted as employment with Colonial
Bank and (iii) after the Effective Date Barton S. Goldberg and Robert E.
Lowder, Chairman and Chief Executive Officer of Colonial Bank, may in their
sole discretion, mutually agree to pay severance benefits in an amount
greater than the amount provided for under the Colonial Bank severance
policy to any employee of any Acquired Corporation Company who would have
been entitled to receive greater severance benefits had the Bank severance
policy been in effect as of the date of such employee's termination. 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 on the Effective Date 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 period of
employment of such employees who are employed at least 30 hours per week
with any Acquired Corporation Company as of the Effective Date shall be
counted as employment under such dental and medical plans of Colonial Bank
for purposes of calculating any eligibility period and pre-existing
condition limitations. To the extent permitted by applicable Law, other
than with respect to medical and dental benefits plans and the Colonial
Bank severance policy, 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
Colonial Bank.
(g) Adequate Current Public Information. For not less than the three
year period immediately following the Effective Date, BancGroup shall use
its best efforts to make available adequate current public information
about itself, as that terminology is used in and as required by Rules
144(c) and 145 of the SEC under the 1933 Act.
(h) SEC Action.
(i) BancGroup shall promptly deliver to Acquired Corporation copies
of all written material filed or supplementally furnished to the SEC or
the SEC staff with, or in connection with, the Registration Statement
(and any amendments thereto), and copies of all written and
electronically transcribed material and other information received from
the SEC and the SEC staff in connection with the Registration Statement
(and any amendments thereto) including any comments (verbal or written)
received from the SEC with respect to the Registration Statement.
BancGroup shall
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consult with Acquired Corporation regarding, and provide Acquired
Corporation and its counsel a reasonable opportunity to comment on, any
such material received from the SEC or the SEC staff, and BancGroup
shall give due consideration to any comments of Acquired Corporation and
its counsel before BancGroup formally or informally responds to the SEC
or the SEC staff.
(ii) BancGroup will advise Acquired Corporation, promptly after
BancGroup receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been
filed, of the issuance of any stop order or the suspension of the
qualification of the BancGroup Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information. In the event
that a stop order has been issued or threatened by the SEC that suspends
or would suspend the effectiveness of the Registration Statement,
BancGroup shall use its reasonable best efforts to promptly remove or
cause not to be issued any such stop order.
(i) Qualification for Tax Free Reorganization. BancGroup undertakes
and agrees to use its best efforts to cause the Merger to qualify and to
take no action which would cause the Merger to fail to qualify as a
reorganization within the meaning of section 368 of the Code. BancGroup
agrees to notify Acquired Corporation promptly of any action of which it
has Knowledge which will cause the Merger to fail to qualify as a
reorganization.
(j) Indemnification; Directors and Officers Insurance.
(i) From and after the Effective Date, BancGroup shall indemnify
and advance costs and expenses (including reasonable attorneys fees,
disbursements and expenses) and hold harmless each present and former
director and/or officer of each Acquired Corporation Company determined
as of the Effective Date (the "Indemnified Parties"), against any costs
or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, settlements or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or
investigative (each a "Claim"), arising out of or pertaining to matters
existing or occurring at or prior to the Effective Date, whether
asserted or claimed prior to, at or after the Effective Date to the
fullest extent that the applicable Acquired Corporation Company would
have been required under Florida Law and its Articles of Incorporation
or Bylaws in effect on the date hereof, to indemnify such person (and
also advance expenses as incurred to the fullest extent permitted under
applicable Law).
(ii) Any Indemnified Party wishing to claim indemnification under
section 6.1(j)(i) shall notify BancGroup within forty-five (45) days of
the Indemnified Party's receipt of a notice of any Claim, but the
failure to so notify shall not relieve BancGroup of any liability it may
have to such Indemnified Party if such failure does not materially
prejudice the Indemnifying Party. In the event of any claim (whether
arising before or after the Effective Date), (i) BancGroup shall have
the right to assume the defense thereof, and BancGroup shall not be
liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if BancGroup
elects not to assume such defense, or counsel for the Indemnified
Parties advises that there are 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 the
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly after statements therefore are received; provided, however,
that BancGroup shall be obligated pursuant to this paragraph (ii) to pay
for only one firm of counsel for all Indemnified Parties in any
jurisdiction unless the use of one counsel for such Indemnified Parties
will present such counsel with a conflict of interest, (ii) the
Indemnified Parties will cooperate in the defense of any such matter,
and (iii) and BancGroup shall not be liable for any settlement effected
without its prior written consent which shall not be unreasonably
withheld. If such indemnity with any respect to any Indemnified Party is
unenforceable against BancGroup, then
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BancGroup and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults
and benefits.
(iii) For a period of four (4) years after the Effective Date,
BancGroup shall maintain in effect the current policies with directors
and officers liability insurance maintained by the Acquired Corporation
provided that the insurer agrees to maintain such policies (and provided
that BancGroup may substitute therefore policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such directors and officers and provided that the
deductible amount on BancGroup's policies may be higher than that for
existing Acquired Corporation policies) with respect to claims arising
from facts or events which occurred before the Effective Date, provided
that such policies may be maintained at a cost that does not exceed 200%
of the cost of one year's annual premium of such policies as of the date
of this Agreement.
(iv) If BancGroup or any of its successors and assigns, (i) shall
consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) shall transfer all or substantially all
of its property and assets to any individual, corporation or other
entity, then, in each such case, proper provision shall be made so that
the successors and assigns of BancGroup and its Subsidiaries shall
assume the obligations set forth in this section.
