<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
THE COLONIAL BANCGROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6711 63-0661573
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
ONE COMMERCE STREET, SUITE 800 (334) 240-5000
MONTGOMERY, ALABAMA 36104 (Telephone No.)
(Address of principal executive offices)
</TABLE>
---------------------
W. FLAKE OAKLEY, IV
SECRETARY
POST OFFICE BOX 1108
MONTGOMERY, ALABAMA 36101-1108
(Name and address of agent for service)
Copies to:
<TABLE>
<C> <C>
MICHAEL D. WATERS, ESQUIRE JOHN P. GREELEY, ESQ.
MILLER, HAMILTON, SNIDER & ODOM, L.L.C. SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS,
ONE COMMERCE STREET, SUITE 802 P.A.
P.O. BOX 19 CITRUS CENTER, SUITE 800
MONTGOMERY, ALABAMA 36101-0019 255 S. ORANGE AVENUE
FACSIMILE: (334) 265-4533 ORLANDO, FLORIDA 32801
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE(1)
<TABLE>
<CAPTION>
===========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $2.50 per
share................................ 1,136,703 Not Applicable $13,852,960 $4,197.87
===========================================================================================================================
</TABLE>
(1) Calculated pursuant to Rule 457(f)(2) based upon the market value of $8.00
per share of 1,731,620 shares of company acquired, including 140,775 shares
subject to employee stock options.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON EACH SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE> 2
GREAT SOUTHERN BANCORP
2000 PALM BEACH LAKES BOULEVARD
EIGHTH FLOOR
WEST PALM BEACH, FLORIDA 33409
(561)683-1600
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , , 1997, AT P.M.
---------------------
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "Special
Meeting") of Great Southern Bancorp ("Great Southern") will be held at the
office of Great Southern Bank, located at , West Palm Beach,
Florida, on , , 1997, at p.m., local time, for
the following purposes:
1. Merger. To consider and vote upon the proposed merger (the
"Merger") of Great Southern with and into The Colonial BancGroup, Inc.
("BancGroup"), in accordance with an Agreement and Plan of Merger, dated as
of March 6, 1997 between Great Southern and BancGroup (the "Agreement").
BancGroup will be the surviving corporation in the Merger. Each share of
common stock of Great Southern outstanding at the time of the Merger will
be converted into the right to receive shares of BancGroup Common Stock
with a market value (as calculated in accordance with the terms of the
Agreement) at the time of the Merger of $13.05, 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 Proxy Statement and Prospectus. The Agreement is
attached to the 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 Great Southern has fixed the close of business on
, , 1997, 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 Great Southern 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. Great Southern shareholders are
entitled to assert dissenters' rights pursuant to the Florida Business
Corporation Act. A copy of the dissenters' rights provisions is attached to the
enclosed Proxy Statement and Prospectus as Appendix C.
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 Great Southern, by executing a
later dated proxy and delivering it to the Secretary of Great Southern, or by
attending the Special Meeting and voting in person.
BY ORDER OF THE BOARD OF DIRECTORS
C. ROBERT STOCK
Chairman
<PAGE> 3
PROXY STATEMENT AND PROSPECTUS
THE COLONIAL BANCGROUP, INC.
COMMON STOCK
GREAT SOUTHERN BANCORP
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , , 1997
This Proxy Statement and Prospectus (the "Prospectus") relates to the
proposed merger (the "Merger") of Great Southern Bancorp, a Florida corporation
("Great Southern"), with and into The Colonial BancGroup, Inc., a Delaware
corporation ("BancGroup"). This Prospectus is being furnished to the
shareholders of Great Southern in connection with the solicitation of proxies by
the Board of Directors of Great Southern for use at a special meeting of the
shareholders of Great Southern (the "Special Meeting") to be held on ,
, 1997, at p.m., local time, at ,
West Palm Beach, Florida, including any adjournments or postponements thereof.
At the Special Meeting, shareholders of Great Southern 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 March 6, 1997 by and between BancGroup and Great
Southern (the "Agreement"). The Agreement provides that, subject to the approval
of the Agreement by the shareholders of Great Southern 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, Great Southern will be
merged with and into BancGroup and BancGroup will be the surviving corporation.
Each issued and outstanding share of common stock, par value $.01 per share, of
Great Southern (the "Great Southern 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 $13.05, 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 ending on the trading day that is five calendar days immediately preceding
the Effective Date of the Merger. See "THE MERGER -- Conversion of Great
Southern Common Stock." 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 April 14, 1997 was $22 7/8.
Consummation of the Merger requires, among other things, the affirmative
vote of the holders of at least a majority of the outstanding shares of Great
Southern 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 Great Southern Common Stock assumed by
BancGroup as part of the Merger. This document constitutes a Proxy Statement of
Great Southern in connection with the solicitation of proxies by Great Southern
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 Great Southern on or about the date set forth
below.
THE BOARD OF DIRECTORS OF GREAT SOUTHERN UNANIMOUSLY RECOMMENDS APPROVAL OF
THE AGREEMENT.
---------------------
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 principal office and mailing address of Great Southern are 2000 Palm
Beach Lakes Boulevard, Eighth Floor, West Palm Beach, Florida 33409 (telephone
561-683-1600), 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 , 1997.
<PAGE> 4
AVAILABLE INFORMATION
BancGroup is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by
BancGroup, including proxy and information statements, can be inspected and
copied at the public reference facilities of the Commission, Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at certain
regional offices: 7 World Trade Center, 13th Floor, New York, New York 10048;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; 1401 Brickell Avenue, Suite 200, Miami, Florida 33131; 1801
California Street, Suite 4800, Denver, Colorado 80202-2648; and 5670 Wilshire
Boulevard, 11th Floor, Los Angeles, California 90036-3648. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as BancGroup, that file electronically with the Commission.
The BancGroup Common Stock is listed for trading on the NYSE. Reports,
including proxy and information statements, of BancGroup and other information
may be inspected at the NYSE, 20 Broad Street, New York, New York 10005.
BancGroup has filed with the Commission a Registration Statement under the
Securities Act to register the shares of BancGroup Common Stock being offered in
connection with the Merger. This Prospectus omits certain information contained
in the Registration Statement and exhibits thereto. Such Registration Statement,
including the exhibits thereto, can be inspected at the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
such Registration Statement can be obtained at prescribed rates from the
Commission at that address.
The information in this Prospectus concerning BancGroup and its
subsidiaries has been furnished by BancGroup, and the information concerning
Great Southern and its subsidiary has been furnished by Great Southern.
DOCUMENTS INCORPORATED BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS OF BANCGROUP 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 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, 1996;
(2) BancGroup's Report on Form 8-K dated January 20, 1997;
(3) BancGroup's Report on Form 8-K dated March 10, 1997;
(4) BancGroup's Report on Form 8-K dated April 15; 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
i
<PAGE> 5
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 Great Southern 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).
ii
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY.....................................................
THE SPECIAL MEETING.........................................
General.....................................................
Record Date; Shares Entitled to Vote; Vote Required for the
Merger....................................................
Solicitation, Voting and Revocation of Proxies..............
Effect of Merger on Outstanding BancGroup Common Stock......
THE MERGER..................................................
General.....................................................
Background of the Merger....................................
Great Southern's Board of Directors' Reasons for Approving
the Merger................................................
Opinion of Financial Advisor................................
Recommendation of the Board of Directors of Great
Southern..................................................
BancGroup's Reasons for the Merger..........................
Interests of Certain Persons in the Merger..................
Conversion of Great Southern Common Stock...................
Surrender of Great Southern Common Stock Certificates.......
Certain Federal Income Tax Consequences.....................
Other Possible Consequences.................................
Conditions to Consummation of the Merger....................
Amendment or Termination....................................
Regulatory Approvals........................................
Conduct of Business Pending the Merger......................
Commitments with Respect to Other Offers....................
Indemnification.............................................
Rights of Dissenting Shareholders...........................
Resale of BancGroup Common Stock Issued in the Merger.......
Accounting Treatment........................................
NYSE Reporting of BancGroup Common Stock Issued in the
Merger....................................................
Treatment of Great Southern Options.........................
COMPARATIVE MARKET PRICES AND DIVIDENDS.....................
BancGroup...................................................
Great Southern..............................................
BANCGROUP CAPITAL STOCK AND DEBENTURES......................
BancGroup Common Stock......................................
Preference Stock............................................
1986 Debentures.............................................
Changes in Control..........................................
COMPARATIVE RIGHTS OF STOCKHOLDERS..........................
Director Elections..........................................
Removal of Directors........................................
Voting......................................................
Preemptive Rights...........................................
Directors' Liability........................................
Indemnification.............................................
Special Meetings of Stockholders; Action Without a
Meeting...................................................
Mergers, Share Exchanges and Sales of Assets................
Amendment of Certificate of Incorporation and Bylaws........
Rights of Dissenting Stockholders...........................
Preferred Stock.............................................
Effect of the Merger on Great Southern Shareholders.........
</TABLE>
iii
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES.............................................................
Condensed Pro Forma Statements of Condition (Unaudited)...................................................
Condensed Pro Forma Statements of Income (Unaudited)......................................................
Recent Developments.......................................................................................
Selected Financial Data...................................................................................
GREAT SOUTHERN BANCORP....................................................................................
Selected Financial Data...................................................................................
Management's Discussion and Analysis of Financial Condition and Results of Operations for the Fiscal Years
Ended December 31, 1996, 1995 and 1994..................................................................
BUSINESS OF BANCGROUP.....................................................................................
General...................................................................................................
Proposed Affiliate Banks..................................................................................
Voting Securities and Principal Stockholders..............................................................
Security Ownership of Management..........................................................................
Management Information....................................................................................
BUSINESS OF GREAT SOUTHERN................................................................................
General...................................................................................................
Market Area...............................................................................................
Properties................................................................................................
Competition...............................................................................................
Principal Holders of Common Stock.........................................................................
ADJOURNMENT OF SPECIAL MEETING............................................................................
OTHER MATTERS.............................................................................................
DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS....................................................
LEGAL MATTERS.............................................................................................
EXPERTS...................................................................................................
INDEX TO FINANCIAL STATEMENTS............................................................................. F-1
APPENDIX A -- Agreement and Plan of Merger................................................................ A-1
APPENDIX B -- Opinion of Financial Adviser................................................................ B-1
APPENDIX C -- Sections 607.1301, 607.1302 and 607.1320 of the Florida Business Corporation Act Regarding
Dissenters' Rights.......................................................................... C-1
</TABLE>
---------------------
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 GREAT
SOUTHERN. 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 GREAT SOUTHERN 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.
iv
<PAGE> 8
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 Great Southern 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 Great Southern with and into
BancGroup.
THE SPECIAL MEETING
The Special Meeting will be held at , West Palm
Beach, Florida on , , 1997, at p.m., local time, for
the purpose of considering and voting upon the Merger and the Agreement. Only
holders of record of Great Southern Common Stock at the close of business on
, , 1997 (the "Record Date") are entitled to the notice of
and to vote at the Special Meeting. As of the Record Date, shares of Great
Southern 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 and has operated under its current name and management since
1981. 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 branches. In Tennessee, Colonial Bank conducts a
general commercial banking business through three branches. In Georgia, Colonial
Bank, operates eleven branches in the Atlanta area and three branches in the
Dalton area. In Florida, Colonial Bank operates eleven branches in the Orlando
and Ormond Beach areas, nine branches in Dade, Broward and Palm Beach counties,
and six branches in Eustis and Lake County. BancGroup has also entered into an
agreement to acquire three additional banks. BancGroup plans to merge all of its
existing subsidiary banks into its Alabama bank, Colonial Bank, no later than
July 1, 1997. Colonial Mortgage Company, a subsidiary of the Colonial Bank in
Alabama, is a mortgage banking company which services approximately $10.6
billion in residential loans and which originates residential mortgages in 37
states through 6 regional offices. At December 31, 1996, BancGroup had
consolidated total assets of $4.9 billion and consolidated stockholders' equity
of $343.2 million. Since December 31, 1996, BancGroup has acquired five banks
with aggregate assets of $896.9 million and aggregate stockholders' equity of
$66.6 million. These acquisitions are included in the pro forma statements
included herein. See "BUSINESS OF BANCGROUP."
Great Southern. Great Southern is a bank holding company under the BHCA,
having been incorporated on March 21, 1995 solely for the purpose of acquiring
the outstanding shares of Great Southern Bank (the "Bank"). The acquisition was
concluded as of January 1, 1996. As of December 31, 1996, Great Southern's
consolidated assets totaled approximately $119.2 million. Great Southern's sole
operating subsidiary, the Bank, is an independent commercial bank chartered by
the State of Florida and headquartered in West Palm Beach, Florida. The Bank
commenced operations on April 17, 1989. Currently, the Bank operates five
offices located in central and northern Palm Beach County, Florida. At December
31, 1996, the Bank's assets totaled approximately $119.1 million, its deposits
totaled approximately $108 million and its shareholders' equity totaled
approximately $9.9 million. See "BUSINESS OF GREAT SOUTHERN."
TERMS OF THE MERGER
The Agreement provides for the Merger of Great Southern with and into
BancGroup, with BancGroup to be the surviving corporation. Upon the date of
consummation of the Merger (the "Effective Date"), each
1
<PAGE> 9
outstanding share of Great Southern Common Stock (except shares as to which
dissenters' rights are perfected) shall be converted by operation of law and
without any action by any holder thereof into shares of BancGroup Common Stock.
The number of shares of BancGroup Common Stock into which each outstanding share
of Great Southern Common Stock on the Effective Date shall be converted shall be
equal to $13.05 divided by the Market Value (the "Merger Consideration"). 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 BancGroup Common Stock as reported by the
NYSE on each of the 10 trading days ending on the trading day five calendar days
immediately preceding the Effective Date, provided that the Market Value shall
not be less than $19.88 nor more than $26.88, 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 1,044,292 (based upon a minimum
Market Value of $19.88) and the minimum number of shares of BancGroup Common
Stock to be issued in the Merger shall be 772,341 (based upon a maximum Market
Value of $26.88), based upon the 1,590,845 shares of Great Southern Common Stock
outstanding as of the March 6, 1997 date of the Agreement. To the extent that as
of the Effective Date the number of shares of Great Southern Common Stock
outstanding has increased as a result of the exercise of employee stock options
for Great Southern Common Stock after March 6, 1997, the number of shares of
BancGroup Common Stock to be issued in the Merger will increase with each share
of Great Southern Common Stock outstanding at the Effective Date exchanged for a
number of shares of BancGroup Common Stock equal to $13.05 divided by the Market
Value and the minimum and maximum number of shares of BancGroup Common Stock
will also be adjusted to take into account increases in the number of shares of
Great Southern Common Stock outstanding in excess of 1,590,845 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 that a fractional interest arises as a result of
the BancGroup Common Stock issuable in the Merger, cash will be paid in lieu
thereof based upon the Market Value.
As of the date of this Prospectus, Great Southern had granted options (the
"Great Southern Options") which entitle the holders thereof to acquire up to
140,775 shares of Great Southern Common Stock. On the Effective Date, BancGroup
shall assume all Great Southern Options outstanding, and each such option shall
represent the right to acquire BancGroup Common Stock on substantially the same
terms applicable to the Great Southern Options. The number of shares of
BancGroup Common Stock to be issued pursuant to such options shall equal the
number of shares of Great Southern Common Stock subject to such Great Southern
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 Great
Southern 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, or by paying for such fraction in cash. The exercise price for the
acquisition of BancGroup Common Stock shall be the exercise price for each share
of Great Southern 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 $13.05
by the Market Value.
Great Southern shareholders will be given notice of the consummation 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 Great Southern Common Stock.
See "THE MERGER -- Conversion of Great Southern Common Stock," "Surrender
of Great Southern Common Stock Certificates," and "Treatment of Great Southern
Options."
For certain information concerning dissenters' rights, voting at the
Special Meeting, and management of BancGroup and Great Southern, see "THE
MERGER -- Rights of Dissenting Shareholders," "-- Conversion of Great Southern
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 GREAT SOUTHERN -- Principal Holders
of Common Stock."
2
<PAGE> 10
RECOMMENDATION OF GREAT SOUTHERN'S BOARD OF DIRECTORS
The Board of Directors of Great Southern has unanimously approved the
Agreement. THE BOARD OF DIRECTORS OF GREAT SOUTHERN BELIEVES THAT THE MERGER IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF GREAT SOUTHERN, AND
RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AGREEMENT. For a
discussion of the factors considered by the Board of Directors in reaching its
conclusions, see "THE MERGER -- Background of the Merger" and "Great Southern's
Board of Directors' Reasons for Approving the Merger."
OPINION OF FINANCIAL ADVISOR
Great Southern has received an opinion from ABN AMRO Chicago Corporation
that the Merger Consideration to be paid to the shareholders of Great Southern
is fair from a financial point of view. The full text of ABN AMRO Chicago
Corporation's opinion, which describes the procedures followed, assumptions
made, limitations on the review taken, and other matters in connection with
rendering such opinion, is set forth as Appendix B to this Prospectus and should
be read in its entirety by Great Southern shareholders. For additional
information regarding ABN AMRO Chicago Corporation's opinion, see "THE MERGER --
Opinion of Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain of the executive officers of Great Southern hold Great Southern
Options which entitle them to purchase, in the aggregate, up to 116,575 shares
of Great Southern Common Stock. Under the terms of the Agreement, any Great
Southern Options which are not exercised prior to the Effective Date will be
assumed by BancGroup. See "THE MERGER -- Conversion of Great Southern Common
Stock" and "Treatment of Great Southern Options."
The Agreement stipulates that it is a condition to BancGroup's obligation
to close the Merger that C. Robert Stock, J. Russell Greene, Sally L. Teel and
Gerald F. Martens, each an executive officer of Great Southern and the Bank,
enter into new employment agreements with Colonial Bank, which will provide for
(i) terms of one year, (ii) annual salaries for Messrs. Stock, Greene and
Martens, and for Ms. Teel of $130,400, $113,400, $100,000 and $103,200
respectively, which represent their current salaries and (iii) non-competition
agreements to run concurrently with each one year term. The current employment
agreements between such persons and Great Southern will be terminated and
Messrs. Stock, Greene and Martens and Ms. Teel will receive lump-sum payments at
the Effective Date of $391,200, $283,500, $100,000 and $103,200, respectively,
pursuant to such agreements.
On the Effective Date, and subject to the existing agreements referenced
above, all employees of Great Southern 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. All employees of Great Southern 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.
Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of Great Southern against certain claims and liabilities
arising out of or pertaining to matters existing or occurring at or prior to the
Effective Date, to the extent that Great Southern would have been permitted
under Florida law, or under its Articles of Incorporation or Bylaws, to
indemnify such persons.
Except as indicated above, none of the directors or executive officers of
Great Southern, 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 Great Southern 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 Great
Southern Common Stock. Each share of Great Southern 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 Great Southern 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, 1,590,845 shares of Great Southern Common Stock were
issued and outstanding. As of the Record Date, the directors and executive
officers of Great Southern and the Bank held approximately % of the
outstanding shares of Great Southern Common Stock. As of the same date, the
directors, executive officers and affiliates of BancGroup held no shares of
Great Southern Common Stock. See "THE SPECIAL MEETING."
The directors of Great Southern own shares of Great Southern Common
Stock representing approximately % of the outstanding shares and have
agreed with BancGroup to vote their shares in favor of the Agreement. See "THE
SPECIAL MEETING." As of March 1, 1997, Directors and executive officers of
BancGroup beneficially owned in the aggregate 4,454,136 shares of BancGroup
Common Stock representing approximately 10.98% of BancGroup's outstanding
shares.
Proxies should be returned to Great Southern in the envelope enclosed
herewith. Shareholders of Great Southern submitting proxies may revoke their
proxies by (i) giving notice of such revocation in writing to the Secretary of
Great Southern at or prior to the Special Meeting, (ii) by executing and
delivering a proxy bearing a later date to the Secretary of Great Southern at or
prior to the Special Meeting, or (iii) by attending the Special Meeting and
voting in person. Because approval of the Agreement requires the approval of at
least a majority of the outstanding shares of Great Southern 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 Great Southern 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" 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.
Shareholders wishing to exercise dissenters' rights must follow properly all
requirements for the exercise of such rights as set forth in Sections 607.1301,
607.1302 and 607.1320 of the FBCA, a copy of which is attached as Appendix C to
this Prospectus. See "THE MERGER -- Rights of Dissenting Shareholders." Any
shareholder who properly exercises dissenters' rights and receives cash for his
or her shares will encounter income tax treatment different than the treatment
for shareholders who do not exercise dissenters' rights. See "THE
MERGER -- Rights of Dissenting Shareholders."
CONDITIONS TO THE MERGER
The parties' obligation to consummate the Merger is subject to the
satisfaction (or waiver, to the extent permitted by law) of various conditions
set forth in the Agreement.
The mutual obligations of the parties to consummate the Merger are subject
to the following conditions, among others: (i) the approval of the Agreement by
the holders of at least a majority of the outstanding shares of Great Southern
Common Stock; (ii) the notification to or approval of the Merger by The Board of
Governors of the Federal Reserve System (the "Federal Reserve") and the approval
of the merger of the Bank with Colonial Bank (the "Bank Merger") by the Alabama
Banking Department (the "Alabama Department") and the Federal Reserve; (iii) the
absence of any pending or threatened litigation which seeks
4
<PAGE> 12
to restrain or prohibit the Merger; (iv) the consummation of the Merger on or
before December 31, 1997; and (v) receipt of opinions of counsel as to certain
matters, including tax matters.
The obligation of Great Southern 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.
The obligations of BancGroup to consummate the Merger are subject to
various conditions, including: (i) the absence of any material adverse change in
the financial condition or affairs of Great Southern; (ii) the holders of not
more than 10% of the outstanding shares of Great Southern 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., BancGroup's independent
accountants, to the effect that the independent accountants concur with the
conclusions of BancGroup's and Great Southern's management that no conditions
exist with respect to each company which would preclude accounting for the
Merger as a pooling of interests.
Applications for appropriate regulatory approvals by the Federal Reserve
and the Alabama Department were filed with such agencies on or about April 21,
1997. The regulatory approval process is expected to take approximately two
months from that date, and it is anticipated that the Merger will be consummated
on or about July 1, 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 Great Southern may agree to amend
or terminate the Agreement at any time prior to the Effective Date. However, the
Board of Directors of Great Southern 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 Great Southern, would adversely affect the rights of
the shareholders of Great Southern, unless such amendments are approved by the
holders of a majority of the outstanding Great Southern 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 Great Southern 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 at "COMPARATIVE
RIGHTS OF STOCKHOLDERS."
FEDERAL INCOME TAX CONSEQUENCES
No ruling with respect to the federal income tax consequences of the Merger
to Great Southern's shareholders will be requested from the Internal Revenue
Service (the "IRS"). Great Southern has received an opinion from Coopers &
Lybrand L.L.P., that, among other things, a shareholder of Great Southern who
exchanges shares of Great Southern Common Stock for BancGroup Common Stock shall
not recognize gain except that, shareholders of Great Southern will recognize
gain to the extent such shareholders receive cash in lieu of fractional shares
of BancGroup Common Stock. Shareholders who receive cash for their shares of
Great Southern Common Stock upon perfection of dissenters' rights also will
realize gain or loss for federal income tax purposes with respect to such
shares. See "APPROVAL OF THE MERGER -- Certain Federal Income Tax Consequences."
Great Southern shareholders are urged to consult their own tax advisors as to
the specific tax consequences to them of the Merger.
ACCOUNTING TREATMENT
The merger of Great Southern into BancGroup will be treated as a
"pooling-of-interests" transaction by BancGroup for accounting purposes. See
"THE MERGER -- Accounting Treatment."
5
<PAGE> 13
RECENT PER SHARE MARKET PRICES
Great Southern. There is no established public trading market for the
Great Southern Common Stock. The shares of Great Southern Common Stock are not
actively traded, and such trading activity, as it occurs, takes place in
privately negotiated transactions. Management of Great Southern is aware of
certain transactions in shares of Great Southern that have occurred since
January 1, 1995, although the trading prices of all stock transactions are not
known. The following sets forth the trading prices for the shares of Great
Southern Common Stock that have occurred since January 1, 1995 for transactions
in which the trading prices are known to management of Great Southern:
<TABLE>
<CAPTION>
PRICE PER SHARE OF
COMMON STOCK(1)
------------------
HIGH LOW DIVIDENDS PER SHARE
----- ----- -------------------
<S> <C> <C> <C>
1995
First Quarter................................ $4.78 $4.78 --
Second Quarter............................... 5.00 5.00 --
Third Quarter................................ 5.00 5.00 --
Fourth Quarter............................... -- -- --
1996
First Quarter................................ -- -- --
Second Quarter............................... 6.50 6.00 $.10
Third Quarter................................ -- -- --
Fourth Quarter............................... 7.00 7.00 --
1997
First Quarter................................ 8.00 8.00 --
Second Quarter (through ,
1997).....................................
</TABLE>
- ---------------
(1) Restated to reflect the effect of the exchange on January 1, 1996 of two
shares of Great Southern Common Stock for each share of Bank common stock as
a result of the reorganization of the Bank into a holding company structure.
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.
6
<PAGE> 14
<TABLE>
<CAPTION>
PRICE PER SHARE OF
COMMON STOCK(1)
-------------------
HIGH LOW
------ -----
<S> <C> <C>
1995
First Quarter(2).......................................... $11 13/16 $ 9 3/4
Second Quarter............................................ 13 5/8 11 9/16
Third Quarter............................................. 14 15/16 13 3/4
Fourth Quarter............................................ 16 7/16 14 1/4
1996
First Quarter............................................. 18 1/4 15
Second Quarter............................................ 18 1/16 15 5/8
Third Quarter............................................. 17 15/16 15 5/8
Fourth Quarter............................................ 20 1/8 17 3/8
1997
First Quarter............................................. 24 18 2/3
Second Quarter (through April 14, 1997)................... 23 1/4 22 5/8
</TABLE>
- ---------------
(1) Restated to reflect the impact of a two-for-one stock split effected in the
form of a 100% stock dividend paid February 11, 1997.
(2) Trading on the NYSE commenced on February 24, 1995.
On February 19, 1997, the business day immediately prior to the public
announcement of the Merger, the closing price of the BancGroup Common Stock on
the NYSE was $23 3/8 per share. The following table presents the market value of
BancGroup Common Stock on that date, and the market value and equivalent per
share value of Great Southern Common Stock on that date:
<TABLE>
<CAPTION>
EQUIVALENT
BANCGROUP GREAT SOUTHERN BANCGROUP
COMMON STOCK COMMON STOCK COMMON STOCK
(PER SHARE) (PER SHARE) (PER SHARE)
------------ -------------- ------------
<S> <C> <C> <C>
Comparative Market Value.................. $23.375(1) $8.00(2) $13.05(3)
</TABLE>
- ---------------
(1) Closing price as reported by the NYSE on February 19, 1997.
(2) There is no established public trading market for the shares of Great
Southern Common Stock. The value shown is the price at which shares of Great
Southern Common Stock were sold on February 18, 1997, which was the last
sale price prior to the public announcement of the Merger on February 20,
1997, of which management of Great Southern is aware.
(3) If the Merger had closed on February 19, 1997, .6038 (13.05 divided by
21.6126) shares of BancGroup Common Stock would have been exchanged for each
share of Great Southern Common Stock.
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.
7
<PAGE> 15
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 Great Southern
on a historical basis and on a pro forma equivalent basis assuming consummation
of the Merger. Certain information from the table has been taken from the
condensed pro forma statements of condition and income included elsewhere in
this document. The table should be read in conjunction with those pro forma
statements.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
PER SHARE DATA
BancGroup-Historical (as restated):
Net Income
Primary*............................................ $ 1.30 $ 1.23 $ 0.98
Fully diluted*...................................... 1.28 1.20 0.97
Book value at end of period*........................... 10.31 9.41 7.87
Dividends per share:
Common Stock*.......................................... 0.54 0.3375
Common A*.............................................. 0.1125 0.40
Common B*.............................................. 0.0625 0.20
Great Southern Bancorp
Net Income
Historical:
Primary............................................. 0.75 0.75 0.59
Fully diluted....................................... 0.75 0.75 0.59
Pro forma equivalent assuming combination with
completed business combinations and Great
Southern(a):
Primary............................................. .70 0.70 0.55
Fully diluted....................................... .70 0.68 0.55
Pro forma equivalent assuming combination with
completed business combinations, Great Southern, and
other probable business combinations(a):
Primary............................................. .68 0.69 0.54
Fully diluted....................................... .67 0.67 0.53
Book value at end of period
Historical............................................. 6.35 5.74 4.84
Pro forma equivalent assuming combination with
completed business combinations and Great
Southern(a)......................................... 5.89 N/A N/A
Pro forma equivalent assuming combination with
completed business combinations, Great Southern and
other probable business combinations(a)............. 5.78 N/A N/A
Dividends per share
Historical(c).......................................... 0.10 0.00 0.00
Pro forma equivalent assuming combination with
completed business combinations and Great
Southern(b)......................................... 0.31 0.25 0.23
Pro forma equivalent assuming combination with
completed business combinations, Great Southern and
other probable business combinations(b):............ 0.31 0.25 0.23
</TABLE>
8
<PAGE> 16
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
BancGroup-Pro Forma Combined (completed business
combinations and Great Southern):
Net Income
Primary............................................. 1.24 1.23 0.98
Fully diluted....................................... 1.23 1.20 0.97
Book value at end of period.............................. 10.41 N/A N/A
BancGroup-Pro Forma Combined (completed business
combinations, Great Southern, and other probable
business combinations):
Net Income
Primary............................................. 1.20 1.22 0.95
Fully diluted....................................... 1.19 1.19 0.94
Book value at end of period.............................. 10.21 N/A N/A
</TABLE>
- ---------------
* Restated to reflect the impact of a two-for-one stock split effected in the
form of a 100% stock dividend paid February 11, 1997.
N/A Not applicable due to pro forma balance sheet being presented only at
December 31, 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) 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 Great
Southern. For the purposes of these pro forma equivalent per share amounts,
a .5655 BancGroup common stock share conversion ratio is utilized. The
ratio is based on the 10-day average of the closing market price of
Colonial BancGroup, Inc. common stock of $23.075 ($13.05/23.075 = .5655)
(which was the Market Value calculated as of March 24, 1997).
(b) Pro forma equivalent dividends per share are shown at BancGroup's Common
Stock dividend per share rate multiplied by the .5655 conversion ratio per
share of Great Southern common stock (see note (a)). BancGroup presently
contemplates that dividends will be declared in the future. However, the
payment of cash dividends is subject to BancGroup's actual results of
operations as well as certain other internal and external factors.
Accordingly, there is no assurance that cash dividends will either be
declared and paid in the future, or, if declared and paid, that such
dividends will approximate the pro forma amounts indicated.
(c) Great Southern has paid dividends as follows:
<TABLE>
<S> <C> <C>
1996............................................ $.10 per share $151,701
</TABLE>
9
<PAGE> 17
THE SPECIAL MEETING
GENERAL
This Prospectus is being furnished to the shareholders of Great Southern in
connection with the solicitation of proxies by the Board of Directors of Great
Southern for use at the Special Meeting. The purpose of the Special Meeting is
to consider and vote upon the Agreement which provides for the proposed Merger
of Great Southern 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 GREAT SOUTHERN BELIEVES THAT THE MERGER IS IN THE
BEST INTERESTS OF GREAT SOUTHERN AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" THE AGREEMENT (ITEM 1 ON THE PROXY CARD).
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED FOR THE MERGER
The Board of Directors of Great Southern has fixed the close of business on
, 1997, as the Record Date for determination of shareholders
entitled to vote at the Special Meeting. There were
record holders of Great Southern Common Stock and shares of Great Southern
Common Stock outstanding, each entitled to one vote per share, as of the Record
Date. Great Southern is obligated to issue an additional 140,775 shares of Great
Southern Common Stock upon the exercise of outstanding Great Southern Options.
The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Great Southern Common Stock on the
Record Date is necessary to constitute a quorum for the transaction of business
at the Special Meeting. In the absence of a quorum, the Special Meeting may be
postponed from time to time until Great Southern shareholders holding the
requisite amount of shares of Great Southern Common Stock are represented in
person or by proxy. If a quorum is present, the affirmative vote of the holders
of at least a majority of the outstanding shares of Great Southern Common Stock,
whether or not present or represented at the Special Meeting, is required to
approve the Agreement. Broker nonvotes 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 Great Southern 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 of Great Southern owned shares of
Great Southern Common Stock representing approximately % of the outstanding
shares. These individuals have agreed with BancGroup to vote their shares in
favor of the Merger.
If the Agreement is approved at the Special Meeting, Great Southern 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 GREAT SOUTHERN URGES THE SHAREHOLDERS OF GREAT
SOUTHERN 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 AGREEMENT.
SOLICITATION, VOTING AND REVOCATION OF PROXIES
In addition to soliciting proxies by mail, directors, officers and other
employees of Great Southern, without receiving special compensation therefor,
may solicit proxies from Great Southern's shareholders by telephone, by telegram
or in person. Arrangements will also be made with brokerage firms and other
10
<PAGE> 18
custodians, nominees and fiduciaries, if any, to forward solicitation materials
to any beneficial owners of shares of Great Southern Common Stock.
Great Southern will bear the cost of assembling and mailing this Prospectus
and other materials furnished to shareholders of Great Southern. It will also
pay all other expenses of solicitation, including the expenses of brokers,
custodians, nominees, and other fiduciaries who, at the request of Great
Southern, mail material to or otherwise communicate with beneficial owners of
the shares held by them. BancGroup will pay all expenses incident to the
registration of the BancGroup Common Stock to be issued in connection with the
Merger.
Shares of Great Southern 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 GREAT SOUTHERN
COMMON STOCK REPRESENTED BY THE PROXY WILL BE VOTED "FOR" THE PROPOSAL TO
APPROVE THE AGREEMENT AND IN ACCORDANCE WITH THE DETERMINATION OF THE MAJORITY
OF THE BOARD OF DIRECTORS OF GREAT SOUTHERN AS TO ANY OTHER MATTER WHICH MAY
PROPERLY COME BEFORE THE SPECIAL MEETING, INCLUDING ANY ADJOURNMENT OR
POSTPONEMENT THEREOF. A shareholder may revoke any proxy given pursuant to this
solicitation by: (i) delivering to the Secretary of Great Southern, prior to or
at the Special Meeting, a written notice revoking the proxy; (ii) delivering to
the Secretary of Great Southern, 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 Great Southern's proxies
should be addressed to:
Great Southern Bancorp
2000 Palm Beach Lakes Boulevard
Eighth Floor
West Palm Beach, Florida 33409
Attention: Sally L. Teel, 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 Great Southern 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
Assuming that no dissenters' rights of appraisal are exercised in the
Merger, no Great Southern Options are exercised prior to the Merger, and a
Market Value of BancGroup Common Stock of $23.075 on the Effective Date (which
was the Market Value calculated as of March 24, 1997), BancGroup would issue
899,698 shares of BancGroup Common Stock to the shareholders of Great Southern
pursuant to the Merger. Based on those assumptions, the 899,698 shares of
BancGroup Common Stock would represent approximately 2% of the total number of
shares of BancGroup Common Stock outstanding following the Merger, not counting
any additional shares BancGroup may issue, including shares to be issued
pursuant to other pending acquisitions.
11
<PAGE> 19
THE MERGER
THE FOLLOWING SETS FORTH A SUMMARY OF THE MATERIAL PROVISIONS OF THE
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. THE DESCRIPTION DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
AGREEMENT ATTACHED HERETO AS APPENDIX A AND CERTAIN PROVISIONS OF FLORIDA LAW
RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS, A COPY OF WHICH PROVISIONS
ARE ATTACHED HERETO AS APPENDIX C. ALL GREAT SOUTHERN SHAREHOLDERS ARE URGED TO
READ THE AGREEMENT AND THE APPENDICES IN THEIR ENTIRETY.
GENERAL
The Agreement provides that, subject to shareholder approval, receipt of
necessary regulatory approval and certain other conditions described below at
"Conditions to Consummation of the Merger," Great Southern will merge with and
into BancGroup. Upon completion of the Merger, the corporate existence of Great
Southern will cease, and BancGroup will succeed to the business formerly
conducted by Great Southern.
BACKGROUND OF THE MERGER
During 1995, several financial institutions made expressions of interest to
Great Southern management regarding a possible acquisition of Great Southern. In
November, 1995, Great Southern retained ABN AMRO Chicago Corporation, an
investment banking firm which specializes in the financial services industry.
While not making any decision whether any transaction involving a sale of Great
Southern should be pursued, the Great Southern Board of Directors authorized ABN
AMRO Chicago Corporation to obtain indications of interest from other financial
institutions that might warrant consideration by the Board of Directors. In
December, 1995 and January, 1996, ABN AMRO Chicago Corporation contacted 15
financial institutions to explore their possible interest in acquiring Great
Southern. As to the 15 financial institutions contacted, seven entered into
confidentiality agreements with Great Southern and reviewed certain financial
and other information regarding Great Southern. As to the seven financial
institutions who received such information, three financial institutions
submitted proposals for the acquisition of Great Southern. At a meeting of the
Great Southern Board of Directors on February 21, 1996, the Great Southern
directors decided not to pursue a sale of Great Southern based on the values
represented by the indications of interest received.
On August 6, 1996, representatives of BancGroup met with C. Robert Stock
(the Chairman of Great Southern) during which the BancGroup representatives
expressed BancGroup's interest in acquiring Great Southern. On September 26,
1996, Mr. Stock met with BancGroup representatives. Mr. Stock indicated that the
Great Southern board considered any acquisition of Great Southern at that time
to be premature as a result of then-pending litigation against Great Southern by
another financial institution alleging that the Great Southern Bank name
infringed upon the name of the other financial institution. This litigation was
subsequently settled in December, 1996. In late December, 1996 and early
January, 1997, Great Southern forwarded to BancGroup certain information
regarding Great Southern and its operations. On January 6 and 17, 1997, Great
Southern representatives had additional discussions in which the BancGroup
representatives provided additional information regarding BancGroup, and the
executives discussed trends in the financial services industry and in general
terms the potential benefits of an acquisition of Great Southern by BancGroup.
Also in January, 1997, Great Southern contacted ABN AMRO Chicago Corporation to
assist Great Southern in its discussions and negotiations with BancGroup. During
January, 1997, ABN AMRO Chicago Corporation contacted six other financial
institutions (certain of which were similarly contacted by ABN AMRO Chicago
Corporation on behalf of Great Southern in late 1995 and early 1996) to see if
they had any interest in exploring an acquisition of Great Southern. None of the
six financial institutions expressed an interest in acquiring Great Southern.
The Great Southern Board of Directors reviewed the status of discussions with
BancGroup and other issues on January 8, January 22, and February 5, 1997.