(v) In consideration of and as a condition precedent to the
effectiveness of the indemnification obligations provided by BancGroup
in this section to a director or officer of the Acquired Corporation,
such director or officer of the Acquired Corporation shall have
delivered to BancGroup on or prior to the Effective Date a letter in
form reasonably satisfactory to BancGroup concerning claims such
directors or officer may have against Acquired Corporation. In the
letter, the directors or officer shall: (i) acknowledge the assumption
by BancGroup as of the Effective Date of all Liability (to the extent
Acquired Corporation is so liable) for claims for indemnification
arising under section 6.1(j) 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 following clause (iii)) 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(j)(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 (A) those referred to in the foregoing clause(iii)
and disclosed in the letter of the director or officer, (B) claims which
have not yet been asserted against such director or officer (other than
claims arising from facts and circumstances of which such director or
officer is aware but which are not disclosed in such director or
executive officer's letter), (C) claims arising from any transaction
contemplated by this Agreement or disclosed in any schedule to this
Agreement, and (D) claims arising in the ordinary course of business of
any Acquired Corporation Company after the date of the letter.
(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(j) other than as disclosed in the letters of the directors and
executive officers referred to in section 6.1(j)(v) hereof or described
in any schedule to this Agreement and claims arising from any
transaction contemplated by this Agreement.
(vii) The provisions of this section 6.1(j) are intended to be for
the benefit of, and shall be enforceable by each Indemnified Party, and
each Indemnified Party's heirs and representatives.
6.2 Additional Covenants of Acquired Corporation. Acquired Corporation
covenants to and with BancGroup as follows:
(a) Operations. (i) Acquired Corporation will conduct its business and the
business of each Acquired Corporation Company in a proper and prudent manner and
will use commercially reasonable efforts to maintain its relationships with its
depositors, customers and employees. Except with the prior written consent
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of BancGroup, 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
except to the extent that such representations expressly relate to an earlier
date; provided, that the foregoing shall not be deemed to prohibit or limit the
ability of any Acquired Corporation Company to take any of the actions described
in Schedule 5.5 hereto. BancGroup agrees to respond to any request for a consent
pursuant to this section 6.2(a) within ten (10) days after its receipt of a
written request for such consent, which request shall include a description in
reasonable detail of the transaction with respect to which such consent is being
requested. In the event that Acquired Corporation has not received a written
response to such request within such period, the transaction shall be deemed to
have been consented to by BancGroup. Acquired Corporation 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.
(ii) If requested by BancGroup, Acquired Corporation shall use its best
efforts to cause all officers and directors of Acquired Corporation that own
more than five percent (5%) of Acquired Corporation's outstanding shares of
common stock to execute an acknowledgement that such person has no present plan,
intention, or binding commitment to sell or otherwise dispose of the BancGroup
Common Stock to be received in the Merger within twelve (12) months after the
Effective Date.
(b) Stockholders Meeting; Best Efforts. Acquired Corporation will
cooperate with BancGroup in the preparation of the Registration Statement and
any regulatory filings and 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. (i) 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 nothing contained herein shall be deemed to
prohibit any officer or director of Acquired Corporation from fulfilling its
fiduciary duty or from taking any action that is required by Law, as advised in
writing by counsel for Acquired Corporation, a copy of which shall be furnished
to BancGroup.
(ii) If Acquired Corporation (A) enters into a letter of intent or
definitive agreement regarding an Acquisition Proposal with any third party
(other than BancGroup or any of its Subsidiaries) prior to the earlier of (i)
the Effective Date or (ii) the termination of this Agreement pursuant to Article
13 hereof (other than a termination by either Party pursuant to paragraphs (a),
(d) or (f) of section 13.2 hereof or by Acquired Corporation pursuant to
paragraphs (b), (c) or (g) of section 13.2 hereof), or (B) if Acquired
Corporation receives or is the subject of an Acquisition Proposal from a third
party (other than BancGroup or its Subsidiaries) prior to the termination of
this Agreement pursuant to Article 13 hereof (other than a termination by either
Party pursuant to paragraphs (a), (d) or (f) of section 13.2 hereof or by
Acquired Corporation pursuant to paragraphs (b), (c) or (g) of section 13.2
hereof), and within 12 months after termination of this Agreement pursuant to
Article 13 hereof (other than a termination by either Party pursuant to
paragraphs (a), (d) or (f) of section 13.2 hereof or by Acquired Corporation
pursuant to paragraphs (b), (c) or (g) of section 13.2 hereof) an Acquisition
Proposal is consummated with such third party, Acquired Corporation covenants
and agrees that it shall pay to BancGroup upon demand at any time (C) after
Acquired Corporation enters into an agreement which is legally binding on
Acquired Corporation
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regarding an Acquisition Proposal or (D) at any time on or after the date of
consummation of such Acquisition Proposal, which ever is the first to occur, the
principal sum of $2,000,000 less any amounts payable by Acquired Corporation to
BancGroup for expenses pursuant to the proviso clause of section 15.1 hereof.
Such payment shall compensate BancGroup for its direct and indirect costs and
expenses in connection with the transactions contemplated by this Agreement,
including BancGroup's management time devoted to negotiation and preparation for
the Merger and BancGroup's loss as a result of the Merger not being consummated.
The Parties acknowledge and agree that it would be impracticable or extremely
difficult to fix the actual damages resulting from the foregoing events and,
therefore, the Parties have agreed upon the foregoing payment as liquidated
damages which shall not be deemed to be in the nature of a penalty. Other than
the payment provided for in this section 6.2(c)(ii) and any Liability for
expenses as set forth in section 15.1 hereof, there shall be no other Liability
or obligation on the part of any Acquired Corporation Company or their
respective directors or officers resulting from any of the events described in
this section 6.2(c)(ii).
(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 as set forth in section 6.2(c)(i)
hereof.
(e) Shareholder Voting. Acquired Corporation shall on the date of
execution of this Agreement obtain and submit to BancGroup an agreement from
each of its directors who are 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) Forbearances. Between the date hereof and the Effective Date, no
Acquired Corporation Company, without the express written approval of BancGroup
(which approval will not be unreasonably withheld except respecting clauses (a),
(b), (d), (e) and (i) of section 5.5), will do any of the things listed in
clauses (a) through (m) of section 5.5 except as permitted therein or in
Schedule 5.5 or as contemplated in this Agreement, and no Acquired Corporation
Company will enter into any material Contract, other than Contracts and Loans or
renewals thereof entered into in the ordinary course of business, without the
express written consent of BancGroup (which approval will not be unreasonably
withheld). BancGroup agrees to respond to any request for a consent pursuant to
this section 6.2(g) within ten (10) days after its receipt of a written request
for such consent, which request shall include a description in reasonable detail
of the transaction with respect to which such consent is being requested. In the
event that Acquired Corporation has not received a written response to such
request within such period, the transaction shall be deemed to have been
consented to by BancGroup.
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(h) Fiduciary Duties. Acquired Corporation shall deliver agreements from
each director of Acquired Corporation respecting certain fiduciary activities.
(i) Certain Practices. At the request of BancGroup, (i) Acquired
Corporation shall consult with BancGroup and advise BancGroup through its bank
Subsidiary in Florida of all of the Bank's loan requests over $3,000,000 that
are not single-family residential loan requests or of any other loan request
outside the normal course of business (other than any loan requests for which
commitments have already been issued by the Bank), (ii) Acquired Corporation
shall furnish to BancGroup promptly upon their availability copies of all
minutes of loan committee meetings of the Bank for meetings occurring after the
date of this Agreement, and (iii) 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 if to do so would constitute
a violation of Law.
(j) Investment Portfolio. Between the date of this Agreement and December
31, 1996, the Bank will dispose of all of the structured notes in its investment
portfolio and such other items as may be mutually agreed upon between Acquired
Corporation and BancGroup as disclosed on Schedule 6.2(j); provided, that no
such action will be required to be taken by Bank if, after giving effect to such
action, the Bank would not be "well capitalized" within the meaning of 12 CFR
sec. 208.33 or if such action would otherwise result in a violation of
applicable Law. All proceeds received from such dispositions shall be reinvested
in instruments mutually agreed upon between BancGroup and Acquired Corporation.
(k) Expenses. Acquired Corporation shall consult with BancGroup regarding
ways in which operating expenses of Acquired Corporation and the Bank may be
reduced prior to the Effective Date. Acquired Corporation shall not be required
to undertake any steps to reduce expenses unless such steps are mutually
agreeable to BancGroup and Acquired Corporation; provided, that the Acquired
Corporation shall take the actions with respect to certain expenses as described
on Schedule 6.2(k); provided, that no such action will be required to be taken
by Bank if, after giving effect to such action, the Bank would not be "well
capitalized" within the meaning of 12 CFR sec. 208.33 or if such action would
otherwise result in a violation of applicable Law.
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 Party 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,
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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 Party may have
full opportunity to make such investigation as they shall desire of the affairs
of such Party and shall furnish to such Party 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 shall constitute "Confidential Information" subject
to the provisions of the Confidentiality Agreement.
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 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 shall
have been entered by the Board of Governors of the Federal Reserve System and
other appropriate bank regulatory Agencies and shall be in full force and effect
(and all statutory waiting periods in respect thereof shall have expired) (i)
granting the authority necessary for the consummation of the transactions
contemplated by this Agreement including consummation of the Merger and the
merger referenced in section 2.8 hereof, provided that neither the consummation
of the merger referenced in section 2.8 nor approval of such merger shall be a
condition precedent to the consummation of the Merger and (ii) satisfying all
other requirements prescribed by Law; provided, however, that no such Order,
Consent or approval shall have imposed any condition or requirement which, in
the good faith, reasonable opinion of BancGroup, would so materially adversely
impact the economic or business benefits to BancGroup of the transactions
contemplated by this Agreement so as to render inadvisable the consummation of
the Merger.
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
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proceeding with respect to the transactions contemplated hereby shall be pending
or threatened under any such state Law.
8.5 No Illegality. No action shall have been taken and no statute, rule,
regulation or Order shall have been enacted, promulgated or issued or been
deemed applicable to the Merger by any governmental authority, which would make
the consummation of the Merger illegal.
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 (except to the extent that
such representations and warranties speak as of an earlier 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 Chairman 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
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.
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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. The letter received from Tucker Anthony Incorporated
on or prior to the date of this Agreement setting forth its opinion that the
Merger 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
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 in its good faith, reasonable judgment 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 for an extended period on the NYSE or any other
exchange on which BancGroup Common Stock may be traded.
9.9 Acquired Corporation Counsel Tax Opinion. Acquired Corporation shall
have received an opinion of Steel Hector & Davis LLP, counsel to Acquired
Corporation, in form and substance satisfactory to the Acquired Corporation, 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
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 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 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 (except to the extent
that such representations and warranties speak as of an earlier 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.
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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 Chairman 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;
(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
Steel, Hector & Davis LLP, 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.
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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 in its good faith, reasonable judgment 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 for an extended period on the NYSE or any exchange
on which BancGroup Common Stock may be traded.
10.9 Ancillary Agreements. The supplemental agreements executed on or
prior to the date of this Agreement between BancGroup, Colonial Bank and Barton
S. Goldberg, and BancGroup, Colonial Bank, and Arthur H. Courshon shall be in
full force and effect and each of the parties thereto shall be in compliance
with the provisions thereof.
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.
10.11 Tax Opinion. BancGroup shall have received an opinion of Coopers &
Lybrand, L.L.P., in form and substance reasonably satisfactory to BancGroup,
that (i) the Merger will constitute a "reorganization" under section 368 of the
Code and (ii) no gain or loss will be recognized by BancGroup or Acquired
Corporation as a result of the transactions contemplated by this Agreement.