On February 11, 1997, representatives of Great Southern visited BancGroup's
headquarters in Montgomery, Alabama and met with BancGroup executives. The
BancGroup executives advised Great Southern of BancGroup's interest in acquiring
Great Southern for $22 million in a stock-for-stock merger. The parties also
discussed certain non-financial aspects of a possible acquisition, including the
operations of BancGroup and its
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prospects in Florida and elsewhere. On February 12, 1997, the Great Southern
Board of Directors reviewed and discussed the meetings with the BancGroup
representatives and the interest of BancGroup in acquiring Great Southern for
$22 million. The Board of Directors authorized Mr. Stock, with the assistance of
Great Southern's financial and legal advisors, to negotiate the terms of a
letter of intent that would be brought back to the Great Southern Board of
Directors for review and consideration. At the meeting, the Great Southern
directors also approved an engagement letter to retain ABN AMRO Chicago
Corporation as financial advisor. On February 19, 1997, the Great Southern Board
of Directors met to review a proposed letter of intent submitted by BancGroup as
well as the discussions that representatives of ABN AMRO Chicago Corporation had
with other interested parties. The Board of Directors unanimously approved the
letter of intent for the acquisition by BancGroup of Great Southern for $22
million. On February 20, 1997, BancGroup and Great Southern entered into, and
issued a press release announcing, the letter of intent.
On February 21, 1997, 1st United Bancorp ("Bancorp"), a bank holding
company based in Boca Raton, Florida, with assets of approximately $560 million,
sent a letter to ABN AMRO Chicago Corporation indicating that Bancorp had
received the announcement of the letter of intent and that Bancorp was prepared
to enter into a letter of intent with Great Southern which, subject to a due
diligence review and other conditions, would provide for the acquisition of
Great Southern by Bancorp for $23.5 million of Bancorp common stock.
Representatives of ABN AMRO Chicago Corporation contacted Bancorp and advised
its executives that the Bancorp proposal had been received and would be
considered by the Great Southern directors. On February 24, 1997, BancGroup
commenced a due diligence review of Great Southern. On February 25, 1997,
BancGroup forwarded to Great Southern a draft of a proposed definitive
agreement.
On the morning of February 27, 1997, representatives of Great Southern and
ABN AMRO Chicago Corporation, and Great Southern's legal counsel, met with
representatives of BancGroup and its legal counsel. During the course of these
discussions, the BancGroup representatives advised that BancGroup would increase
its offer to acquire Great Southern from $22 million to $22.6 million and permit
Great Southern to distribute dividends to its shareholders for the first and
second quarters of 1997, such that the value of the BancGroup proposal to
acquire Great Southern was approximately $22.8 million. BancGroup's executives
indicated that BancGroup's interest in acquiring Great Southern would terminate
if Great Southern did not enter into a definitive agreement in accordance with
the foregoing terms on or before March 4, 1997. Following the morning meeting
with the BancGroup representatives on February 27, 1997, a special meeting of
the Great Southern Board of Directors was convened that afternoon at which the
directors discussed the Bancorp proposal as well as the terms and conditions of
the increased offer from BancGroup. At the meeting, the directors, among other
things, authorized ABN AMRO Chicago Corporation to contact Bancorp to provide to
Bancorp additional information regarding Great Southern (including the severance
agreements previously entered into by Great Southern with its executive
officers), to answer questions that Bancorp may have regarding Great Southern,
to secure additional information regarding Bancorp, and to advise Bancorp that
BancGroup had increased its offer for Great Southern. The Great Southern Board
also requested that its representatives contact BancGroup to request an
extension to March 6, 1997 of the time period beyond which BancGroup would no
longer be interested in acquiring Great Southern if a definitive agreement had
not been entered into on or before such date, in order to allow additional time
for Great Southern representatives to provide information to, and have
discussions with, Bancorp representatives. Subsequent to the meeting, BancGroup
advised Great Southern that the March 6, 1997 date was acceptable. Also on
February 27, 1997, a representative of ABN AMRO Chicago Corporation visited with
BancGroup executives regarding the operations and prospects of BancGroup.
On February 28, 1997, a special meeting of the Great Southern Board of
Directors was held, at which a representative of ABN AMRO Chicago Corporation
and Great Southern's legal counsel also participated. The directors reviewed and
discussed, among other things, the BancGroup and Bancorp proposals.
On March 3, 1997, a representative of ABN AMRO Chicago Corporation met with
executives of Bancorp to provide information on Great Southern and to discuss
information regarding Bancorp's operations and its prospects. From February 25,
1997 through March 4, 1997, representatives of BancGroup and Great Southern had
discussions regarding the terms, and reviewed and negotiated drafts, of a
proposed definitive agreement. On March 5, 1997, BancGroup sent to Great
Southern a final draft of a definitive agreement
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<PAGE> 21
advising Great Southern in writing that the agreement represented BancGroup's
final proposal respecting a transaction between the two companies and that, in
light of the enhanced value being offered by BancGroup and given other
acquisition opportunities that BancGroup was pursuing in Florida, if the
agreement was not approved by the Great Southern Board of Directors on Thursday,
March 6, 1997, and signed by Great Southern on that date, then BancGroup would
conclude that Great Southern did not intend to proceed with the transaction and
BancGroup would be required to issue a press release stating that negotiations
had terminated.
On March 6, 1997, a special meeting of the Great Southern Board of
Directors was held, at which a representative of ABN AMRO Chicago Corporation
and Great Southern's legal counsel participated. At this meeting, legal counsel
reviewed generally for Great Southern's directors the fiduciary obligations of
directors in mergers of financial institutions. The ABN AMRO Chicago Corporation
representative reviewed his discussions with Bancorp. The Great Southern
directors also reviewed the BancGroup and Bancorp proposals, a report from ABN
AMRO Chicago Corporation, and other information. As to the BancGroup and Bancorp
proposals, the directors noted certain issues, including (i) that a closing of a
Bancorp transaction would be conditioned, among other things, on no more than a
ten percent decrease in the number of deposit accounts of Great Southern and a
price adjustment if certain minimum shareholders' equity was not maintained,
neither of which conditions were imposed by BancGroup; (ii) the nature of the
financial institutions previously acquired by BancGroup and Bancorp; (iii) the
trading values of the shares of BancGroup and Bancorp relative to their
respective earnings, book values and tangible book values; (iv) the prospects
for BancGroup and Bancorp; (v) the operating performance of BancGroup and
Bancorp, including the level of non-performing assets and allowance for loan
losses reported by each of BancGroup and Bancorp; (vi) the pro forma effect of
the BancGroup and Bancorp proposals on the book value, earnings per share and
dividends per share of Great Southern; (vii) the asset size, equity base, and
total market capitalization of BancGroup and Bancorp; and (viii) other
information. The directors also discussed the terms of the BancGroup agreement
and the change of control provisions of employment agreements previously entered
into with several bank officers (see -- "Interests of Certain Persons in the
Merger"). At the meeting, ABN AMRO Chicago Corporation rendered an opinion that
the terms of the Merger are fair, from a financial point of view, to the
shareholders of Great Southern. The Great Southern Board then unanimously
approved the Agreement and the transactions contemplated thereby. Great Southern
management also was authorized to execute the Agreement.
Immediately following adjournment of the March 6, 1997 meeting of the Great
Southern Board of Directors, Great Southern received a revised proposal from
Bancorp (which proposal was dated March 5, 1997) advising that Bancorp would
increase to $24.1 million, the total consideration to be delivered to Great
Southern shareholders in a transaction with Bancorp. The Great Southern Board of
Directors then immediately reconvened for another special meeting. ABN AMRO
Chicago Corporation then prepared and reviewed with the Great Southern directors
revised information taking into account the increased Bancorp proposal and other
information. The Great Southern directors discussed the BancGroup offer in the
context of the increased Bancorp proposal. During the discussion, which included
analysis of the revised proposal from Bancorp, ABN AMRO Chicago Corporation
reaffirmed its opinion that the Merger with BancGroup was fair to Great Southern
shareholders from a financial point of view. Great Southern's Board then
unanimously ratified approval of the Agreement and the transactions contemplated
thereby, and its authorization to execute the Agreement, which was signed by
Great Southern and BancGroup effective March 6, 1997.
GREAT SOUTHERN'S BOARD OF DIRECTORS' REASONS FOR APPROVING THE MERGER
Great Southern's Board of Directors believes that the Merger is in the best
interests of Great Southern and its shareholders. The Board of Directors of
Great Southern considered a number of factors in deciding to approve and
recommend the terms of the Agreement to Great Southern shareholders, including
the terms of the proposed transaction; the financial condition, results of
operations, and future prospects of Great Southern; the value of the
consideration to be received by Great Southern shareholders relative to the book
value and earnings per share of Great Southern Common Stock; the competitive and
regulatory environment for financial institutions generally; the fact that the
Merger will enable Great Southern shareholders to exchange their shares of Great
Southern Common Stock for shares of common stock of a larger and more
diversified
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entity, the stock of which is more widely held and more actively traded; the
likelihood of receiving the requisite regulatory approvals; the expectation that
the Merger will be a tax-free transaction (except in respect of cash received as
a result of the exercise of appraisal rights for Great Southern Common Stock)
for federal income tax purposes; and other information. The Board of Directors
also took into consideration that the Merger would trigger certain change of
control provisions of employment agreements previously entered into with several
Great Southern officers. (See " -- Interests of Certain Persons in the Merger").
The Board of Directors also took into account an opinion received from ABN AMRO
Chicago Corporation that the Merger Consideration to be paid to the shareholders
of Great Southern is fair from a financial point of view. See "-- Opinion of
Financial Advisor." The foregoing discussion of the information and factors
considered by the Board of Directors is not intended to be exhaustive of the
factors considered by the Board of Directors. The Great Southern Board of
Directors did not assign any relative or specific weights to the foregoing
factors, and individual directors may have given different weights to different
factors.
OPINION OF GREAT SOUTHERN'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated February 5, 1997 between Great
Southern and ABN AMRO Chicago Corporation, Great Southern retained ABN AMRO
Chicago Corporation to act as its sole financial advisor in connection with the
Merger and related matters. As part of its engagement, ABN AMRO Chicago
Corporation agreed, if requested by Great Southern, to render an opinion with
respect to the fairness from a financial point of view to Great Southern
shareholders of the consideration to be paid by Great Southern in the Merger.
ABN AMRO Chicago Corporation is a nationally recognized specialist in the
financial services industry in general and in the midwestern banks and thrifts
in particular. ABN AMRO Chicago Corporation is regularly engaged in evaluations
of similar businesses and in advising institutions with regard to mergers and
acquisitions, as well as raising debt and equity capital for such institutions.
Great Southern selected ABN AMRO Chicago Corporation as its financial advisor
based upon its qualifications, expertise and reputation in such capacity, as
well as ABN AMRO Chicago Corporation's existing relationship and familiarity
with Great Southern.
At the March 6, 1997 meeting of the Great Southern Board of Directors, ABN
AMRO Chicago Corporation delivered a written opinion that the consideration to
be paid by Great Southern in the Merger was fair to Great Southern shareholders
from a financial point of view as of March 6, 1997. ABN AMRO Chicago Corporation
subsequently delivered to the Great Southern Board an updated written opinion
dated as of the date of this Joint Proxy Statement and Prospectus confirming its
March 6, 1997 opinion.
THE FULL TEXT OF ABN AMRO CHICAGO CORPORATION'S WRITTEN OPINION TO THE
GREAT SOUTHERN BOARD, DATED AS OF THE DATE OF THIS PROSPECTUS WHICH SETS FORTH
THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS OF REVIEW BY ABN AMRO
CHICAGO CORPORATION, IS ATTACHED HERETO AS APPENDIX B AND IS INCORPORATED HEREIN
BY REFERENCE AND SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION
WITH THIS PROSPECTUS. THE FOLLOWING SUMMARY OF ABN AMRO CHICAGO CORPORATION'S
OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION. ABN AMRO CHICAGO CORPORATION'S OPINION IS ADDRESSED TO THE GREAT
SOUTHERN BOARD AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF
GREAT SOUTHERN AS TO HOW SUCH STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE
MERGER.
In connection to its opinion, ABN AMRO Chicago Corporation has, among other
things: (i) reviewed the Merger Agreement and this Prospectus; (ii) reviewed
certain historical business and financial information relating to Great Southern
and BancGroup; (iii) reviewed other pertinent internally-generated reports with
regard to the separate businesses and prospects of Great Southern and BancGroup
including, among other things, the strategic objectives of each company and the
potential benefits which might be realized through consummation of the Merger;
(iv) participated in senior management discussions of Great Southern and
BancGroup with regard to said strategic objectives which might be realized
through consummation of the Merger; (v) reviewed public information regarding
other selected comparable publicly traded companies deemed relevant to the
proposed business combination; (vi) reviewed the financial terms and data of
selected comparable business combinations between banks, thrifts and bank and
thrift holding companies deemed relevant to the proposed business combination;
(vii) reviewed the historical market performance and trading volume of BancGroup
Common Stock; (viii) reviewed certain information pertaining to prospective cost
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<PAGE> 23
savings and/or revenue enhancements relative to the proposed business
combination; (ix) reviewed and evaluated the current stock distribution and
ownership of Great Southern Common Stock and BancGroup Common Stock, as well as
the pro forma distribution and ownership following consummation of the Merger,
based upon the contribution of Great Southern's assets, liabilities,
stockholders' equity and earnings to the combined entity; and (x) conducted such
other financial studies, analyses and investigations as ABN AMRO Chicago
Corporation deemed appropriate. The written opinions provided by ABN AMRO
Chicago Corporation to Great Southern were necessarily based upon economic,
monetary, financial market and other relevant conditions as of the dates
thereof.
In connection with its review and arriving to its opinion, ABN AMRO Chicago
Corporation relied upon the accuracy and completeness of the financial
information and other pertinent information provided by Great Southern and
BancGroup to ABN AMRO Chicago Corporation for purposes of rendering its opinion.
ABN AMRO Chicago Corporation did not assume any obligation to independently
verify any of the provided information as being complete and accurate in all
material respects. With regard to the financial forecasts established and
developed for Great Southern and BancGroup and provided to ABN AMRO Chicago
Corporation by the respective managements, as well as projections of cost
savings, revenue enhancements and operating synergies, ABN AMRO Chicago
Corporation assumed that these materials had been reasonably prepared on bases
reflecting the best available estimates and judgments of Great Southern and
BancGroup as to the future performance of the separate and combined entities and
that the projections provided a reasonable basis upon which ABN AMRO Chicago
Corporation could form its opinion. Neither Great Southern nor BancGroup
publicly discloses such internal management projections of the type provided to
ABN AMRO Chicago Corporation in connection with ABN AMRO Chicago Corporation's
role as financial advisor to Great Southern in review of the Merger. Therefore,
such projections cannot be assumed to have been prepared with a view towards
public disclosure. The projections were based upon numerous variables and
assumptions that are inherently uncertain, including, but notwithstanding,
factors relative to the general economic and competitive conditions facing Great
Southern and BancGroup. Accordingly, actual results could vary significantly
from those set forth in the respective projections.
ABN AMRO Chicago Corporation does not claim to be an expert in the
evaluation of loan portfolios or the allowance for loan losses with respect
thereto and therefore assumes that such allowances for Great Southern and
BancGroup are adequate to cover such losses. In addition, ABN AMRO Chicago
Corporation does not assume responsibility for the review of individual credit
files nor make an independent evaluation, appraisal or physical inspection of
the assets or individual properties of Great Southern or BancGroup, nor was ABN
AMRO Chicago Corporation provided with such appraisals. Furthermore, ABN AMRO
Chicago Corporation assumes that the Merger will be consummated following the
terms set forth in the Agreement, without any waiver of any material terms or
conditions by Great Southern and that obtaining the necessary regulatory
approvals for the Merger will not have an adverse effect on either separate
institution or the combined entity. Moreover, in each analysis that involves per
share data for Great Southern or the combined entity, ABN AMRO Chicago
Corporation adjusted the data to reflect full dilution, i.e. the exercise of all
outstanding options. In particular, ABN AMRO Chicago Corporation assumes that
the Merger will be recorded as a "pooling of interests" in accordance with
generally accepted accounting principles.
In connection with rendering its opinion to the Great Southern Board of
Directors, ABN AMRO Chicago Corporation performed a variety of financial and
comparative analyses briefly summarized below. Such a summary of analyses does
not purport to be a complete description of the analyses performed by ABN AMRO
Chicago Corporation. Moreover, ABN AMRO Chicago Corporation believes that these
analyses must be considered as a whole and that selecting portions of such
analyses and the factors considered by it, without considering all such analyses
and factors, could create an incomplete scope of the process underlying the
analyses and, more importantly, the opinion derived from them. The preparation
of a financial advisor's opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analyses or a summary
description of such analyses. In its full analysis, ABN AMRO Chicago Corporation
also accounted for the assessment of general economic, financial market and
other financial conditions. Furthermore, ABN AMRO Chicago Corporation drew from
its past experience in similar transactions, as well as its experience in the
valuation of securities and its knowledge of the banking industry on a whole.
Any
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estimates contained in ABN AMRO Chicago Corporation's analyses were not
necessarily indicative of future results or values which may significantly
diverge more or less favorably from such estimates. Estimates of company
valuations do not purport to be appraisals or necessarily reflect the prices at
which companies or their respective securities actually may be sold. Most
notably, none of the analyses performed by ABN AMRO Chicago Corporation were
assigned a greater significance by ABN AMRO Chicago Corporation than any other
in deriving its opinion.
The analyses performed by ABN AMRO Chicago Corporation in rendering its
opinion are briefly described below.
Comparable Company Analysis. ABN AMRO Chicago Corporation reviewed and
compared actual stock market data and actual and estimated selected financial
information for selected peer groups of companies comparable to (i) Great
Southern with corresponding information for twenty (20) publicly traded
southeastern banking organizations with assets between $100 million and $300
million ("Selected Great Southern Peer Group"); and (ii) BancGroup with
corresponding information for fifteen (15) publicly traded southeastern banking
organizations with assets between $2.0 billion and $10.0 billion ("Selected
BancGroup Peer Group").
The Selected Great Southern Peer Group were: Colony Bankcorp, Incorporated,
Fitzgerald, GA; PAB Bankshares Inc., Valdosta, GA; Yadkin Valley Bank & Trust
Co., Elkin, NC; Pocahontas Bankshares Corp., Bluefield, WV; Premier Bancshares,
Inc., Atlanta, GA; Peoples Bank, Newton, NC; CB&T, Incorporated, McMinnville,
TN; Auburn National Bancorp., Auburn, AL; C&F Financial Corporation, West Point,
VA; First United Bancorporation, Anderson, SC; United Security Bancshares, Inc.,
Thomasville, AL; Merit Holding Corporation, Tucker, GA; Georgia Bank Financial
Corp., Augusta, GA; FNB Financial Services Corp., Reidsville, NC; First Southern
Bancshares, Florence, AL; Highlands Bankshares, Inc., Petersburg, WV; Community
Financial Group Inc., Nashville, TN; Chesapeake Financial Shares, Kilmarnock,
VA; Citizens Financial Corp, Elkins, WV; and Salem Bank & Trust, NA, Salem, VA.
The analysis of the Selected Great Southern Peer Group indicated, among
other things, that based on the market prices as of March 5, 1997 and financial
data as of September 30, 1996 or December 31, 1996, (i) the average multiple of
price to respective last twelve months' earnings was 13.5x for the Selected
Great Southern Peer Group; (ii) the average multiple of price to 1997 estimated
earnings was 15.5x for the Selected Great Southern Peer Group (based on a
published consensus market estimate for only three of the twenty comparable
companies); (iii) the average ratio of price to book value per share was 161.8%
for the Selected Great Southern Peer Group; (iv) the average ratio of price to
tangible book value per share was 167.6% for the Selected Great Southern Peer
Group; (v) the average ratio of tangible equity as a percentage of tangible
assets was 9.71% for the Selected Great Southern Peer Group as compared to a
corresponding ratio of 8.31% for Great Southern; (vi) the average return on
average assets was 1.21% for the Selected Great Southern Peer Group as compared
to a corresponding return of 1.09% for Great Southern; (vii) the average return
on average equity was 11.9% for the Selected Great Southern Peer Group as
compared to a corresponding return of 13.4% for Great Southern, (viii) the
average ratio of non-performing assets as a percentage of total assets was 0.57%
for the Selected Great Southern Peer Group as compared to a corresponding ratio
of 0.52% for Great Southern; and (ix) the average ratio of loan loss reserves as
a percentage of non-performing assets was 342.6% for the Selected Great Southern
Peer Group as compared to a corresponding ratio of 186.4% for Great Southern.
The Selected BancGroup Peer Group were: Synovus Financial Corp., Columbus,
GA; First Virginia Banks Inc., Falls Church, VA; First Citizens BancShares Inc.,
Raleigh, NC; Deposit Guaranty Corp., Jackson, MS; Centura Banks Inc., Rocky
Mount, NC; First Commercial Corporation, Little Rock, AR; CCB Financial
Corporation, Durham, NC; Trustmark Corporation, Jackson, MS; One Valley Bancorp
Inc., Charleston, WV; National Commerce Bancorp., Memphis, TN; BancorpSouth
Inc., Tupelo, MS; United Bankshares Inc., Charleston, WV; F&M National
Corporation, Winchester, VA; Hancock Holding Company, Gulfport, MS; and
Jefferson Bankshares Inc., Charlottesville, VA.
The analysis of the Selected BancGroup Peer Group indicated, among other
things, that based on the market prices as of March 5, 1997 and financial data
as of December 31, 1996, (i) the average multiple of
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price to respective last twelve months' earnings was 15.5x as compared to a
corresponding multiple of 13.9x for BancGroup; (ii) the average multiple of
price to 1997 estimated earnings was 14.5x (based on a published consensus of
market estimates) as compared to a corresponding multiple of 11.9x for BancGroup
(based on a published consensus of market estimates); (iii) the average ratio of
price to book value per share was 230.2% as compared to a corresponding ratio of
212.3% for BancGroup; (iv) the average ratio of price to tangible book value per
share was 249.2% as compared to a corresponding ratio of 232.7% for BancGroup;
(v) the average ratio of tangible equity as a percentage of tangible assets was
8.79% as compared to a corresponding ratio of 6.65% for BancGroup; (vi) the
average return on average assets was 1.33% as compared to a corresponding ratio
of 1.19% for BancGroup; (vii) the average return on average equity was 14.4% as
compared to a corresponding ratio of 16.8% for BancGroup; (viii) the average
ratio of non-performing assets as a percentage of total assets was 0.31% as
compared to a corresponding ratio of 0.64% for BancGroup; and (ix) the average
ratio of loan loss reserves as a percentage of non-performing assets was 476.9%
as compared to a corresponding ratio of 204.2% for BancGroup.
Comparable Transactions Analysis. ABN AMRO Chicago Corporation reviewed
and compared actual information for comparable pending or closed transactions it
deemed pertinent to the Merger, including: (i) information for nineteen (19)
recent Florida bank transactions with seller's assets between $50 million and
$200 million ("Selected Florida Bank Transactions"); and (ii) information for
twelve (12) recent bank transactions with seller's assets between $2.0 billion
and $10.0 billion ("Selected Large Bank Transactions").
The Selected Florida Bank Transactions were (note: selling company is in
italics): Seacoast Banking Corp, Stuart, FL/Port St Lucie Nat'l Bank, Port Saint
Lucie, FL; Colonial BancGroup, Montgomery, AL/First Commerce Banks, Winter
Haven, FL; 1st United Bancorp, Boca Raton, FL/Island National Bank, Palm Beach,
FL; Regions Financial, Birmingham, AL/First Mercantile Nat'l Bank, Longwood, FL;
FNB Corporation, Hermitage, PA/West Coast Bancorp, Cape Coral, FL; Colonial
BancGroup, Montgomery, AL/Fort Brooke Bancorp, Brandon, FL; Compass Bancshares,
Birmingham, AL/Enterprise Nat'l Bank, Jacksonville, FL; Colonial BancGroup,
Montgomery, AL/Tomoka Bancorp, Ormond Beach, FL; SouthTrust Corp, Birmingham,
AL/FirstMerit Bank, NA, Clearwater, FL; 1st United Bancorp, Boca Raton, FL/Park
Bankshares, Lake Park, FL; Whitney Holding Corp, New Orleans, LA/American Bank &
Trust, Pensacola, FL; Whitney Holding Corp, New Orleans, LA/Liberty Holding Co.,
Pensacola, FL; SouthTrust Corp, Birmingham, AL/Heritage Bancshares, Fort Myers,
FL; SouthTrust Corp, Birmingham, AL/Prime Bank. Boynton Beach, FL; SouthTrust
Corp, Birmingham, AL/First State Bank-FL, Deltona, FL; SouthTrust Corp,
Birmingham, AL/Citizen Bank-MacClenny, MacClenny, FL; SunTrust Banks, Inc.,
Atlanta, GA/Ponte Vedra Banking, Ponte Vedra Beach, FL; TAC Bancshares, Miami,
FL/Founders Fin'l Corp, Naples, FL; 1st United Bancorp, Boca Raton, FL/American
Bancorp, Merritt Island, FL.
The analysis of the Selected Florida Bank Transactions indicated, among
other things, that based on the announced transaction values, (i) the average
multiple of deal price to respective last twelve months' earnings was 18.2x as
compared to a corresponding multiple of 15.7x (excluding Great Southern
non-recurring expenses) in the Merger; (ii) the average ratio of deal price to
book value per share was 200.5% as compared to a corresponding ratio of 233.9%
in the Merger; (iii) the average ratio of deal price to tangible book value per
share was 205.9% as compared to a corresponding ratio of 233.9% in the Merger;
and (iv) the average tangible book premium as a percentage of core deposits was
10.6% as compared to a corresponding ratio of 13.9% in the Merger.
The Selected Large Bank Transactions were (note: selling company is in
italics): Allied Irish Banks, Dublin, Ireland/Dauphin Deposit Corp, Harrisburg,
PA; Banc One Corporation, Columbus, OH/Liberty Bancorp, Inc, Oklahoma City, OK;
Southern Nat'l Corp, Winston-Salem, NC/United Carolina Bancshares, Whiteville,
NC; Mercantile Bancorp, St. Louis, MO/Mark Twain Bancshares, St. Louis, MO;
Crestar Financial, Richmond, VA/Citizens Bancorp, Laurel, MD; Union Bank, San
Francisco, CA/BanCal Tri-State, San Francisco, CA; Regions Financial,
Birmingham, AL/First National Bancorp, Gainesville, GA; UJB Financial,
Princeton, NJ/Summit Bancorp, Chatham, NJ; First Bank System, Minneapolis,
MN/FirsTier Financial, Omaha, NE; Boatmen's Bancshares, St. Louis, MO/Fourth
Financial, Wichita, KS; NationsBank Corp., Charlotte, NC/Bank South Corp.,
Atlanta, GA; Banc One Corporation, Columbus, OH/Premier Bancorp, Baton Rouge,
LA.
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The analysis of the Selected Large Bank Transactions indicated, among other
things, that based on the announced transaction values, (i) the average multiple
of deal price to respective last twelve months' earnings was 18.4x; (ii) the
average ratio of deal price to book value per share was 213.4%; (iii) the
average ratio of deal price to tangible book value per share was 225.3%; and
(iv) the average tangible book premium as a percentage of core deposits was
16.6%.
Contribution Analysis. ABN AMRO Chicago Corporation analyzed the
contribution of each of Great Southern and BancGroup to, among other things, the
pro forma assets, common equity and tangible common equity of the combined
entity as at December 31, 1996. This analysis showed, among other things, that
Great Southern would have contributed 2.39%, 2.80% and 3.03% of the pro forma
assets, common equity and tangible common equity, respectively, of the combined
entity at December 31, 1996. Similarly, ABN AMRO Chicago Corporation analyzed
the contribution to pro forma net income for the year ended December 31, 1996
and the projected years ending December 31, 1997 and 1998, which showed that
Great Southern would have contributed, for such periods, 3.12%, 2.41%, and
2.46%, respectively to the net income of the combined entity. Based upon a 0.587
exchange ratio, which represents the implied exchange ratio based on Colonial's
closing stock price on March 5, 1997, the holders of Great Southern Common Stock
will then own approximately 3.01% of the outstanding common stock of the
combined entity upon completion of the Merger.
Accretion/Dilution Analysis. On the basis of the range of projections
prepared by the respective managements of Great Southern and BancGroup, for the
calendar years 1997, 1998, 1999, 2000, 2001 and the range of projected net cost
savings, revenue enhancements and synergy benefits provided to ABN AMRO Chicago
Corporation, ABN AMRO Chicago Corporation analyzed pro forma net income,
dividends, book value and tangible book value for the combined entity to the
stand-alone projections for Great Southern. This analysis assumed synergistic
after-tax cost savings for the calendar years 1997, 1998, 1999, 2000, 2001 and
transaction expenses, which are assumed to be incurred in 1997, in accordance
with the range of projections provided to ABN AMRO Chicago Corporation.
The accretion/dilution analysis showed, among other things, that the Merger
would result in a projected earnings accretion of 14.9%, 12.2%, 11.8% 12.9% and
14.0%, in 1997, 1998, 1999, 2000, 2001, respectively, for holders of Great
Southern Common Stock as well as accretion to dividends ranging from 168.4% to
264.0% in the same period. The analysis also showed that the Merger would result
in dilution to Great Southern book value ranging from 21.0% to 25.1%, and
dilution to the tangible book value ranging from 23.6% to 31.2%.
Discounted Cash Flow Analysis. ABN AMRO Chicago Corporation performed
discounted cash flow analyses with regard to Great Southern on a stand-alone
basis using the earnings projections for Great Southern. ABN AMRO Chicago
Corporation utilized a discount rate of 15.0% as well as a range of terminal
multiples applied to 2001 projected earnings per share of $1.40. The discount
rate was selected by ABN AMRO Chicago Corporation as a reasonable estimate of
the cost of capital to Great Southern. The selected terminal rates reflect the
range of price-to-earnings multiples paid in similar merger transactions. The
analyses resulted in ranges of present values between $10.62 and $13.64 per
share on a stand-alone basis.
Other Analyses. ABN AMRO Chicago Corporation also reviewed certain other
information regarding selected pro forma industry rankings, the institutional
and inside ownership of Great Southern Common Stock and BancGroup Common Stock
and the historical performance, trading volume and/or other relevant market
information of Great Southern Common Stock and BancGroup Common Stock.
No other company used as a comparison in the above analyses is identical to
Great Southern, BancGroup or the combined entity; and no other transaction is
identical to the Merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial market and operating
characteristics of the companies and other factors that could affect the public
trading volume of the companies to which Great Southern, BancGroup and the
combined entity are being compared.
For its financial advisory services provided to Great Southern, upon
closing of the Merger, ABN AMRO Chicago Corporation will be paid the following
fees: $30,000 for the issuance of each written fairness opinion and a fee at the
closing of the Merger equal to 0.875% of the total consideration in the Merger,
less fees paid
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previously for the issuance of the written fairness opinions. In addition, Great
Southern has agreed to reimburse ABN AMRO Chicago Corporation for all reasonable
out-of-pocket expenses, not to exceed $5,000, incurred by it on Great Southern's
behalf, as well as indemnify ABN AMRO Chicago Corporation against certain
liabilities, including any which may arise under the federal securities laws.
ABN AMRO Chicago Corporation is a member of all principal securities
exchanges in the United States; and in its conduct of its broker-dealer
activities may have from time to time purchased securities from, and sold
securities to, Great Southern and/or BancGroup. As a market maker, ABN AMRO
Chicago Corporation may have also purchased and sold the securities of Great
Southern and/or BancGroup for ABN AMRO Chicago Corporation's own account and for
the accounts of its customers. Two affiliates of ABN AMRO Chicago Corporation
manage limited partnerships which invest in publicly traded securities of
banking institutions. Additionally, ABN AMRO Chicago Corporation manages two
group trusts which invest in publicly traded securities of banking institutions.
However, together, these investment pools, known as The Banc Funds, have not
reported ownership of shares in either Great Southern Common Stock or shares of
BancGroup Common Stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF GREAT SOUTHERN
The Board of Directors of Great Southern has determined that the Merger is
in the best interests of Great Southern and its shareholders. THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF GREAT SOUTHERN 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 state of Florida. BancGroup currently operates a commercial bank in the
Orlando, Ormond Beach and the Miami Beach areas, with acquisitions pending in
the Tampa and Winter Haven areas. The Board of Directors of BancGroup believes
that the combination with Great Southern 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
Great Southern, including its strong capital and good asset quality; (ii)
similarities in the philosophies of BancGroup and Great Southern, including
Great Southern's commitment to delivering high quality personalized financial
services to its customers; and (iii) Great Southern's management's knowledge of
and experience in the West Palm Beach, Florida market.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain executive officers of the Bank hold Great Southern Options which
entitle them to purchase, in the aggregate, up to 116,575 shares of Great
Southern Common Stock. Under the terms of the Agreement, any Great Southern
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 Great Southern Common Stock" and
"Treatment of Great Southern Options."
The Agreement provides that it is a condition to BancGroup's obligation to
close the Merger that C. Robert Stock, J. Russell Greene, Sally L. Teel and
Gerald F. Martens, each an executive officer of Great Southern and the Bank,
enter into new employment agreements with Colonial Bank, which will provide for
(i) terms of one year, (ii) annual salaries for Messrs. Stock, Greene and
Martens, and for Ms. Teel of $130,400, $113,400, $100,000 and $103,200,
respectively, which represent their current salaries and (iii) non-competition
agreements to run concurrently with each one year term. The current employment
agreements between such persons and Great Southern will be terminated and
Messrs. Stock, Greene and Martens and Ms. Teel will receive lump-sum payments at
the Effective Date of $391,200, $283,500, $100,000 and $103,200, respectively,
pursuant to such agreements.
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On the Effective Date and subject to the agreements described above, all
employees of Great Southern (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. All employees of Great Southern
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.
Under the Agreement, BancGroup has agreed to indemnify the directors and
executive officers of Great Southern against certain claims and liabilities
arising out of or pertaining to matters existing or occurring at or prior to the
Effective Date, to the extent that Great Southern would have been permitted
under Florida law, or under its Articles of Incorporation or Bylaws, to
indemnify such persons.
Except as described above, none of the directors or executive officers of
Great Southern, 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 Great Southern Common Stock.
CONVERSION OF GREAT SOUTHERN COMMON STOCK
On the Effective Date, each share of Great Southern Common Stock
outstanding and held by Great Southern's shareholders (except shares as to which
dissenters' rights are perfected) shall be converted by operation of law and
without any action by any holder thereof into shares of BancGroup Common Stock.
The number of shares, or fractions of a share of BancGroup Common Stock into
which each outstanding share of Great Southern Common Stock on the Effective
Date shall be converted, shall be equal to $13.05 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 consecutive trading days ending on the trading day
five calendar days immediately preceding the Effective Date, provided that the
Market Value shall not be less than $19.88 nor more than $26.88, 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 1,044,292 (based
upon a minimum Market Value of $19.88) and the minimum number of shares of
BancGroup Common Stock to be issued in the Merger shall be 772,341 (based upon a
maximum Market Value of $26.88), based upon the 1,590,845 shares of Great
Southern Common Stock outstanding as of the March 6, 1997 date of the Agreement.
To the extent that as of the Effective Date the number of shares of Great
Southern Common Stock outstanding has increased as a result of the exercise of
employee stock options for Great Southern Common Stock after March 6, 1997, the
number of shares of BancGroup Common Stock to be issued in the Merger will
increase with each share of Great Southern Common Stock outstanding at the
Effective Date exchanged for a number of shares of BancGroup Common Stock equal
to $13.05 divided by the Market Value, and the minimum and maximum number of
shares of BancGroup Common Stock will also be adjusted to take into account
increases in the number of shares of Great Southern Common Stock outstanding in
excess of 1,590,845 shares as a result of such exercises.
No fractional shares of BancGroup Common Stock will be issued in the
Merger. Each shareholder of Great Southern having a fractional interest arising
upon the conversion of Great Southern Common Stock into BancGroup Common Stock
will, at the time of surrender of the certificates representing Great Southern
Common Stock, be paid by BancGroup an amount of cash equal to such fractional
interest multiplied by the Market Value.
As an example, if the Market Value is $23.075 (which was the Market Value
calculated as of March 24, 1997), then each share of Great Southern Common Stock
will be converted on the Effective Date into .5655 of a share of BancGroup
Common Stock (i.e., $13.05 divided by $23.075). As a result, a shareholder of
Great Southern who owns 500 shares of Great Southern Common Stock would receive
282 shares of BancGroup Common Stock ($13.05 / $23.075 multiplied by 500) with
the .75 of a share paid in cash equal to $17.31 (.75 X $23.075).
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
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shares to be issued will increase, subject to the minimum and maximum amounts to
be issued, as described above. The closing sales price on the NYSE of the
BancGroup Common Stock on April 14, 1997 was $22 7/8 per share.
Shareholders are advised to obtain current market quotations for BancGroup
Common Stock. The market price of BancGroup Common Stock at the Effective Date,
or on the date on which certificates representing such shares are received by
Great Southern shareholders, may be higher or lower than the market price of
BancGroup Common Stock as of the Record Date or at the time of the Special
Meeting.
The Agreement provides that if, prior to the Effective Date, BancGroup
Common Stock shall be changed into a different number of shares or a different
class of shares by reason of any recapitalization or reclassification, stock
dividend, combination, stock split, or reverse stock split of the BancGroup
Common Stock, an appropriate and proportionate adjustment shall be made in the
number of shares of BancGroup Common Stock into which the Great Southern Common
Stock shall be converted in the Merger.
For a description of the assumption of Great Southern Options, see
"Treatment of Great Southern Options."
SURRENDER OF GREAT SOUTHERN COMMON STOCK CERTIFICATES
Upon the Effective Date and subject to the conditions described at
"Conditions to Consummation of the Merger," Great Southern's shareholders
(except to the extent that such holders perfect dissenters' rights under
applicable law) 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 Great
Southern Common Stock shall represent shares of BancGroup Common Stock.
Thereafter, upon surrender of the certificates formerly representing shares of
Great Southern 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 Great Southern unless and until such
shareholder surrenders for cancellation his certificate for Great Southern
Common Stock. SunTrust Bank, Atlanta, Atlanta, Georgia, transfer agent for
BancGroup Common Stock, will act as the Exchange Agent with respect to the
shares of Great Southern Common Stock surrendered in connection with the Merger.