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 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
sections 6.2(c)(ii), 7.2, Article 11, Article 15, any applicable definitions of
Article 14 and the Confidentiality Agreement, 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 made by (i) certified or registered
mail, return receipt requested; (ii) hand delivery; (iii) telefax transmittal;
or (iv) by courier service, and shall be deemed to have been duly given (a) when
delivered by hand; (b) three days after mailing, in the case of certified or
registered mail; (c) when electronic confirmation is received and recorded, in
the case of telefax, and (d) one business day after being forwarded to a
nationally recognized overnight courier service for overnight delivery; in each
case correctly addressed to such Party at its address set forth below or such
other address as such Party may specify by notice to the parties hereto:
(a) If to Acquired Corporation to Barton S. Goldberg, Secretary,
Jefferson Bancorp, Inc., 301 Arthur Godfrey Road, Miami Beach, Florida
33140, facsimile (305) 531-4045, with copies to Thomas R. Woolsey, Esq.,
Steel, Hector & Davis LLP, 777 South Flagler Drive, 1900 Phillips Point
West, West
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Palm Beach, Florida 33401-6198, facsimile (561) 655-1509, 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) 240-6019, 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. Subject to compliance with applicable Law, 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; provided, however, that after any approval
of the transactions contemplated by this Agreement by the Acquired Corporation's
shareholders, there may not be, without further approval of such shareholders,
any amendment of this Agreement which reduces the amount or changes the form of
the consideration to be delivered to the Acquired Corporation's shareholders
hereunder other than as contemplated by this Agreement. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
Parties.
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 material 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; provided, that the non-breaching Party provides the
breaching Party with a written notice of termination within ten days after
the earlier of the expiration of such 30-day period or the date it receives
a written notice from the breaching Party stating that it is unable or
unwilling to cure such breach;
(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 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; provided, that the non-breaching Party provides the
breaching Party with a written notice of termination within ten days after
the earlier of the expiration of such 30-day period or the date it receives
a written notice from the breaching Party stating that it is unable or
unwilling to cure such breach;
(d) by the board of directors of either BancGroup or Acquired
Corporation if any approval or authorization of any Agency, the lack of
which would result in the failure to satisfy the closing condition set
forth in section 8.2, (i) shall have been denied by such Agency, (ii) such
Agency shall have requested the withdrawal of any application therefor, or
(iii) such Agency shall have indicated in writing an intention to deny, or
impose a condition or requirement of the type referred to in the proviso to
section 8.2; provided, that in connection with any termination pursuant to
this section 13.2(d), (i) the Party terminating this Agreement shall have
provided evidence reasonably satisfactory to the other Party that such
event has occurred, (ii) if BancGroup is the terminating party, BancGroup
shall be in material compliance with the provisions of section 6.1(a) with
respect to the applicable Agency, and (iii) if BancGroup is the terminating
party, prior to such termination BancGroup shall have given Acquired
Corporation not less than fifteen (15) days notice of such Agency action
and, if requested in writing by
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Acquired Corporation within such fifteen (15) day period, arranged for a
meeting between appropriate representatives of Acquired Corporation and the
applicable Agency, in which case such termination may not occur until ten
(10) days after such meeting has occurred;
(e) by the board of directors of either BancGroup or Acquired
Corporation in the event that any shareholder approval contemplated by
section 8.1 is not obtained at a meeting or meetings or any adjournment
thereof called for the purpose of obtaining such approval;
(f) by the board of directors of either BancGroup or Acquired
Corporation if (i) there shall be a final nonappealable Order of federal or
state court restraining or prohibiting the consummation of the Merger, or
(ii) there shall be any action taken, or any statute, rule, regulation or
Order enacted, promulgated or issued or deemed applicable to the Merger by
any governmental authority, which would make the consummation of the merger
illegal;
(g) by the board of directors of Acquired Corporation if all
transactions contemplated by this Agreement shall not have been consummated
on or prior to June 30, 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 Acquired Corporation; or
(h) without further action by either Party, upon the execution by
Acquired Corporation of an agreement which is legally binding on Acquired
Corporation with any third party (other than BancGroup or its Subsidiaries)
with respect to an Acquisition Proposal if, in connection therewith,
BancGroup will have the right to demand the payment of the sum described in
section 6.2(c)(ii) by the Acquired Corporation.
13.3 Damages. In the event of termination pursuant to section 13.2, this
Agreement shall forthwith become null and void and there shall be no liability
or obligation on the part of Acquired Corporation or BancGroup or their
respective directors or officers other than as set forth in section 6.2(c)(ii)
and hereinafter in this section 13.3, except that nothing shall relieve any
Party hereto from any liability for willful breach of this Agreement (including
without limitation, liability for certain expenses as set forth in section 15.1
hereof), and except that sections 6.2(c)(ii) and 7.2, Article 11, Article 15,
any applicable definitions of Article 14 and the Confidentiality Agreement shall
survive the termination of this Agreement.
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 Jefferson Bancorp, Inc., a Florida corporation.
Acquired Corporation
Company Shall mean Acquired Corporation, the Bank, any
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 Options respecting the issuance of a maximum of
231,925 shares of Acquired 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 Subsidiar-
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ies 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 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 Jefferson Bank of Florida, a Florida 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.
Colonial Bank A wholly owned, Florida commercial bank Subsidiary
of BancGroup, located in Orlando, Florida.
Common Stock BancGroup's Common Stock authorized and defined in
the restated certificate of incorporation of
BancGroup, as amended through the date of this
Agreement.
Confidentiality Agreement Confidentiality Agreement executed by BancGroup on
August 22, 1996 and Acquired Corporation on August
28, 1996.
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
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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 $18.90 by the Market
Value, as set forth in section 3.1(b).
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.
FBCA The Florida Business Corporation Act
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 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
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(including Contracts related to it), or the
transactions contemplated by this Agreement.
Loan Property Any property in which the Party in question or
Subsidiary holds a security interest.
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 and, with respect to any action
taken or relating to any Acquired Corporation
Company, shall be determined in light of the
financial position, Assets, business and results of
operation of the Acquired Corporation and its
Subsidiaries taken as a whole; 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
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 or financial condition of
the Parties, including, without limitation, the
taking of any actions by any Acquired Corporation
Company pursuant to sections 6.2(j) and (k) of this
Agreement or otherwise taken by any Acquired
Corporation Company with the consent or agreement
of BancGroup.
Merger The merger of Acquired Corporation with BancGroup
as contemplated in this Agreement.