A detailed explanation of these arrangements will be mailed to Great
Southern 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 Great Southern to consummate the Merger
is conditioned on the receipt by Great Southern of an opinion from Coopers &
Lybrand, L.L.P., which serves as BancGroup's independent public accountant, to
the effect that the Merger will constitute such a reorganization. The opinion
has been delivered to Great Southern. In delivering its opinion, Coopers &
Lybrand, L.L.P., has received and relied upon certain representations contained
in certificates of officers of BancGroup and Great Southern 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 Great Southern has no knowledge of any plan or intention on the
part of the Great Southern 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 Great Southern Common Stock outstanding immediately upon the Merger.
Neither Great Southern nor BancGroup intends to seek a ruling from the
Internal Revenue Service as to the federal income tax consequences of the
Merger. Great Southern's shareholders should be aware that the opinion will not
be binding on the Internal Revenue Service or the courts. Great Southern's
shareholders also
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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 Great Southern's shareholders who exchange their shares of Great Southern
Common Stock for shares of BancGroup Common Stock:
(i) No gain or loss will be recognized by Great Southern's
shareholders on the exchange of shares of Great Southern Common Stock for
shares of BancGroup Common Stock;
(ii) The aggregate basis of BancGroup Common Stock received by each
Great Southern shareholder (including any fractional shares of BancGroup
Common Stock deemed received, but not actually received), will be the same
as the aggregate tax basis of the shares of Great Southern Common Stock
surrendered in exchange therefor;
(iii) The holding period of the shares of BancGroup Common Stock
received by each Great Southern shareholder will include the period during
which the shares of Great Southern Common Stock exchanged therefor were
held, provided that the shares of Great Southern Common Stock were a
capital asset in the holder's hands as of the Effective Date;
(iv) Cash payments received by each Great Southern 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 Great Southern Common Stock is a capital asset in the hands
of the holder;
(vi) No gain or loss will be recognized by Great Southern upon the
transfer of its assets and liabilities to BancGroup. No gain or loss will
be recognized by BancGroup upon the receipt of the assets and liabilities
of Great Southern;
(vii) The basis of the assets of Great Southern acquired by BancGroup
will be the same as the basis of the assets in the hands of Great Southern
immediately prior to the Merger;
(viii) The holding period of the assets of Great Southern in the hands
of BancGroup will include the period during which such assets were held by
Great Southern; and
(ix) A Great Southern shareholder who dissents and receives only cash
pursuant to dissenters rights will recognize gain or loss. Such gain or
loss will, in general, be treated as capital gain or loss, measured by the
difference between the amount of cash received and the tax basis of the
shares of Great Southern Common Stock converted, if the shares of Great
Southern Common Stock were held as capital assets. However, a Great
Southern shareholder who receives only cash may need to consider the
effects of Section 302 and 318 of the Code in determining the federal
income tax consequences of the transaction.
Each Great Southern 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 FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF ALL MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO THE SHAREHOLDERS OF GREAT
SOUTHERN TO GREAT SOUTHERN AND TO BANCGROUP 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
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PERSONS, STOCKHOLDERS WHO DO NOT HOLD THEIR SHARES OF GREAT SOUTHERN COMMON
STOCK AS "CAPITAL ASSETS" WITHIN THE MEANING OF SECTION 1221 OF THE CODE, AND
SHAREHOLDERS WHO ACQUIRED THEIR SHARES OF GREAT SOUTHERN 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 GREAT SOUTHERN 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. GREAT SOUTHERN SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE PARTICULAR FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE MERGER TO THEM.
OTHER POSSIBLE CONSEQUENCES
If the Merger is consummated, the shareholders of Great Southern, 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 Great Southern 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 Great Southern 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 Great Southern
Common Stock; (ii) the notification to or approval of the Merger by the Federal
Reserve and approval of the Bank Merger by the Alabama 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 December 31, 1997; and (vi) receipt of opinions of counsel regarding
certain matters.
The obligation of Great Southern 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 Great Southern; (ii) the holders of not
more than 10% of the outstanding shares of Great Southern Common Stock shall
have exercised dissenters' rights with respect to their shares; (iii) the
receipt of a letter from Coopers & Lybrand L.L.P. concurring with the
conclusions of BancGroup's and Great Southern's management that no conditions
exist with respect to each company which would preclude accounting for the
Merger as a pooling of interests; (iv) the accuracy in all material respects of
the representations and warranties of Great Southern contained in the Agreement,
and the performance by Great Southern of all of its covenants and agreements
under the Agreement; and (v) the receipt by BancGroup of certain undertakings
from holders of Great Southern
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Common Stock who may be deemed to be "affiliates" of Great Southern 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 Great Southern 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 Great Southern
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 Great Southern 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 Great Southern may agree to amend
or terminate the Agreement before or after approval by the shareholders of Great
Southern. However, the Board of Directors of Great Southern may not amend the
Agreement in a manner which would alter the Merger Consideration or which, in
the opinion of the Board of Directors of Great Southern, would adversely affect
the rights of the shareholders of Great Southern, unless such amendments are
approved by a majority of the outstanding shares of Great Southern Common Stock.
Such amendments may require the filing of an amendment of the Registration
Statement, of which this Prospectus forms a part, with the Commission. See
"Conditions to Consummation of the Merger."
REGULATORY APPROVALS
Prior to the Merger, a 10-day prior notification to the Federal Reserve
will be provided pursuant to Section 3 of the BHCA and the regulations
promulgated pursuant thereto. It is contemplated that the Merger will occur
simultaneously with the Bank Merger. The approval of the Federal Reserve and the
Alabama Department must be obtained prior to consummation of the Bank Merger.
Applications were filed with the Federal Reserve and the Alabama Department on
or about April 21, 1997. The regulatory approval process is expected to take
approximately two months from that date.
Federal Reserve Notification. Under limited circumstances, approval of the
Merger by the Federal Reserve under Section 3 of the BHCA is not required. More
specifically, the Merger would not require Federal Reserve approval if: (1) the
Bank is merged into a BancGroup bank subsidiary simultaneously with the Merger;
(2) the Bank's merger into a BancGroup bank subsidiary requires the prior
approval of a federal supervisory agency under the Bank Merger Act; (3) the
transaction does not involve an acquisition subject to Section 4 of the BHCA;
(4) both before and after the transaction, BancGroup meets the Federal Reserve's
capital adequacy guidelines; and (5) BancGroup provides written notice of the
transaction to the Federal Reserve at least ten days prior to the transaction,
and during that period, the Federal Reserve does not require an application
under Section 3 of the BHCA. It is anticipated that BancGroup will satisfy the
foregoing requirements, and, absent Federal Reserve action pursuant to item (5)
above, an application with the Federal Reserve pursuant to Section 3 of the BHCA
will not be required.
In the event the Federal Reserve requires an application pursuant to
Section 3 of the BHCA, approval of the Federal Reserve would be required prior
to the Merger. Pursuant to Section 3 of the BHCA, and the regulations
promulgated pursuant thereto, the Federal Reserve must withhold approval of the
Merger if it finds that the transaction will result in a monopoly or be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States. In
addition, the Federal Reserve may not approve the Merger if it finds that the
effect thereof may be substantially to lessen competition in any section of the
country, or tend to create a monopoly, or would in any other manner be in
restraint of trade, unless it finds that the anti-competitive effects of the
Merger are clearly outweighed by the probable effect of the Merger in meeting
the convenience and needs of the communities to be served. The Federal Reserve
will also take into consideration the financial condition and managerial
resources of
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BancGroup, its subsidiaries, any banks related to BancGroup through common
ownership or management, and the Bank. Finally, the Federal Reserve will
consider the compliance records of BancGroup's subsidiaries under the Community
Reinvestment Act.
The BHCA provides for the publication of notice and public comment on the
application and authorizes the Federal Reserve to permit interested parties to
intervene in the proceedings. If an interested party is permitted to intervene,
such intervention could delay the regulatory approvals required for consummation
of the Merger. Section 11 of the BHCA imposes a waiting period which prohibits
the consummation of the Merger, in ordinary circumstances, for a period ranging
from 15-30 days following the Federal Reserve's approval of the Merger. During
such period, the United States Department of Justice, should it object to the
Merger for antitrust reasons, may challenge the consummation of the Merger.
Alabama State Banking Department Approval. The Bank Merger must be
approved by the Alabama Department pursuant to applicable provisions of the
Alabama Banking Code. If the Superintendent of the Alabama Department finds that
(1) the proposed transaction will not be detrimental to the safety and soundness
of the bank resulting from the Bank Merger, (2) any new officers and directors
of the resulting bank are qualified by character, experience, and financial
responsibility to direct and manage the resulting bank, and (3) the proposed
Bank Merger is consistent with the convenience and needs of the communities to
be served by the resulting bank in the State of Alabama and is otherwise in the
public interest, the Bank Merger will be approved by the Superintendent.
Federal Reserve Approval. On March 14, 1997, Colonial Bank, a
state-chartered non-member bank, the primary federal regulator of which is
currently the Federal Deposit Insurance Corporation, filed an application for
membership in the Federal Reserve. Subject to Federal Reserve approval of the
pending membership application, it is anticipated that Colonial Bank will become
a member of the Federal Reserve on or about June 1, 1997. As the primary federal
regulator of state-chartered banks that are members of the Federal Reserve, the
Federal Reserve will become the primary federal regulator of Colonial Bank upon
its admission to membership in the Federal Reserve. In that the Bank Merger Act
requires that a bank merger be approved by the primary federal regulator of the
resulting bank, and in that Colonial Bank will be the bank resulting from the
Bank Merger, the Federal Reserve's approval of the Bank Merger must be obtained.
A delay in the receipt of the Federal Reserve's approval of the membership
application or the Federal Reserve's disapproval of such application could
significantly impact the timing of the Bank Merger.
The Federal Reserve 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 Federal Reserve is prohibited
from approving the Bank Merger if its effect, in any section of the country,
would be substantially to lessen competition, or to tend to create a monopoly,
or which in any other manner would be in restraint of trade, unless it finds
that the anti-competitive effects of the Bank Merger are clearly outweighed in
the public interest by the probable effect of the Bank Merger in meeting the
convenience and needs of the community to be served. The Federal Reserve 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.
In that the Bank Merger constitutes an interstate bank merger, certain
additional requirements are applicable to the Bank Merger. For example, subject
to certain exceptions, the Federal Reserve is prohibited from approving the Bank
Merger if Colonial Bank materially fails to comply with filing requirements
imposed by the Florida Department of Banking and Finance for interstate bank
merger transactions. In addition, the Federal Reserve is prohibited from
approving the Bank Merger if the bank resulting from the Bank Merger, including
all insured depository institutions which are affiliates of such resulting bank,
upon consummation of the transaction, would control more than 10% of the total
amount of deposits of insured depository institutions in the United States. The
Federal Reserve is also prohibited from approving the Bank Merger if either
party to the Bank Merger has a branch in any state in which any other bank
involved in the Bank Merger has a branch, and the resulting bank, upon
consummation of the Bank Merger, would control 30% or more of the total amount
of deposits of insured depository institutions in any such state. Finally, the
Federal Reserve may
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approve the interstate bank merger only if each bank involved in the transaction
is adequately capitalized as of the date the application is filed, and the
Federal Reserve determines that the resulting bank will continue to be
adequately capitalized and adequately managed upon consummation of the Bank
Merger.
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 Federal Reserve'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 Great
Southern to consummate the Merger is conditioned upon the receipt of all
necessary regulatory approvals, and the absence in such approvals of any
condition or restriction which in the reasonable good faith judgment of the
Board of Directors of BancGroup or Great Southern would so materially adversely
impact the economic benefits of the transaction as contemplated by the Agreement
so as to render inadvisable the Merger. There can be no assurance that the
applications necessary for BancGroup to consummate the Merger with Great
Southern will be approved, 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.
Any approval received from the banking agencies reflects only their view
that the Merger does not contravene applicable competitive standards imposed by
law, and that the Merger is consistent with regulatory policies relating to
safety and soundness. THE APPROVAL OF THE BANKING AGENCIES IS NOT AN ENDORSEMENT
OR RECOMMENDATION OF THE MERGER.
BancGroup is not aware of any other governmental approvals or actions that
may be required for consummation of the Merger except for the Federal Reserve
and the Alabama Department approvals, described above. Should any such approval
or action be required, it is presently contemplated that such approval or action
would be sought.
CONDUCT OF BUSINESS PENDING THE MERGER
The Agreement contains certain restrictions on the conduct of the business
of Great Southern pending consummation of the Merger. The Agreement prohibits
Great Southern 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 Great Southern Common Stock issued
upon the exercise of Great Southern 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;
(iv) Declaring or making or agreeing to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
shareholders, or purchasing or redeeming or agreeing to purchase or redeem,
any of its outstanding securities, except that Great Southern may pay a
cash dividend to its shareholders for the first and second quarters of
1997. Each of those dividends shall be equal to $Dividend X .5582 where
"$Dividend" equals the per share cash dividend paid by BancGroup for the
quarter in question;
(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;
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<PAGE> 35
(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 Great Southern 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 Great Southern or its subsidiaries.
The Agreement also provides that (i) Great Southern will consult with
BancGroup respecting loan requests in excess of $250,000 that are not
single-family residential loan requests and respecting other loan requests
outside the normal course of business, and (ii) Great Southern will consult with
BancGroup respecting business issues that Great Southern believes should be
brought to the attention of BancGroup.
COMMITMENTS WITH RESPECT TO OTHER OFFERS
Until the termination of the Agreement, and except for the Merger, neither
Great Southern 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,
Great Southern or any business combination involving Great Southern
(collectively, an "Acquisition Proposal") other than as contemplated by the
Agreement. Great Southern will notify BancGroup immediately if any such
inquiries or proposals are received by Great Southern, if any such information
is requested from Great Southern, or if any such negotiations or discussions are
sought to be initiated with Great Southern. Great Southern shall instruct its
officers, directors, agents or affiliates or their subsidiaries to refrain from
doing any of the above. Great Southern may communicate information about an
Acquisition Proposal to its shareholders if and to the extent that legal counsel
provides a written opinion to Great Southern (a copy of which shall be provided
in advance to BancGroup) that it is required to do so in order to comply with
its legal obligations.
If (i) an Acquisition Proposal is submitted to and approved by the
shareholders of Great Southern at any time prior to the Effective Date; or (ii)
an Acquisition Proposal is received by Great Southern or is made directly to the
shareholders of Great Southern at any time prior to the termination of the
Agreement (except for a termination by Great Southern for a breach of the
Agreement by BancGroup) and, in the case of (i) or (ii), such Acquisition
Proposal is closed, then Great Southern shall pay to BancGroup a termination fee
in an amount equal to 10% of the shareholders' equity of Great Southern as of
the end of the month preceding such
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<PAGE> 36
payment, as liquidated damages, and not as a penalty, and, upon the payment in
full thereof, the Agreement shall be terminated and no party to the Agreement
shall have any further liability under the Agreement.
INDEMNIFICATION
BancGroup has agreed to indemnify present and former directors and officers
of Great Southern 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 Great Southern's Articles of
Incorporation and Bylaws.
RIGHTS OF DISSENTING SHAREHOLDERS
Holders of Great Southern Common Stock as of the Record Date are entitled
to dissenters' rights of appraisal under Florida law. Consummation of the Merger
is subject to, among other things, the holders of no more than 10% of the
outstanding Great Southern Common Stock electing to exercise their dissenters'
rights. Pursuant to Section 607.1320 of the FBCA, a Great Southern 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 Great Southern shareholders. Such fair value is exclusive of any
appreciation or depreciation in anticipation of the Merger, unless exclusion
would be inequitable.
In order to exercise appraisal rights, a dissenting shareholder of Great
Southern (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 Great Southern are urged to read such Sections in their entirety and to
consult with their legal advisors. Each shareholder of Great Southern 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
will cause a forfeiture of any appraisal rights. The following summary of
Florida law is qualified in its entirety by reference to the full text of the
provisions of the FBCA attached hereto as Appendix C.
To exercise appraisal rights,
1. A Dissenting Shareholder must file with Great Southern, 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, Great Southern
must give written notice of the authorization of the Merger, if obtained,
to each Great Southern shareholder who filed notice of intent to demand
payment for his shares. WITHIN TWENTY DAYS AFTER THE GIVING OF THE
FOREGOING NOTICE BY GREAT SOUTHERN, EACH DISSENTING SHAREHOLDER MUST FILE
WITH GREAT SOUTHERN A NOTICE OF ELECTION TO DISSENT, STATING HIS OR HER
NAME AND ADDRESS, THE NUMBER OF SHARES AS TO WHICH HE OR SHE DISSENTS AND
A DEMAND FOR PAYMENT OF THE FAIR VALUE OF HIS OR HER 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
AGREEMENT. A Dissenting Shareholder filing an election to dissent must
also deposit the certificate(s) representing his or her shares with Great
Southern 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 Great Southern 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.
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<PAGE> 37
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), Great
Southern (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 Great Southern to be the fair
value thereof.
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 Great Southern (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 Great Southern, 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 Palm Beach County requesting that the fair
value of such shares be determined by the Court.
7. If Great Southern fails to institute such proceeding within the
above-prescribed period, any Dissenting Shareholder may do so in the name
of Great Southern. A copy of the initial pleading will be served on each
Dissenting Shareholder. Great Southern is required to pay each Dissenting
Shareholder the amount found to be due within ten days after final
determination of the proceedings. The judgment of the court is payable
only upon and concurrently with the surrender to Great Southern of the
certificate(s) representing the shares. Upon payment of the judgment, the
Dissenting Shareholder ceases to have any interest in such shares.
8. The costs and expenses of the court proceeding are determined by the
court and will be assessed against Great Southern (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 Great Southern 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 Great Southern 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.
The foregoing discussion is only a summary of the provisions of Florida law
and does not purport to be complete and is qualified in its entirety by
reference to the provisions of Florida law, which are attached hereto as
Appendix C. Successful assertion by Great Southern shareholders of their
dissenters' appraisal rights is dependent upon compliance with the requirements
described above. Non-compliance with any provision will 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
DISSENTERS' APPRAISAL RIGHTS, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM
THE MERGER ARE URGED TO CONSULT THEIR OWN LEGAL ADVISERS.
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 Great Southern Options) has been
registered under the Securities Act of 1933 (the "Securities Act"). As a result,
shareholders of Great Southern who are not "affiliates" of Great Southern (as
such term is defined under the Securities Act) may resell, without restriction,
all shares of BancGroup
30
<PAGE> 38
Common Stock which they receive in connection with the Merger. Under the
Securities Act, affiliates of Great Southern 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 Great Southern 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 or certain other
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
the NYSE during the four calendar weeks preceding such sale. Sales under Rule
144 are also subject to the availability of current public information about
BancGroup. The restrictions on sales will cease to apply under most
circumstances once the former Great Southern affiliate has held the BancGroup
Common Stock for at least one year. BancGroup Common Stock held by affiliates of
Great Southern who become affiliates of BancGroup, if any, will be subject to
additional restrictions on the ability of such persons to resell such shares.
Great Southern 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 Great Southern. Great Southern 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 Great Southern 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 Great Southern
Common Stock. Under this accounting treatment, assets and liabilities of Great
Southern 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 may be restated to reflect the consolidated
operations of BancGroup and Great Southern 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
Great Southern Common Stock will be reported on the NYSE.
TREATMENT OF GREAT SOUTHERN OPTIONS
ASSUMPTION OF OPTIONS. As of the date of this Prospectus, Great Southern
had granted options (the "Great Southern Options"), which entitle the holders
thereof to acquire up to 140,775 shares of Great Southern Common Stock. On the
Effective Date, BancGroup will assume all Great Southern Options outstanding,
and each such option will represent the right to acquire BancGroup Common Stock
on substantially the same terms applicable to the Great Southern Options. The
registration statement registering the shares of BancGroup Common Stock issued
pursuant to the Merger also registers the shares of
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<PAGE> 39
BancGroup Common Stock to be issued upon the exercise of the Great Southern
Options assumed by BancGroup. The number of shares of BancGroup Common Stock to
be issued pursuant to such options will equal the number of shares of Great
Southern Common Stock subject to such Great Southern Options multiplied by the
Exchange Ratio, provided that no fraction of shares of BancGroup Common Stock
will be issued and the number of shares of BancGroup Common Stock to be issued
upon the exercise of Great Southern Options, if a fractional share exists, will
equal the number of whole shares obtained by rounding to the nearest whole
number, giving account to such fraction, or else such fractional interest shall
be paid in cash. The exercise price for the acquisition of BancGroup Common
Stock will be the exercise price for each share of Great Southern 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" means the result obtained by dividing $13.05 by the Market
Value.
The Great Southern Options are issuable pursuant to the Great Southern Bank
Executive Incentive Stock Option Plan (the "Option Plan").
The Option Plan is not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, nor is it subject to the Employee Retirement
Income Security Act of 1974. Great Southern Options are not transferrable except
under the laws of descent and distribution.
PURPOSE OF THE OPTION PLAN. The purpose of the Option Plan is to advance
the interests of Great Southern and the Bank by affording to key management
employees and officers an opportunity to acquire or increase their propriety
interest in Great Southern and, thus, to motivate, retain and attract highly
competent individuals for the benefit of Great Southern. BancGroup believes that
its assumption of the Great Southern Options will be consistent with this
purpose. No further options will be granted under the Option Plan after the
Merger. A total of nine persons currently hold Great Southern Options.
TAX CONSEQUENCES -- INCENTIVE OPTIONS. Options issued under the Option
Plan are intended 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 any securities law restrictions
that may apply to the sale of shares obtained through an option.
The foregoing statements concerning federal income tax treatment are
necessarily general and may not apply in a particular instance. 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
Great Southern Options granted under the Option Plan shall be made available,
after the Merger, from the authorized but unissued shares of BancGroup's Common
Stock.
The Option Plan is to be administered, after the Merger, by the Personnel
and Compensation Committee (the "Committee") of the Board of Directors of
BancGroup. All members of the Committee are directors of
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<PAGE> 40
BancGroup. The Chairman of the Committee, John C. H. Miller, Jr., receives
employee-related compensation from BancGroup and holds options under BancGroup's
stock option plans. Mr. Miller is a member of a law firm that performs legal
services for BancGroup. See "LEGAL OPINIONS." Another member of the Committee,
Jack H. Rainer, is Chairman of Bankers Credit Life Insurance Company, which
provides credit life insurance on certain loans made by Colonial Bank,
BancGroup's Alabama bank subsidiary. The members of the Committee serve at the
pleasure of the Board of Directors of BancGroup. The Committee shall interpret
the Option Plan and resolve questions presented by holders of options under the
Option Plan. Requests for information or questions about the Option Plan should
be directed to BancGroup's Corporate Secretary, at the offices of BancGroup,
Post Office Box 1108, One Commerce Street, Montgomery, Alabama 36102, telephone:
(334) 240-5000.
EXERCISE OF OPTIONS. After a Great Southern 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,
by delivering BancGroup stock already owned by the option holder. The period
during which an option may be exercised is stated in the agreement respecting
each grant of options but in no case may be more than 10 years from the date the
option is granted. The optionee must be in the continuous employ of Great
Southern or BancGroup from the date of grant through the date of exercise,
except as stated below.
TERMINATION OF EMPLOYMENT. If an employee is terminated for cause, or if
an employee voluntarily terminates employment other than by retirement, the
option will also terminate as of the date of termination of employment. "Cause"
is defined in the Option Plan as the negligent or willful failure of an optionee
to perform his or her duties in a manner consistent with the best interests of
Great Southern or its subsidiaries and in accordance with the directives of
management. If an employee's employment is terminated without cause, the holder
of the option has 30 days following such termination to exercise such option. In
the case of permanent and total disability, the optionee has the right at any
time during the period ending one year from the date of termination of
employment as a result of such disability to exercise the option.
AMENDMENT AND OTHER MATTERS. BancGroup's Board of Directors may at any
time amend the Option Plan, except that no amendment may make any change in any
option already granted which would adversely affect the rights of any
participant.
It is not anticipated that BancGroup will make any reports to option
holders regarding the amount or status of Great Southern Options held. Option
holders may obtain such information from BancGroup at the address given above.
The shares subject to options will be obtained by BancGroup from authorized
but unissued shares. BancGroup has reserved sufficient authorized but unissued
shares for issuance pursuant to options under the Option Plan and does not
anticipate acquiring any shares in the open market for such purposes.
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(1)
--------------- DIVIDENDS(1)
HIGH LOW (PER SHARE)
----- ---- ------------
<S> <C> <C> <C>
1995
1st Quarter............................................... $11 13/16 $ 9 3/4 $0.1125
2nd Quarter............................................... 13 5/8 11 9/16 0.1125
3rd Quarter............................................... 14 15/16 13 3/4 0.1125
4th Quarter............................................... 16 7/16 14 1/4 0.1125
1996
1st Quarter............................................... 18 1/4 15 0.135
2nd Quarter............................................... 18 1/6 15 5/8 0.135
3rd Quarter............................................... 17 15/16 15 5/8 0.135
4th Quarter............................................... 20 1/8 17 3/8 0.135
1997
1st Quarter............................................... 24 18 2/3 0.15
2nd Quarter (through April 14, 1997)...................... 23 1/4 22 5/8 0.15
</TABLE>
- ---------------
(1) Price and dividends have been restated to reflect the impact of a
two-for-one stock split effected in the form of a 100% stock dividend paid
February 11, 1997.
On February 19, 1997, 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 $23 3/8 per share.
At December 31, 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.
GREAT SOUTHERN
There is no established public trading market for the Great Southern Common
Stock. The shares of Great Southern Common Stock are not actively traded, and
such trading activity, as it occurs, takes place in privately negotiated
transactions. Management of Great Southern is aware of certain transactions in
shares of Great Southern that have occurred since January 1, 1995, although the
trading prices of all stock transactions are not known. The following sets forth
the trading prices for the shares of Great Southern Common Stock
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<PAGE> 42
that have occurred since January 1, 1995 for transactions in which the trading
prices are known to management of Great Southern:
<TABLE>
<CAPTION>
PRICE PER SHARE OF
COMMON STOCK(1)
------------------ DIVIDENDS
HIGH LOW PER SHARE
------ ------ ---------
<S> <C> <C> <C>
1995
First Quarter............................................. $4.78 $4.78 --
Second Quarter............................................ 5.00 5.00 --
Third Quarter............................................. 5.00 5.00 --
Fourth Quarter............................................ -- -- --
1996
First Quarter............................................. -- -- --
Second Quarter............................................ 6.50 6.00 $.10
Third Quarter............................................. -- -- --
Fourth Quarter............................................ 7.00 7.00 --
1997
First Quarter............................................. 8.00 8.00 --
2nd Quarter (through , 1997).................. -- -- --
</TABLE>
- ---------------
(1) Restated to reflect the effect of the exchange on January 1, 1996 of two
shares of Great Southern Common Stock for each share of Bank common stock as
a result of the reorganization of the Bank into a holding company structure.
The Agreement limits Great Southern's ability to pay dividends prior to the
Effective Date to two dividend payments that are comparable to dividends paid by
BancGroup. See "THE MERGER -- Conduct of Business Pending the Merger."
BANCGROUP CAPITAL STOCK AND DEBENTURES
BancGroup's authorized capital stock consists of 100,000,000 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 March 1, 1997, there were
issued and outstanding a total of 38,955,210 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 $7,187,000 were outstanding
as of December 31, 1996 and convertible at any time into 512,800 shares of
BancGroup Common Stock, subject to adjustment. There are 1,605,010 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. On January 20, 1997, BancGroup issued, through a
special purpose trust, $70 million of Trust Preferred Securities. 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.
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Voting Rights. Each holder of BancGroup Common Stock has one vote for each
share held on matters presented for consideration by the stockholders.
Preemptive Rights. The holders of BancGroup Common Stock have no
preemptive rights to acquire any additional shares of BancGroup.
Issuance of Stock. The BancGroup Certificate authorizes the BancGroup
Board to issue authorized shares of BancGroup Common Stock without stockholder
approval. However, BancGroup's Common Stock is listed on the NYSE, which
requires stockholder approval of the issuance of additional shares of BancGroup
Common Stock under certain circumstances.
Liquidation Rights. In the event of liquidation, dissolution or winding-up
of BancGroup, whether voluntary or involuntary, the holders of BancGroup Common
Stock will be entitled to share ratably in any of its assets or funds that are
available for distribution to its stockholders after the satisfaction of its
liabilities (or after adequate provision is made therefor) and after preferences
of any outstanding Preference Stock.
PREFERENCE STOCK
BancGroup's Preference Stock may be issued from time to time as a class
without series, or if so determined by the BancGroup Board of Directors, either
in whole or in part in one or more series. The voting rights, and such
designations, preferences and relative, participating, optional or other special
rights, if any, and the qualifications, limitations or restrictions thereof, if
any, including, but not limited to, the dividend rights, conversion rights,
redemption rights and liquidation preferences, if any, of any wholly unissued
series of BancGroup Preference Stock (or of the entire class of BancGroup
Preference Stock if none of such shares has been issued), the number of shares
constituting any such series and the terms and conditions of the issue thereof
may be fixed by resolution of the BancGroup Board of Directors. BancGroup
Preference Stock may have a preference over the BancGroup Common Stock with
respect to the payment of dividends and the distribution of assets in the event
of the liquidation or winding-up of BancGroup and such other preferences as may
be fixed by the BancGroup Board.
1986 DEBENTURES
BancGroup issued in 1986 its 7 1/2% Convertible Subordinated Debentures due
2011 (the "1986 Debentures") in the total principal amount of $28,750,000. The
1986 Debentures were issued under a trust indenture (the "1986 Indenture")
between BancGroup and SunTrust Bank, Atlanta, Georgia, as trustee.
The 1986 Debentures will mature on March 31, 2011, and are convertible at
any time into shares of BancGroup Common Stock at the option of a holder
thereof, at the conversion price of $14 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 512,800 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.
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At December 31, 1996, BancGroup's Senior Indebtedness as defined in the
1986 Indenture aggregated approximately $870 million. Such debt includes all
short-term debt consisting of federal funds purchased, securities purchased
under repurchase agreements and borrowings with the Federal Home Loan Bank but
excludes all federally-insured deposits. BancGroup may from time to time incur
additional indebtedness constituting Senior Indebtedness. The 1986 Indenture
does not limit the amount of Senior Indebtedness which BancGroup may incur, nor
does such indenture prohibit BancGroup from creating liens on its property for
any purpose.
On January 29, 1997, BancGroup issued, through a special purpose trust, $70
million of Trust Preferred Securities in a private placement offering. The
securities bear interest at 8.92% and are mandatorily redeemable by BancGroup
beginning January 2017 through January 2027. Also, BancGroup has the option to
redeem the securities, in whole or in part, at a premium after January 2007
through January 2017, or at the face amount plus accrued interest after January
2017. The securities are subordinated to substantially all of BancGroup's
indebtedness. In BancGroup's consolidated statement of condition, these
securities will be shown as long-term debt.
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 22 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. As
of March 1, 1997, the
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Board of Directors of BancGroup owned approximately 10.95% of the outstanding
shares of BancGroup Common Stock.
Board Evaluation of Mergers. BancGroup's Certificate permits the Board of
Directors to consider certain factors such as the character and financial
stability of the other party, the projected social, legal, and economic effects
of a proposed transaction upon the employees, suppliers, regulatory agencies and
customers and communities of BancGroup, and other factors when considering
whether BancGroup should undertake a merger, sale of assets, or other similar
transaction with another party. This provision may not be amended except by the
affirmative vote of at least 80% of the outstanding shares of BancGroup Common
Stock. This provision may give greater latitude to the Board of Directors in
terms of the factors which the board may consider in recommending or rejecting a
merger or other Business Combination of BancGroup.
Director Authority. BancGroup's Certificate prohibits stockholders from
calling special stockholders' meetings and acting by written consent. It also
provides that only BancGroup's Board of Directors has the authority to undertake
certain actions with respect to governing BancGroup such as appointing
committees, electing officers, and establishing compensation of officers, and it
allows the Board to act by majority vote.
Bylaw Provisions. BancGroup's bylaws provide that stockholders wishing to
propose nominees for the Board of Directors or other business to be taken up at
an annual meeting of BancGroup stockholders must comply with certain advance
written notice provisions. These bylaw provisions are intended to provide for
the more orderly conduct of stockholder meetings but could make it more
difficult for stockholders to nominate directors or introduce business at
stockholder meetings.
Delaware Business Combination Statute. Subject to some exceptions,
Delaware law prohibits BancGroup from entering into certain "business
combinations" (as defined) involving persons beneficially owning 15% or more of
the outstanding BancGroup Common Stock (or who is an affiliate of BancGroup and
has over the past three years beneficially owned 15% or more of such stock)
(either, for the purpose of this paragraph, an "Interested Stockholder"), unless
the BancGroup Board has approved either (i) the business combination or (ii)
prior to the stock acquisition by which such person's beneficial ownership
interest reached 15% (a "Stock Acquisition"), the Stock Acquisition. The
prohibition lasts for three years from the date of the Stock Acquisition.
Notwithstanding the preceding, Delaware law allows BancGroup to enter into a
business combination with an Interested Stockholder if (i) the business
combination is approved by the BancGroup Board of Directors and authorized by an
affirmative vote of at least 66 2/3% of the outstanding voting stock of
BancGroup which is not owned by the Interested Stockholder or (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
Interested Stockholder, such stockholder owned at least 85% of the outstanding
stock of BancGroup (excluding BancGroup stock held by officers and directors of
BancGroup or by certain BancGroup stock plans). These provisions of Delaware law
apply simultaneously with the provisions of BancGroup's Certificate relating to
business combinations with a related person, described above at "Business
Combinations," but they are generally less restrictive than BancGroup's
Certificate.
Control Acquisitions. As it relates to BancGroup, the Change in Bank
Control Act of 1978 prohibits a person or group of persons from acquiring
"control" of a bank holding company unless the Federal Reserve has been given 60
days' prior written notice of such proposed acquisition and within that time
period the Federal Reserve has not issued a notice disapproving the proposed
acquisition or extending for up to another 30 days the period during which such
a disapproval may be issued. An acquisition may be made prior to the expiration
of the disapproval period if the Federal Reserve issues written notice of its
intent not to disapprove the action. Under a rebuttable presumption established
by the Federal Reserve, the acquisition of more than 10% of a class of voting
stock of a bank holding company with a class of securities registered under
Section 12 of the Exchange Act, such as BancGroup, would, under the
circumstances set forth in the presumption, constitute the acquisition of
control. The receipt of revocable proxies, provided the proxies terminate within
a reasonable time after the meeting to which they relate, is not included in
determining percentages for change in control purposes.
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COMPARATIVE RIGHTS OF STOCKHOLDERS
If the Merger is consummated, shareholders of Great Southern (except those
perfecting dissenters' rights) will become holders of BancGroup Common Stock.
The rights of the holders of the Great Southern 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 Great
Southern 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 Great Southern's Articles of Incorporation and
bylaws, the Delaware General Corporation Law (the "Delaware GCL") and the
Florida Business Corporation Act ("FBCA").
DIRECTOR ELECTIONS
Great Southern. Great Southern's directors are elected annually.
Shareholders may not cumulate votes in connection with such election (nor for
any other purpose).
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
Great Southern. Great Southern's bylaws provide for the removal of a
director, with or without cause, by the Great Southern shareholders.
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
Great Southern. Each holder of Great Southern Common Stock is entitled to
cast one vote for each share held on each issue with respect to which a
shareholder vote is authorized, but may not cumulate votes for the election of
directors or for any other purpose.
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
Great Southern. Holders of Great Southern Common Stock have no preemptive
rights to subscribe for additional shares on a pro rata or other basis when and
if shares are offered for sale by Great Southern.
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
Great Southern. Section 607.0831 of the FBCA provides that a director of
Great Southern will not be personally liable for monetary damages to Great
Southern 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
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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 Great Southern to procure judgment in its favor
or by or in the right of a shareholder, conscious disregard for the best
interests of Great Southern, or willful misconduct, or (5) in a proceeding by or
in the right of someone other than Great Southern 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 Great Southern 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 Great Southern 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 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
Great Southern. Under Section 607.0850 of the FBCA, the directors and
officers of Great Southern 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
Great Southern, 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 Great
Southern in a proceeding by or in the right of Great Southern to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
Great Southern's Bylaws require Great Southern 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.
Great Southern maintains a directors' and officers' insurance policy
pursuant to which officers and directors of Great Southern would be entitled to
indemnification against certain liabilities, including reimbursement of certain
expenses.
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
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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.
SPECIAL MEETINGS OF STOCKHOLDERS; ACTION WITHOUT A MEETING
Great Southern. Great Southern's bylaws authorize a special shareholder
meeting to be called by the board of directors, the chairman of the board or
Great Southern's president. Section 607.0702 of the FBCA separately authorizes
such a call by the holders of not less than ten percent of the total voting
power of all outstanding shares of voting stock.
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
Great Southern. 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
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of control of BancGroup. See "Antitakeover Statutes" for a description of
additional restrictions on business combination transactions.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
Great Southern. 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.
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
Great Southern. Holders of Great Southern 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
Great Southern. Great Southern's Articles of Incorporation do not
authorize the issuance of shares of capital stock other than common voting
shares.
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
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Preference Stock are issued and outstanding. See "BANCGROUP CAPITAL STOCK AND
DEBENTURES -- Preference Stock."
EFFECT OF THE MERGER ON GREAT SOUTHERN SHAREHOLDERS
As of , 1997, Great Southern had shareholders of
record and outstanding shares of common stock. As of March 1, 1997,
BancGroup had 38,955,210 shares of BancGroup Common Stock outstanding with 7,129
stockholders of record.
Assuming that no dissenters' rights of appraisal are exercised in the
Merger, no Great Southern Options are exercised prior to the Merger, and a
Market Value of BancGroup Common Stock of $23.075 on the Effective Date (which
was the Market Value calculated as of March 24, 1997), an aggregate amount of
899,698 shares of BancGroup Common Stock would be issued to the shareholders of
Great Southern pursuant to the Merger. These shares would represent
approximately 2% of the total shares of BancGroup Common Stock outstanding after
the Merger, not counting any shares of BancGroup Common Stock to be issued in
other pending acquisitions.
The issuance of the BancGroup Common Stock pursuant to the Merger will
reduce the percentage interest of the BancGroup Common Stock currently held by
each principal stockholder and each director and officer of BancGroup. Based
upon the foregoing assumptions, as a group, the directors and officers of
BancGroup who own approximately 10.98% of BancGroup's outstanding shares would
own approximately 10.7% after the Merger. See "BUSINESS OF BANCGROUP -- Voting
Securities and Principal Stockholders."
BancGroup has entered into agreements pursuant to which additional shares
of BancGroup Common Stock will be issued. See "BUSINESS OF BANCGROUP -- Proposed
Affiliate Banks."