Merger Consideration The distribution of BancGroup Common Stock and cash
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.
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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 will have 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 50% or more of the
outstanding equity securities either directly or
through an unbroken chain of entities as to each of
which 50% or more of the outstanding equity
securities is owned directly or indirectly by its
parent; provided, 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; provided, in the event
of termination of this Agreement, which termination shall have been judicially
determined to have been caused by willful breach of this Agreement, then in
addition to other remedies at law or equity for breach of this Agreement, the
Party so found to have willfully breached this Agreement shall indemnify the
other Party for its costs and fees, including without limitation reasonable fees
and expenses of counsel (including at the trial and appellate levels).
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15.2 Benefit. This Agreement shall inure to the benefit of and be binding
upon Acquired Corporation and BancGroup, and their respective successors.
Nothing in this Agreement, express or implied, is intended to confer upon any
person, other than the Parties or their respective successors, any rights
remedies, obligations or liabilities under or by reason of this Agreement, other
than as set forth in section 6.1(f) and (j). 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 States of
Florida and Delaware apply to the Merger, this Agreement shall be governed by,
and construed in accordance with the Laws of the State of Alabama 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. This Agreement 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 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) which is permitted pursuant to section 13.3, the
prevailing Party in such action shall be entitled to recover from the other
Party its reasonable costs and expenses incurred in connection with such action
(including fees, disbursements and expenses of attorneys at the trial and
appellate levels 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 waiver 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
A-33
<PAGE> 105
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, the Confidentiality 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.
<TABLE>
<S> <C>
ATTEST: JEFFERSON BANCORP, INC.
/s/ ARTHUR H. COURSHON
---------------------------------------------
BY: /s/ Barton S. Goldberg BY: Arthur H. Courshon
- --------------------------------------------- ---------------------------------------------
ITS: Secretary ITS: Chairman
</TABLE>
(CORPORATE SEAL)
<TABLE>
<S> <C>
ATTEST: THE COLONIAL BANCGROUP, INC.
/s/ ROBERT E. LOWDER
---------------------------------------------
BY: /s/ W. Flake Oakley BY: Robert E. Lowder
- --------------------------------------------- ---------------------------------------------
ITS: Secretary ITS: Chairman
</TABLE>
(CORPORATE SEAL)
A-34
<PAGE> 106
APPENDIX B
November 27, 1996
Board of Directors
Jefferson Bancorp, Inc.
301 Arthur Godfrey Road
Miami Beach, FL 33140
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, of the consideration to be received by the holders of Jefferson
Bancorp, Inc. (the "Company") common stock, par value $1.00 per share (the
"Common Stock"), pursuant to the Agreement and Plan of Merger dated October 25,
1996 (the "Agreement") by and between the Company and Colonial BancGroup, Inc.
("Colonial"). On the Effective Date, as defined in the Agreement, each share of
Common Stock held by Jefferson's shareholders other than shares held by
dissenting shareholders shall be converted by operation of law and without any
action by any holder thereof into shares of Colonial common stock at a per share
price of $18.90 as specified below. Specifically, each outstanding share of
Jefferson Common Stock shall be converted into such number of shares of Colonial
common stock equal to $18.90 divided by the Market Value of Colonial common
stock. The "Market Value" shall represent the per share market value of Colonial
common stock at the Effective Date and shall be determined by calculating the
average of the daily closing prices of the common stock of Colonial 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 Market Value, as calculated above, Market Value shall not be less than
$30.50, nor more than $38.50.
Tucker Anthony Incorporated ("Tucker Anthony") as part of its investment
banking business is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for corporate and other
purposes. In the ordinary course of our business, we may actively trade the
securities of both the Company and Colonial for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. John Hancock Advisers, Inc., an affiliate of Tucker
Anthony, is an institutional investment adviser which beneficially owns 630,778
shares (approximately 3.9%) of the outstanding common stock of Colonial. Tucker
Anthony has provided a variety of services to the Company, from time to time,
primarily with regard to risk and investment portfolio management.
In arriving at our opinion, we have among other things:
(i) Reviewed the Agreement and the Joint Proxy Statement and
Prospectus;
(ii) Reviewed certain historical financial and other information
concerning the Company for the five fiscal years ended December 31, 1995
and for the three quarters ended March 31, June 30 and September 30, 1996,
including the Company's reports on Forms 10-K and 10-Q;
(iii) Reviewed certain historical financial and other information
concerning Colonial for the five fiscal years ended December 31, 1995 and
for the three quarters ended March 31, June 30 and September 30, 1996,
including Colonial's reports on Forms 10-K and 10-Q;
(iv) Held discussions with the senior management of the Company and
Colonial with respect to their past and current financial performance,
financial condition and future prospects;
(v) Reviewed certain internal financial data, projections and other
information of the Company including financial projections prepared by
management;
(vi) Analyzed certain publicly available information of other
financial institutions that we deemed comparable or otherwise relevant to
our inquiry, and compared the Company and Colonial from a financial point
of view with certain of these institutions;
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(vii) Compared the consideration to be received by the stockholders of
the Company pursuant to the Agreement with the consideration received by
stockholders in other acquisitions of financial institutions that we deemed
comparable or otherwise relevant to our inquiry;
(viii) Reviewed publicly available earnings estimates, historical
trading activity and ownership data of the Common Stock and Colonial common
stock and considered the prospects for dividends and price movement in
each; and
(ix) Conducted such other financial studies, analyses and
investigations and reviewed such other information as we deemed appropriate
to enable us to render our opinion. In our review, we have also taken into
account an assessment of general economic, market and financial conditions
and certain industry trends and related matters.
In our review and analysis and in arriving at our opinion we have assumed
and relied upon the accuracy and completeness of all the financial information
publicly available or provided to us by the Company and Colonial and have not
attempted to verify any of such information. We have assumed that (i) the
financial projections of the Company provided to us with respect to the results
of operations likely to be achieved by the Company have been prepared on a basis
reflecting the best currently available estimates and judgments of the Company's
management and advisors as to future financial performance and results and (ii)
that such forecasts and estimates will be realized in the amounts and in the
time periods currently estimated by management. We have also assumed, without
independent verification, that the aggregate reserves for possible loan losses
for the Company and Colonial are adequate to cover such losses. We did not make
or obtain any independent evaluations or appraisals of any assets or liabilities
of the Company, Colonial or any of their respective subsidiaries nor did we
verify any of the Company's or Colonial's books or records or review any
individual loan credit files. In addition, we have not participated in the
negotiation of the Agreement nor have we been engaged or authorized to solicit,
and we have not solicited, any indications of interest from any third party with
respect to the purchase of all or part of the Common Stock or business of the
Company, and made no recommendation to the Board of Directors of either party as
to the amount of the Merger Consideration. Our opinion is necessarily based upon
market, economic and other conditions as they exist and can be evaluated as of
the date of this letter. This opinion is being furnished for the use and benefit
of the Board of Directors of the Company and is not a recommendation to
shareholders. Tucker Anthony has advised the Board that it does not believe any
person other than the Board has the legal right to rely on the opinion and,
absent any controlling precedent, would resist any assertion otherwise.
Based upon and subject to the foregoing, it is our opinion that as of the
date hereof the consideration to be received by the stockholders of the Company
pursuant to the Agreement is fair to such stockholders from a financial point of
view.
Very truly yours,
TUCKER ANTHONY INCORPORATED
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<PAGE> 108
October 23, 1996
Board of Directors
Jefferson Bancorp, Inc.
301 Arthur Godfrey Road
Miami Beach, Florida 33140
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 Jefferson Bancorp, Inc.
("Jefferson") in connection with the proposed merger of Jefferson with and into
The Colonial BancGroup, Inc. ("BancGroup"), pursuant to the September 19, 1996
Draft Agreement and Plan of Merger (the "Agreement"), (the "Merger"). The
Agreement calls for each outstanding share of Jefferson's Common Stock to be
converted into the right to receive that number of shares of BancGroup's Common
Stock equal to $18.90 divided by the Market Value of that stock as defined in
the Agreement.
TSJ&A is an investment banking and consulting firm that specializes in the
valuation of closely held and publicly traded corporations and provides fairness
opinions as part of its practice. Because of its prior experience in the
appraisal of regional financial institutions involved in mergers, it has
developed an expertise in fairness opinions related to the securities of
regional 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 Jefferson or any of its subsidiaries or of BancGroup or any of
its subsidiaries. As such, TSJ&A does not express an opinion as to the fair
market value of Jefferson. 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 22, 1996.
In arriving at its opinion, TSJ&A reviewed and analyzed audited and
unaudited financial information regarding Jefferson and BancGroup, the Merger,
the 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 Jefferson' shareholders is set
at $18.90 per share converted into the right to receive BancGroup Common Stock,
subject to the Market Value of BancGroup stock, as defined in the Agreement,
being not less than $30.50 per share nor more than $38.50 per share. BancGroup's
stock has traded within this range during at least the last three months.
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.
There are currently 3,791,040 shares of Jefferson Common Stock outstanding
with a book value as of September 30, 1996 of $9.88 per share. There are options
outstanding for a total of 231,925 shares with an average exercise price of
$8.81 per share. Earnings for the first nine months totaled $2.05 million or
$.53 per share. Earnings for the last twelve months totaled $2.57 million or
$0.66 per share.
The deal value per share has been established at $18.90. This deal value is
1.913 times September 30, 1996 book value. This deal value is 28.683 times the
last twelve months' earnings per share.
TSJ&A reviewed the Merger as of October 22, 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 28
transactions that were announced between January 1, 1995 and October 21, 1996
that have been determined to be comparable transactions. They include selling
institutions with total assets between $300 million and $1 billion. 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 28 comparable transactions reported an announced deal price to book value of
1.899 times and an announced deal price to earnings of 17.54 times.
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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 Jefferson is fair from a
financial point of view.
Sincerely,
T. Stephen Johnson & Associates, Inc.
B-4
<PAGE> 110
DEALS ANNOUNCED FROM JANUARY 1, 1995 TO OCTOBER 21, 1996
TARGETS WITH TOTAL ASSETS BETWEEN $300 MILLION AND $1 BILLION; EQUITY/ASSETS
< 10.00%
<TABLE>
<CAPTION>
SELLER: SELLER:
TOTAL EQTY/
BANK/ ASSETS ASSETS ANNOUNCE
BUYER ST SELLER ST THRIFT ($000) (%) DATE
- ---------------------------------------- -------------------------------------------- ---- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Valley National Bancorp NJ Midland Bancorp NJ Bank 405,027 8.36 09/13/96
Southern National Corp NC Fidelity Financial VA Bank 325,814 8.60 08/22/96
Hinesdale Financial IL Liberty Bancorp IL Thrift 661,198 9.83 08/02/96
Washington Federal WA Metropolitan Bancorp WA Thrift 761,014 6.72 07/12/96
Union Planters TN Financial Bancshares MO Bank 325,403 7.35 06/27/96
Hibennia Corporation LA Texarkana National TX Bank 413,382 8.49 06/26/96
Sovereign Bancorp PA First State Financial NJ Thrift 628,684 6.84 06/25/96
Peoples Heritage ME Family Bancorp MA Thrift 887,387 7.76 05/31/96
Habco Inc. NJ LaFayette American CT Bank 735,405 8.09 02/06/96
FNB Corporation PA Southwest Banks, Inc. FL Bank 352,091 8.27 02/05/96