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THE COLONIAL BANCGROUP INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENT OF CONDITION (UNAUDITED)
(IN THOUSANDS)
The following summary includes (i) the condensed consolidated statement of
condition of BancGroup and subsidiaries (as restated) as of December 31, 1996,
(ii) the combined presentation of the condensed consolidated statements of
condition of completed business combinations: Tomoka Bancorp, Inc. ("Tomoka"),
First Family Financial Corporation ("First Family"), and Shamrock Holding, Inc.
("Shamrock"), ("completed business combinations") as of December 31, 1996, (iii)
the condensed consolidated statement of condition of Great Southern Bancorp and
subsidiary ("Great Southern"), as of December 31, 1996, (iv) the combined
presentation of the condensed consolidated statements of condition of other
probable business combinations with BancGroup: Fort Brooke Bancorporation ("Fort
Brooke") and First Commerce Banks of Florida, Inc. ("First Commerce"), ("other
probable business combinations") as of December 31, 1996, (v) adjustments to
give effect to the proposed and completed purchase method acquisitions of First
Commerce, Shamrock and First Family, respectively and the proposed and completed
pooling of interests method business combinations with Great Southern, Fort
Brooke and Tomoka, respectively, and (vi) the pro forma combined condensed
statement of condition of BancGroup and subsidiaries as if such combinations had
occurred on December 31, 1996.
These pro forma statements should be read in conjunction with the
accompanying notes and the separate consolidated statements of condition of
BancGroup and subsidiaries (as restated), incorporated by reference herein, and
separate statement of condition of Great Southern included elsewhere herein. The
pro forma information provided may not be indicative of future results.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL COMPLETED GREAT
BANCGROUP BUSINESS ADJUSTMENTS/ SOUTHERN ADJUSTMENTS/
(RESTATED)** COMBINATIONS (DEDUCTIONS) BANCORP (DEDUCTIONS) SUBTOTAL
--------------- ------------ ------------ -------------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and due from banks........... $ 222,059 $ 13,244 $ (6,404)(2) $ 6,646 $ 223,732
(11,813)(3)
Interest-bearing deposits in
banks............................ 5,143 2,408 7,551
Federal funds sold................ 15,990 4,862 2,752 23,604
Securities available for sale..... 440,015 37,717 9,230 486,962
Investment securities............. 282,210 39,948 (658)(2) 3,299 324,799
Mortgage loans held for sale...... 157,966 157,966
Loans, net of unearned income..... 4,074,633 191,103 94,194 4,359,930
Less: Allowance for possible loan
losses........................... (50,761) (2,895) (1,027) (54,683)
---------- -------- -------- -------- -------- ----------
Loans, net........................ 4,023,872 188,208 93,167 4,305,247
Premises and equipment, net....... 87,514 5,831 970(2) 2,485 96,710
(90)(3)
Excess of cost over tangible and
identified intangible assets
acquired, net.................... 30,381 111 5,840(2) 40,088
3,756(3)
Mortgage servicing rights......... 98,856 98,856
Other real estate owned........... 9,270 154 68 9,492
Accrued interest and other
assets........................... 93,575 4,816 (341)(2) 1,542 100,060
407(2)
61(3)
---------- -------- -------- -------- -------- ----------
Total Assets...................... $5,466,851 $297,299 $ (8,272) $119,189 $ -- $5,875,067
========== ======== ======== ======== ======== ==========
Liabilities and Shareholders'
Equity:
Deposits.......................... $4,113,934 $270,922 $107,751 $4,492,607
FHLB short-term borrowings........ 715,000 715,000
Other short-term borrowings....... 126,262 1,533 875 128,670
Subordinated debt................. 8,612 8,612
Other long-term debt.............. 30,480 30,480
Other liabilities................. 85,567 2,074 $ 1,133(2) 467 89,326
85(3)
---------- -------- -------- -------- -------- ----------
Total liabilities................. 5,079,855 274,529 1,218 109,093 5,464,695
Common Stock...................... 93,864 2,064 (2,055)(1) 16 $ (16)(4) 98,586
1,656(1) 2,249(4)
(5)(2)
817(2)
(4)(3)
Additional paid in capital........ 159,640 4,672 (1,266)(1) 7,591 (7,591)(4) 172,783
1,665(1) 5,358(4)
(2,910)(2)
5,587(2)
533(2)
(496)(3)
Retained earnings................. 134,523 17,456 (5,341)(2) 2,514 140,082
(9,070)(3)
Treasury Stock.................... (1,245) 1,245(3)
Unearned compensation............. (1,603) (1,603)
Unrealized gain (loss) on
securities available for sale,
net of taxes..................... 572 (177) 154(3) (25) 524
---------- -------- -------- -------- -------- ----------
Total equity...................... 386,996 22,770 (9,490) 10,096 -- 410,372
---------- -------- -------- -------- -------- ----------
Total liabilities and equity...... $5,466,851 $297,299 $ (8,272) $119,189 $ -- $5,875,067
========== ======== ======== ======== ======== ==========
Capital Ratios:
Capital Ratio.................... 8.09%
Tangible Leverage Ratio.......... 6.73%
Tier One Capital Ratio*.......... 9.15%
Total Capital Ratio*............. 10.63%
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------
OTHER PROBABLE PRO FORMA
BUSINESS ADJUSTMENTS/ COMBINED
COMBINATIONS (DEDUCTIONS) TOTAL
-------------- ------------ ----------
<S> <C> <C> <C>
Assets:
Cash and due from banks........... $ 23,485 $(15,778)(6) $ 231,439
Interest-bearing deposits in
banks............................ 7,551
Federal funds sold................ 7,688 31,292
Securities available for sale..... 42,355 529,317
Investment securities............. 19,558 41(7) 344,398
Mortgage loans held for sale...... 157,966
Loans, net of unearned income..... 209,009 4,568,939
Less: Allowance for possible loan
losses........................... (4,135) (58,818)
-------- -------- ----------
Loans, net........................ 204,874 4,510,121
Premises and equipment, net....... 6,804 (198)(7) 103,316
Excess of cost over tangible and
identified intangible assets
acquired, net.................... 6,005(7) 46,093
Mortgage servicing rights......... 98,856
Other real estate owned........... 1,038 10,530
Accrued interest and other
assets........................... 5,853 452(7) 106,365
-------- -------- ----------
Total Assets...................... $311,655 $ (9,478) $6,177,244
======== ======== ==========
Liabilities and Shareholders'
Equity:
Deposits.......................... $280,636 $4,773,243
FHLB short-term borrowings........ 715,000
Other short-term borrowings....... 2,867 131,537
Subordinated debt................. 8,612
Other long-term debt.............. 30,480
Other liabilities................. 1,826 $ 1,135(7) 92,287
-------- -------- ----------
Total liabilities................. 285,329 1,135 5,751,159
Common Stock...................... 17 (1)(5) 102,586
4,000(5)
(16)(7)
Additional paid in capital........ 19,162 (12,424)(5) 181,208
8,425(5)
(6,738)(7)
Retained earnings................. 7,325 (3,892)(7) 143,515
Treasury Stock.................... (15,778)(6)
15,778(7)
Unearned compensation............. (1,603)
Unrealized gain (loss) on
securities available for sale,
net of taxes..................... (178) 33(7) 379
-------- -------- ----------
Total equity...................... 26,326 (10,613) 426,085
-------- -------- ----------
Total liabilities and equity...... $311,655 $ (9,478) $6,177,244
======== ======== ==========
Capital Ratios:
Capital Ratio.................... 8.14%
Tangible Leverage Ratio.......... 6.61%
Tier One Capital Ratio*.......... 8.78%
Total Capital Ratio*............. 10.25%
</TABLE>
- ---------------
* Based on risk weighted assets
** Restated to give effect to the January 3, 1997 and January 31, 1997
pooling-of-interests business combinations with Jefferson Bancorp, Inc. and
D/W Bankshares, Inc.
44
<PAGE> 52
COMPLETED BUSINESS COMBINATIONS
TOMOKA BANCORP INC.
(pooling of interests)
(1) To record the issuance of approximately 662,515 shares of BancGroup Common
Stock in exchange for all of the outstanding shares of Tomoka:
<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Tomoka outstanding shares................................. 410,913
Conversion ratio, determined as follows:
$32/$19.8469 per share, the 20-day average market value
of BancGroup Common Stock on the fifth day prior to
January 2, 1997...................................... 1.6123
---------
BancGroup shares to be issued............................. 662,515
Par value of 662,515 shares issued at $2.50 per share..... $ 1,656
Shares issued at par value................................ $ 1,656
Total capital stock of Tomoka............................. 3,321
Excess recorded as an increase to contributed capital..... 1,665
-------
3,321
To eliminate Tomoka capital stock:
Common stock, at par value............................. (2,055)
Contributed capital.................................... (1,266)
-------
(3,321)
-------
Net change in equity.............................. $ 0
=======
</TABLE>
45
<PAGE> 53
FIRST FAMILY FINANCIAL CORPORATION
(purchase method)
(2) To assign the amount by which the estimated value of BancGroup's investment
in First Family is in excess of the historical carrying amount of the net
assets acquired, based on the estimated fair value of such net assets and to
record the investment in First Family by the issuance of approximately
326,618 shares of BancGroup Common Stock and $6,403,750 in cash for all of
the outstanding 545,000 shares of First Family as follows:
<TABLE>
<S> <C>
Equity in carrying value of net assets of First Family...... $ 8,256
Adjustments to state assets at fair value:
Write-up of fixed assets.................................. 970
Write-down securities held to maturity.................... (658)
Other..................................................... (341)
Acquisition accruals:
Severance pay............................................. (952)
Other legal, accounting, and professional................. (181)
Tax effect of purchase adjustments.......................... 407
Goodwill.................................................... 5,840
-------
Total adjustments........................................... 5,085
Adjusted equity in carrying value of net assets............. $13,341
=======
Allocated as follows:
Par Value of 326,618 shares issued for all outstanding
shares of First Family.................................... $ 817
Estimated amount in excess of par value of 326,618 shares of
BancGroup Common Stock issued for First Family outstanding
shares at an assumed market value of $19.6063 per share
(10 day average at January 8, 1997) (date of closing)..... 5,587
Stock options to be assumed by BancGroup.................... 533
Cash of $11.75 per share paid to First Family
shareholders.............................................. 6,404
-------
Total purchase price........................................ $13,341
=======
</TABLE>
SHAMROCK HOLDING, INC.
(purchase method)
(3) To assign the amount by which the estimated value of BancGroup's investment
in Shamrock is in excess of the historical carrying amount of the net assets
acquired, based on the estimated fair value of such net assets and to record
the investment in Shamrock by the payment of approximately $11,813,000 for
all of the outstanding shares of Shamrock as follows:
<TABLE>
<S> <C>
Equity in carrying value of net assets of Shamrock.......... $ 8,171
Adjustments to state at fair market value:
Write-down software....................................... (90)
Acquisition Accruals
Buyout data processing contract........................... (45)
Other legal and professional.............................. (40)
Tax effect of purchase adjustments.......................... 61
Goodwill.................................................... 3,756
-------
Total adjustments........................................... 3,642
-------
Adjusted equity in carrying value of net assets........... $11,813
=======
Allocated as follows:
Cash of $387.65 per share paid to Shamrock shareholders..... 11,813
-------
Total purchase price........................................ $11,813
=======
</TABLE>
46
<PAGE> 54
GREAT SOUTHERN BANCORP
(pooling of interests)
(4) To record the issuance of 899,698 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Great Southern:
<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Great Southern outstanding shares........................... 1,590,845
Conversion ratio, determined as follows:
$13.05/$23.075 per share, the 10-day average market value
of BancGroup Common Stock on March 24, 1997............ 0.5655
---------
BancGroup shares to be issued............................... 899,698
Par value of 899,698 shares issued at $2.50 per share....... $2,249
Shares issued at par value.................................. $2,249
Total capital stock of Great Southern....................... 7,607
Excess recorded as an increase in contributed
capital.............................................. 5,358
-------
7,607
To eliminate Great Southern capital stock:
Common stock, at par value................................ (16)
Contributed capital....................................... (7,591)
-------
(7,607)
-------
Net change in equity.............................. $ 0
=======
</TABLE>
OTHER PROBABLE COMBINATIONS
FORT BROOKE BANCORPORATION
(pooling of interests)
(5) To record the issuance of 1,600,124 shares of BancGroup Common Stock in
exchange for all of the outstanding shares of Fort Brooke:
<TABLE>
<CAPTION>
OUTSTANDING
SHARES
-----------
<S> <C> <C>
Fort Brooke outstanding shares.............................. 990,553
Conversion ratio, determined as follows:
$31.50/$19.50 per share, the maximum market value per the
merger agreement, as compared to the 10-day average
market value of BancGroup Common Stock on March 24,
1997................................................... 1.6154
-------
BancGroup shares to be issued............................... 1,600,124
Par value of 1,600,124 shares issued at $2.50 per share..... $ 4,000
Shares issued at par value.................................. $ 4,000
Total capital stock of Fort Brooke.......................... 12,425
Excess recorded as an increase in contributed capital..... 8,425
---------
12,425
To eliminate Fort Brooke capital stock:
Common stock, at par value................................ (1)
Contributed capital....................................... (12,424)
---------
(12,425)
---------
Net change in equity.............................. $ 0
=========
</TABLE>
47
<PAGE> 55
FIRST COMMERCE BANKS OF FLORIDA, INC.
(purchase method)
(6) To show the purchase of treasury stock for the purpose of issuance in the
First Commerce business combination:
<TABLE>
<S> <C>
Cash........................................................ $(15,778)
Treasury stock.............................................. 15,778
</TABLE>
(7) To assign the amount by which the estimated value of BancGroup's investment
in First Commerce is in excess of the historical carrying amount of the net
assets acquired, based on the estimated fair value of such net assets and to
record the investment in First Commerce by the issuance of approximately
685,990 shares of BancGroup Common Stock for all of the outstanding
1,585,737 shares of First Commerce as follows:
<TABLE>
<S> <C>
Equity in carrying value of net assets of First Commerce.... $10,613
Adjustments to state assets at fair value:
Write-down of fixed assets................................ (198)
Write-up securities held to maturity...................... 41
Acquisition accruals:
Broker's fee.............................................. (156)
Severance pay............................................. (230)
Buyout data processing contract........................... (540)
Other legal, accounting, and professional................. (209)
Tax effect of purchase adjustments.......................... 452
Goodwill.................................................... 6,005
-------
Total adjustments................................. 5,165
-------
Adjusted equity in carrying value of net assets............. $15,778
=======
Allocated as follows:
Cost of 685,990 shares of BancGroup common stock purchased
and re-issued for First Commerce outstanding shares at an
assumed market value of $23 per share..................... 15,778
-------
Total purchase price.............................. $15,778
=======
</TABLE>
48
<PAGE> 56
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
CONDENSED PRO FORMA STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS)
The following summaries include (i) the condensed consolidated statements
of income of BancGroup on a historical basis for the years ended December 31,
1996, 1995, and 1994 (as restated), (ii) the combined presentation of condensed
consolidated statements of income of the completed business combinations for the
years ended December 31, 1996, 1995, and 1994 (iii) the condensed consolidated
statements of income of Great Southern for the years ended December 31, 1996,
1995, and 1994, (iv) the combined presentation of condensed consolidated
statements of income of the other probable business combinations for the years
ended December 31, 1996, 1995, and 1994, (v) adjustments to give effect to the
proposed and completed purchase method combinations with Shamrock, First Family
and First Commerce, respectively and the proposed and completed
pooling-of-interests method business combinations with Fort Brooke and Great
Southern and Tomoka, respectively, and (vi) the pro forma combined condensed
consolidated statements of income of BancGroup and subsidiaries as if such
business combinations had occurred on January 1, 1994. Note that for the
purchase method combinations, Article 11 of Regulation S-X requires pro forma
statements of income to be presented for only the most recent fiscal year.
Accordingly, only the condensed consolidated statements of income for the year
ended December 31, 1996 are included in (ii), (iv) and (v) above for First
Family, Shamrock, and First Commerce.
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 statements of income of Great Southern, included elsewhere herein. The pro
forma information provided may not necessarily be indicative of future results.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------------------
CONSOLIDATED
COLONIAL COMPLETED
BANCGROUP BUSINESS ADJUSTMENTS/ GREAT SOUTHERN ADJUSTMENTS/
(RESTATED)* COMBINATIONS (DEDUCTIONS) BANCORP (DEDUCTIONS)
------------ ------------ ------------ -------------- ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Interest income................ $391,957 $21,247 $132(1) $9,104
(368)(1)
(679)(2)
Interest expense............... 199,953 11,156 3,012
---------- --------- ---------- --------- ----------
Net interest income............ 192,004 10,091 (915) 6,092
Provision for loan losses...... 11,783 1,933 110
---------- --------- ---------- --------- ----------
Net interest income after
provision for loan losses..... 180,221 8,158 (915) 5,982
---------- --------- ---------- --------- ----------
Noninterest income............. 70,818 2,477 68(1) 883
30(2)
Noninterest expense............ 174,822 9,135 341(1) 4,888
188(2)
---------- --------- ---------- --------- ----------
Income before income taxes..... 76,217 1,500 (1,346) 1,977
Applicable income taxes........ 26,834 1,127 (76)(1) 739
(227)(2)
---------- --------- ---------- --------- ----------
Net income..................... $49,383 $373 $(1,043) $1,238 $--
========== ========= ========== ========= ==========
Average primary shares
outstanding**................. 38,117,000 998,500 (998,500) 1,652,151 (1,652,151)
1,069,242 936,058
Average fully-diluted shares
outstanding**................. 38,977,000 998,500 (998,500) 1,652,151 (1,652,151)
1,079,135 940,876
Earnings per share:
Net Income:
Primary**................... $1.30
Fully diluted**............. $1.28
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------
OTHER
PROBABLE PRO FORMA
BUSINESS ADJUSTMENTS/ COMBINED
SUBTOTAL COMBINATIONS (DEDUCTIONS) TOTAL
---------- ------------ ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income................ $421,393 $23,838 $(907)(3) $444,316
(8)(3)
Interest expense............... 214,121 9,431 223,552
---------- --------- ---------- ----------
Net interest income............ 207,272 14,407 (915) 220,764
Provision for loan losses...... 13,826 1,736 15,562
---------- --------- ---------- ----------
Net interest income after
provision for loan losses..... 193,446 12,671 (915) 205,202
---------- --------- ---------- ----------
Noninterest income............. 74,276 2,487 76,763
Noninterest expense............ 189,374 13,706 (40)(3) 203,190
150(3)
---------- --------- ---------- ----------
Income before income taxes..... 78,348 1,452 (1,025) 78,775
Applicable income taxes........ 28,397 484 (306)(3) 28,575
---------- --------- ---------- ----------
Net income..................... $49,951 $968 $(719) $50,200
========== ========= ========== ==========
Average primary shares
outstanding**................. 40,122,300 2,677,740 (2,677,740) 41,822,232
1,699,932
Average fully-diluted shares
outstanding**................. 40,997,011 2,677,740 (2,677,740) 42,712,744
1,715,733
Earnings per share:
Net Income:
Primary**................... $1.24 $1.20
Fully diluted**............. $1.23 $1.19
</TABLE>
- ---------------
* Restated to give effect to the January 3,1997 and January 31, 1997
pooling-of-interests business combinations with Jefferson Bancorp, Inc. and
D/W Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997
49
<PAGE> 57
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------
CONSOLIDATED
COLONIAL COMPLETED
BANCGROUP BUSINESS ADJUSTMENTS/ GREAT SOUTHERN ADJUSTMENTS/
(RESTATED)* COMBINATIONS (DEDUCTIONS) BANCORP (DEDUCTIONS)
------------ ------------ ------------ -------------- ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Interest income.......... $327,897 $4,852 $8,654
Interest expense......... 164,895 1,908 3,159
---------- ------- -------- --------- ----------
Net interest income...... 163,002 2,944 5,495
Provision for loan
losses................. 8,281 130 50
---------- ------- -------- --------- ----------
Net interest income after
provision for loan
losses................. 154,721 2,814 5,445
---------- ------- -------- --------- ----------
Noninterest income....... 59,261 649 857
Noninterest expense...... 144,525 2,146 4,400
---------- ------- -------- --------- ----------
Income before income
taxes.................. 69,457 1,317 1,902
Income taxes............. 24,656 500 740
---------- ------- -------- --------- ----------
Net Income............... $ 44,801 $ 817 $-- $1,162
========== ======= ======== ========= ==========
Average primary shares
outstanding**.......... 36,327,000 405,000 (405,000) 1,542,420 (1,542,420)
709,356 917,782
Average fully-diluted
shares outstanding**... 38,199,000 405,000 (405,000) 1,542,420 (1,542,420)
720,692 928,599
Earnings per share:
Net Income:
Primary**............ $1.23
Fully diluted**...... $1.20
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------------------
OTHER
PROBABLE PROFORMA
BUSINESS ADJUSTMENTS/ COMBINED
SUBTOTAL COMBINATIONS (DEDUCTIONS) TOTAL
---------- ------------ ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income.......... $341,403 $13,929 $355,332
Interest expense......... 169,962 5,588 175,550
---------- --------- ---------- ----------
Net interest income...... 171,441 8,341 179,782
Provision for loan
losses................. 8,461 705 9,166
---------- --------- ---------- ----------
Net interest income after
provision for loan
losses................. 162,980 7,636 170,616
---------- --------- ---------- ----------
Noninterest income....... 60,767 1,266 62,033
Noninterest expense...... 151,071 6,129 157,200
---------- --------- ---------- ----------
Income before income
taxes.................. 72,676 2,773 75,449
Income taxes............. 25,896 1,109 27,005
---------- --------- ---------- ----------
Net Income............... $ 46,780 $ 1,664 $-- $ 48,444
========== ========= ========== ==========
Average primary shares
outstanding**.......... 37,954,138 1,005,920 (1,005,920) 39,606,609
1,652,471
Average fully-diluted
shares outstanding**... 39,848,291 1,005,920 (1,005,920) 41,507,077
1,658,786
Earnings per share:
Net Income:
Primary**............ $1.23 $1.22
Fully diluted**...... $1.20 $1.19
</TABLE>
- ---------------
* Restated to give effect to the January 3, 1997 and January 31, 1997
pooling-of-interests business combinations with Jefferson Bancorp, Inc. and
D/W Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.
50
<PAGE> 58
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------------------------
CONSOLIDATED
COLONIAL COMPLETED GREAT
BANCGROUP BUSINESS ADJUSTMENTS/ SOUTHERN ADJUSTMENTS/
(RESTATED)* COMBINATIONS (DEDUCTIONS) BANCORP (DEDUCTIONS) SUBTOTAL
------------ ------------ ------------ --------- ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Interest income..... $244,145 $3,704 $6,911 $254,760
Interest expense.... 101,293 1,548 2,196 105,037
---------- ------- -------- --------- ---------- ----------
Net interest
income............ 142,852 2,156 4,715 149,723
Provision for loan
losses............ 8,070 82 170 8,322
---------- ------- -------- --------- ---------- ----------
Net interest income
after provision
for loan losses... 134,782 2,074 4,545 141,401
---------- ------- -------- --------- ---------- ----------
Noninterest
income............ 52,830 477 782 54,089
Noninterest
expense........... 136,906 1,898 3,959 142,763
---------- ------- -------- --------- ---------- ----------
Income before income
taxes............. 50,706 653 1,368 52,727
Income taxes........ 16,831 215 481 17,527
---------- ------- -------- --------- ---------- ----------
Net Income.......... $33,875 $438 $-- $887 $35,200
========== ======= ======== ========= ========== ==========
Average primary
shares
outstanding**..... 34,445,000 405,000 (405,000) 1,506,176 (1,506,176) 36,002,634
675,294 882,340
Average
fully-diluted
shares
outstanding**..... 35,979,000 405,000 (405,000) 1,506,176 (1,506,176) 37,536,634
675,294 882,340
Earnings per share:
Net Income:
Primary**....... $0.98 $0.98
Fully
diluted**..... $0.97 $0.97
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------
OTHER
PROBABLE PROFORMA
BUSINESS ADJUSTMENTS/ COMBINED
COMBINATIONS (DEDUCTIONS) TOTAL
------------ ------------ ----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Interest income..... $11,613 $266,373
Interest expense.... 4,504 109,541
------- --------- ----------
Net interest
income............ 7,109 156,832
Provision for loan
losses............ 184 8,506
------- --------- ----------
Net interest income
after provision
for loan losses... 6,925 148,326
------- --------- ----------
Noninterest
income............ 1,319 55,408
Noninterest
expense........... 7,213 149,976
------- --------- ----------
Income before income
taxes............. 1,031 53,758
Income taxes........ 412 17,939
------- --------- ----------
Net Income.......... $619 $-- $35,819
======= ========= ==========
Average primary
shares
outstanding**..... 984,711 (984,711) 37,611,070
1,608,436
Average
fully-diluted
shares
outstanding**..... 984,711 (984,711) 39,145,070
1,608,436
Earnings per share:
Net Income:
Primary**....... $0.95
Fully
diluted**..... $0.94
</TABLE>
- ---------------
* Restated to give effect to the January 3, 1997 and January 31, 1997
pooling-of-interests business combinations with Jefferson Bancorp, Inc. and
D/W Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.
51
<PAGE> 59
PRO FORMA ADJUSTMENTS:
(In thousands)
Completed business combinations
Adjustments applicable to the purchase method business combinations with
First Family (1) and Shamrock (2):
(1) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Increases in income:
Amortization of other write downs (5 year period)......... $ 68
Amortization of write-down on securities portfolio (5 year
period)................................................ 132
Decrease in income:
Earnings forgone on $6,403,750 cash at an average interest
rate 5.75%............................................. (368)
-----
Total............................................. (168)
-----
Increase in expense:
Additional depreciation due to write-up in building and
premises (20 year period).............................. (49)
Amortization of goodwill (20 year period)................. (292)
-----
Total............................................. (341)
-----
Net decrease in income before tax........................... (509)
-----
Tax effect of the pro forma adjustments (other than goodwill
amortization)............................................. 76
-----
Net decrease in income...................................... $(433)
-----
</TABLE>
(2) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the
following:
<TABLE>
<S> <C>
Increase in income:
Amortization of write down on software (3 year period).... $ 30
Decrease in income:
Earnings forgone on $11,813,000 cash at an average
interest rate 5.75%.................................... (679)
-----
Total............................................. (649)
Increase in expense:
Amortization of goodwill (20 year period)................. (188)
-----
Total............................................. (188)
Net decrease in income before tax........................... (837)
Tax effect of the pro forma adjustments (other than goodwill
amortization)............................................. 227
-----
Net decrease in income...................................... $(610)
-----
</TABLE>
52
<PAGE> 60
PENDING BUSINESS COMBINATIONS
Adjustments applicable to the purchase method business combination with
First Commerce:
(3) To amortize the assignment of estimated fair value in excess of the
carrying amount of assets acquired. The amortization consists of the
following:
<TABLE>
<S> <C>
Decreases in income:
Amortization of write-up on securities portfolio (5 year
period)................................................ $ (8)
Earnings forgone on $15,777,770 cash at an average
interest rate 5.75%.................................... (907)
-------
Total............................................. (915)
-------
Increase in expense:
Amortization of goodwill (20 year period)................. (300)
-------
Decrease in Expense:
Amortization of write down on fixed assets (5 year
period)................................................ 40
-------
Total............................................. (260)
-------
Net decrease in income before tax........................... (1,175)
-------
Tax effect of the pro forma adjustments (other than goodwill
amortization)............................................. 306
-------
Net decrease in income...................................... $ (719)
-------
</TABLE>
53
<PAGE> 61
RECENT DEVELOPMENTS -- BANCGROUP AND GREAT SOUTHERN
The following table presents certain unaudited data for BancGroup for the
period ended March 31, 1997. Unaudited historical data reflect, in the opinion
of management, all adjustments (consisting of normal recurring adjustments)
necessary to a fair presentation of such data. The unaudited financial
information is presented for informational purposes only and is not necessarily
indicative of the financial position or results of operations which would have
actually occurred if the transactions had been consummated in the past or which
may be obtained in the future.
THE COLONIAL BANCGROUP, INC.
SELECTED FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
% CHANGE
MARCH 31, DEC. 31, MARCH 31, MARCH 31,
1997 1996 1996 1996 TO 1997
---------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF CONDITION SUMMARY
Total assets.................................... $5,797,328 $5,466,851 $4,933,532 18%
Loans, net of unearned income................... 4,338,994 4,074,633 3,587,951 21%
Total earnings assets........................... 5,318,917 4,975,957 4,488,267 19%
Deposits........................................ 4,525,183 4,113,934 3,747,987 21%
Shareholders' equity............................ 410,130 386,996 353,532 16%
Book value per share............................ $ 10.49 $ 10.31 $ 9.76 8%
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
% CHANGE
1997 1996 97 TO 96
------- ------- --------
<S> <C> <C> <C>
EARNINGS SUMMARY
Net interest income (taxable equivalent).................... $53,983 $45,769 18%
Provision for loan losses................................... 2,854 1,750 63%
Noninterest income.......................................... 18,401 17,640 4%
Noninterest expense......................................... 42,662 39,812 7%
Net income.................................................. 16,723 13,623 23%
Average primary shares outstanding.......................... 39,679 37,158
Average fully-diluted shares outstanding.................... 40,279 37,908
Earnings per share:
Primary................................................... $ 0.42 $ 0.36 17%
Fully-diluted............................................. 0.42 0.35 20%
SELECTED RATIOS:
Return on average assets.................................... 1.20% 1.14%
Return on average equity.................................... 16.72% 15.69%
Efficiency ratio............................................ 58.94% 62.79%
Equity to assets............................................ 7.07% 7.17%
Total capital............................................... 8.07% 8.26%
Tier one leverage........................................... 7.85% 6.85%
</TABLE>
- ---------------
NOTE: Restated financial results above reflect the January 1997 mergers of
Colonial BancGroup with Jefferson Bancorp and D/W Bankshares. These
mergers were accounted for as poolings of interest and the financial
results restated accordingly.
Net income for the three months ended March 31, 1997 was $16,723,000
compared to $13,623,000 for the previous period, a 23% increase. Earnings per
share for the three months were $0.42 on a fully diluted basis, a 20% increase
over 1996. The company's return on average equity was 16.72% compared to 15.69%
in 1996. Return on average assets was 1.20% compared to 1.14% in 1996.
54
<PAGE> 62
GREAT SOUTHERN UNAUDITED RESULTS OF OPERATIONS AND FINANCIAL HIGHLIGHTS FOR THE
THREE MONTHS ENDED MARCH 31, 1997.
Great Southern Bank reported net income for the three months ended March
31, 1997 of $333,183 or $0.21 per share, versus $384,972 or $0.25 per share for
the prior year. The first quarter of 1997 reflects approximately $64,000 in data
processing conversion costs.
Set forth below are selected financial highlights for the Bank at and for
the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Total interest income..................................... $ 2,354,839 $ 2,135,797
Total interest expense.................................... 852,444 686,686
----------- -----------
Net interest income....................................... 1,502,395 1,449,111
Provision for loan losses................................. 35,000 20,000
----------- -----------
Net interest income after provision for loan losses....... 1,467,395 1,429,111
Total other income........................................ 315,233 279,841
Total other expenses...................................... (1,258,445) (1,088,030)
----------- -----------
Income before taxes....................................... 524,183 620,922
Income tax................................................ 191,000 235,950
----------- -----------
Net income................................................ $ 333,183 $ 384,972
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
MARCH 31,
1997 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Total assets............................................ $122,284,816 $106,819,506
Deposits................................................ 109,978,391 95,669,421
Loans receivable, net of allowances for loan losses..... 92,706,445 82,106,633
Securities.............................................. 12,485,053 12,220,403
Real estate owned....................................... 234,000 --
Shareholders' equity.................................... 10,176,474 8,824,184
Return on average assets................................ 1.11% 1.48%
Return on average equity................................ 13.23% 17.68%
</TABLE>
55
<PAGE> 63
THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OPERATING INFORMATION
The following tables present certain financial information for BancGroup on
a historical basis (as restated) for the years ended December 31, 1996, 1995,
1994, 1993 and 1992 and as of December 31, 1996 and on a pro forma basis for the
years ended December 31, 1996, 1995, 1994, 1993 and 1992 and as of December 31,
1996.
The pro forma information includes consolidated BancGroup and subsidiaries
(as restated) and consolidated Great Southern, Tomoka, Fort Brooke, First
Commerce, Shamrock and First Family. The pro forma balance sheet data gives
effect to the combinations as if they had occurred on December 31, 1996 and the
pro forma operating data gives effect to the combinations as if they had
occurred at the beginning of the earliest period presented. Note that for the
purchase method combinations, Article 11 of Regulation S-X requires pro forma
statements be presented for only the most recent fiscal year. Accordingly, only
the pro forma information as of and for the year ended December 31, 1996 is
included for Shamrock, First Family and First Commerce.
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.
56
<PAGE> 64
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------------------------------------------------- -----------------------
BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP BANCGROUP
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA HISTORICAL HISTORICAL
1996 1995 1994 1993 1992 1996* 1995*
--------- --------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
Interest income....... $444,316 $355,332 $266,373 $212,918 $200,290 $391,957 $327,897
Interest expense...... 223,552 175,550 109,541 84,161 89,649 199,953 164,895
-------- -------- -------- -------- -------- -------- --------
Net interest income... 220,764 179,782 156,832 128,757 110,641 192,004 163,002
Provision for possible
loan losses......... 15,562 9,166 8,506 12,178 15,417 11,783 8,281
-------- -------- -------- -------- -------- -------- --------
Net interest income
after provision for
loan losses......... 205,202 170,616 148,326 116,579 95,224 180,221 154,721
Noninterest income.... 76,763 62,033 55,408 52,513 47,308 70,818 59,261
Noninterest expense... 199,373 157,200 149,976 131,577 116,702 171,005 144,525
SAIF special
assessment (1)...... 3,817 -- -- -- -- 3,817 --
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes............... 78,775 75,449 53,758 37,515 25,830 76,217 69,457
Applicable income
taxes............... 28,575 27,005 17,939 11,339 7,070 26,834 24,656
-------- -------- -------- -------- -------- -------- --------
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes........ 50,200 48,444 35,819 26,176 18,760 49,383 44,801
Extraordinary items,
net of income
taxes............... (396) -- --
Cumulative effect of
change in accounting
for income taxes.... 3,926 -- --
-------- -------- -------- -------- -------- -------- --------
Net income............ $ 50,200 $ 48,444 $ 35,819 $ 29,706 $ 18,760 $ 49,383 $ 44,801
======== ======== ======== ======== ======== ======== ========
EARNINGS PER SHARE
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes:
Primary**........... $ 1.20 $ 1.22 $ 0.95 $ 0.80 $ 0.68 $ 1.30 $ 1.23
Fully-diluted**..... $ 1.19 $ 1.19 $ 0.94 $ 0.80 $ 0.66 $ 1.28 $ 1.20
Net income:
Primary**........... $ 1.20 $ 1.22 $ 0.95 $ 0.91 $ 0.68 $ 1.30 $ 1.23
Fully-diluted**..... $ 1.19 $ 1.19 $ 0.94 $ 0.90 $ 0.66 $ 1.28 $ 1.20
Average shares
outstanding
Primary**........... 41,822 39,607 37,611 32,681 29,397 38,117 36,327
Fully-diluted**..... 42,713 41,507 39,145 34,886 32,125 38,977 38,199
Cash dividends per
common share:
Common**............ $ 0.540 $ 0.034 $ 0.54 $ 0.3375
Class A**........... $ 0.113 $ 0.040 $ 0.355 $ 0.335 -- $ 0.1125
Class B**........... $ 0.063 $ 0.020 $ 0.155 $ 0.135 -- $ 0.0625
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
BANCGROUP BANCGROUP BANCGROUP
HISTORICAL HISTORICAL HISTORICAL
1994* 1993* 1992*
---------- ---------- ----------
<S> <C> <C> <C>
STATEMENT OF INCOME
Interest income....... $244,145 $193,026 $179,872
Interest expense...... 101,293 76,378 80,212
-------- -------- --------
Net interest income... 142,852 116,648 99,660
Provision for possible
loan losses......... 8,070 11,423 12,899
-------- -------- --------
Net interest income
after provision for
loan losses......... 134,782 105,225 86,761
Noninterest income.... 52,830 49,555 44,518
Noninterest expense... 136,906 119,589 105,853
SAIF special
assessment (1)...... -- -- --
-------- -------- --------
Income before income
taxes............... 50,706 35,191 25,426
Applicable income
taxes............... 16,831 10,727 6,926
-------- -------- --------
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes........ 33,875 24,464 18,500
Extraordinary items,
net of income
taxes............... -- (396) --
Cumulative effect of
change in accounting
for income taxes.... -- 3,890 --
-------- -------- --------
Net income............ $ 33,875 $ 27,958 $ 18,500
======== ======== ========
EARNINGS PER SHARE
Income before
extraordinary items
and the cumulative
effect of a change
in accounting for
income taxes:
Primary**........... $ 0.98 $ 0.82 $ 0.70
Fully-diluted**..... $ 0.97 $ 0.81 $ 0.70
Net income:
Primary**........... $ 0.98 $ 0.94 $ 0.70
Fully-diluted**..... $ 0.97 $ 0.92 $ 0.70
Average shares
outstanding
Primary**........... 34,445 29,884 26,470
Fully-diluted**..... 35,979 32,069 29,186
Cash dividends per
common share:
Common**............ -- -- --
Class A**........... $ 0.40 $ 0.355 $ 0.335
Class B**........... $ 0.20 $ 0.155 $ 0.135
</TABLE>
- ---------------
* Restated to give retroactive effect to the January 3, 1997 and January 31,
1997 pooling-of-interests business combinations with Jefferson Bancorp, Inc.
and D/W Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.
(1) Legislation approving a one-time special assessment to recapitalize the
Savings Association Insurance Fund ("SAIF") resulted in $3,817,000 in
expense before income taxes and $2,466,000 net of applicable income taxes in
1996.