NationsBank Corp NC Charter Bancshares TX Bank 840,622 6.97 01/25/96
Compass Bancshares AL CFB Bancorp FL Bank 309,590 6.16 11/27/95
Peoples Heritage Fin ME Bank of NH Corp NH Thrift 960,052 8.34 10/25/95
Washington Mutual WA Western Bank OR Thrift 738,572 8.88 10/12/95
Firstar Corp WI Harvest Financial Corp IA Bank 345,951 6.46 07/24/95
Center Financial Corp CT Great Country Bank CT Thrift 339,912 4.52 07/11/95
Summit Bancorp NJ Garden State Bancshares NJ Bank 316,253 8.41 06/14/95
First Commercial Corp AR FDH Bancshares AR Bank 386,724 5.61 05/30/95
First Union Corp NC RS Financial Corp NC Bank 809,722 8.52 05/30/95
First American Corp TN Charter Federal Bank VA Bank 744,110 6.25 05/17/95
First Commerce Corp TN Central Corporation LA Bank 820,150 8.55 05/16/95
Commercial Federal ME Railroad Financial KS Thrift 561,496 4.48 04/19/95
Bank of New York NY Putnam Trust Co CT Bank 686,406 8.22 03/27/95
Main Street Community MA Lexington Savings Bank MA Thrift 393,659 9.22 03/14/95
First American Corp TN Heritage Federal TN Bank 521,546 9.77 02/21/95
First Union Corp NC United Financial of SC SC Bank 758,783 8.01 02/21/95
Valley National Banc. NJ Lakeland First NJ Bank 661,393 7.74 05/30/95
NBD Bancorp MI DearBank Corp IL Bank 765,886 7.78 01/09/95
-- --------- ----
Averages: 28 $587,365 7.65
-- --------- ----
<CAPTION>
ANN'D
ANN'D ANN'D DEAL
DEAL DEAL PR/
VALUE CONSIDER PR/BK 4-QTR
BUYER STATUS ($M) TYPE (%) EPS (X)
- ---------------------------------------- ---------- ----- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Valley National Bancorp Pending 104.1 Com Stock 284.44 20.67
Southern National Corp Pending 16.1 Com Stock 202.00 18.02
Hinesdale Financial Pending 60.9 Com Stock 94.84 18.43
Washington Federal Pending 60.9 Com Stock 146.02 N/A
Union Planters Pending 36.2 Com Stock 149.79 19.38
Hibennia Corporation Pending 76.3 Com Stock 217.45 23.95
Sovereign Bancorp Pending 58.1 Com Stock 137.98 15.36
Peoples Heritage Pending 107.1 Com Stock 147.77 12.76
Habco Inc. Completed 137.3 Com Stock 222.35 7.19
FNB Corporation Pending 60.8 Com Stock 203.07 57.80
NationsBank Corp Completed 94.7 Com Stock 282.22 16.64
Compass Bancshares Completed 43.1 Com Stock 226.03 26.60
Peoples Heritage Fin Completed 170.7 Com Stock 213.20 15.50
Washington Mutual Completed 159.9 Com Stock 244.05 16.67
Firstar Corp Completed 35.4 Com Stock 145.47 10.11
Center Financial Corp Completed 28.2 Com Stock 183.44 N/A
Summit Bancorp Completed 69.2 Com Stock 255.24 25.47
First Commercial Corp Completed 34.9 Com Stock 160.94 13.29
First Union Corp Completed 117.8 Com Stock 161.71 19.93
First American Corp Completed 68.4 Com Stock 146.48 8.87
First Commerce Corp Completed 190.2 Com Stock 271.23 18.05
Commercial Federal Completed 37.9 Com Stock 144.96 20.06
Bank of New York Completed 141.0 Com Stock 247.55 15.27
Main Street Community Completed 33.9 Com Stock 93.38 11.68
First American Corp Completed 97.4 Com Stock 188.81 14.66
First Union Corp Completed 127.4 Com Stock 193.75 19.73
Valley National Banc. Completed 34.9 Com Stock 160.94 13.29
NBD Bancorp Completed 119.8 Com Stock 192.97 14.29
------ -----
189.93 17.54
------ -----
</TABLE>
B-5
<PAGE> 111
APPENDIX C
607.1301 DISSENTER'S RIGHTS; DEFINITIONS. -- The following definitions
apply to ss. 607.1302 and 607.1302 and 607.132:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the
value of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on
which the corporation received written consents without a meeting from the
requisite number of shareholders in order to authorize the action, or, in
the case of a merger pursuant to s. 607.1104, the day prior to the date on
which a copy of the plan of merger was mailed to each shareholder of record
of the subsidiary corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT. -- (1) Any shareholder has the
right to dissent from, and obtain payment of the fair value of his shares in the
event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under s.607.1104, and the shareholders would have been entitled
to vote on action taken, except for the applicability of s.607.1104;
(b) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation, other than in the usual and regular
corse of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to s.607.1202, including a sale in dissolution but not
including a sale pursuant to court order or a sale of 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 1 year after the date of sale;
(c) As provided in s.607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation
is a party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder
is entitled to vote on the amendment and if such amendment would adversely
affect such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his shares;
2. Altering or abolishing the voting rights pertaining to any of
his shares, except as such rights may be affected by the voting rights
of new shares then being authorized of any existing or new class or
series of shares;
3. Effecting an exchange, cancellation, or reclassification of any
of his shares, when such exchange, cancellation, or reclassification
would alter or abolish his voting rights or alter his percentage or
equity in the corporation, or effecting a reduction or cancellation of
accrued dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his redeemable
shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his shares, or making any
of his shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
his preferred shares which had theretofore been cumulative;
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6. Reducing the stated dividend preference to any of his preferred
shares; or
7. Reducing any stated preferential amount payable on any of his
preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in
paragraph (1)(e) has the right to dissent only as to those of his shares
which are adversely affected by the amendment.
(3) A Shareholder may dissent as to less than all the shares
registered in his name. In that event, his rights shall be determined as
if the shares as to which he has dissented and his other shares were
registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this
section does not apply with respect to a plan of merger or share
exchange or a proposed sale or exchange of property, to the holders of
shares of any class or series which, on the record date fixed to
determine the shareholders entitled to vote at the meeting of
shareholders at which such action is to be acted upon or to consent to
any such action without a meeting, were either registered on a national
securities exchange or designated as a national market system security
on a interdealer quotation system by the National Association of
Securities Dealers, Inc., or held of record by not fewer than 2,000
shareholders.
(5) A shareholder entitled to dissent and obtain payment for his
shares under this section may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent
with respect to the shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS. -- (1)(a) If a
proposed corporate section creating dissenters' rights under s. 607.1320 is
submitted to a vote at a shareholders' meeting, the meeting notice shall state
that shareholders are or may be entitled to assert dissenters' rights and be
accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A shareholder who
wishes to assert dissenter's rights shall:
1. 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. Not vote his shares in favor of the proposed action. A proxy or
vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of ss. 607.1301, 607,1302, and 607.1320 to
each shareholder simultaneously with any request for his written consent
or, if such a request is not made, within 10 days after the date the
corporation received written consents without a meeting from the requisite
number of shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent,
to each shareholder, excepting any who voted for, or consented in writing
to, the proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder
who elects to dissent shall file with the corporation a notice of such
election, stating his name and address, the number, classes, and series of
shares. Any shareholder failing to file such election to dissent within the
period set forth shall be bound by the terms of the proposed corporate
action. Any shareholder filing an election to dissent shall deposit his
certificates for certificated shares with the corporation simultaneously
with the filing of the election to dissent. The corporation may restrict
the transfer of uncertificated shares from the date the shareholder's
election to dissent is filed with the corporation.
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<PAGE> 113
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and
shall not be entitled to vote or to exercise any other rights of a
shareholder. A notice of election may be withdrawn in writing by the
shareholder at any time before an offer is made by the corporation, as
provided in subsection (5), to pay for his shares. After such offer, no
such notice of election may be withdrawn unless the corporation consents
thereto. However, the right of such shareholder to be paid the fair value
of his shares shall cease, and he shall be reinstated to have all right of
such shareholder to be paid the fair value of his shares shall cease, and
he shall be reinstated to have all his rights as a shareholder as of the
filing of his notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined
by the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceeding that may have been taken in
the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a
court has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within 10
days after such corporate action is effected, whichever is later (but in no
case later than 90 days from the shareholders' authorization date), the
corporation shall make a written offer to each dissenting shareholder who
has made demand as provided in this section to pay an amount the
corporation estimates to be the fair value for such shares. If the
corporate action has not been consummated before the expiration of the
90-day period after the shareholders' authorization date, the offer may be
made conditional upon the consummation of such action. Such notice and
offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date and not more
than 12 months prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month
period ended on the date of such balance sheet or, if the corporation was
not in existence throughout such 12-month period, for the portion thereof
during which it was in existence.
(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his shares shall be made within 90 days after
the making of such offer or the consummation of the proposed action,
whichever is later. Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period
specific therefor in subsection (5) or if it makes the offer and any
dissenting shareholder or shareholders fail to accept the same within the
period of 30 days thereafter, then the corporation, within 30 days after
receipt of written demand from any dissenting shareholder given within 60
days after the date on which such corporate action was effected, shall, or
at its election at any time within such period of 60 days may, file an
action in any court of competent jurisdiction in the county in this state
where the registered office of the corporation is located requesting that
the fair value of such shares be determined. The court shall also determine
whether each dissenting shareholder, as to whom the corporation requests
the court to make such determination, is entitled to receive payment for
his shares. If the corporation fails to institute the proceeding as herein
provided, any dissenting shareholders (whether or not residents of this
state), other than shareholders who have agreed with the corporation as to
the value of their shares, shall be made
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parties to the proceeding as an action against their shares. The
corporation shall serve a copy of the initial pleading in such 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 and publication or in such other manner as is permitted by law. The
jurisdiction of the court is plenary and exclusive. All shareholders who
are proper parties to the proceeding are entitled to judgment against the
corporation for the amount of the fair value of their shares. The court
may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The
appraisers shall have such power and authority as is specified in the order
of their appointment or an amendment thereof. The corporation shall pay
each dissenting shareholder the amount found to be due him within 10 days
after final determination of the proceedings. Upon payment of the judgment,
the dissenting shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair
rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the corporation, but all or any
part of such costs and expenses may be apportioned and assessed as the
court deems equitable against any or all of the dissenting shareholders who
are parties to the proceeding, to whom the corporation has made an offer to
pay for the shares, if the court finds that action of such shareholders in
failing to accept such offer was arbitrary, vexatious, or not in good
faith. Such expenses shall include reasonable compensation for, and
reasonable expenses of, the appraisers, but shall exclude the fees and
expenses of counsel for, and experts employed by, any party. If the fair
value of the shares, as determined, materially exceeds the amount which the
corporation offered to pay therefor or if no offer was made, the court in
its discretion may award to any shareholder who is a party to the
proceeding such sum as the court determines to be reasonable compensation
to any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the
agreed value thereof or pursuant to payment of the judgment entered
therefor, as provided in this action, may be held and disposed of by such
corporation as authorized but unissued shares of the corporation, except
that, in the case of a merger, they may be held and disposed of as the plan
of merger otherwise provides. The shares of the surviving corporation into
which the shares of such dissenting shareholders would have been converted
had they assented to the merger shall have the status of authorized but
unissued shares of the surviving corporation.
C-4
<PAGE> 115
APPENDIX A
SOLICITED BY THE BOARD OF DIRECTORS
PROXY
JEFFERSON BANCORP, INC.
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 27, 1996
The undersigned hereby appoints Arthur H. Courshon, Norman M. Giller and
Barton S. Goldberg, and each or any of them, or such other persons as the Board
of Directors of Jefferson Bancorp, Inc. ("Jefferson") 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 Jefferson at the special
meeting of shareholders to be held on December 27, 1996, and at any and all
adjournments thereof.
1. To ratify and approve the Agreement and Plan of Merger dated as of
October 25, 1996, pursuant to which Jefferson 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.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF JEFFERSON 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
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PHONE NO:
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- -
--------------------------------
(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.