57
<PAGE> 65
<TABLE>
<CAPTION>
BANCGROUP BANCGROUP HISTORICAL
PRO FORMA --------------------------------------------------------------
1996 1996* 1995* 1994* 1993* 1992*
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF CONDITION DATA
At year-end:
Total assets...................................... $6,177,244 $5,466,851 $4,773,049 $3,690,626 $3,555,476 $2,493,824
Loans, net of unearned income..................... 4,568,939 4,074,633 3,521,514 2,622,181 2,182,755 1,549,316
Mortgage loans held for sale...................... 157,966 157,966 112,203 61,556 368,515 150,835
Deposits.......................................... 4,773,243 4,113,934 3,700,715 2,909,623 2,831,978 2,102,575
Long-term debt.................................... 39,092 39,092 47,688 86,662 57,397 22,979
Shareholders' equity.............................. 426,085 386,996 336,931 261,560 243,396 152,602
Average balances:
Total assets...................................... $5,795,487 $5,093,410 $4,193,246 $3,535,205 $2,850,680 $2,426,537
Interest-earning assets........................... 5,307,987 4,661,294 3,824,327 3,192,897 2,530,300 2,141,541
Loans, net of unearned income..................... 4,273,554 3,799,947 3,007,312 2,375,396 1,710,797 1,505,114
Mortgage loans held for sale...................... 135,135 135,135 98,785 135,046 248,502 121,820
Deposits.......................................... 4,428,785 3,896,620 3,291,343 2,865,107 2,277,465 2,048,111
Shareholders' equity.............................. 418,844 367,075 293,651 255,861 187,322 147,980
Book value per share at year-end**.................. $ 10.21 $ 10.31 $ 9.41 $ 7.87 $ 7.62 $ 6.19
Tangible book value per share at year-end**......... $ 9.48 $ 9.50 $ 8.57 $ 7.26 $ 7.09 $ 5.90
SELECTED RATIOS
Income before extraordinary items and the cumulative
effect of a change in accounting for income taxes
to:
Average assets.................................... 0.87% 0.97% 1.07% 0.96% 0.86% 0.76%
Average shareholders' equity...................... 12.0 13.45 15.26 13.24 13.06 12.50
Net income to:
Average assets.................................... 0.87 0.97 1.07 0.96 0.98 0.76
Average shareholder's equity...................... 12.0 13.45 15.26 13.24 14.93 12.50
Efficiency ratio(1)................................. 67.10 64.54 64.43 69.20 71.67 72.87
Dividend payout ratio............................... 45.00 41.54 36.59 40.82 37.77 47.86
Average equity to average total assets.............. 7.23 7.21 7.00 7.24 6.57 6.10
Allowance for possible losses to total loans (net of
unearned income).................................. 1.29% 1.25% 1.28% 1.56% 1.62% 1.54%
</TABLE>
- ---------------
* Restated to give retroactive effect to the January 3, 1997 and January 31,
1997 pooling-of-interests business combinations with Jefferson Bancorp, Inc.
and D/W Bankshares, Inc.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.
(1) Legislation approving a one-time special assessment to recapitalize the
Savings Association Insurance Fund ("SAIF") resulted in $3,817,000 in
expense before income taxes and $2,466,000 net of applicable income taxes in
1996.
58
<PAGE> 66
GREAT SOUTHERN BANCORP
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table presents selected historical financial data for Great
Southern and the Bank. This table should be read in conjunction with the
historical financial statements and notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
AT AND FOR THE YEAR ENDED
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
At Period End:
Cash and cash equivalents................................ $ 9,398 $ 14,043 $ 11,026 $ 10,459 $ 6,940
Investment securities.................................... 12,529 11,974 21,621 10,321 10,280
Loans, net............................................... 93,167 81,030 71,382 66,493 52,671
Other assets............................................. 4,095 2,549 3,253 2,953 2,695
---------- ---------- ---------- ---------- ----------
Total assets....................................... $ 119,189 $ 109,596 $ 107,282 $ 90,226 $ 72,586
========== ========== ========== ========== ==========
Deposits................................................. 107,751 99,493 99,104 83,472 66,699
Other liabilities........................................ 1,342 1,247 716 475 304
Shareholders' equity..................................... 10,096 8,856 7,462 6,279 5,583
---------- ---------- ---------- ---------- ----------
Total liabilities and shareholders' equity......... $ 119,189 $ 109,596 $ 107,282 $ 90,226 $ 72,586
========== ========== ========== ========== ==========
For the Period:
Total interest income.................................... $ 9,104 $ 8,654 $ 6,911 $ 5,621 $ 4,877
Total interest expense................................... 3,012 3,159 2,196 1,649 1,702
---------- ---------- ---------- ---------- ----------
Net interest income................................ 6,092 5,495 4,715 3,972 3,175
Provision for loan losses................................ 110 50 170 349 692
---------- ---------- ---------- ---------- ----------
Net interest income after provision for loan
losses........................................... 5,982 5,445 4,545 3,623 2,483
Noninterest income....................................... 883 858 782 779 627
Noninterest expense...................................... (4,888) (4,400) (3,959) (3,651) (3,192)
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes.................. 1,977 1,903 1,368 751 (82)
Income taxes............................................. 739 740 481 55 --
---------- ---------- ---------- ---------- ----------
Net Income (loss).................................. $ 1,238 $ 1,163 $ 887 $ 696 $ (82)
========== ========== ========== ========== ==========
Net income (loss) per share.............................. $ 0.75 $ 0.75 $ 0.59 $ 0.48 $ (0.06)
========== ========== ========== ========== ==========
Weighted average number of shares outstanding............ 1,652,151 1,542,420 1,506,176 1,451,810 1,329,501
========== ========== ========== ========== ==========
Actual shares outstanding at end of year................... 1,590,845 1,542,420 1,542,420 1,451,810 1,451,810
========== ========== ========== ========== ==========
Book Value per share....................................... $ 6.35 $ 5.74 $ 4.84 $ 4.32 $ 3.85
========== ========== ========== ========== ==========
Ratios and Other Data:
Return on average assets................................. 1.15% 1.11% 0.92% 0.85% (0.13)%
Return on average equity................................. 13.17 14.3 12.64 11.64 (1.57)
Average equity to average assets......................... 8.73 7.78 7.28 7.31 7.85
Net yield on average earning assets...................... 9.01 8.88 7.88 7.71 8.57
Average earning assets to average interest-bearing
liabilities............................................ 1.39 1.35 1.35 1.31 1.23
Noninterest exp. to average assets....................... 4.54 4.21 4.11 4.46 5.02
Nonperforming assets as percent of total assets.......... 0.24 -- 1.26 1.18 1.59
Allowance for loan losses to total loans................. 1.08 1.23 1.29 1.05 1.31
</TABLE>
59
<PAGE> 67
GREAT SOUTHERN BANCORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is provided to afford the reader an understanding
of the major elements of Great Southern's financial condition, results of
operation, capital resources and liquidity. It should be read in conjunction
with the financial statements and notes thereto and other information appearing
elsewhere in this Prospectus.
GENERAL
Great Southern is a one-bank holding company, and its only current business
is the ownership and operation of the Bank. On January 1, 1996, the common
shareholders of the Bank exchanged their common shares for shares of Great
Southern Common Stock, and at that time the Bank became a wholly-owned
subsidiary of Great Southern. The formation of Great Southern and exchange of
shares has been accounted for as a combination of interests under common control
in a manner similar to a pooling of interests. Shares held by dissenting
shareholders were settled for cash.
The Bank is an FDIC-insured, state-chartered commercial bank headquartered
in West Palm Beach, Florida. The Bank commenced operations on April 17, 1989.
The Bank has five branch offices located in central and north Palm Beach County,
Florida, and its main business is to attract deposits and to invest those funds
in loans, including both secured and unsecured commercial loans, consumer loans,
construction and permanent residential mortgage loans, and the origination of
loans secured by commercial real estate properties.
At December 31, 1996, Great Southern had total assets of $119.2 million, an
increase of 8.76% over the $109.6 million recorded at December 31, 1995, and
total shareholders' equity of $10.1 million, up 13.48% over the $8.9 million at
December 31, 1995. For the twelve months ended December 31, 1996 it had
consolidated net earnings of $1,237,628, an increase of 6.49% over the earnings
reported for the twelve months ending December 31, 1995 of $1,162,150. Earnings
in 1996 were impacted by the costs of defending and settling litigation
initiated in 1989 by another financial institution claiming the right to the
Bank's name. Although Bank management and the board of directors considered the
claims totally without merit, they agreed in December, 1996 to settle this suit
in order to eliminate increasing defense costs. Under the settlement agreement,
the Bank was permitted to retain its name and conduct its business thereunder.
The total costs of settlement and defense charged to 1996 operations was
approximately $274,000.
During the year ended December 31, 1996, net loans increased 15.06% to
$93.2 million from $81.0 million as of December 31, 1995. The Bank's portfolio
of investment securities increased to $12.5 million as of December 31, 1996 from
$12.0 million at December 31, 1995. The Bank's deposits increased to $107.8
million as of December 31, 1996 from $99.5 million at December 31, 1995. The
8.34% increase in deposits reflected the Bank's strategy of continuing to accept
and retain deposit accounts for which funds can be prudently invested.
REGULATION AND LEGISLATION
As a state-chartered commercial bank, the Bank is subject to extensive
regulation by the Florida Department of Banking and Finance ("Florida
Department") and the FDIC. The Bank files reports with the Florida Department
and the FDIC concerning its activities and financial condition, in addition to
obtaining regulatory approvals prior to entering into certain transactions such
as mergers with or acquisitions of other financial institutions. Periodic
examinations are performed by the Florida Department and the FDIC to monitor the
Bank's compliance with the various regulatory requirements. The Bank is also
subject to regulation by the Federal Reserve with respect to reserves required
to be maintained against deposits and certain other matters. As a Florida
corporation, the Bank is subject to that state's banking laws and to certain
regulations by the Florida Department.
60
<PAGE> 68
Great Southern 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.
CREDIT RISK
The Bank's business activity entails potential loan losses, the magnitude
of which depend on a variety of economic factors affecting borrowers which are
beyond the control of the Bank. While the Bank has instituted underwriting
guidelines and credit review procedures to protect the Bank from avoidable
credit losses, some losses will inevitably occur.
The following table sets forth certain information regarding non-accrual
loans and real estate owned, the ratio of such loans and real estate owned to
total assets as of the dates indicated, and certain other related information:
<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------------------------
1996 1995 1994 1993 1992
----- ----- ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
Real estate loans:
Residential................................ $ 218 $ -- $ -- $ -- $ --
Commercial................................. -- -- 488 48 --
Consumer and other loans...................... -- -- 59 0 271
----- ----- ------ ------ ------
Total nonperforming loans............. 218 -- 547 48 271
Other real estate owned:
Real estate acquired by foreclosure or deed in
lieu of foreclosure........................ 68 -- 800 1,020 884
----- ----- ------ ------ ------
Total nonperforming assets............ $ 286 $ -- $1,347 $1,068 $1,155
===== ===== ====== ====== ======
Total nonperforming loans to total
assets.............................. 0.18% 0.00% 0.51% 0.05% 0.37%
===== ===== ====== ====== ======
Total nonperforming assets to total
assets.............................. 0.24% 0.00% 1.26% 1.18% 1.59%
===== ===== ====== ====== ======
</TABLE>
61
<PAGE> 69
The following table sets forth information with respect to activity in the
Bank's allowance for loan losses during the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Average loans outstanding:............ $85,858 $76,814 $69,893 $58,613 $44,422
======= ======= ======= ======= =======
Allowance at beginning of period...... $ 1,015 $ 935 $ 706 $ 700 $ 709
------- ------- ------- ------- -------
Loans Charged-off:
Residential real estate loans.... -- -- -- 75 73
Commercial real estate loans..... -- -- -- -- 30
Commercial loans................. 50 51 0 319 613
Consumer loans................... 74 17 58 13 4
------- ------- ------- ------- -------
Total loans charged-off..... 124 68 58 407 720
Recoveries.......................... 26 98 117 64 19
------- ------- ------- ------- -------
Net charge-offs (recoveries)..... 98 (30) (59) 343 701
Provision for loan losses charged
to operating expenses.......... 110 50 170 349 692
------- ------- ------- ------- -------
Allowance at end of year......... $ 1,027 $ 1,015 $ 935 $ 706 $ 700
======= ======= ======= ======= =======
Net charge-offs to average loans
outstanding.................... 0.11% (0.04)% (0.08)% 0.59% 1.58%
======= ======= ======= ======= =======
Allowance to period-end loans.... 1.08% 1.23% 1.29% 1.05% 1.31%
======= ======= ======= ======= =======
Period end total loans................ $94,456 $82,300 $72,572 $67,393 $53,525
======= ======= ======= ======= =======
</TABLE>
RESULTS OF OPERATIONS
The operating results of the Bank depend primarily on its net interest
income, which is equal to the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities,
consisting primarily of deposits. Net interest income is determined by reference
to (i) the difference between yields earned on interest-earning assets and rates
paid on interest-bearing liabilities ("net interest spread"), and (ii) the
relative amounts of interest-earning assets and interest-bearing liabilities.
The Bank's net interest spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows. In addition, the Bank's net earnings are also affected by the level of
nonperforming loans and real estate owned, as well as the level of its
non-interest income and non-interest expenses, such as salaries and employee
benefits, occupancy, check and data processing and equipment costs and
provisions for loan losses and income taxes.
The following table sets forth for the periods indicated information
regarding (i) the total dollar amount of interest income of the Bank from
earning assets and the resultant average yields; (ii) the total dollar
62
<PAGE> 70
amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) net interest spread; and (v) net
interest margin. Average balances are based upon daily balances.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1996 1995 1994
---------------------------- ---------------------------- ----------------------------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------ -------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans(1).................... $ 85,858 $8,190 9.54% $ 76,814 $7,424 9.66% $ 69,893 $5,950 8.51%
Investment securities....... 12,826 791 6.17 15,831 948 5.99 13,491 765 5.67
Federal funds sold.......... 2,304 123 5.32 4,769 282 5.92 4,373 196 4.47
-------- ------ ---- -------- ------ ---- -------- ------ ----
Total earning
assets............. 100,988 9,104 9.01 97,414 8,654 8.88 87,756 6,911 7.88
Non-earning assets............ 6,731 7,119 8,658
-------- -------- --------
Total assets......... $107,719 $104,533 $ 96,414
======== ======== ========
Interest-bearing liabilities:
Savings and NOW accounts.... $ 12,412 $ 229 1.84% $ 13,575 $ 241 1.78% $ 14,216 $ 248 1.74%
Money market deposits....... 35,073 1,474 4.20 35,492 1,708 4.81 27,721 975 3.52
Certificates of deposit..... 23,782 1,252 5.27 22,452 1,190 5.30 22,965 969 4.22
Borrowings.................. 1,278 57 4.44 424 20 4.80 301 4 1.38
-------- ------ ---- -------- ------ ---- -------- ------ ----
Total
interest-bearing
liabilities........ 72,545 3,012 4.15 71,943 3,159 4.39 65,202 2,196 3.37
------ ---- ------ ---- ------ ----
Noninterest-bearing
liabilities................. 25,774 24,458 24,198
Shareholders' equity.......... 9,400 8,132 7,018
-------- -------- --------
Total liabilities and
shareholders'
equity............. $107,719 $104,533 $ 96,414
======== ======== ========
Net interest income........... $6,092 $5,495 $4,715
====== ====== ======
Net interest spread(2)........ 4.86% 4.49% 4.51%
==== ==== ====
Net interest margin(3)........ 6.03% 5.64% 5.37%
==== ==== ====
Ratio of average earning
assets to average
interest-bearing
liabilities................. 1.39 1.35 1.35
======== ======== ========
</TABLE>
- ---------------
(1) Includes nonaccrual loans.
(2) Represents the difference between the yield on earning assets and the cost
of interest-bearing liabilities.
(3) Represents the net interest income divided by average earning assets.
63
<PAGE> 71
RATE/VOLUME ANALYSIS
The following table sets forth certain information regarding changes in
interest income and interest expense of the Bank for the periods indicated. For
each category of earning assets and interest-bearing liabilities, information is
provided on changes attributable to (1) changes in rate (change in rate
multiplied by prior volume), (2) changes in volume (change in volume multiplied
by prior rate) and (3) changes in rate-volume (change in rate multiplied by
change in volume).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 VS. 1995
-------------------------------
INCREASE (DECREASE) DUE TO
(IN THOUSANDS)
-------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
----- ------ ------ -----
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans..................................................... $ (92) $ 874 $(16) $ 766
Investment securities..................................... 28 (180) (5) (157)
Other earning assets...................................... (29) (145) 15 (159)
----- ----- ---- -----
Total............................................. $ (93) $ 549 $ (6) $ 450
----- ----- ---- -----
Interest-bearing liabilities:
Deposits:
Savings and NOW accounts............................... $ 8 $ (21) $ 1 $ (12)
Money market accounts.................................. (217) (11) (6) (234)
Certificate accounts................................... (7) 70 1 62
Borrowings................................................ (2) 41 (2) 37
----- ----- ---- -----
Total............................................. (218) 79 (8) (147)
----- ----- ---- -----
Net change in net interest income........................... $ 125 $ 470 $ 2 $ 597
===== ===== ==== =====
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 VS. 1994
-------------------------------
INCREASE (DECREASE) DUE TO
(IN THOUSANDS)
-------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
---- ------ ------ ------
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans..................................................... $804 $589 $ 81 $1,474
Investment securities..................................... 43 133 7 183
Other interest-earning assets............................. 63 18 5 86
---- ---- ---- ------
Total............................................. $910 $740 $ 93 $1,743
---- ---- ---- ------
Interest-bearing liabilities:
Deposits:
Savings and NOW accounts............................... $ 6 $(11) $ (2) $ (7)
Money market accounts.................................. 358 274 101 733
Certificate accounts................................... 248 (22) (5) 221
Borrowings................................................ 10 2 4 16
---- ---- ---- ------
Total............................................. 622 243 98 963
---- ---- ---- ------
Net change in net interest income........................... $288 $497 $ (5) $ 780
==== ==== ==== ======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
A Florida-chartered commercial bank is required to maintain a liquidity
reserve of at least 15% of its total transaction accounts and 8% of its total
nontransaction accounts less public funds deposits. The liquidity reserve may
consist of cash on hand, cash on deposit with other correspondent banks, federal
funds sold, and certain investments as determined by the rules of the Florida
Department. As of December 31, 1996 and
64
<PAGE> 72
December 31, 1995, the Bank's liquidity reserve totaled, $18,424,915 and
$13,376,613, respectively, or approximately 17.10% and 13.45% of its total
deposits.
The following table sets forth the carrying value of the Bank's investment
portfolio as of the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Securities Available for Sale:
U.S. Treasury securities................................ $ 2,983 $ 7,034 $11,566
U.S. Government agencies................................ 5,582 3,597 1,774
State, county and municipal............................. 300 -- --
Other securities........................................ 365 343 126
------- ------- -------
Total available for sale........................ 9,230 10,974 13,466
------- ------- -------
Securities Held to Maturity:
U.S. Treasury securities................................ -- -- 4,995
U.S. Government agencies................................ 2,029 1,000 3,160
State, county and municipal............................. 1,270 -- --
Other securities........................................ -- -- --
------- ------- -------
Total held to maturity.......................... 3,299 1,000 8,155
------- ------- -------
Total investment securities..................... $12,529 $11,974 $21,621
======= ======= =======
</TABLE>
The following table sets forth, by maturity distribution, certain
information pertaining to the Bank's investment securities portfolio at December
31, 1996:
<TABLE>
<CAPTION>
SECURITIES AVAILABLE SECURITIES HELD
FOR SALE TO MATURITY
---------------------- ----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
--------- ---------- --------- ----------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in:
One year or less............................. $ 501 $ 503 $ 91 $ 91
After one through five years................. 7,907 7,868 1,489 1,483
After five through ten years................. 497 494 1,719 1,690
Mortgage-backed securities/other............. 365 365 -- --
------ ------ ------ ------
Total........................................ $9,270 $9,230 $3,299 $3,264
====== ====== ====== ======
</TABLE>
At December 31, 1996 the securities available for sale portfolio carried a
6.06% aggregate yield to maturity, while the securities held to maturity
portfolio had an aggregate yield to maturity of 5.85%.
The Bank's primary sources of funds consist of principal payments on loans
and investment securities, proceeds from sales and maturities of investment
securities and net increases in deposits. The Bank uses its capital resources
principally to purchase investment securities and fund existing and continuing
loan commitments. At December 31, 1996 and December 31, 1995, the Bank had
commitments to originate loans totaling $11.8 million and $10.4 million,
respectively. Scheduled maturities of certificates of deposit during the next 12
months following December 31, 1996 totaled $18.8 million.
REGULATORY CAPITAL REQUIREMENTS
For the purpose of evaluating what should constitute the minimum capital
adequacy of a financial institution, Federal banking regulators have adopted
regulations which make reference to the institution's "Tier 1 leverage" capital
and also to its "total" capital. In most instances, "Tier 1 leverage" capital
will consist solely of funds permanently committed to the institution (i.e.,
shareholders' equity), less net intangible assets. Conversely, "total" capital
(comprised of the sum of Tier 1 and supplementary, or Tier 2, capital) includes
not
65
<PAGE> 73
only shareholders' equity, but the allowance for loan losses (subject to
limitations). Under FDIC regulations, the Bank is required to meet certain
minimum capital thresholds. The requirement is not a valuation allowance and has
not been created by charges against earnings; rather, it represents a
restriction on shareholders' equity. The following chart compares the minimum
capital ratios required by the FDIC to the ratios maintained by Great Southern
on a consolidated basis, and by the Bank:
<TABLE>
<CAPTION>
MINIMUM AMOUNT AND
ACTUAL RATIO REQUIRED
------------------- --------------------
AMOUNT RATIO AMOUNT RATIO
----------- ----- ----------- -----
(THOUSANDS) (THOUSANDS)
<S> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital (to Risk Weighted Assets):
Consolidated............................... $11,098 12.2% $7,302 8.0%
Subsidiary Bank............................ 10,943 12.0 7,302 8.0
Tier 1 Capital (to Risk Weighted Assets):
Consolidated............................... $10,071 11.0% $3,651 4.0%
Subsidiary Bank............................ 9,915 10.9 3,651 4.0
Tier 1 Capital (to Average Assets):
Consolidated............................... $10,071 8.9% $4,529 4.0%
Subsidiary Bank............................ 9,915 8.8 4,521 4.0
</TABLE>
ASSET AND LIABILITY MANAGEMENT
As part of its asset and liability management, the Bank has emphasized
establishing and implementing internal asset-liability decision processes, as
well as communications and control procedures to aid in managing the Bank's
earnings. Management believes that these processes and procedures provide the
Bank with better capital planning, asset mix and volume controls, loan-pricing
guidelines, and deposit interest-rate guidelines which should result in controls
and less exposure to interest-rate risk.
The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest-rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest-rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest-rate sensitivity
gap is defined as the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within a given time period.
The gap ratio is computed as rate-sensitive assets to rate-sensitive
liabilities. A gap ratio of 1.0 represents perfect matching. A gap is considered
positive when the interest-rate sensitive assets exceed interest-rate sensitive
liabilities. A gap is considered negative when interest-rate sensitive
liabilities exceed interest-rate sensitive assets. During a period of rising
interest rates, a negative gap would adversely affect net interest income, while
a positive gap would result in an increase in net interest income. During a
period of falling interest rates, a negative gap would result in an increase in
net interest income, while a positive gap would adversely affect net interest
income.
In order to minimize the potential for adverse effects of material and
prolonged increases in interest rates on the Bank's results of operations,
management continues to monitor asset and liability management policies to
better match the maturities and repricing terms of the Bank's interest-earning
assets and interest-bearing liabilities. Such policies have consisted primarily
of: (i) emphasizing the origination of adjustable-rate loans; (ii) maintaining a
stable core deposit base; and (iii) maintaining a significant portion of liquid
assets (cash and short-term investments).
The Bank has also maintained a relatively large portfolio of liquid assets
(cash and assets maturing or repricing in one year or less) in order to reduce
its vulnerability to shifts in market rates of interest. At December 31, 1996
and December 31, 1995, 8.39% and 17.70%, respectively, of the Bank's total
assets consisted of cash, federal funds sold, and short-term U.S. Government
securities, and its overall liquidity ratio was approximately 9.28% and 19.50%
of total deposits.
The Bank seeks to maintain a large stable core deposit base by providing
quality service to its customers without significantly increasing its cost of
funds or operating expenses. The success of the Bank's core deposit
66
<PAGE> 74
strategy is demonstrated by the stability of its money-market deposit accounts,
savings accounts and NOW accounts, which, in the aggregate, totaled $50.9
million, representing 47.22% of total deposits at December 31, 1996, and $48.0
million or 48.24% of such deposits at December 31, 1995. These accounts bore a
weighted-average rate of 3.06% at December 31, 1996 and 3.29% at December 31,
1995.
As of December 31, 1996, the Bank's cumulative one-year interest-rate
sensitivity gap ratio was .93%. Although management believes that the
implementation of the referenced strategies has reduced the potential adverse
effects of changes in interest rates on the Bank's results of operations, any
substantial and prolonged increase in market interest rates could have an
adverse impact on the Bank's results of operations. Management monitors the
Bank's interest-rate sensitivity gap on a quarterly basis, having retained
Community Bank and Thrift Advisory Services, Inc., to provide practical and
theoretical gap reports. The practical gap report is based on the Federal
Reserve's March 26, 1993 draft for incorporating Interest-Rate Risk into
Risk-Based Capital Standards.
The Bank's management monitors interest rate risk by reviewing several
areas of the Bank's operation, such as liquidity, volatile liability dependency
and rate sensitivity, operating within the targets and guidelines of the Bank's
Funds Management policy. Although management believes little can be done until
the maturity of the Bank's deposits occur to effect changes in rate sensitivity,
the asset mix continues to move toward less rate sensitivity for all time
periods, and while a negative gap will continue in the one year time period, it
should decline in line with management goals.
The following table sets forth certain information relating to the Bank's
earning assets and interest-bearing liabilities at December 31, 1996 that are
estimated to mature or are scheduled to reprice within the period shown:
<TABLE>
<CAPTION>
MORE THAN MORE
ONE YEAR THAN
ONE YEAR TO FIVE YEARS FIVE YEARS TOTAL
-------- ------------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
EARNING ASSETS:
Mortgage and Commercial loans:
Adjustable Rate (all property types)....... $27,013 $ 3,086 $ 371 $ 30,470
Fixed rate................................. 18,286 8,495 9,315 36,096
------- ------- ------- --------
Total mortgage loans............... 45,299 11,581 9,686 66,566
Consumer and other loans..................... 17,153 9,868 607 27,628
Short-term cash equivalents.................. 2,752 -- -- 2,752
Investments.................................. 690 10,191 1,648 12,529
------- ------- ------- --------
Total Earning Assets............... 65,894 31,640 11,941 109,475
------- ------- ------- --------
INTEREST-BEARING LIABILITIES:
Certificates of deposit.................... 18,753 6,353 42 25,148
Savings and NOW accounts................... 14,296 -- -- 14,296
Money market accounts...................... 36,644 -- -- 36,644
Other borrowings........................... 875 -- -- 875
------- ------- ------- --------
Total Interest-Bearing
Liabilities...................... 70,568 6,353 42 76,963
------- ------- ------- --------
Rate Sensitivity GAP......................... $(4,674) $25,287 $11,899 $ 32,512
======= ======= ======= ========
Cumulative Rate Sensitivity GAP.............. $(4,674) $20,613 $32,512 $ 32,512
======= ======= ======= ========
Rate Sensitivity GAP Ratio................... .93% 4.98% 284.3% 1.42%
Cumulative Rate Sensitivity GAP Ratio........ .93% 1.27% 1.42% 1.42%
Ratio of Cumulative GAP to Total Earning
Assets..................................... (4.27)% 18.83% 29.70% 29.70%
</TABLE>
- ---------------
(1) In preparing the table above, adjustable-rate loans are included in the
period in which the interest rates are next scheduled to adjust rather than
in the period in which the loans mature. Fixed-rate loans are scheduled,
including repayment, according to their maturities.
67
<PAGE> 75
(2) Excludes nonaccrual loans.
(3) Investments are scheduled through repricing and maturity dates.
(4) Includes Federal Home Loan Bank stock.
(5) Checking accounts, NOW accounts, savings accounts and money market deposit
accounts are regarded as ready accessible withdrawable accounts. All other
time accounts are scheduled through the maturity dates.
Loan Maturities. The table below sets forth the contractual maturity of
the Bank's commercial loan and construction loan portfolios at December 31,
1996. Demand loans, secured exclusively by passbook savings or CD's and having
no stated schedule of repayments and no stated maturity, are reported as due
within one year. The table does not reflect anticipated prepayments.
MATURITY SCHEDULE OF SELECTED LOANS
<TABLE>
<CAPTION>
0-12 1-5 OVER 5
MONTHS YEARS YEARS TOTAL
------- ------ ------ -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial, financial, and agricultural............... $11,852 $5,908 $ 317 $18,077
Real Estate -- Construction........................... 2,200 -- 787 2,987
------- ------ ------ -------
Total....................................... $14,052 $5,908 $1,104 $21,064
======= ====== ====== =======
Fixed Interest Rate................................... $ 1,957 $ -- $ 40 $ 1,997
Variable Interest Rate................................ 12,095 5,908 1,064 19,067
</TABLE>
The following table shows the distribution of, and certain other
information relating to, Great Southern's consolidated deposit accounts, by
type:
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------------------------
1996 1995 1994
------------------ ----------------- -----------------
% OF % OF % OF
AMOUNT DEPOSIT AMOUNT DEPOSIT AMOUNT DEPOSIT
-------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Demand deposits................ $ 31,663 29.4% $29,187 29.3% $26,209 26.5%
Savings and NOW deposits....... 14,296 13.3 14,497 14.6 11,605 11.7
Money market deposits.......... 36,644 34.0 33,544 33.7 37,298 37.6
-------- ----- ------- ----- ------- -----
SubTotal............. 82,603 76.7 77,228 77.6 75,112 75.8
-------- ----- ------- ----- ------- -----
Certificates of deposit
2.00 - 3.99%................. 381 0.3 423 0.4 3,467 3.5
4.00 - 5.99.................. 23,361 21.7 15,923 16.0 19,887 20.0
6.00 - 7.99.................. 1,406 1.3 5,919 6.0 468 0.5
8.00 - 9.99.................. -- 0.0 -- 0.0 170 0.2
10.00 - 11.99................ -- 0.0 -- 0.0 -- 0.0
-------- ----- ------- ----- ------- -----
Total certificates of
deposits(1)............... 25,148 23.3 22,265 22.4 23,992 24.2
-------- ----- ------- ----- ------- -----
Total deposits............... $107,751 100.0% $99,493 100.0% $99,104 100.0%
======== ===== ======= ===== ======= =====
</TABLE>
- ---------------
(1) Includes individual retirement accounts ("IRA") totaling $2.3 million, $1.9
million and $1.9 million at December 31, 1996, 1995, and 1994, respectively,
all of which were in the form of certificates of deposits.
68
<PAGE> 76
The following table shows the average amount of and the average rate paid
on each of the following deposit accounts categories during the periods
indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994
----------------- ----------------- -----------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing checking
accounts......................... $25,166 0.00% $23,854 0.00% $22,667 0.00%
NOW and savings accounts........... 12,412 1.84 13,575 1.78 14,216 1.74
Money market accounts.............. 35,073 4.20 35,492 4.81 27,721 3.52
Certificate of deposit............. 23,782 5.27 22,452 5.30 22,965 4.22
------- ------- -------
Total deposits........... $96,433 3.06 $95,373 3.29 $87,569 2.50
======= ======= =======
</TABLE>
The following table presents for various interest rate categories the
amounts of outstanding certificates of deposit at December 31, 1996 which mature
during the periods indicated:
<TABLE>
<CAPTION>
MATURITY
-------- (IN THOUSANDS)
<S> <C>
1997........................................................ $18,765
1998........................................................ 5,848
1999-2000................................................... 535
2001 & thereafter........................................... 42
-------
Total............................................. $25,148
=======
</TABLE>
Jumbo certificates ($100,000 and over) outstanding as of December 31, 1996
mature as follows:
<TABLE>
<CAPTION>
MATURITY
-------- (IN THOUSANDS)
<S> <C>
Due within three months or less............................. $ 3,972
Due over three months to six months......................... 1,100
Due over six months to one year............................. 3,325
Due over one year........................................... 2,817
-------
Total............................................. $11,214
=======
</TABLE>
COMPARISON OF YEARS ENDED DECEMBER 1996 AND 1995
General. Net income for the year ended December 31, 1996 was $1,237,628 or
$.75 per share compared to $1,162,150 or $.75 per share for 1995. The increase
in earnings was due primarily to an increase in net interest income. The Bank's
net income was affected by the costs associated with defending and settling
litigation initiated in 1989 by another financial institution claiming the right
to the Bank's name. Although Bank management and the board of directors
considered the claims totally without merit, they agreed in December, 1996 to
settle this suit in order to eliminate increasing defense costs. Under the
settlement agreement, the Bank was permitted to retain its name and conduct its
business thereunder. The total costs of settlement and defense charged to 1996
operations was approximately $274,000.
Interest Income and Expense. Interest income increased $450,133 or 5.2% to
$9,104,466 during the year ended December 31, 1996. Interest on loans increased
$766,659 to $8,190,460 due to an increase in the average loan portfolio from
$76,814,000 during 1995 to $85,858,000 during 1996. Interest on investment
securities decreased $156,918 to $791,272 due to a decrease in the average
amount invested in securities during 1996 compared with 1995.
Interest expense on deposit accounts and short-term borrowings decreased
from $3,159,120 for the year ended December 31, 1995 to $3,012,388 for the year
ended December 31, 1996. This increase was primarily the result of a decrease in
rates paid on deposits.
69
<PAGE> 77
Provision for Credit Losses. The provision for credit losses is charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Bank, industry standards, the amount of nonperforming
loans, general economic conditions, particularly as they relate to the Bank's
market areas, and other factors related to the collectibility of the Bank's loan
portfolio. The provision for loan losses increased from $50,041 for the year
ended December 31, 1995 to $109,903 during 1996. The allowance for loan losses
increased from $1,014,838 at December 31, 1995 to $1,027,300 at December 31,
1996. Nonperforming loans as a percentage of total assets were .18% at December
31, 1996. There were no non-performing loans at December 31, 1995. While
management believes that its allowance for loan losses was adequate as of
December 31, 1996, future adjustments to the Bank's allowance for loan losses
may be necessary if economic and other conditions differ substantially from the
assumptions used in making the determination.
Total Noninterest Expense. Total noninterest expense increased 11% from
$4,400,301 for the year ended December 1995 to $4,888,351 for the year ended
December 1996. The increase was primarily due to an increase in legal fees
related to litigation described above. There were also increases in employee
compensation, occupancy expense and equipment expense.
Income Tax Provision. The income tax provision was $739,230 for the year
ended December 31, 1996 based on income before taxes. The income tax provision
was $740,237 for the year ended December 31, 1995.
COMPARISON OF YEARS ENDED DECEMBER 1995 AND 1994
General. Net income for the year ended December 31, 1995 was $1,162,150 or
$.75 per share compared to $886,535 or $.59 per share for 1994. The increase in
earnings was primarily due to increases in net interest income and noninterest
income as well as improved expense control.
Interest Income and Expense. Interest income increased $1,743,462 or 25%
during the year ended December 31, 1995. Interest on loans increased $1,473,563
to $7,423,801 due to an increase in the weighted average yield from 8.51% during
the year ended December 31, 1994 to 9.66% during the year ended December 31,
1995. The increase was also due to an increase in the average loan portfolio
from $69,893,000 for the year ended December 31, 1994 to $76,814,000 for the
year ended December 1995. Interest on investment securities increased from
$765,053 for the year ended December 31, 1994 to $948,190 for the year ended
December 31, 1995 due primarily to an increase in the average amount invested in
securities during 1995 compared to 1994.
Interest expense on deposit accounts and short-term borrowings increased
from $2,195,634 for the year ended December 31, 1994 to $3,159,120 for the year
ended December 31, 995. This increase was primarily the result of an increase in
the rates paid on interest-bearing liabilities from 3.37% during 1994 to 4.39%
during 1995.
Provision for Credit Losses. The provision for credit losses decreased
from $170,147 for the year ended December 31, 1994 to $50,041 during 1995. The
allowance for loan losses increased from $935,000 at December 31, 1994 to
$1,014,838 at December 31, 1995.
Noninterest Expense. Total noninterest expense increased 11% from
$3,959,424 for the year ended December 31, 1994 to $4,400,301 for the year ended
December 1995. The increase was primarily due to an increase in employee
compensation and other miscellaneous expenses. There were smaller increases in
occupancy expense and equipment expense from 1994 to 1995.
Income Tax Provision. The income tax provision increased from $481,352 for
the year ended December 31, 1994 to $740,237 for 1995, based on increased
earnings before income taxes.
COMPARISON OF YEARS ENDED DECEMBER 1994 AND 1993
General. Net income for the year ended December 31, 1994 was $886,535 or
$.59 per share compared to $695,938 or $.48 per share for 1993. The increase in
earnings was primarily due to an increase in net interest income and a decrease
in the loan loss provision, partially offset by increased non-interest expenses.
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<PAGE> 78
Interest Income. Interest income increased $1,290,275 or 23% during the
year ended December 1994. Interest on loans increased $1,038,920 to $5,950,238
due to an increase in the weighted average yield from 8.28% during the year
ended December 1993 to 8.51% during the year ended December 1994. The increase
was also due to an increase in the average loan portfolio from $59,330,000 for
the year ended December 1993 to $69,893,000 for the year ended December 1994.
Interest on investment securities increased from $598,249 for the year ended
December 31, 1993 to $765,053 for the year ended December 31, 1994, due to an
increase in the average amount invested in securities during 1994 compared to
1993.
Interest Expense. Interest expense on deposit accounts and short-term
borrowings increased from $1,648,849 in the year ended December 31, 1993 to
$2,195,634 for the year ended December 31, 1994. This increase was primarily the
result of an increase in the rates paid on deposits from 2.98% during 1993 to
3.37% during 1994.
Noninterest Expense. Total noninterest expense increased 8.5% from
$3,650,868 for the year ended December 31, 1993 to $3,959,424 for the year ended
December 1994. The increase was primarily due to an increase in employee
compensation. There were also increases in legal expenses due to the litigation
discussed above as well as data processing expenses.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have been
prepared on the traditional basis of accounting, which requires the measurement
of financial position and operating results in terms of historical dollars,
without considering changes in the relative purchasing power of money over time
due to inflation. Unlike most industrial companies, substantially all of the
assets and liabilities of the Bank are monetary in nature. As a result, interest
rates have a more significant impact on the Bank's performance than the effects
of general levels of inflation. Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services,
since such prices are affected by inflation to a larger extent than interest
rates.
FUTURE ACCOUNTING REQUIREMENTS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 125 which provides accounting and
reporting standards for certain transfers and servicing of financial assets as
well as extinguishment of liabilities. SFAS No. 125 also provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. SFAS No. 125, as amended by SFAS No. 127,
is generally effective for activities under the standard that occur after
December 31, 1997. Management does not anticipate SFAS No. 125 will have a
material impact on Great Southern.
The FASB has also issued SFAS No. 128, "Earnings Per Share". This SFAS
establishes standards for computing and presenting earnings per share, making
them comparable to international accounting standards. It replaces the
previously-required presentation of primary earnings per share with a
presentation of basic earnings per share, and requires a reconciliation of the
numerator and denominator of the basic earnings per share computation to the
numerator and denominator of the diluted earnings per share computation. Under
SFAS No. 128, dilution is excluded from basic earnings per share. SFAS No. 128
is effective for periods ending after December 15, 1997, and earlier application
is not permitted. Other than the required restatement after the effective date
of prior earnings per share data, management does not believes SFAS No. 128 will
have any material effect on Great Southern.
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<PAGE> 79
BUSINESS OF BANCGROUP
GENERAL
BancGroup is a bank holding company registered under the BHCA. It was
organized in 1974 under the laws of Delaware and has operated under its current
name and management since 1981. 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 branches. In
Tennessee, Colonial Bank conducts a general commercial banking business through
three branches. In Georgia, Colonial Bank operates eleven branches in the
Atlanta area and three branches in the Dalton area. In Florida, Colonial Bank
operates eleven branches in the Orlando and Ormond Beach areas, nine branches in
Dade, Broward and Palm Beach counties, and six branches in Eustis and Lake
County. Colonial Mortgage Company, a subsidiary of Colonial Bank in Alabama, is
a mortgage banking company which services approximately $10.6 billion in
residential loans and which originates mortgages in 37 states through 6 regional
offices. BancGroup's commercial banking loan portfolio is comprised primarily of
commercial real estate loans (24%) and residential real estate loans (43%), 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.
BancGroup plans to merge all of its existing subsidiary banks in Florida,
Georgia and Tennessee into its Alabama bank subsidiary. Colonial Bank, no later
than July 1, 1997. Thereafter, Colonial Bank will conduct business as a single
bank subsidiary of BancGroup in the states of Alabama, Florida, Georgia and
Tennessee.
PROPOSED AFFILIATE BANKS
Since December 31, 1996, BancGroup has merged five banking institutions
into BancGroup, First Family, Tomoka, and Jefferson,, located in Florida,
Bankshares, located in Georgia, and Shamrock, located in Alabama, with aggregate
assets and stockholders' equity acquired of $896.9 and $66.6 million,
respectively. These acquisitions are included in the pro forma statements
contained herein.
See "THE COLONIAL BANCGROUP, INC. AND SUBSIDIARIES -- Condensed Pro Forma
Statements of Condition (Unaudited)."
BancGroup has entered into a definitive agreement dated as of March 24,
1997, to acquire First Commerce Banks of Florida, Inc. ("FCC"). FCC is a Florida
corporation and is a holding company for First Commerce Bank of Polk County
located in Winter Haven, Florida. FCC will merge with BancGroup and following
such merger First Commerce Bank of Polk County will merge with BancGroup's
Alabama bank subsidiary, Colonial Bank. Based on the market price of BancGroup
Common Stock as of March 24, 1997, a total of 685,990 shares of BancGroup Common
Stock would be issued to the stockholders of FCC. 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 maximum
and minimum amounts to be issued. This transaction is subject to, among other
things, approval by the stockholders of FCC and approval by appropriate
regulatory authorities. At December 31, 1996, FCC has assets of $106.0 million,
deposits of $94.8 million and stockholders' equity of $10.6 million.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
As of March 1, 1997, BancGroup had issued and outstanding 38,955,210 shares
of BancGroup Common Stock with 7,129 stockholders of record. Each such share is
entitled to one vote. In addition, as of that date, 1,605,010 shares of
BancGroup Common Stock were subject to issue upon exercise of options pursuant
to BancGroup's stock option plans and up to 512,800 shares of BancGroup Common
Stock were issuable upon conversion of BancGroup's 1986 Debentures. There are
currently 100,000,000 shares of BancGroup Common Stock authorized.
72
<PAGE> 80
The following table shows those persons who are known to BancGroup to be
beneficial owners as of March 1, 1997, 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)......................................... 2,888,820(3) 7.12%
Post Office Box 1108
Montgomery, AL 36101
James K. Lowder............................................. 2,199,298 5.42%
Post Office Box 250
Montgomery, AL 36142
Thomas H. Lowder............................................ 2,146,106 5.29%
Post Office Box 11687
Birmingham, AL 35202
</TABLE>
- ---------------
(1) Percentages are calculated assuming the issuance of 1,605,010 shares of
Common Stock pursuant to BancGroup's stock option plans.
(2) Robert E. Lowder is the brother of James K. and Thomas H. Lowder. Robert E.
Lowder disclaims any beneficial ownership interest in the shares owned by
his brothers.
(3) Includes 181,020 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 March 1, 1997.
<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ---- --------- --------------
<S> <C> <C>
DIRECTORS
Lewis Beville............................................... 1,816 *
Young J. Boozer............................................. 15,256(2) *
William Britton............................................. 19,616 *
Jerry J. Chesser............................................ 147,428 *
Augustus K. Clements, III................................... 18,600 *
Robert S. Craft............................................. 11,994 *
Patrick F. Dye.............................................. 37,960(3) *
Clinton O. Holdbrooks....................................... 280,900(4) *
D. B. Jones................................................. 20,714(5) *
Harold D. King.............................................. 156,108 *
Robert E. Lowder**.......................................... 2,888,820(6) 7.12%
John Ed Mathison............................................ 28,454 *
Milton E. McGregor.......................................... -- *
John C. H. Miller, Jr....................................... 40,480(7) *
Joe D. Mussafer............................................. 20,264 *
William E. Powell, III...................................... 14,352 *
J. Donald Prewitt........................................... 244,940(8) *
Jack H. Rainer.............................................. 2,900 *
Jimmy Rane.................................................. -- *
</TABLE>
73
<PAGE> 81
<TABLE>
<CAPTION>
PERCENTAGE
COMMON OF CLASS
NAME STOCK OUTSTANDING(1)
- ---- --------- --------------
<S> <C> <C>
Frances E. Roper............................................ 365,342 *
Simuel Sippial.............................................. 2,774 *
Ed V. Welch................................................. 30,454 *
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Young J. Boozer, III........................................ 46,920(9) *
W. Flake Oakley, IV......................................... 39,458(9) *
Michelle Condon............................................. 18,586(9) *
All Executive Officers and Directors as a Group............. 4,454,136(10) 10.98%
</TABLE>
- ---------------
* Represents less than one percent.
** Executive Officer.
(1) Percentages are calculated assuming the issuance of 1,605,010 shares of
Common Stock pursuant to BancGroup's stock option plans.
(2) Includes 1,000 shares of Common Stock out of 2,000 shares owned by Young J.
Boozer, and Young J. Boozer, III EX U/W Phyllis C. Boozer.
(3) Includes 35,960 shares of Common Stock subject to options exercisable under
BancGroup's stock option plans.
(4) Includes 24,524 shares of Common Stock subject to options under BancGroup's
stock option plans, and 78,998 shares over which Mr. Holdbrooks serves as
trustee.
(5) Mr. Jones holds power to vote these shares as trustee.
(6) These shares include 181,020 shares of Common Stock subject to options
under BancGroup's stock option plans. See the table at "Voting Securities
and Principal Stockholders."
(7) Includes 20,000 shares subject to options.
(8) Includes 61,604 shares subject to stock options.
(9) Young J. Boozer, III, W. Flake Oakley, IV and Michelle Condon, hold options
respecting 25,000, 16,000 and 10,000 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, 1996, at items 10, 11, and 13 and is
incorporated herein by reference.
74
<PAGE> 82
BUSINESS OF GREAT SOUTHERN
GENERAL
Great Southern was incorporated on March 21, 1995. As of January 1, 1996,
by way of a merger transaction undertaken following the receipt of all requisite
regulatory and shareholder approvals, Great Southern acquired all of the
outstanding shares of the Bank. Aside from organizational activities and those
associated with such acquisition, Great Southern has engaged in no other
business activities other than its ownership of the Bank's shares and resulting
oversight of its operations.
The Bank was chartered by the State of Florida as a capital stock
commercial bank on December 15, 1988 and commenced operations on April 17, 1989
as a non-member bank of the Federal Reserve System insured by the Federal
Deposit Insurance Corporation. The Bank has operated as a traditional commercial
financial institution, attracting checking, savings, and money market account
deposits from individuals and businesses, and using such deposits to originate
commercial and residential real estate loans which are secured by property
located primarily in Palm Beach County, Florida. The Bank also originates
commercial loans, lines of credit and consumer loans. Its income is primarily
derived from interest and fees received in connection with lending activities.
Interest on deposits and general administrative expenses are the Bank's major
expense items.
The Bank currently employs 60 individuals and engages in the general
business of personal and commercial banking in Palm Beach County communities
including Atlantis, Boynton Beach, Hypoluxo, Juno Beach, Jupiter, Lantana, Lake
Worth, Palm Beach, Palm Beach Gardens, Riviera Beach, Wellington, Royal Palm
Beach, West Palm Beach and unincorporated Palm Beach County. For its primary
sources of funds, the Bank relies on personal and business deposits,
certificates of deposit and money market deposit accounts. The Bank's primary
sources of income include interest and fees earned from residential and
commercial mortgage loans, including construction and permanent mortgage loans,
secured and unsecured commercial and consumer loans, revolving credit lines,
home equity lines of credit and automobile loans.
MARKET AREA
The Bank's five branch bank offices are located in Palm Beach County,
Florida which contains the West Palm Beach-Boca Raton Metropolitan Statistical
Area. As of 1996, the latest estimate available, the West Palm Beach-Boca Raton
MSA had a population of approximately one million, and is one of the fastest
growing regions in the country.
While changing conditions involving the infrastructure requirements of
various geographic locations around the country have limited economic growth and
population expansion, the Bank's market area has continued to grow because of
the area's ability to attract new residents to its year round climate and its
relatively stable economic environment. The major economic base in the Bank's
market area includes service, tourism, retail, and real estate development and
construction businesses. The Bank believes that its office locations are
situated so as to take advantage of the existing and expected economic and
demographic growth in the market area.
PROPERTIES
The Bank's main office is located at 2000 Palm Beach Lakes Boulevard, West
Palm Beach in a ten story office building just west of Interstate Highway 95 in
the Palm Beach Lakes Boulevard business district. The office is situated
northwest of the downtown business district of West Palm Beach, which is also
home to the county and city governments. The Bank leases the first floor and
portions of the second and eighth floors, totaling 12,061 square feet. The first
floor comprises the Bank's main branch. There are three drive-thru lanes and a
drive-up ATM. The second floor contains various operations departments. The
eighth floor houses the corporate headquarters of Great Southern and the Bank's
loan department.
Management of the Bank believes the location to be convenient to both
commercial and individual customers and that such accessibility is a competitive
advantage. In addition to its main office, the Bank
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<PAGE> 83
maintains full-service branch offices at 3100 Lantana Road, Lantana, Florida (13
miles south of the headquarters office), and 10455 Southern Boulevard, Royal
Palm Beach, Florida (9 miles southwest of the headquarters). In April 1997, the
Bank opened a full-service branch office at 11317 Okeechobee Boulevard, Royal
Palm Beach, Florida (10 miles west of the headquarters) and a branch office at
185 East Indiantown Road, Suite 112, Jupiter, Florida (16 miles north of the
headquarters). The Jupiter office was approved by the Florida Department of
Banking to function as an interim facility while a permanent 3,500 square feet
full service branch is under construction during 1997. The Bank owns the land
and building on which two of its five branch offices are situated. The new
Jupiter Office will be constructed on land owned by the Bank. It leases the Palm
Beach Lakes Boulevard, Southern Boulevard and interim Jupiter locations with
leases expiring from 1997 to 2001. Most leases contain lease renewal options. In
addition, the Bank has a sixth approved branch location at 5750 Okeechobee
Boulevard, West Palm Beach under lease, which is anticipated to open during
third quarter, 1997.
COMPETITION
All phases of the Bank's business are highly competitive and subject to
severe competitive pressures. The Bank competes with local commercial banks,
numerous regional banks, credit unions, and savings and loan associations, many
of which have assets, capital and lending limits larger than the Bank. It is one
of approximately 34 commercial banks that have 239 offices located in Palm Beach
County. The Bank, along with other commercial banks, also competes with respect
to its lending activities, as well as in attracting demand deposits, with
savings banks, savings and loan associations, insurance companies, regulated
small loan companies, credit unions and with the issuers of securities, such as
shares in money market funds. Larger institutions have the resources to finance
wide ranging advertising campaigns and to allocate their investment assets to
products of higher yields and demand. By virtue of their greater total capital,
such institutions have substantially higher lending limits than the Bank (legal
lending limits to an individual borrower are limited to a percentage of the
Bank's total capital). Great Southern expects that if the Merger is consummated
these advantages will render the Bank more competitive to benefit its growth and
profitability. It will continue to focus on commercial customers, professionals
and consumers, because Great Southern management believes these segments offer
the greatest concentration of potential business and have historically
demonstrated a degree of loyalty in their banking relationships.
PRINCIPAL HOLDERS OF COMMON STOCK
Great Southern's authorized capital stock consists of 10,000,000 shares of
Great Southern Common Stock, par value $0.01, of which 1,590,845 shares are
currently issued and outstanding. There are reserved for issuance upon exercise,
140,775 stock options granted under the terms of the Bank's Stock Option Plan,
which was assumed by Great Southern.
The following table sets forth information as of March 31, 1997, regarding
the ownership of Great Southern Common Stock by each director and executive
officer of Great Southern, by each person known to Great Southern to be the
beneficial of more than five percent of the Great Southern Common Stock and by
all
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<PAGE> 84
directors and executive officers as a group. Unless otherwise indicated, all
persons shown in the table have sole voting and investment power with regard to
the shares shown.
<TABLE>
<CAPTION>
NAME AND POSITION SHARES PERCENTAGE
OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) OWNERSHIP
- ------------------- ---------------------- ----------
<S> <C> <C>
David H. Baker, Director................................ 24,192(2) 1.52%
John W. Cheatham, Director.............................. 81,760(3) 5.14
Sandy L. Costello, Director............................. 33,592(4) 2.11
Donald H. Cunningham, Director.......................... 11,680(5) .73
Roger H. Dean, Private Investor......................... 121,000 7.60
Abbott B. Gordon, Director.............................. 52,030(6) 3.27
J. Russell Greene, President, Director.................. 41,250(7) 2.54
Arthur S. Hillbrath, Director........................... 52,150(8) 3.28
Gerald F. Martens, Treasurer............................ 24,700(9) 1.53
James A. Schmid, Director............................... 58,200(10) 3.66
C. Robert Stock, Chairman of the Board.................. 141,571(11) 8.66
Sally L. Teel, Secretary................................ 31,460(12) 1.95
All directors and executive officers as a group (12
persons, including those names above)................. 673,585 39.45%
</TABLE>
- ---------------
(1) The stock ownership information shown has been furnished to Great Southern
by the named persons and group. Beneficial ownership as reported in the
table and elsewhere in this Prospectus has been determined in accordance
with the Securities and Exchange Commission regulations and includes shares
of Great Southern Common Stock which may be acquired within sixty days upon
the exercise of outstanding stock options.
(2) Consists of 6,278 shares owned jointly with his spouse, 14,410 shares held
as trustee, and 3,504 shares owned by separate IRAs in the names of his
children.
(3) Consists of 28,520 shares owned jointly with his spouse, 4,840 shares owned
by his spouse, and 48,400 shares owned by a company which is owned by him.
(4) Consists of 8,760 shares owned jointly with his spouse, and 24,832 shares
owned by his company's profit sharing trust.
(5) Consists of shares owned jointly with his spouse.
(6) Consists of shares owned by his revocable trust.
(7) Consists of 16,320 shares owned by his IRA, 330 shares held as custodian
for a minor child, 400 shares owned by a minor child, and 24,200 shares
which he may acquire upon exercise of stock options.
(8) Includes 6,050 shares owned by a corporation which is owned by him.
(9) Consists of 500 shares held as custodian for a minor child and 24,200
shares that he may acquire upon exercise of stock options.
(10) Consists of 34,000 shares owned by his trust and 24,200 shares held by him
as trustee.
(11) Includes 57,341 shares owned by his IRA, 37,800 shares owned jointly with
his spouse, 300 shares owned jointly with a minor child, 2,033 shares owned
by a minor child, and 43,975 shares that he may acquire upon exercise of
stock options.
(12) Consists of 7,260 shares owned by her IRA and 24,200 shares that she may
acquire upon exercise of stock options.
ADJOURNMENT OF SPECIAL MEETING
Approval of the Agreement by Great Southern'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 Great Southern Common Stock present in person or by proxy at the Special
Meeting to approve the Agreement, Great Southern'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
77
<PAGE> 85
the Special Meeting. Proxies voted against the Agreement and abstentions will
not be voted to adjourn the Special Meeting. Abstentions and broker non-votes
will not be voted on this matter but will not count as "no votes." If it is
necessary to adjourn the Special Meeting and the adjournment is for a period of
not more than 30 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 Great Southern to
solicit additional proxies for approval of the Agreement. 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 Agreement, an adjournment would afford Great
Southern the opportunity to solicit additional proxies in favor of the
Agreement.
OTHER MATTERS
The Board of Directors of Great Southern 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 Great Southern.
DATE FOR SUBMISSION OF BANCGROUP STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in BancGroup's proxy solicitation
materials for its 1998 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 14, 1998.
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 1996 of $1,474,853. John C. H.
Miller, Jr. beneficially owns 40,480 shares of Common Stock. Mr. Miller also
received employee-related compensation from BancGroup in 1996 of $41,000.
Certain legal matters relating to the Merger are being passed upon for Great
Southern by the law firm of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.,
Orlando, Florida.
EXPERTS
Coopers & Lybrand L.L.P. serves as the independent accountants for
BancGroup. The consolidated financial statements of BancGroup as of December 31,
1996 and 1995 and for each of the three years ended December 31, 1996 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.
Osburn, Henning and Company, P.A. serves as the independent certified
public accountants for Great Southern. Great Southern's consolidated financial
statements as of December 31, 1996 and 1995 and for each of the three years
ended December 31, 1996 are in this Prospectus in reliance upon the report of
such firm, are given on the authority of that firm as experts in accounting and
auditing. It is not expected that a representative of such firm will be present
at the Special Meeting.
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY
GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF GREAT SOUTHERN PRIOR TO
THE SPECIAL MEETING, BY EXECUTING A LATER DATED PROXY AND DELIVERING IT TO THE
SECRETARY OF GREAT SOUTHERN PRIOR TO THE SPECIAL MEETING OR BY ATTENDING THE
SPECIAL MEETING VOTING IN PERSON.
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<PAGE> 86
GREAT SOUTHERN BANCORP AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Shareholders' Equity............. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 87
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders
Great Southern Bancorp and Subsidiary
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheets of Great
Southern Bancorp and Subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Great
Southern Bancorp and Subsidiary as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
OSBURN, HENNING AND COMPANY
February 7, 1997, except for
Note 16, as to which the date is
March 6, 1997
Orlando, Florida
F-2
<PAGE> 88
GREAT SOUTHERN BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 6,646,497 $ 6,722,594
Federal funds sold and securities purchased under resale
agreements................................................ 2,752,000 7,320,000
------------ ------------
Total Cash and Cash Equivalents................... 9,398,497 14,042,594
Securities available for sale............................... 9,229,760 10,974,377
Securities held to maturity................................. 3,299,443 1,000,000
Loans:
Commercial, financial and agricultural.................... 18,076,621 17,364,350
Real estate -- construction............................... 2,987,351 3,977,353
Real estate -- mortgage................................... 65,150,129 53,682,529
Installment and consumer lines............................ 8,242,679 7,276,236
------------ ------------
Total Loans....................................... 94,456,780 82,300,468
Less: Allowance for loan losses........................... (1,027,300) (1,014,838)
Unearned income..................................... (262,970) (255,754)
------------ ------------
Net Loans......................................... 93,166,510 81,029,876
Premises and equipment...................................... 2,485,193 1,328,483
Other real estate........................................... 68,000 --
Other assets................................................ 1,541,524 1,220,413
------------ ------------
TOTAL ASSETS...................................... $119,188,927 $109,595,743
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand................................ $ 31,662,852 $ 29,186,522
Savings, NOW and money market............................. 50,940,035 48,041,659
Time, under $100,000...................................... 13,934,223 13,556,414
Time, $100,000 and over................................... 11,213,943 8,708,621
------------ ------------
Total Deposits.................................... 107,751,053 99,493,216
Securities sold under repurchase agreements................. 875,000 650,000
Other liabilities........................................... 466,653 596,245
------------ ------------
Total Liabilities................................. 109,092,706 100,739,461
Commitments and Contingencies (Note 12)
Shareholders' Equity
Common stock, $.01 par value, 10,000,000 shares
authorized, 1,590,845 and 1,542,420 shares issued and
outstanding, respectively.............................. 15,908 15,424
Additional paid-in capital................................ 7,590,694 7,384,576
Retained earnings......................................... 2,514,230 1,428,303
Unrealized gain (loss) on securities available for sale... (24,611) 27,979
------------ ------------
Total Shareholders' Equity........................ 10,096,221 8,856,282
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $119,188,927 $109,595,743
============ ============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 89
GREAT SOUTHERN BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans............................... $8,190,460 $7,423,801 $5,950,238
Interest on securities................................... 791,272 948,190 765,053
Interest on federal funds sold and other cash
equivalents........................................... 122,734 282,342 195,580
---------- ---------- ----------
Total Interest Income............................ 9,104,466 8,654,333 6,910,871
---------- ---------- ----------
Interest Expense
Interest on deposits..................................... 2,955,381 3,138,774 2,195,634
Interest on short-term borrowings........................ 57,007 20,346 --
---------- ---------- ----------
Total Interest Expense........................... 3,012,388 3,159,120 2,195,634
---------- ---------- ----------
Net Interest Income.............................. 6,092,078 5,495,213 4,715,237
Provision for Loan Losses.................................. 109,903 50,041 170,147
---------- ---------- ----------
Net Interest Income After Provision For Loan
Losses......................................... 5,982,175 5,445,172 4,545,090
Noninterest Income
Service charges and fees................................. 694,302 695,296 668,259
Net gain (loss) on sale of securities.................... 10,407 7,270 (7,284)
Other.................................................... 178,325 154,950 121,246
---------- ---------- ----------
Total Noninterest Income......................... 883,034 857,516 782,221
---------- ---------- ----------
Noninterest Expense
Salaries and employee benefits........................... 2,321,151 2,239,732 1,927,183
Occupancy expenses....................................... 479,337 465,613 446,439
Equipment expenses....................................... 399,973 386,579 337,321
Other operating expenses................................. 1,687,890 1,308,377 1,248,481
---------- ---------- ----------
Total Noninterest Expense........................ 4,888,351 4,400,301 3,959,424
---------- ---------- ----------
Income Before Income Taxes....................... 1,976,858 1,902,387 1,367,887
Income Taxes............................................... 739,230 740,237 481,352
---------- ---------- ----------
Net Income....................................... $1,237,628 $1,162,150 $ 886,535
========== ========== ==========
Net Income Per Share............................. $ .75 $ .75 $ .59
========== ========== ==========
Average Common Shares............................ 1,652,151 1,542,420 1,506,176
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 90
GREAT SOUTHERN BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
COMMON STOCK ADDITIONAL ON
--------------------- PAID-IN RETAINED SECURITIES
SHARES PAR VALUE CAPITAL EARNINGS FOR SALE
--------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1993............... 1,184,128 $11,841 $5,377,458 $ 889,689 $ --
10% stock dividend.................... 127,462 1,275 712,512 (713,787)
Issuance of common shares at $5.63.... 90,610 906 499,724 --
Transfer.............................. -- -- 1,784 (1,784)
Establishment of unrealized loss on
securities available for sale, net
of income tax...................... -- -- -- -- (204,107)
Net income for the year ended December
31, 1994.............................. -- -- -- 886,535
--------- ------- ---------- ---------- ---------
Balance December 31, 1994............... 1,402,200 14,022 6,591,478 1,060,653 (204,107)
10% stock dividend.................... 140,220 1,402 793,098 (794,500) --
Net income for year ended December 31,
1995............................... -- -- -- 1,162,150 --
Change in unrealized loss on
securities available for sale, net
income of tax...................... -- -- -- -- 232,086
--------- ------- ---------- ---------- ---------
Balance December 31, 1995............... 1,542,420 15,424 7,384,576 1,428,303 27,979
Net increase from resale of
dissenters' shares in subsidiary... -- -- 6,607 -- --
Exercise of stock options @ $4.13 per
share.............................. 48,425 484 199,511 -- --
Cash dividends........................ -- -- -- (151,701) --
Net income for year ended December 31,
1996............................... -- -- -- 1,237,628 --
Change in unrealized gain on
securities available for sale, net
of income tax...................... -- -- -- -- (52,590)
--------- ------- ---------- ---------- ---------
Balance December 31, 1996............... 1,590,845 $15,908 $7,590,694 $2,514,230 $ (24,611)
========= ======= ========== ========== =========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 91
GREAT SOUTHERN BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
------------ ----------- ------------
<S> <C> <C> <C>
Operating Activities
Net income.......................................... $ 1,237,628 $ 1,162,150 $ 886,535
Adjustments to reconcile net income to cash provided
by operating activities:
Provision for loan losses........................ 109,903 50,041 170,147
Recoveries on loans previously charged off....... 25,651 97,729 117,400
Provision for other real estate owned............ -- 81,547 41,000
Depreciation and amortization.................... 379,502 392,970 329,958
Deferred tax provision (benefit)................. 9,210 (19,763) (30,000)
Net (gain) loss on sale of securities............ (10,407) (7,270) 7,284
Security premium or discounts -- net............. (11,576) (35,450) (7,518)
Loss on abandonment of leasehold improvements.... 73,243 -- --
Changes in year-end balances of:
Interest receivable.............................. 12,099 (43,839) (278,467)
Interest payable................................. 44,216 (59,808) 88,761
Other accounts -- net............................ (497,287) (195,692) 173,255
------------ ----------- ------------
Net Cash Provided By Operating Activities... 1,372,182 1,422,615 1,498,355
------------ ----------- ------------
Investing Activities
Purchases of securities available for sale.......... (8,807,050) (6,906,363) (24,603,328)
Purchases of securities held to maturity............ (2,299,213) (1,000,000) --
Proceeds from sales of securities available for
sale............................................. 6,989,313 13,428,480 11,142,908
Proceeds from securities maturities and principal
collections...................................... 3,500,000 4,506,328 1,844,178
Net increase in loans............................... (12,340,188) (9,796,290) (5,177,099)
Increase in premises and equipment.................. (1,596,879) (396,188) (449,052)
Proceeds from sales of other real estate............ -- 718,844 179,000
------------ ----------- ------------
Net Cash Provided By (Used In) Investing
Activities................................ (14,554,017) 554,811 (17,063,393)
------------ ----------- ------------
Financing Activities
Net increase in deposits............................ 8,257,837 389,101 15,631,540
Increase in repurchase agreements................... 225,000 650,000 --
Net proceeds from sale of common stock.............. 206,602 -- 500,630
Dividends........................................... (151,701) -- --
------------ ----------- ------------
Net Cash Provided By Financing Activities... 8,537,738 1,039,101 16,132,170
------------ ----------- ------------
Increase (decrease) in Cash and Cash
Equivalents............................... (4,644,097) 3,016,527 567,132
Cash and Cash Equivalents:
Beginning of year......................... 14,042,594 11,026,067 10,458,935
------------ ----------- ------------
End of Year............................... $ 9,398,497 $14,042,594 $ 11,026,067
============ =========== ============
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 92
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATIONAL BACKGROUND
Organization. Great Southern Bank (the Bank) was incorporated on December
15, 1988 in the State of Florida and commenced operations under a state charter
April 17, 1989. The Bank conducts its business from its main office in West Palm
Beach, Florida and three branches throughout Palm Beach County. Effective
January 1, 1996, the Bank became a wholly-owned subsidiary of its newly-formed
parent bank holding company, Great Southern Bancorp (the Company). This change
in ownership was effected through the conversion of each share of Bank stock
into two shares of equivalent value Company stock. This change has been
accounted for as a combination of interests under common control in a manner
similar to a pooling of interests. Accordingly, the shareholders' equity
accounts have been restated to give effect to the new par value and number of
shares outstanding as though the Company existed as of the earliest date shown,
December 31, 1993.
(2) SIGNIFICANT ACCOUNTING POLICIES
SECURITIES
Securities Available for Sale. Securities which are used for
asset/liability, liquidity, and other funds management purposes are classified
as securities available for sale. These securities have indefinite holding
periods and are accounted for on a fair value basis with market adjustments
charged or credited directly to shareholders' equity, net of any associated
income tax effect.
Securities Held to Maturity. Securities which the Bank has the intent and
ability to hold to maturity are classified as securities held to maturity. These
securities are stated at cost, adjusted for amortization of premiums and
accretion of discounts.
Amortization and accretion of premiums and discounts are recognized as
adjustments to interest income. Realized gains and losses are recognized using
the specific identification method.
LOANS AND ALLOWANCE FOR LOAN LOSSES. Loans are stated at the amount of unpaid
principal, reduced by an allowance for loan losses and by unearned loan income.
Interest on substantially all loans is calculated by using the simple interest
method on daily balances of the principal amounts outstanding except for those
classified as nonaccrual loans. The accrual of interest is discontinued when
future collection of principal or interest in accordance with the contractual
terms may be doubtful.
The allowance for loan losses is established through a provision for loan
losses charged against operations. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb possible losses on existing loans that may become uncollectible, based
on evaluations of the collectibility of loans, past loan loss experience and
other factors.
Loan fees, net of origination costs, are capitalized and amortized as yield
adjustments over the respective loan terms using a method which does not differ
materially from the interest method. Interest and fees on loans includes loan
fees recognized as yield adjustments of $72,300, $84,990 and $71,199 in 1996,
1995 and 1994, respectively.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost less
allowances for depreciation and amortization. Depreciation is computed on the
straight-line method over the estimated useful lives of the assets. Maintenance
and repairs are charged to expenses as incurred. Gains and losses on
dispositions are reflected in operations.
OTHER REAL ESTATE. Other real estate is carried at the lower of fair value,
less estimated costs to sell, or cost. Gain or loss upon sale is recorded in
current operations.
F-7
<PAGE> 93
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
INCOME TAXES. The Company uses the liability method of accounting for income
taxes. This method requires the recognition of deferred tax assets and
liabilities for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.
CASH FLOW INFORMATION. For purposes of the statements of cash flows, the
Company considers cash and due from banks, federal funds sold and reverse
repurchase agreements as cash and cash equivalents. Cash paid for interest and
income taxes was approximately $3,057,000 and $880,000, respectively, during
1996, $3,219,000 and $693,000, respectively, during 1995 and $2,107,000 and
$177,000, respectively, during 1994.
NET INCOME PER SHARE. Stock dividends have been afforded retroactive
recognition to the earliest year presented, as has the January 1, 1996 two for
one stock exchange of the Company's shares for Bank shares. Net income per share
is based on the average number of common shares outstanding and any dilutive
common stock equivalent for each period using the treasury stock method. Fully
diluted per share data are not materially different from the primary per share
data presented.
RECLASSIFICATIONS. Certain accounts and captions for 1995 and 1994 have been
changed from that originally presented to conform to the 1996 presentations.
(3) SECURITIES
Amortized cost and estimated fair value of securities available for sale
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------------------------
U.S. U.S. STATE,
TREASURY GOVERNMENT COUNTY, &
SECURITIES AGENCIES MUNICIPAL OTHER TOTAL
---------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Amortized cost.................. $2,987,369 $5,617,136 $300,000 $364,950 $9,269,455
Gross unrealized:
Gains......................... 5,991 -- -- -- 5,991
Losses........................ (9,915) (35,294) (477) -- (45,686)
---------- ---------- -------- -------- ----------
Estimated fair value............ $2,983,445 $5,581,842 $299,523 $364,950 $9,229,760
========== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------------------------
U.S. U.S.
TREASURY GOVERNMENT
SECURITIES AGENCIES OTHER TOTAL
---------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Amortized cost.......................... $6,996,298 $3,590,118 $343,550 $10,929,966
Gross unrealized:
Gains................................. 37,901 10,967 -- 48,868
Losses................................ -- (4,457) -- (4,457)
---------- ---------- -------- -----------
Estimated fair value.................... $7,034,199 $3,596,628 $343,550 $10,974,377
========== ========== ======== ===========
</TABLE>
F-8
<PAGE> 94
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amortized cost and estimated fair value of securities held to maturity are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------
1996 1995
------------------------------------ -----------------------
U. S. STATE, U.S.
GOVERNMENT COUNTY & GOVERNMENT
AGENCIES MUNICIPAL TOTAL AGENCIES TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Amortized cost....................... $2,028,944 $1,270,500 $3,299,443 $1,000,000 $1,000,000
Gross unrealized:
Gains.............................. 728 -- 729 5,000 5,000
Losses............................. (6,252) (30,353) (36,605) -- --
---------- ---------- ---------- ---------- ----------
Estimated fair value................. $2,023,420 $1,240,147 $3,263,567 $1,005,000 $1,005,000
========== ========== ========== ========== ==========
</TABLE>
The amortized cost and estimated fair value of securities at December 31,
1996, by contractual maturity, are shown below:
<TABLE>
<CAPTION>
SECURITIES SECURITIES
AVAILABLE FOR SALE HELD TO MATURITY
----------------------- -----------------------
AMORTIZED ESTIMATED AMORTIZED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Due in:
One year or less.................... $ 500,610 $ 502,580 $ 90,749 $ 90,540
After one through five years........ 7,906,989 7,867,700 1,489,132 1,482,603
After five through ten years........ 496,906 494,530 1,719,562 1,690,424
Mortgage-backed securities/other.... 364,950 364,950 -- --
---------- ---------- ---------- ----------
$9,269,455 $9,229,760 $3,299,443 $3,263,567
========== ========== ========== ==========
</TABLE>
Proceeds from the sale of securities available for sale were $6,989,313,
$13,428,480 and $11,142,908 in 1996, 1995 and 1994, respectively. Gross realized
gains on such sales were $23,753, $90,639 and $42,124 and gross realized losses
were $13,346, $83,369 and $49,408 in 1996, 1995 and 1994, respectively. Interest
on securities in 1996 includes tax exempt interest of $52,463.
At December 31, 1996, U. S. Treasury and Government agency securities with
an amortized cost of $4,624,701 and estimated fair value of $4,602,477 were
pledged to collateralize, in part, public funds of $8,807,000, repurchase
agreements of $875,000, and other deposits.
(4) ALLOWANCE FOR LOAN LOSSES AND NON-PERFORMING ASSETS
Activity in the allowance for loan losses account was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- --------
<S> <C> <C> <C>
Balance beginning of year........................... $1,014,838 $ 935,000 $706,319
Provision........................................... 109,903 50,041 170,147
Recoveries.......................................... 25,651 97,729 117,400
Charge-offs......................................... (123,092) (67,932) (58,866)
---------- ---------- --------
Balance At End Of Year.................... $1,027,300 $1,014,838 $935,000
========== ========== ========
</TABLE>
The Company had loans on which the accrual of interest had been
discontinued of approximately $218,000 and $500,000 at December 31, 1996 and
December 31, 1994, respectively. There were no nonaccrual loans at December 31,
1995. Foregone interest on all nonaccrual loans during 1996, 1995 and 1994 was
insignificant.
F-9
<PAGE> 95
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) PREMISES AND EQUIPMENT
Premises and equipment were comprised of the following components at
December 31:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Land and improvements....................................... $ 583,239 $ 229,292
Buildings................................................... 548,994 --
Equipment and furnishings................................... 1,934,252 1,712,550
Leasehold improvements...................................... 291,115 530,660
Software.................................................... 264,318 219,433
Construction in progress.................................... 263,992 89,170
----------- ----------
3,885,910 2,781,105
Less accumulated depreciation............................... (1,400,717) (1,452,622)
----------- ----------
$ 2,485,193 $1,328,483
=========== ==========
</TABLE>
Depreciation and amortization charged against operations was $366,926,
$392,970 and $329,958 in 1996, 1995 and 1994, respectively.
(6) DEPOSITS AND SHORT-TERM BORROWINGS
Deposits. At December 31, 1996, the scheduled maturities of time
certificates of deposit are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1997........................................................ $18,765
1998........................................................ 5,848
1999 and thereafter......................................... 535
</TABLE>
Short-Term Borrowings. In addition to the occasional purchase of federal
funds, the Bank has a daily repurchase agreement with one of its deposit
customers. The highest balance of the repurchase agreement during 1996 and 1995
was $1.6 million and $1.4 million, respectively. Average balances during 1996
and 1995 were $1,203,000 and $306,000. Interest is based generally on the
Federal Funds rate less 75 basis points.
(7) EMPLOYEE BENEFIT PLANS
Stock Option Plan. The Company has reserved 242,000 shares for issuance
under its stock option plan. The plan was adopted in 1989 by the Bank, and
covers several key officers of the Bank and the Company. The options vest
immediately upon grant and expire in 1999 if not exercised. The grant price of
all options granted to date has been based on the fair value of a share of stock
at the grant date (deemed to be equal to the then-book value). Administration of
the plan rests with the Stock Option Committee of the Board of Directors of the
Company.
The following table reflects certain activity and balances of options at
and for the years ending December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER OF OPTIONS NUMBER AVG. PRICE NUMBER AVG. PRICE NUMBER AVG. PRICE
- ----------------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding January 1............................... 189,200 $4.33 145,200 $4.13 121,000 $4.13
Granted during year................................. -- -- 44,000 $4.99 24,200 $4.13
Exercised during year............................... (48,425) $4.13 -- -- -- --
------- ------- -------
Outstanding December 31............................. 140,775 $4.40 189,200 $4.33 145,200 $4.13
======= ======= =======
</TABLE>
At December 31, 1996, all options are exercisable and bear an exercise
price less than the December 31, 1996 book value of $6.35 (before exercise of
any options). The weighted average price of the options
F-10
<PAGE> 96
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
outstanding at December 31, 1996 is $4.40 per option. The remaining contractual
life at December 31, 1996 is three years.
The Company has adopted Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS No.123) issued in October,
1995. As permitted by the provisions of SFAS No. 123, the Company applies APB
Opinion 25 and related interpretations in accounting for its stock option plan
and, accordingly, does not recognize compensation costs. The Company has based
the fair value of the 1995 options, in part, on the value recently offered for
its shares by an outside party (approximately $13.00 per share). If the Company
had elected to recognize compensation cost for options granted in 1995 and 1996,
1995 pro forma net income would have been approximately $1,034,000, or $.67 per
share, and 1996 pro forma net income would have been $1,065,000, or $.64 per
share.
The aggregate value of the shares underlying the options outstanding at
December 31, 1996 is $1,837,000 compared to an aggregate exercise price of
$619,000.
401(k) Plan. During 1991, the Bank established a 401(k) plan for all
eligible employees who have completed at least one year of service and have
attained the age of 21. The Bank presently matches 75% of the employee's
contribution to the plan up to 4% of the employee's salary. The Bank also has
discretion to contribute additional amounts as approved by the Board of
Directors. During the years ended December 31, 1996, 1995 and 1994, the Bank
made matching contributions of approximately $40,000, $32,000 and $51,000,
respectively.
(8) OTHER OPERATING EXPENSES
Components of other operating expense that individually exceeded $75,000 in
any of the three years ending December 31, 1996 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Legal and professional................................. $510,337 $209,740 $213,255
Data processing........................................ 212,266 159,776 165,334
Stationery and supplies................................ 113,965 132,930 103,373
Insurance.............................................. 83,584 62,696 59,332
Regulatory fees........................................ 27,622 135,394 203,857
Other real estate expense.............................. 3,501 99,059 64,972
</TABLE>
(9) INCOME TAXES
Tax expense (benefit) consists of the following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Provision for federal income taxes:
Current.............................................. $655,520 $675,000 $460,217
Deferred............................................. 8,300 (2,000) (27,000)
-------- -------- --------
Total........................................ 663,820 673,000 433,217
Provision for state income taxes:
Current.............................................. 74,500 85,000 51,135
Deferred............................................. 910 (17,763) (3,000)
-------- -------- --------
Total........................................ 75,410 67,237 48,135
-------- -------- --------
Total provision........................................ $739,230 $740,237 $481,352
======== ======== ========
</TABLE>
F-11
<PAGE> 97
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The difference between recorded income taxes and the amount derived by
application of the statutory federal rate of 34% is due to the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Tax provisions at statutory rate....................... $672,132 $646,812 $465,082
Increase (decrease) resulting from:
Tax-exempt interest.................................. (17,561) -- --
Disallowed interest deductions....................... 1,756 -- --
State income tax, net of federal benefit............. 50,080 56,100 30,749
Non-deductible expense............................... 5,275 6,091 3,190
Other................................................ 27,548 31,234 (17,669)
-------- -------- --------
$739,230 $740,237 $481,352
======== ======== ========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities and their respective tax
bases. Significant components and the resultant deferred tax assets and
liabilities at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Excess book loan loss provisions.......................... $266,200 $259,000
Basis difference of property and equipment................ 15,500 27,000
Deferred loan fees........................................ -- 1,300
Accrued compensation...................................... 15,900 --
Other items............................................... 48 58
-------- --------
297,648 287,358
Deferred tax liabilities:
Deferred loan fees........................................ 19,500 --
-------- --------
278,148 287,358
Deferred tax attributable to unrealized gain or loss on
securities available for sale............................. 15,084 (16,432)
-------- --------
Net Deferred Tax Asset............................ $293,232 $270,926
======== ========
</TABLE>
The Company and the Bank have entered into a tax sharing agreement under
which intercompany settlements of tax due from the Bank equal the amount that
would have been paid by the Bank, had it filed an income tax return as a
separate entity.
(10) LOANS TO RELATED PARTIES
Certain officers and directors of the Company or the Bank, and companies in
which they held a 10 percent or more beneficial ownership, were indebted (or, in
some cases, guaranteed loans) to the Bank as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Balance January 1........................................... $1,429,000 $1,630,000
New loans and advances...................................... 989,000 643,000
Repayments (excluding renewals)............................. (766,000) (844,000)
---------- ----------
Balance December 31......................................... $1,652,000 $1,429,000
========== ==========
</TABLE>
F-12
<PAGE> 98
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The loans summarized above were made in the normal course of business at
prevailing interest rates and terms.
(11) DIVIDEND RESTRICTIONS
The Company's ability to pay dividends is dependent on the Bank's
profitability and ability to pay dividends to the Company. The Bank's ability to
pay cash dividends is limited by applicable banking statutes as to the amount of
dividends it may pay in any given year. Such restrictions generally limit
dividends to an amount not exceeding net income for the current and two
preceding years, less dividends paid in those years. At December 31, 1996, the
Bank would be permitted to pay dividends to the Company of up to approximately
$2,000,000.
(12) COMMITMENTS AND CONTINGENCIES
Financial Instruments With Off-Balance-Sheet Risk. The financial
statements do not reflect various commitments and contingent liabilities that
arise in the normal course of business to meet the financing needs of customers.
These include commitments to extend credit and honor stand-by letters of credit.
These instruments involve, to varying degrees, elements of credit, interest rate
and liquidity risks in excess of amounts reflected in the balance sheets. The
extent of the Company's and its bank subsidiary's involvement in these
commitments or contingent liabilities is expressed by the contractual, or
notional, amounts of the instruments.
Commitments to extend credit, which amount to $11,750,000 and $10,381,000
at December 31, 1996 and 1995, respectively, represent legally binding
agreements to lend to customers with fixed expiration dates or other termination
clauses. Since many commitments are expected to expire without being funded,
committed amounts do not necessarily represent future liquidity requirements.
The amount of collateral obtained, if any, is based on management's credit
evaluation in the same manner as though an immediate credit extension were to be
granted.
Stand-by letters of credit are conditional commitments issued by the Bank
guaranteeing the performance of a customer to a third party. The decision
whether to guarantee such performance and the extent of collateral requirements
are made considering the same factors as are considered in credit extension. The
Bank had $1,262,000 and $1,537,000 outstanding on stand-by letters of credit at
December 31, 1996 and 1995, respectively.
The Company expects no significant losses to be realized in the performance
of its obligations under any of the above instruments.
Concentrations of Credit Risk. The Bank originates residential and
commercial real estate loans, and other consumer and commercial loans primarily
in the West Palm Beach and Lantana, Florida areas. In addition, the Bank
occasionally purchases loans, primarily in Florida. Although the Bank has a
diversified loan portfolio, a substantial portion of its borrowers' ability to
repay their loans is dependent upon economic conditions in the Bank's market
area.
Leases. The Bank leases its headquarters and its branch facilities under
leases which have been accounted for as operating leases. The leases provide for
initial terms ranging from five to seven years and generally contain renewal
options and provide for cost of living increases based on various indices. Rent
included in occupancy expense for the years ended December 31, 1996, 1995 and
1994 was approximately $277,000, $282,000 and $289,000, respectively.
F-13
<PAGE> 99
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of December 31, 1996, future minimum lease payments on noncancelable
leases were as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
1997........................................................ $234,206
1998........................................................ 234,206
1999........................................................ 42,123
</TABLE>
New Branch Facilities. At December 31, 1996, the Bank has contracted to
purchase land for $450,000 on which to construct a bank branch facility for
occupancy in 1997. As of December 31, 1996, the Bank has also contracted for
construction contracts for Bank facilities on land already owned.
Use of Estimates in Preparation of Financial Statements. The process of
preparing financial statements in conformity with generally accepted accounting
principles requires the use of estimates and assumptions regarding certain types
of assets, liabilities, revenues and expenses. For the Bank, such estimates
significantly affect the amount at which the allowance for loan losses is
carried, the amount of the deferred tax assets that are dependent upon future
taxable income and the likelihood and timing of realization of such assets, the
fair value of financial instruments discussed in Note 13, the value that will
ultimately be attributed to the Company's stock options, the value of the
Company's stock at various dates, and other factors and amounts entering into
the preparation of the financial statements. All such estimates relate to
unsettled transactions and events as of the date of the financial statements
and, accordingly, upon settlement it is likely that actual amounts will differ
from currently estimated amounts.
Employment Contracts. The Bank has an employment agreement with its chief
executive officer and three other members of senior management. Under these
agreements, the Bank is required to pay stipulated annual salary amounts and
certain other benefits to the officers upon death or disability, termination for
other than cause or change in control of the Bank.
Litigation. The Bank has been party to certain litigation over the past
several years where another financial institution claimed the right to the
Bank's name. The suit asked for the use of the Bank's name, lost profits and
other remedies. Although management and the Board of Directors continue to
consider these claims totally without merit, they agreed in December, 1996 to
settle this suit in order to eliminate increasing defense costs. Under the
settlement agreement, the Bank was permitted to retain its name and conduct its
business as though the litigation had never existed. The total costs of
settlement and defense charged to 1996 operations was approximately $274,000.
(13) FAIR VALUE OF FINANCIAL INSTRUMENTS
The table which follows shows the estimated fair value and the related
carrying amounts of the Company's financial instruments at December 31, 1996.
For purposes of this disclosure, the estimated fair value for cash and cash
equivalents is considered to approximate their carrying amounts. The estimated
fair value for securities is based on quoted market values for the individual or
equivalent securities. The estimated fair value for loans is based on interest
rates the Bank would have charged borrowers at December 31, 1996 for similar
loans, maturities and terms.
The estimated fair value for demand and savings deposits is based on their
carrying amount. The estimated fair value for time deposits is based on rates
the Bank offered at December 31, 1996 for deposits of similar remaining
maturities. The estimated fair value for other financial instruments and
off-balance-sheet loan commitments are considered to approximate carrying
amounts at December 31, 1996. Assets and liabilities not defined as financial
instruments, such as premises and equipment, are excluded from these
disclosures.
F-14
<PAGE> 100
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
Financial Assets
Cash and cash equivalents................................. $ 9,398 $ 9,398
Securities available for sale............................. 9,230 9,230
Securities held to maturity............................... 3,299 3,264
Loans..................................................... 94,194 94,913
Financial Liabilities
Demand and Savings Deposits............................... $82,603 $82,603
Time Deposits............................................. 25,148 25,165
Repurchase agreements..................................... 875 875
</TABLE>
Non-financial instruments typically not recognized in the financial
statements nevertheless may have value but are not included in the above
disclosures. These include, among other items, the estimated earnings power of
core deposit accounts, the earnings potential of loan servicing rights, customer
goodwill, and similar items.
While these estimates of fair value are based on management's judgment of
the most appropriate factors, there is no assurance that, were the Bank to have
disposed of such items at December 31, 1996, the estimated fair values would
necessarily have been achieved at that date, since market values may differ
depending on various circumstances. The estimated fair values at December 31,
1996 should not necessarily be considered to apply at subsequent dates.
(14) REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios of Total and Tier I
capital (as defined in the regulations) to risk-weighted assets (as defined),
and of Tier I capital (as defined) to average assets (as defined). If such
minimum amounts and ratios are met, the Bank is considered "adequately
capitalized". If a bank exceeds the requirements of "adequately capitalized",
and meets even more stringent minimum standards, it is considered "well
capitalized". Management believes as of December 31, 1996 and 1995, the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the Office of
the Comptroller of the Currency categorized the Bank as "well capitalized" under
the regulatory framework for prompt corrective action. The table below shows the
Total and Tier I risk-based capital and ratios, the Tier I leverage ratios of
the Bank at December 31, 1996 and 1995, and the minimum amounts and ratios
needed to maintain the
F-15
<PAGE> 101
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
definition of "well capitalized". There are no conditions or events since that
notification that management believes have changed the institution's category.
<TABLE>
<CAPTION>
MINIMUM AMOUNT
AND
RATIO TO REMAIN
ACTUAL WELL CAPITALIZED
---------------- -----------------
AMOUNT RATIO AMOUNT RATIO
------- ----- ------- ------
(THOUSANDS) (THOUSANDS)
<S> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital:
Consolidated......................................... $11,098 12.2% $9,128 10.0%
Subsidiary Bank...................................... 10,943 12.0 9,128 10.0
Tier I Capital:
Consolidated......................................... 10,071 11.0 5,477 6.0
Subsidiary Bank...................................... 9,915 10.9 5,477 6.0
Tier I Leverage:
Consolidated......................................... 10,071 8.9 5,661 5.0
Subsidiary Bank...................................... 9,915 8.8 5,651 5.0
As of December 31, 1995:
Total Capital:
Consolidated......................................... $ 9,839 12.5% $7,860 10.0%
Subsidiary Bank...................................... 9,839 12.5 7,860 10.0
Tier I Capital:
Consolidated......................................... 8,856 11.3 4,516 6.0
Subsidiary Bank...................................... 8,856 11.3 4,516 6.0
Tier I Leverage:
Consolidated......................................... 8,856 8.4 5,295 5.0
Subsidiary Bank...................................... 8,856 8.4 5,295 5.0
</TABLE>
(15) COMPANY-ONLY CONDENSED FINANCIAL STATEMENTS
Balance Sheet
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------
<S> <C>
ASSETS
Cash...................................................... $ 215,375
Investment in bank subsidiary............................. 9,890,817
Organizational costs -- net............................... 50,301
Other assets.............................................. 3,813
-----------
Total assets...................................... $10,160,306
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities......................................... $ 64,085
Shareholders' equity...................................... 10,096,221
-----------
Total liabilities and shareholders' equity........ $10,160,306
===========
</TABLE>
F-16
<PAGE> 102
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Statement of Operations
Income from subsidiary:
Dividends................................................. $ 364,242
Interest.................................................. 3,910
----------
368,152
Other income................................................ 300
----------
368,452
----------
Expenses:
Amortization.............................................. 12,576
Legal and professional.................................... 2,710
Interest.................................................. 801
Other..................................................... 5,675
Income tax benefit........................................ (3,814)
----------
17,948
----------
Income before undistributed income of
subsidiary....................................... 350,504
Equity in undistributed income of subsidiary................ 887,124
----------
Net income........................................ $1,237,628
==========
</TABLE>
Statement of Cash Flows
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income.................................................. $1,237,628
Adjustments to reconcile net income to cash provided by
operating activities:
Amortization of organizational costs...................... 12,576
Undistributed income of subsidiary........................ (887,124)
Change in year-end balances of:
Organizational costs...................................... (62,877)
Income tax receivable..................................... (3,814)
Other liabilities......................................... 64,085
----------
Net cash provided by operating activities................. 360,474
----------
INVESTING ACTIVITIES
Contribution to capital of subsidiary....................... (200,000)
----------
Net cash used in investing activities..................... (200,000)
----------
FINANCING ACTIVITIES
Net proceeds from sale of common stock...................... $ 206,602
Dividends................................................... (151,701)
----------
Net cash provided by financing activities................. 54,901
----------
Increase in cash.......................................... 215,375
Cash at beginning of year................................. --
----------
Cash at December 31, 1996................................. $ 215,375
==========
</TABLE>
F-17
<PAGE> 103
GREAT SOUTHERN BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(16) POTENTIAL SALE
Subsequent to December 31, 1996, the Company was approached by a
prospective buyer, where the buyer offered to exchange shares of its common
stock equating to $13.05 per share for each share of the Company's stock, and
assume the existing outstanding options for the Company's stock by use of the
same exchange ratio. In addition, the buyer would settle the severance aspect of
the employment agreements discussed in Note 12 as a part of the purchase. On
March 6, 1997, the parties entered into a definitive agreement to this effect.
F-18
<PAGE> 104
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
THE COLONIAL BANCGROUP, INC.,
AND
GREAT SOUTHERN BANCORP
DATED AS OF
MARCH 6, 1997
<PAGE> 105
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 -- NAME
1.1 Name........................................................
ARTICLE 2 -- MERGER -- TERMS AND CONDITIONS
2.1 Applicable Law..............................................
2.2 Corporate Existence.........................................
2.3 Articles of Incorporation and Bylaws........................
2.4 Resulting Corporation's Officers and Board..................
2.5 Stockholder Approval........................................
2.6 Further Acts................................................
2.7 Effective Date and Closing..................................
2.8 Subsidiary Bank Merger......................................
ARTICLE 3 -- CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock....................
3.2 Surrender of Acquired Corporation Stock.....................
3.3 Fractional Shares...........................................
3.4 Adjustments.................................................
3.5 BancGroup Stock.............................................
3.6 Dissenting Rights...........................................
ARTICLE 4 -- REPRESENTATIONS, WARRANTIES AND COVENANTS OF BANCGROUP
4.1 Organization................................................
4.2 Capital Stock...............................................
4.3 Financial Statements; Taxes.................................
4.4 No Conflict with Other Instrument...........................
4.5 Absence of Material Adverse Change..........................
4.6 Approval of Agreements......................................
4.7 Tax Treatment...............................................
4.8 Title and Related Matters...................................
4.9 Subsidiaries................................................
4.10 Contracts...................................................
4.11 Litigation..................................................
4.12 Compliance..................................................
4.13 Registration Statement......................................
4.14 SEC Filings.................................................
4.15 Form S-4....................................................
4.16 Brokers.....................................................
4.17 Government Authorization....................................
4.18 Absence of Regulatory Communications........................
4.19 Disclosure..................................................
ARTICLE 5 -- REPRESENTATIONS, WARRANTIES AND COVENANTS OF ACQUIRED
CORPORATION
5.1 Organization................................................
5.2 Capital Stock...............................................
5.3 Subsidiaries................................................
5.4 Financial Statements; Taxes.................................
5.5 Absence of Certain Changes or Events........................
5.6 Title and Related Matters...................................
5.7 Commitments.................................................
</TABLE>
i
<PAGE> 106
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.8 Charter and Bylaws..........................................
5.9 Litigation..................................................
5.10 Material Contract Defaults..................................
5.11 No Conflict with Other Instrument...........................
5.12 Governmental Authorization..................................
5.13 Absence of Regulatory Communications........................
5.14 Absence of Material Adverse Change..........................
5.15 Insurance...................................................
5.16 Pension and Employee Benefit Plans..........................
5.17 Buy-Sell Agreement..........................................
5.18 Brokers.....................................................
5.19 Approval of Agreements......................................
5.20 Disclosure..................................................
5.21 Registration Statement......................................
5.22 Loans; Adequacy of Allowance for Loan Losses................
5.23 Environmental Matters.......................................
5.24 Transfer of Shares..........................................
5.25 Collective Bargaining.......................................
5.26 Labor Disputes..............................................
5.27 Derivative Contracts........................................
ARTICLE 6 -- ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup...........................
6.2 Additional Covenants of Acquired Corporation................
ARTICLE 7 -- MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation...................................
7.2 Press Release...............................................
7.3 Mutual Disclosure...........................................
7.4 Access to Properties and Records............................
7.5 Notice of Adverse Changes...................................
ARTICLE 8 -- CONDITIONS TO OBLIGATIONS OF ALL PARTIES
8.1 Approval by Shareholders....................................
8.2 Regulatory Authority Approval...............................
8.3 Litigation..................................................
8.4 Registration Statement......................................
8.5 Tax Opinion.................................................
ARTICLE 9 -- CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
9.1 Representations, Warranties and Covenants...................
9.2 Adverse Changes.............................................
9.3 Closing Certificate.........................................
9.4 Opinion of Counsel..........................................
9.5 Fairness Opinion............................................
9.6 NYSE Listing................................................
9.7 Other Matters...............................................
9.8 Material Events.............................................
ARTICLE 10 -- CONDITIONS TO OBLIGATIONS OF BANCGROUP
10.1 Representations, Warranties and Covenants...................
10.2 Adverse Changes.............................................
10.3 Closing Certificate.........................................
10.4 Opinion of Counsel..........................................
10.5 Controlling Shareholders....................................
</TABLE>
ii
<PAGE> 107
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
10.6 Other Matters...............................................
10.7 Dissenters..................................................
10.8 Material Events.............................................
10.9 Employment Agreements.......................................
10.10 Pooling of Interest.........................................
10.11 Increase of Authorized Shares...............................
ARTICLE 11 -- TERMINATION OF REPRESENTATIONS AND WARRANTIES............
ARTICLE 12 -- NOTICES..................................................
ARTICLE 13 -- AMENDMENT OR TERMINATION
13.1 Amendment...................................................
13.2 Termination.................................................
13.3 Damages..................................................... 36
13.4 Acquisition Proposal; Termination and Fee...................
ARTICLE 14 -- DEFINITIONS..............................................
ARTICLE 15 -- MISCELLANEOUS
15.1 Expenses....................................................
15.2 Benefit.....................................................
15.3 Governing Law...............................................
15.4 Counterparts................................................
15.5 Headings....................................................
15.6 Severability................................................
15.7 Construction................................................
15.8 Return of Information.......................................
15.9 Equitable Remedies..........................................
15.10 Attorneys' Fees.............................................
15.11 No Waiver...................................................
15.12 Remedies Cumulative.........................................
15.13 Entire Contract.............................................
</TABLE>
iii
<PAGE> 108
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of this the
6th day of March 1997, by and between GREAT SOUTHERN BANCORP ("Acquired
Corporation"), a Florida corporation, and THE COLONIAL BANCGROUP, INC.
("BancGroup"), a Delaware corporation.
WITNESSETH
WHEREAS, Acquired Corporation operates as a bank holding company for its
wholly owned subsidiary, Great Southern Bank (the "Bank"), with its principal
office in West Palm 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.
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.
A-1
<PAGE> 109
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, 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 issued by the
Secretary of State of the State of Delaware (such time being herein called the
"Effective Date"). Assuming all other conditions to the Closing have been or
will be satisfied as of the Closing, the Closing shall take place at the offices
of BancGroup, in Montgomery, Alabama, at 11:00 a.m. on a date specified by
BancGroup that shall be as soon as reasonably practicable after the later to
occur of the Stockholder meeting or all required regulatory approvals under
Section 8.2, or at such other place and time that the Parties may mutually
agree.
2.8 Subsidiary Bank Merger. BancGroup and Acquired Corporation anticipate
that immediately after the Effective Date the Bank will merge with and into
Colonial Bank, BancGroup's 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, including the call of any special
meetings of the board of directors of the Bank and the filing of any regulatory
applications, in the execution of appropriate documentation relating to such
merger.
ARTICLE 3
CONVERSION OF ACQUIRED CORPORATION STOCK
3.1 Conversion of Acquired Corporation Stock. (a) On the Effective Date,
each share of common stock of Acquired Corporation outstanding and held by
Acquired Corporation's shareholders (the "Acquired Corporation Stock"), shall be
converted by operation of law and without any action by any holder thereof into
a number of shares of BancGroup Common Stock (the "Merger Consideration") equal
to $13.05 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 ten (10)
consecutive trading days ending on the trading day five calendar days
immediately preceding the Effective Date; provided, however, that the Market
Value shall not be less than $19.88 nor more than $26.88, 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 1,044,292 (based upon
a minimum Market Value of $19.88) and the minimum number of shares of BancGroup
Common Stock to be issued in the Merger shall be 772,341 (based upon a maximum
Market Value of $26.88), assuming 1,590,845 shares of Acquired Corporation
common stock are outstanding as of February 20, 1997. To the extent that the
number of shares of Acquired Corporation Stock may increase based upon the
exercise of Acquired Corporation Options, the number of shares of BancGroup
A-2
<PAGE> 110
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
shares of BancGroup Common Stock equal to $13.05 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 1,590,845 shares as a result
of such exercises.
(b)(i) On the Effective Date, BancGroup shall assume all Acquired
Corporation Options outstanding, and each such option shall cease to represent a
right to acquire Acquired Corporation common stock and shall, instead, represent
the right to acquire BancGroup Common Stock on substantially the same terms
applicable to the Acquired Corporation Options except as specified below in this
section. The number of shares of BancGroup Common Stock to be issued pursuant to
such options shall equal the number of shares of Acquired Corporation common
stock subject to such Acquired Corporation Options multiplied by the Exchange
Ratio, provided that no fractions of shares of BancGroup Common Stock shall be
issued and the number of shares of BancGroup Common Stock to be issued upon the
exercise of Acquired Corporation Options, if a fractional share exists, shall
equal the number of whole shares obtained by rounding to the nearest whole
number, giving account to such fraction, or by paying for such fraction in cash,
based upon the Market Value. 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 $13.05 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) 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.
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 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.
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3.4 Adjustments. In the event that prior to the Effective Date BancGroup
Common Stock shall be changed into a different number of shares or a different
class of shares by reason of any recapitalization or reclassification, stock
dividend, combination, stock split, or reverse stock split of the BancGroup
Common Stock, an appropriate and proportionate adjustment shall be made in the
number of shares of BancGroup Common Stock into which the Acquired Corporation
Stock shall be converted.
3.5 BancGroup Stock. The shares of Common Stock of BancGroup issued and
outstanding immediately before the Effective Date shall continue to be issued
and outstanding shares of the Resulting Corporation.
3.6 Dissenting Rights. Any shareholder of Acquired Corporation who shall
not have voted in favor of this Agreement and who has complied with the
applicable procedures set forth in the 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 February 14,
1997, 38,880,014 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 or will be upon the stockholder approval
referenced in the following sentence duly authorized and, when so issued, will
be validly issued and outstanding, fully paid and nonassessable, will have been
registered under the 1933 Act, and will have been registered or qualified under
the securities laws of all jurisdictions in which such registration or
qualification is required, based upon information provided by Acquired
Corporation. BancGroup has submitted proxy material to the SEC in connection
with its 1997 annual meeting of stockholders to increase its authorized shares
of common stock from 44,000,000 to 100,000,000.
(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 nine months ended September 30, 1996;
(ii) Consolidated statements of operations for each of the three years
ended December 31, 1993, 1994 and 1995, and for the nine months ended
September 30, 1996;
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(iii) Consolidated statements of cash flows 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 changes in shareholders' equity for
the three years ended December 31, 1993, 1994 and 1995, and for the nine
months ended September 30, 1996.
All such financial statements are in all material respects in accordance
with the books and records of BancGroup and have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, all as more particularly set forth in the
notes to such statements. Each of the consolidated balance sheets presents
fairly as of its date the consolidated financial condition of BancGroup and its
Subsidiaries. Except as and to the extent reflected or reserved against in such
balance sheets (including the notes thereto), BancGroup did not have, as of the
dates of such balance sheets, any material Liabilities or obligations (absolute
or contingent) of a nature customarily reflected in a balance sheet or the notes
thereto. The statements of consolidated income, shareholders' equity and changes
in consolidated financial position present fairly the results of operations and
changes in financial position of BancGroup and its Subsidiaries for the periods
indicated. The foregoing representations, insofar as they relate to the
unaudited interim financial statements of BancGroup for the nine months ended
September 30, 1996, are subject in all cases to normal recurring year-end
adjustments and the omission of footnote disclosure.
(b) All Tax returns required to be filed by or on behalf of BancGroup have
been timely filed (or requests for extensions therefor have been timely filed
and granted and have not expired), and all returns filed are complete and
accurate in all material respects. All Taxes shown on these returns to be due
and all additional assessments received have been paid. The amounts recorded for
Taxes on the balance sheets provided under section 4.3(a) are, to the Knowledge
of BancGroup, sufficient in all material respects for the payment of all unpaid
federal, state, county, local, foreign or other Taxes (including any interest or
penalties) of BancGroup accrued for or applicable to the period ended on the
dates thereof, and all years and periods prior thereto and for which BancGroup
may at such dates have been liable in its own right or as transferee of the
Assets of, or as successor to, any other corporation or other party. No audit,
examination or investigation is presently being conducted or, to the Knowledge
of BancGroup, threatened by any taxing authority which is likely to result in a
material Tax Liability, no material unpaid Tax deficiencies or additional
liabilities of any sort have been proposed by any governmental representative
and no agreements for extension of time for the assessment of any material
amount of Tax have been entered into by or on behalf of BancGroup. BancGroup has
withheld from its employees (and timely paid to the appropriate governmental
entity) proper and accurate amounts for all periods in material compliance with
all Tax withholding provisions of applicable federal, state, foreign and local
Laws (including without limitation, income, social security and employment Tax
withholding for all types of compensation).
4.4 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in a breach of or
constitute a Default (without regard to the giving of notice or the passage of
time) under any material Contract, indenture, mortgage, deed of trust or other
material agreement or instrument to which BancGroup or any of its Subsidiaries
is a party or by which they or their Assets may be bound; will not conflict with
any provision of the restated certificate of incorporation or bylaws of
BancGroup or the articles of incorporation or bylaws of any of its Subsidiaries;
and will not violate any provision of any Law, regulation, judgment or decree
binding on them or any of their Assets.
4.5 Absence of Material Adverse Change. Since the date of the most recent
balance sheet provided under section 4.3(a)(i) above, there have been no events,
changes or occurrences which have had or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BancGroup.
4.6 Approval of Agreements. The 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
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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 be conducted by subsidiaries of registered bank holding companies.
4.10 Contracts. Neither BancGroup nor any of its Subsidiaries is in
Default in any material respect under the terms of any material Contract,
agreement, lease or other commitment which is or may be material to the
business, operations, properties or Assets, or the condition, financial or
otherwise, of such company and, to the Knowledge of BancGroup, 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.
4.11 Litigation. Except as disclosed in or reserved for in BancGroup's
financial statements, there is no Litigation before or by any court or Agency,
domestic or foreign, now pending, or, to the Knowledge of BancGroup, threatened
against or affecting BancGroup or any of its Subsidiaries (nor is BancGroup
aware of any facts which could give rise to any such Litigation) which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which may have any Material Adverse Effect or prospective Material
Adverse Effect, or which is likely to materially and adversely affect the
properties or Assets thereof or which is likely to materially affect or delay
the consummation of the transactions contemplated by this Agreement; all pending
legal or governmental proceedings to which BancGroup or any Subsidiary is a
party or of which any of their properties is the subject which are not described
in the Registration Statement, including ordinary routine litigation incidental
to the business, are, considered in the aggregate, not material; and neither
BancGroup nor any of its Subsidiaries have any contingent obligations which
could be considered material to BancGroup and its Subsidiaries considered as one
enterprise which are not disclosed in the Registration Statement as it may be
amended or supplemented. To the Knowledge of BancGroup, each of BancGroup and
its Subsidiaries 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 BancGroup and its Subsidiaries taken as a whole.
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4.12 Compliance. BancGroup and its Subsidiaries, in the conduct of their
businesses, are to the Knowledge of BancGroup, in material compliance with all
material federal, state or local Laws applicable to their or the conduct of
their businesses.
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 Report on Form 10-Q for the fiscal quarter ended September 30, 1996;
and (iv) any reports on Form 8-K, filed by BancGroup with the SEC since December
31, 1995. Since December 31, 1995, BancGroup has timely filed all reports and
registration statements and the documents required to be filed with the SEC
under the rules and regulations of the SEC and all such reports and registration
statements or other documents have complied in all material respects, as of
their respective filing dates and effective dates, as the case may be, with all
the applicable requirements of the 1933 Act and the 1934 Act. As of the
respective filing and effective dates, none of such reports or registration
statements or other documents contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) The documents incorporated by reference into the Registration
Statement, at the time they were filed with the SEC, complied in all material
respects with the requirements of the 1934 Act and Regulations thereunder and
when read together and with the other information in the Registration Statement
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading at the time the Registration Statement becomes effective
or at the time of the Stockholders Meeting.
4.15 Form S-4. The conditions for use of a registration statement on SEC
Form S-4 set forth in the General Instructions on Form S-4 have been or will be
satisfied with respect to BancGroup and the Registration Statement.
4.16 Brokers. All negotiations relative to this Agreement and the
transactions contemplated by this Agreement have been carried on by BancGroup
directly with Acquired Corporation and without the intervention of any other
person, either as a result of any act of BancGroup or otherwise in such manner
as to give rights to any valid claim against BancGroup for finders fees,
brokerage commissions or other like payments.
4.17 Government Authorization. BancGroup and its Subsidiaries have all
Permits that, to the Knowledge of BancGroup and its Subsidiaries, are or will be
legally required to enable BancGroup or any of its Subsidiaries to conduct their
businesses in all material respects as now conducted by each of them.
4.18 Absence of Regulatory Communications. Neither BancGroup nor any of
its Subsidiaries is subject to, or has received during the past three (3) years,
any written communication directed specifically to it from any Agency to which
it is subject or pursuant to which such Agency has imposed or has indicated it
may impose any material restrictions on the operations of it or the business
conducted by it or in which such Agency has raised a material question
concerning the condition, financial or otherwise, of such company.
4.19 Disclosure. No representation or warranty, or any statement or
certificate furnished or to be furnished to Acquired Corporation by BancGroup,
contains or will contain any untrue statement of a material
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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 March 6, 1997, the authorized capital stock
of Acquired Corporation consisted of 10,000,000 shares of common stock, $0.01
par value per share, 1,590,845 shares of which are issued and outstanding. All
of such shares which are outstanding are validly issued, fully paid and
nonassessable and not subject to preemptive rights. Acquired Corporation has
140,775 shares of its common stock subject to exercise at any time 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 grant or
issuance of Acquired Corporation Options.
5.3 Subsidiaries. Acquired Corporation has no direct Subsidiaries other
than the Bank, and there are no Subsidiaries of the Bank. Acquired Corporation
owns all of the issued and outstanding capital stock of the Bank free and clear
of any liens, claims or encumbrances of any kind. All of the issued and
outstanding shares of capital stock of the Subsidiaries have been validly issued
and are fully paid and non-assessable. As of March 6, 1997, there were 1,000,000
shares of the common stock, par value $5.00 per share, authorized of the Bank,
771,210 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.
5.4 Financial Statements; Taxes. (a) Acquired Corporation has delivered to
BancGroup copies of the following financial statements of Acquired Corporation:
(i) Statements of financial condition as of December 31, 1994 and
1995, for bank only and for the nine months ended September 30, 1996 for
parent only and bank only;
(ii) Statements of income for each of the three years ended December
31, 1993, 1994 and 1995, for bank only and for the nine months ended
September 30, 1996 for parent only and bank only;
(iii) Statements of stockholders' equity for each of the three years
ended December 31, 1993, 1994, and 1995, for bank only and for the nine
months ended September 30, 1996 for parent only and bank only; and
(iv) Statements of cash flows for the three years ended December 31,
1993, 1994 and 1995, for bank only.
All of the foregoing financial statements are in all material respects in
accordance with the books and records of Acquired Corporation and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except for changes required
by GAAP, all as more particularly set forth in the notes to such statements.
Each of such balance sheets presents fairly as of its date the financial
condition of Acquired Corporation. Except as and to the extent reflected or
reserved against in such balance sheets (including the notes thereto), Acquired
Corporation did not have, as of the date of such balance sheets, any material
Liabilities or obligations (absolute or contingent) of a nature
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customarily reflected in a balance sheet or the notes thereto. The statements of
income, stockholders' equity and cash flows present fairly the results of
operation, changes in shareholders equity and cash flows of Acquired Corporation
for the periods indicated. The foregoing representations, insofar as they relate
to the unaudited interim financial statements of Acquired Corporation 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.
(c) Each Acquired Corporation Company has withheld from its employees (and
timely paid to the appropriate governmental entity) proper and accurate amounts
for all periods in material compliance with all Tax withholding provisions of
applicable federal, state, foreign and local Laws (including without limitation,
income, social security and employment Tax withholding for all types of
compensation). Each Acquired Corporation Company is in compliance with, and its
records contain all information and documents (including properly completed IRS
Forms W-9) necessary to comply with, all applicable information reporting and
Tax withholding requirements under federal, state and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under section 3406 of the Code.
5.5 Absence of Certain Changes or Events. Except as set forth on Schedule
5.5, since the date of the most recent balance sheet provided under section
5.4(a)(i) above, no Acquired Corporation Company has
(a) issued, delivered or agreed to issue or deliver any stock, bonds
or other corporate securities (whether authorized and unissued or held in
the treasury) except shares of common stock issued upon the exercise of
Acquired Corporation Options 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 reflected in or shown on the most recent
balance sheet referred to in section 5.4(a)(i) and current Liabilities
incurred since that date in the ordinary course of business and consistent
with past practice;
(d) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any Assets of any kind whatsoever to
shareholders, or purchased or redeemed, or agreed to purchase or redeem,
directly or indirectly, or otherwise acquire, any of its outstanding
securities, provided, however, that Acquired Corporation shall be permitted
to pay a cash dividend to its shareholders for the first and second
quarters of 1997. Such dividend shall be equal to $Dividend X .5582, where
$Dividend equals the per share dividend paid in cash by BancGroup for that
quarter in question;
(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;
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(f) except in the ordinary course of business, entered or agreed to
enter into any agreement or arrangement granting any preferential rights to
purchase any of its Assets, or requiring the consent of any party to the
transfer and assignment of any of its Assets;
(g) suffered any Losses or waived any rights of value which in either
event in the aggregate are material considering its business as a whole;
(h) except in the ordinary course of business, made or permitted any
amendment or termination of any Contract, agreement or license to which it
is a party if such amendment or termination is material considering its
business as a whole;
(i) except in accordance with normal and usual practice, made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer or employee;
(j) except in accordance with normal and usual practice, increased the
rate of compensation payable to or to become payable to any of its officers
or employees or made any material increase in any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement or other
employee benefit plan, payment or arrangement made to, for or with any of
its officers or employees;
(k) received notice or had Knowledge or reason to believe that any of
its substantial customers has terminated or intends to terminate its
relationship, which termination would have a Material Adverse Effect on its
financial condition, results of operations, business, Assets or properties;
(l) failed to operate its business in the ordinary course so as to
preserve its business intact and to preserve the goodwill of its customers
and others with whom it has business relations;
(m) entered into any other material transaction other than in the
ordinary course of business; or
(n) agreed in writing, or otherwise, to take any action described in
clauses (a) through (m) above.
Between the date hereof and the Effective Date, no Acquired Corporation
Company, without the express written approval of BancGroup, will do any of the
things listed in clauses (a) through (n) of this section 5.5 except as permitted
therein or as contemplated in this Agreement, and no Acquired Corporation
Company will enter into or amend any material Contract, other than Loans or
renewals thereof entered into in the ordinary course of business, without the
express written consent of BancGroup.
5.6 Title and Related Matters.
(a) Title. Acquired Corporation has good and marketable title to all the
properties, interest in properties and Assets, real and personal, reflected in
the most recent balance sheet referred to in section 5.4(a)(i), or acquired
after the date of such balance sheet (except properties, interests and Assets
sold or otherwise disposed of since such date, in the ordinary course of
business), free and clear of all mortgages, Liens, pledges, charges or
encumbrances except (i) mortgages and other encumbrances referred to in the
notes to such balance sheet, (ii) Liens for current Taxes not yet due and
payable and (iii) such imperfections of title and easements as do not materially
detract from or interfere with the present use of the properties subject thereto
or affected thereby, or otherwise materially impair present business operations
at such properties. To the Knowledge of Acquired Corporation, the material
structures and equipment of each Acquired Corporation Company comply in all
material respects with the requirements of all applicable Laws.
(b) Leases. Schedule 5.6(b) sets forth a list and description of all real
and personal property owned or leased by any Acquired Corporation Company,
either as lessor or lessee.
(c) Personal Property. Schedule 5.6(c) sets forth a depreciation schedule
of each Acquired Corporation Company's fixed Assets as of February 28, 1997.
(d) Computer Hardware and Software. Schedule 5.6(d) contains a description
of all agreements relating to data processing computer software and hardware now
being used in the business operations of any Acquired Corporation Company.
Acquired Corporation is not aware of any defects, irregularities or problems
with any of its computer hardware or software which renders such hardware or
software unable to satisfactorily
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perform the tasks and functions to be performed by them in the business of any
Acquired Corporation Company.
5.7 Commitments. Except as set forth in Schedule 5.7, no Acquired
Corporation Company is a party to any oral or written (i) Contracts for the
employment of any officer or employee which is not terminable on 30 days' (or
less) notice, (ii) profit sharing, bonus, deferred compensation, savings, stock
option, severance pay, pension or retirement plan, agreement or arrangement,
(iii) loan agreement, indenture or similar agreement relating to the borrowing
of money by such party, (iv) guaranty of any obligation for the borrowing of
money or otherwise, excluding endorsements made for collection, and guaranties
made in the ordinary course of business, (v) consulting or other similar
material Contracts, (vi) collective bargaining agreement, (vii) agreement with
any present or former officer, director or shareholder of such party, or (viii)
other Contract, agreement or other commitment which is material to the business,
operations, property, prospects or Assets or to the condition, financial or
otherwise, of any Acquired Corporation Company. Complete and accurate copies of
all Contracts, plans and other items so listed have been made or will be made
available to BancGroup for inspection.
5.8 Charter and Bylaws. Schedule 5.8 contains true and correct copies of
the articles of incorporation and bylaws of each Acquired Corporation Company,
including all amendments thereto, as currently in effect. There will be no
changes in such articles of incorporation or bylaws prior to the Effective Date,
without the prior written consent of BancGroup.
5.9 Litigation. There is no Litigation (whether or not purportedly on
behalf of Acquired Corporation) pending or, to the Knowledge of Acquired
Corporation, threatened against or affecting any Acquired Corporation Company
(nor is Acquired Corporation aware of any facts which are likely to give rise to
any such Litigation) at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involves the possibility of
any judgment or Liability not fully covered by insurance in excess of a
reasonable deductible amount or which may have a Material Adverse Effect on
Acquired Corporation, and no Acquired Corporation Company is in Default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental department, commission,
board, bureau, agency or instrumentality, which Default would have a Material
Adverse Effect on Acquired Corporation. To the Knowledge of Acquired
Corporation, each Acquired Corporation Company has complied in all material
respects with all material applicable Laws and Regulations including those
imposing Taxes, of any applicable jurisdiction and of all states,
municipalities, other political subdivisions and Agencies, in respect of the
ownership of its properties and the conduct of its business, which, if not
complied with, would have a Material Adverse Effect on Acquired Corporation.
5.10 Material Contract Defaults. 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 such company and, to the Knowledge of
Acquired Corporation, there is no event which, with notice or lapse of time, or
both, may be or become an event of Default under any such material Contract,
agreement, lease or other commitment in respect of which adequate steps have not
been taken to prevent such a Default from occurring.
5.11 No Conflict with Other Instrument. The consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of or constitute a Default under any material Contract,
indenture, mortgage, deed of trust or other material agreement or instrument to
which any Acquired Corporation Company is a party and will not conflict with any
provision of the charter or bylaws of any Acquired Corporation Company.
5.12 Governmental Authorization. Each Acquired Corporation Company has all
Permits that, to the Knowledge of Acquired Corporation, are or will be legally
required to enable any Acquired Corporation Company to conduct its business in
all material respects as now conducted by each Acquired Corporation Company.
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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, 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 any Acquired Corporation Company.
5.15 Insurance. Each Acquired Corporation Company has in effect insurance
coverage and bonds with reputable insurers which, in respect to amounts, types
and risks insured, management of Acquired Corporation reasonably believes to be
adequate for the type of business conducted by such company. No Acquired
Corporation Company is liable for any material retroactive premium adjustment.
All insurance policies and bonds are valid, enforceable and in full force and
effect, and no Acquired Corporation Company has received any notice of any
material premium increase or cancellation with respect to any of its insurance
policies or bonds. Within the last three years, no Acquired Corporation Company
has been refused any insurance coverage which it has sought or applied for, and
it has no reason to believe that existing insurance coverage cannot be renewed
as and when the same shall expire, upon terms and conditions as favorable as
those presently in effect, other than possible increases in premiums that do not
result from any extraordinary loss experience. All policies of insurance
presently held or policies containing substantially equivalent coverage will be
outstanding and in full force with respect to each Acquired Corporation Company
at all times from the date hereof to the Effective Date.
5.16 Pension and Employee Benefit Plans.
(a) To the Knowledge of Acquired Corporation, all employee benefit plans of
each Acquired Corporation Company have been established in compliance with, and
such plans have been operated in material compliance with, all applicable Laws.
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 other than the defined benefit plan of
Acquired Corporation that is intended to qualify under section 401 of the Code,
nor do any unfunded Liabilities exist with respect to any employee benefit plan,
past or present. To the Knowledge of Acquired Corporation, no employee benefit
plan, any trust created thereunder or any trustee or administrator thereof has
engaged in a "prohibited transaction," as defined in section 4975 of the Code,
which may have a Material Adverse Effect on the condition, financial or
otherwise, of any Acquired Corporation Company.
(b) To the Knowledge of Acquired Corporation, no amounts payable to any
employee of any Acquired Corporation Company will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code and
regulations thereunder.
5.17 Buy-Sell Agreement. To the Knowledge of Acquired Corporation, there
are no agreements among any of its shareholders granting to any person or
persons a right of first refusal in respect of the sale, transfer, or other
disposition of shares of outstanding securities by any shareholder of Acquired
Corporation, any similar agreement or any voting agreement or voting trust in
respect of any such shares.
5.18 Brokers. Except for negotiations with Chicago Corporation, and
Community Bank & Thrift Advisory Services, Inc., 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
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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 statement or
certificate furnished or to be furnished to BancGroup by Acquired Corporation,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained in
this Agreement or in any such statement or certificate not misleading.
5.21 Registration Statement. At the time the Registration Statement
becomes effective and at the time of the Stockholders Meeting, the Registration
Statement, including the Proxy Statement which shall constitute part thereof,
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this section shall only apply to
statements in or omissions from the Proxy Statement relating to descriptions of
the business of Acquired Corporation, its Assets, properties, operations, and
capital stock or to information furnished in writing by Acquired Corporation or
its representatives expressly for inclusion in the Proxy Statement.
5.22 Loans; Adequacy of Allowance for Loan Losses. All reserves for loan
losses shown on the most recent financial statements furnished by Acquired
Corporation have been calculated in accordance with prudent and customary
banking practices and are adequate in all material respects to reflect the risk
inherent in the loans of Acquired Corporation. Acquired Corporation has no
Knowledge of any fact which is likely to require a future material increase in
the provision for loan losses or a material decrease in the loan loss reserve
reflected in such financial statements. Each loan reflected as an Asset on the
financial statements of Acquired Corporation is the legal, valid and binding
obligation of the obligor of each loan, enforceable in accordance with its terms
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and to general
equitable principles. Acquired Corporation does not have in its portfolio any
loan exceeding its legal lending limit, and except as disclosed on Schedule
5.22, Acquired Corporation has no known significant delinquent, substandard,
doubtful, loss, nonperforming or problem loans.
5.23 Environmental Matters. 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. To the Knowledge of Acquired Corporation, with respect to
Assets of or owned by any Acquired Corporation Company, including any Loan
Property, (i) there has been no spillage, leakage, contamination or release of
any substances for which the appropriate remedial action has not been completed;
(ii) no owned or leased property is contaminated with or contains any hazardous
substance or waste; and (iii) there are no underground storage tanks on any
premises owned or leased by any Acquired Corporation Company. Acquired
Corporation has no Knowledge of any facts which might suggest that any Acquired
Corporation Company has engaged in any management practice with respect to any
of its past or existing borrowers which could reasonably be expected to subject
any Acquired Corporation Company to any Liability, either directly or
indirectly, under the principles of law as set forth in United States v. Fleet
Factors Corp., 901 F.2d 1550 (11th Cir. 1990) or any similar principles.
Moreover, to the Knowledge of Acquired Corporation, no Acquired Corporation
Company has extended credit, either on a secured or unsecured basis, to any
person or other entity engaged in any activities which would require or requires
such person or entity to obtain any Permits which are required under any
Environmental Law which has not been obtained.
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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 none
of said employees are represented by any union or labor organization.
5.26 Labor Disputes. To the Knowledge of Acquired Corporation, each
Acquired Corporation Company is in material compliance with all federal and
state laws respecting employment and employment practices, terms and conditions
of employment, wages and hours. No Acquired Corporation Company is or has been
engaged in any unfair labor practice, and, to the Knowledge of Acquired
Corporation, no unfair labor practice complaint against any Acquired Corporation
Company is pending before the National Labor Relations Board. Relations between
management of each Acquired Corporation Company and the employees are amicable
and there have not been, nor to the Knowledge of Acquired Corporation, are there
presently, any attempts to organize employees, nor to the Knowledge of Acquired
Corporation, are there plans for any such attempts.
5.27 Derivative Contracts. No Acquired Corporation Company is a party to
or has agreed to enter into a swap, forward, future, option, cap, floor or
collar financial contract, or any other interest rate or foreign currency
protection contract or derivative security not included in Acquired
Corporation's financial statements delivered under section 5.4 hereof which is a
financial derivative contract (including various combinations thereof).
ARTICLE 6
ADDITIONAL COVENANTS
6.1 Additional Covenants of BancGroup. BancGroup covenants to and with
Acquired Corporation as follows:
(a) Registration Statement and Other Filings. BancGroup shall prepare
and file with the SEC the Registration Statement on Form S-4 (or such other
form as may be appropriate) and all amendments and supplements thereto, in
form reasonably satisfactory to Acquired Corporation and its counsel, with
respect to the Common Stock to be issued pursuant to this Agreement.
BancGroup shall use reasonable good faith efforts to prepare all necessary
filings with any Agencies which may be necessary for approval to consummate
the transactions contemplated by this Agreement. BancGroup shall provide to
counsel for Acquired Corporation (i) copies of drafts of all filings made
pursuant to this section 6.1(a) in advance of filing, (ii) copies of
documents as filed, and (iii) copies of any correspondence between
BancGroup and any Agencies, including the SEC, respecting the filings made
pursuant to this section 6.1(a).
(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;
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(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.
(e) Listing. Prior to the Effective Date, BancGroup shall use its
reasonable efforts to list the shares of BancGroup Common Stock to be
issued in the Merger on the NYSE or other quotations system on which such
shares are primarily traded.
(f) Employee Benefit Matters. On the Effective Date, all employees of
any Acquired Corporation Company shall, at BancGroup's option, either
become employees of the Resulting Corporation or its Subsidiaries or be
entitled to severance benefits in accordance with Colonial Bank's severance
policy as of the date of this Agreement. All employees of any Acquired
Corporation Company who become employees of the Resulting Corporation or
its Subsidiaries on the Effective Date shall be entitled, to the extent
permitted by applicable Law, to participate in all benefit plans of
Colonial Bank to the same extent as Colonial Bank employees, except as
stated otherwise in this section. Employees of any Acquired Corporation
Company who become employees of the Resulting Corporation or its
Subsidiaries 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 time 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 30 day waiting period and pre-existing condition
limitations. To the extent permitted by applicable Law, the period of
service with the appropriate Acquired Corporation Company of all employees
who become employees of the Resulting Corporation or its Subsidiaries on
the Effective Date shall be recognized only for vesting and eligibility
purposes under Colonial Bank's benefit plans. In addition, if the Effective
Date falls within an annual period of coverage under any group health plan
or group dental plan of the Resulting Corporation and its Subsidiaries,
each such Acquired Corporation Company employee shall be given credit for
covered expenses paid by that employee under comparable employee benefit
plans of the Acquired Corporation Company during the applicable coverage
period through the Effective Date towards satisfaction of any annual
deductible limitation and out-of-pocket maximum that may apply under that
group health plan or group dental plan of the Resulting Corporation and its
Subsidiaries.
(g) Indemnification. (i) Subject to the conditions set forth in the
succeeding paragraph, for a period of six years after the Effective Date
BancGroup shall, and shall cause Colonial Bank to, indemnify, defend and
hold harmless each person entitled to indemnification from the Acquired
Corporation (each being an "Indemnified Party") against all liabilities
arising out of actions or omissions occurring upon or prior to the
Effective Date (including without limitation the transactions contemplated
by this Agreement) to the extent authorized under the articles of
incorporation and bylaws of Acquired Corporation and Florida law.
(ii) Any Indemnified Party wishing to claim indemnification under
this subsection (g), upon learning of any such liability or Litigation,
shall promptly notify BancGroup thereof. In the event of any such
Litigation (whether arising before or after the Effective Date) (i)
BancGroup or Colonial Bank shall have the right to assume the defense
thereof with counsel reasonably acceptable to such
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Indemnified Party and, upon assumption of such defense, 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 or Colonial Bank elects not to assume such defense or
counsel for the Indemnified Parties advises that there are substantive
issues which raise conflicts of interest between BancGroup and the
Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and BancGroup or Colonial Bank shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that BancGroup
shall be obligated pursuant to this subsection to pay for only one firm
of counsel for all Indemnified Parties in any jurisdiction, (ii) the
Indemnified Parties will cooperate in the defense of any such
Litigation; and (iii) BancGroup shall not be liable for any settlement
effected without its prior consent; and provided further provided that
BancGroup and Colonial Bank shall not have any obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
(iii) 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 officers may have against Acquired Corporation. In the
letter, the directors of officers 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(g) 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(g)(i) hereof; and (iv) release as of the Effective Date any
and all claims that they may have against any Acquired Corporation
Company other than (A) those referred to in the foregoing clause (iii)
and disclosed in the letter of the director or officer, (B) claims by
third parties 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 by third parties
arising from any transaction contemplated by this Agreement or disclosed
in any schedule to this Agreement, and (D) claims by third parties
arising in the ordinary course of business of any Acquired Corporation
Company after the date of the letter.
(iv) Acquired Corporation hereby represents and warrants to
BancGroup that it has no Knowledge of any claim, pending or threatened,
or of any facts or circumstances that could give rise to any obligation
by BancGroup to provide the indemnification required by this section
6.1(g) other than as disclosed in the letters of the directors and
executive officers referred to in section 6.1(g)(iii) hereof or
described in any schedule to this Agreement and claims arising from any
transaction contemplated by this Agreement.
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 its best efforts to maintain its relationships
with its depositors, customers and employees. No Acquired Corporation
Company will engage in any material transaction outside the ordinary course
of business or make any material change in its accounting policies or
methods of operation, nor will Acquired Corporation permit the occurrence
of any change or event which would render any of the representations and
warranties in Article 5 hereof untrue in any material respect at and as of
the Effective Date with the same effect as though such representations and
warranties had been made at and as of such Effective Date. Acquired
Corporation shall contact any person who may be required to execute an
undertaking under Section 10.5 hereof to
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request such undertaking and shall take all such reasonable steps as are
necessary to obtain such undertaking. 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 tax-free
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 that own any stock of
Acquired Corporation to execute an acknowledgment 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. Neither Acquired Corporation nor any of
Acquired Corporation's directors or officers (or any person representing
any of the foregoing) shall solicit or encourage inquiries or proposals
with respect to, furnish any information relating to or participate in any
negotiations or discussions concerning, an Acquisition Proposal other than
as contemplated by this Agreement. Acquired Corporation will notify
BancGroup immediately if any such Acquisition Proposal is received by
Acquired Corporation, if any such information is requested from Acquired
Corporation, or if any such negotiations or discussions are sought to be
initiated with Acquired Corporation, and Acquired Corporation shall
instruct Acquired Corporation's officers, directors, agents or affiliates
or their subsidiaries to refrain from doing any of the above; provided,
however, that Acquired Corporation may communicate information about such
an Acquisition Proposal to its shareholders if and to the extent that legal
counsel provides a written opinion to Acquired Corporation (a copy of which
shall be provided in advance to BancGroup) that it is required to do so in
order to comply with its legal obligations. Acquired Corporation shall
immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons other than BancGroup
conducted hereto with respect to any of the foregoing.
(d) Director Recommendation. The members of the Board of Directors of
Acquired Corporation agree to support publicly the Merger.
(e) Shareholder Voting. Acquired Corporation shall on the date of
execution of this Agreement obtain and submit to BancGroup an agreement
from certain of its shareholders substantially in the form set forth in
Exhibit A.
(f) Financial Statements and Monthly Status Reports. 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;
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(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;
(iv) With reasonable promptness, such additional financial data as
BancGroup may reasonably request; and
(v) Within 10 calendar days after the end of each month (or, if the
financial statements referred to in clause (d) not then available as
soon as possible thereafter) commencing with the next calendar month
following the date of this Agreement and ending at the Effective Date, a
written description of (a) the actions taken during the preceding month
with respect to its compliance or non-compliance with the terms of this
section 6.2, together with its then current estimate of the out-
of-pocket costs and expenses incurred or reasonably accruable in
connection with the transactions contemplated by this Agreement; (b) the
status, as of the date of the report, of all existing or threatened
litigation against any Acquired Corporation Company; (c) copies of
minutes of any meeting of the board of directors of any Acquired
Corporation Company and any committee thereof occurring in the month for
which such report is made, including all documents presented to the
directors at such meetings; and (d) monthly financial statements,
including a balance sheet and income statement.
(g) Fiduciary Duties. Prior to the Effective Date, (i) no director or
officer (each an "Executive") of any Acquired Corporation Company shall,
directly or indirectly, own, manage, operate, join, control, be employed by
or participate in the ownership, proposed ownership, management, operation
or control of or be connected in any manner with, any business, corporation
or partnership which is competitive to the business of any Acquired
Corporation Company, (ii) all Executives, at all times, shall satisfy their
fiduciary duties to Acquired Corporation and its Subsidiaries, and (iii)
such Executives shall not (except as required in the course of his or her
employment with any Acquired Corporation Company) communicate or divulge
to, or use for the benefit of himself or herself or any other person, firm,
association or corporation, without the express written consent of Acquired
Corporation, any confidential information which is possessed, owned or used
by or licensed by or to any Acquired Corporation Company or confidential
information belonging to third parties which any Acquired Corporation
Company shall be under obligation to keep secret or which may be
communicated to, acquired by or learned of by the Executive in the course
of or as a result of his or her employment with any Acquired Corporation
Company.
(h) Certain Practices. At the request of BancGroup, (i) Acquired
Corporation shall consult with BancGroup and advise BancGroup through its
bank Subsidiary in Orlando of all of the Bank's loan requests over $250,000
that are not single-family residential loan requests or of any other loan
request outside the normal course of business, and (ii) Acquired
Corporation will consult with BancGroup to coordinate various business
issues on a basis mutually satisfactory to Acquired Corporation and
BancGroup. Acquired Corporation and the Bank shall not be required to
undertake any of such activities, however, except as such activities may be
in compliance with existing Law and Regulations.
ARTICLE 7
MUTUAL COVENANTS AND AGREEMENTS
7.1 Best Efforts; Cooperation. Subject to the terms and conditions herein
provided, BancGroup and Acquired Corporation each agrees to use its best efforts
promptly to take, or cause to be taken, all actions and do, or cause to be done,
all things necessary, proper or advisable under applicable Laws or otherwise,
including, without limitation, promptly making required deliveries of
stockholder lists and stock transfer reports and attempting to obtain all
necessary Consents and waivers and regulatory approvals, including the holding
of any regular or special board meetings, 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
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only in fulfilling the duties hereunder of the Party of which they are officers
but also in assisting, directly or through direction of employees and other
persons under their supervision or control, such as stock transfer agents for
the Party, the other Parties requiring information which is reasonably available
from such Party.
7.2 Press Release. Each Party hereto agrees that, unless approved by the
other Parties in advance, such Party will not make any public announcement,
issue any press release or other publicity or confirm any statements by any
person not a party to this Agreement concerning the transactions contemplated
hereby. Notwithstanding the foregoing, each Party hereto reserves the right to
make any disclosure if such Party, in its reasonable discretion, deems such
disclosure required by Law. In that event, such Party shall provide to the other
Party the text of such disclosure sufficiently in advance to enable the other
Party to have a reasonable opportunity to comment thereon.
7.3 Mutual Disclosure. Each Party hereto agrees to promptly furnish to
each other Party hereto its public disclosures and filings not precluded from
disclosure by Law including but not limited to call reports, Form 8-K, Form 10-Q
and Form 10-K filings, Y-3 applications, reports on Form Y-6, quarterly or
special reports to shareholders, Tax returns, Form S-8 registration statements
and similar documents.
7.4 Access to Properties and Records. Each Party hereto shall afford the
officers and authorized representatives of the other Party full access to the
Assets, books and records of such Party in order that such other Parties may
have full opportunity to make such investigation as they shall desire of the
affairs of such Party and shall furnish to such Parties such additional
financial and operating data and other information as to its businesses and
Assets as shall be from time to time reasonably requested. All such information
that may be obtained by any such Party will be held in confidence by such party,
will not be disclosed by such Party or any of its representatives except in
accordance with this Agreement, and will not be used by such Party for any
purpose other than the accomplishment of the Merger as provided herein.
7.5 Notice of Adverse Changes. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF ALL PARTIES
The obligations of BancGroup and Acquired Corporation to cause the
transactions contemplated by this Agreement to be consummated shall be subject
to the satisfaction, in the sole discretion of the Party relying upon such
conditions, on or before the Effective Date of all the following conditions,
except as such Parties may waive such conditions in writing:
8.1 Approval by Shareholders. At the Stockholders Meeting, this Agreement
and the matters contemplated by this Agreement shall have been duly approved by
the vote of the holders of not less than the requisite number of the issued and
outstanding voting securities of Acquired Corporation as is required by
applicable Law and Acquired Corporation's articles of incorporation and bylaws.
8.2 Regulatory Authority Approval. Orders, Consents and approvals, in form
and substance reasonably satisfactory to BancGroup and Acquired Corporation,
shall have been entered by the Board of Governors of the Federal Reserve System
and other appropriate bank regulatory Agencies (i) granting the authority
necessary for the consummation of the transactions contemplated by this
Agreement, including the merger of the Bank with Colonial Bank as structured
pursuant to section 2.8 hereof and (ii) satisfying all other requirements
prescribed by Law. No Order, Consent or approval so obtained which is necessary
to consummate the transactions as contemplated hereby shall be conditioned or
restricted in a manner which in the reasonable good faith judgment of the Board
of Directors of BancGroup or Acquired Corporation would so
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materially adversely impact the economic benefits of the transaction as
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 proceeding with respect to the transactions contemplated
hereby shall be pending or threatened under any such state Law.
8.5 Tax Opinion. An opinion of Coopers & Lybrand, LLP, shall have been
received in form and substance reasonably satisfactory to the Acquired
Corporation and BancGroup to the effect that (i) the Merger will constitute a
"reorganization" within the meaning of section 368 of the Code; (ii) no gain or
loss will be recognized by BancGroup or Acquired Corporation; (iii) no gain or
loss will be recognized to the shareholders of Acquired Corporation who receive
shares of BancGroup Common Stock except to the extent of any taxable "boot"
received by such persons from BancGroup, and except to the extent of any
dividends received from Acquired Corporation prior to the Effective Date; (iv)
the basis of the BancGroup Common Stock received in the Merger will be equal to
the sum of the basis of the shares of Acquired Corporation common stock
exchanged in the Merger and the amount of gain, if any, which was recognized by
the exchanging Acquired Corporation shareholder, including any portion treated
as a dividend, less the value of taxable boot, if any, received by such
shareholder in the Merger; (v) the holding period of the BancGroup Common Stock
will include the holding period of the shares of Acquired Corporation common
stock exchanged therefor if such shares of Acquired Corporation common stock
were capital assets in the hands of the exchanging Acquired Corporation
shareholder; and (vi) cash received by an Acquired Corporation shareholder in
lieu of a fractional share interest of BancGroup Common Stock will be treated as
having been received as a distribution in full payment in exchange for the
fractional share interest of BancGroup Common Stock which he or she would
otherwise be entitled to receive and will qualify as capital gain or loss
(assuming the Acquired Corporation common stock was a capital asset in his or
her hands as of the Effective Date).
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF ACQUIRED CORPORATION
The obligations of Acquired Corporation to cause the transactions
contemplated by this Agreement to be consummated shall be subject to the
satisfaction on or before the Effective Date of all the following conditions
except as Acquired Corporation may waive such conditions in writing:
9.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of Acquired Corporation, all representations
and warranties of BancGroup contained in this Agreement shall be true in all
material respects on and as of the Effective Date as if such representations and
warranties were made on and as of such Effective Date, and BancGroup shall have
performed in all material respects all agreements and covenants required by this
Agreement to be performed by it on or prior to the Effective Date.
9.2 Adverse Changes. There shall have been no changes after the date of
the most recent balance sheet provided under section 4.3(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition or affairs of BancGroup
which in their total effect constitute a Material Adverse Effect, nor shall
there have been any material changes in the Laws
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governing the business of BancGroup or which would impair the rights of Acquired
Corporation or its shareholders pursuant to this Agreement.
9.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, Acquired Corporation shall have received a certificate
from the President or a Vice President and from the Secretary or Assistant
Secretary of BancGroup dated as of the Closing certifying that:
(a) the Board of Directors of BancGroup has duly adopted resolutions
approving the substantive terms of this Agreement and authorizing the
consummation of the transactions contemplated by this Agreement and such
resolutions have not been amended or modified and remain in full force and
effect;
(b) each person executing this Agreement on behalf of BancGroup is an
officer of BancGroup holding the office or offices specified therein and
the signature of each person set forth on such certificate is his or her
genuine signature;
(c) the certificate of incorporation and bylaws of BancGroup
referenced in section 4.4 hereof remain in full force and effect;
(d) such persons have no knowledge of a basis for any material claim,
in any court or before any Agency or arbitration or otherwise against, by
or affecting BancGroup or the business, prospects, condition (financial or
otherwise), or Assets of BancGroup or which would prevent the performance
of this Agreement or the transactions contemplated by this Agreement or
declare the same unlawful or cause the rescission thereof;
(e) to such persons' knowledge, the Proxy Statement delivered to
Acquired Corporation's shareholders, or any amendments or revisions thereto
so delivered, as of the date thereof, did not contain or incorporate by
reference any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made (it being understood that such persons need not express a
statement as to information concerning or provided by Acquired Corporation
for inclusion in such Proxy Statement); and
(f) the conditions set forth in this Article 9 insofar as they relate
to BancGroup have been satisfied.
9.4 Opinion of Counsel. Acquired Corporation shall have received an
opinion of Miller, Hamilton, Snider & Odom, L.L.C., counsel to BancGroup, dated
as of the Closing, substantially in the form set forth in Exhibit B hereto.
9.5 Fairness Opinion. Acquired Corporation shall have received prior to
the mailing of the Proxy Statement from ABN AMRO Chicago Corporation a letter
dated within five days of the date of the Proxy Statement 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, and such opinion shall not have been withdrawn as of
the Effective Date.
9.6 NYSE Listing. The shares of BancGroup Common Stock to be issued under
this Agreement shall have been approved for listing on the NYSE.
9.7 Other Matters. There shall have been furnished to such counsel for
Acquired Corporation certified copies of such corporate records of BancGroup and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
9.8 Material Events. There shall have been no determination by the board
of directors of Acquired Corporation that the transactions contemplated by this
Agreement have become impractical because of any state of war, declaration of a
banking moratorium in the United States or a general suspension of trading on
the NYSE or any other exchange on which BancGroup Common Stock may be traded.
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ARTICLE 10
CONDITIONS TO OBLIGATIONS OF BANCGROUP
The obligations of BancGroup to cause the transactions contemplated by this
Agreement to be consummated shall be subject to the satisfaction on or before
the Effective Date of all of the following conditions except as BancGroup may
waive such conditions in writing:
10.1 Representations, Warranties and Covenants. Notwithstanding any
investigation made by or on behalf of BancGroup, all representations and
warranties of Acquired Corporation contained in this Agreement shall be true in
all material respects on and as of the Effective Date as if such representations
and warranties were made on and as of the Effective Date, and Acquired
Corporation shall have performed in all material respects all agreements and
covenants required by this Agreement to be performed by it on or prior to the
Effective Date.
10.2 Adverse Changes. There shall have been no changes after the date of
the most recent balance sheet provided under section 5.4(a)(i) hereof in the
results of operations (as compared with the corresponding period of the prior
fiscal year), Assets, Liabilities, financial condition, or affairs of Acquired
Corporation which constitute a Material Adverse Effect, nor shall there have
been any material changes in the Laws governing the business of Acquired
Corporation which would impair BancGroup's rights pursuant to this Agreement.
10.3 Closing Certificate. In addition to any other deliveries required to
be delivered hereunder, BancGroup shall have received a certificate from
Acquired Corporation executed by the President or Vice President and from the
Secretary or Assistant Secretary of Acquired Corporation dated as of the Closing
certifying that:
(a) the Board of Directors of Acquired Corporation has duly adopted
resolutions approving the substantive terms of this Agreement and
authorizing the consummation of the transactions contemplated by this
Agreement and such resolutions have not been amended or modified and remain
in full force and effect;
(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
Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A., counsel to Acquired
Corporation, dated as of the Closing, substantially as set forth in Exhibit C
hereto.
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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 that such person will not sell
or otherwise reduce risk relative to any shares of BancGroup Common Stock
received in the Merger until financial results concerning at least 30 days of
post-Merger combined operations have been published by BancGroup within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. Acquired Corporation recognizes and acknowledges that BancGroup Common
Stock issued to such persons may bear a legend evidencing the agreement
described above.
10.6 Other Matters. There shall have been furnished to counsel for
BancGroup certified copies of such corporate records of Acquired Corporation and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
10.7 Dissenters. The number of shares as to which shareholders of Acquired
Corporation have exercised dissenters rights of appraisal under section 3.6 does
not exceed 10% of the outstanding shares of common stock of Acquired
Corporation.
10.8 Material Events. There shall have been no determination by the board
of directors of BancGroup that the transactions contemplated by this Agreement
have become impractical because of any state of war, declaration of a banking
moratorium in the United States or general suspension of trading on the NYSE or
any exchange on which BancGroup Common Stock may be traded.
10.9 Employment Agreements. The employment agreements of C. Robert Stock,
Russell Greene, Sally Teel and Gerald Martens shall be terminated at the
Closing. Messrs. Stock, Greene and Martens and Ms. Teel shall release Acquired
Corporation, the Bank and BancGroup from any and all liability under such
agreements, and Messrs. Stock, Greene and Martens and Ms. Teel shall receive at
closing only the following amounts under such agreements, respectively:
$391,200, $283,500, $100,000 and $103,200. New agreements in form and substance
reasonably satifactory to BancGroup with each of such persons shall be executed
to commence on the date of Closing. Each new agreement shall provide a one year
term, salary to be paid at the current salary of each such person as long as
such person is employed during the one year period, and a non-competition
agreement to run concurrently with such one year term.
10.10 Pooling of Interest. 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 Increase of Authorized Shares. At the 1997 BancGroup Annual Meeting,
the stockholders of BancGroup shall have increased the authorized number of
shares of BancGroup Common Stock from 44,000,000 to 100,000,000.
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 7.2, 7.4, 13.3 and 13.4, Article 11, Article 15 and any applicable
definitions of Article 14, shall survive. Items disclosed in the Exhibits and
Schedules attached hereto are incorporated into this Agreement and form a part
of the representations, warranties,
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covenants or agreements to which they relate. Information provided in such
Exhibits and Schedules is provided only in response to the specific section of
this Agreement which calls for such information.
ARTICLE 12
NOTICES
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time given or mailed, first class postage prepaid:
(a) If to Acquired Corporation to C. Robert Stock, facsimile (561)
683-4532, with copies to John P. Greeley, Esq., Smith, Mackinnon, Greeley,
Bowdoin & Edwards, P.A., Suite 800 Citrus Center, 255 South Orange Avenue,
Orlando, Florida 32801, facsimile 407-843-2448, or as may otherwise be
specified by Acquired Corporation in writing to BancGroup.
(b) If to BancGroup, to W. Flake Oakley, IV, One Commerce Street,
Suite 800, Montgomery, Alabama, 36104, facsimile (334) 240-6040, with a
copy to Michael D. Waters, Miller, Hamilton, Snider & Odom, L.L.C., One
Commerce Street, Suite 802, Montgomery, Alabama 36104, facsimile (334) 265-
4533, or as may otherwise be specified in writing by BancGroup to Acquired
Corporation.
ARTICLE 13
AMENDMENT OR TERMINATION
13.1 Amendment. This Agreement may be amended by the mutual consent of
BancGroup and Acquired Corporation before or after approval of the transactions
contemplated herein by the shareholders of Acquired Corporation.
13.2 Termination. This Agreement may be terminated at any time prior to or
on the Effective Date whether before or after action thereon by the shareholders
of Acquired Corporation, as follows:
(a) by the mutual consent of the respective boards of directors of
Acquired Corporation and BancGroup;
(b) by the board of directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a 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 and which breach would provide the non-breaching Party
the ability to refuse to consummate the Merger under the standard set forth
in section 10.1 of this Agreement in the case of BancGroup and section 9.1
of this Agreement in the case of Acquired Corporation;
(c) by the board of directors of either Party (provided that the
terminating Party is not then in material breach of any representation,
warranty, covenant, or other agreement contained in this Agreement) in the
event of a material breach by the other Party of any covenant or agreement
contained in this Agreement which cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching Party
of such breach, or if any of the conditions to the obligations of such
Party contained in this Agreement in Article 9 as to Acquired Corporation
or Article 10 as to BancGroup shall not have been satisfied in full; or
(d) by the board of directors of either BancGroup or Acquired
Corporation if all transactions contemplated by this Agreement shall not
have been consummated on or prior to December 31, 1997, if the failure to
consummate the transactions provided for in this Agreement on or before
such date is not caused by any breach of this Agreement by the Party
electing to terminate pursuant to this section 13.2(d).
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13.3 Damages. In the event of termination pursuant to section 13.2,
Acquired Corporation and BancGroup shall not be liable for damages for any
breach of a covenant, warranty or representation contained in this Agreement
made in good faith, and, in that case, the expenses incurred shall be borne as
set forth in section 15.1 hereof.
13.4 Acquisition Proposal; Termination and Fee. During the term of this
Agreement, if (i) an Acquisition Proposal (other than the Merger contemplated by
this Agreement) is submitted to and approved by the shareholders of Acquired
Corporation at any time prior to the Effective Date; or (ii) an Acquisition
Proposal (other than the Merger contemplated by this Agreement) is received by
Acquired Corporation or is made directly to the shareholders of Acquired
Corporation at any time prior to the termination of this Agreement under Section
13.2(b), (c) or (d) (except for a termination by Acquired Corporation for a
breach of this Agreement by BancGroup) and, in the case of (i) or (ii), such
Acquisition Proposal is closed, then Acquired Corporation shall pay to BancGroup
a termination fee in an amount equal to 10% of the shareholders' equity of
Acquired Corporation as of the end of the month preceding such payment, as
liquidated damages, and not as a penalty, and, upon the payment in full thereof,
this Agreement shall be terminated and no Party shall have any further liability
under this Agreement (except as set forth in Section 13.3). The obligations of
the Parties under this Section 13.4 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....... Great Southern Bancorp, 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
140,775 shares of Acquired Corporation common stock
pursuant to Acquired Corporation's stock option
plans.
Acquired Corporation
Stock...................... Shares of common stock, par value $0.01 per share,
of Acquired Corporation.
Acquisition Proposal....... Shall mean, with respect to a Party, any tender
offer or exchange offer or any proposal for a
merger, acquisition of all of the stock or assets
of, or other business combination involving such
Party or any of its Subsidiaries or the acquisition
of a substantial equity interest in, or a
substantial portion of the assets of, such Party or
any of its Subsidiaries.
Agencies................... Shall mean, collectively, the Federal Trade
Commission, the United States Department of
Justice, the Board of the Governors of the Federal
Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, all
state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, HUD,
the VA, the FHA, the GNMA, the FNMA, the FHLMC, the
NYSE, and the SEC.
Agreement.................. Shall mean this Agreement and Plan of Merger and
the Exhibits and Schedules delivered pursuant
hereto and incorporated herein by reference.
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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....................... Great Southern Bank, a Florida bank.
Closing.................... The closing of the transactions contemplated hereby
as described in section 2.7 of this Agreement.
Code....................... The Internal Revenue Code of 1986, as amended.
Common Stock............... BancGroup's Common Stock authorized and defined in
the restated certificate of incorporation of
BancGroup, as amended.
Consent.................... Any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any
Person pursuant to any Contract, Law, Order, or
Permit.
Contract................... Any written or oral agreement, arrangement,
authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice,
restriction, understanding or undertaking of any
kind or character, or other document to which any
Person is a party or that is binding on any Person
or its capital stock, Assets or business.
Default.................... Shall mean (i) any breach or violation of or
default under any Contract, Order or Permit, (ii)
any occurrence of any event that with the passage
of time or the giving of notice or both would
constitute a breach or violation of or default
under any Contract, Order or Permit, or (iii) any
occurrence of any event that with or without the
passage of time or the giving of notice would give
rise to a right to terminate or revoke, change the
current terms of, or renegotiate, or to accelerate,
increase, or impose any Liability under, any
Contract, Order or Permit.
DGCL....................... The Delaware General Corporation Law.
Effective Date............. Means the date and time at which the Merger becomes
effective as defined in section 2.7 hereof.
Environmental Laws......... Means the laws, regulations and governmental
requirements referred to in section 5.23 hereof.
ERISA...................... The Employee Retirement Income Security Act of
1974, as amended.
Exchange Ratio............. The ratio obtained by dividing $13.05 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.
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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 (including Contracts
related to it), or the transactions contemplated by
this Agreement.
Loan Property.............. Any property owned by the Party in question or by
any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where
required by the context, includes the owner or
operator of such property, but only with respect to
such property.
Loss....................... Any and all direct or indirect payments,
obligations, recoveries, deficiencies, fines,
penalties, interest, assessments, losses,
diminution in the value of Assets, damages,
punitive, exemplary or consequential damages
(including, but not limited to, lost income and
profits and interruptions of business),
liabilities, costs, expenses (including without
limitation, reasonable attorneys' fees and
expenses, and consultant's fees and other costs of
defense or investigation), and interest on any
amount payable to a third party as a result of the
foregoing.
Material................... For purposes of this Agreement shall be determined
in light of the facts and circumstances of the
matter in question; provided that any specific
monetary amount stated in this Agreement shall
determine materiality in that instance.
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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 of the Parties.
Merger..................... The merger of Acquired Corporation with BancGroup
as contemplated in this Agreement.
Merger Consideration....... The distribution of BancGroup Common Stock for each
share of Acquired Corporation Stock as provided in
section 3.1(a) hereof.
NYSE....................... The New York Stock Exchange.
Order...................... Any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial
decision or award, ruling, or writ of any federal,
state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or
Agency.
Party...................... Shall mean Acquired Corporation or BancGroup, and
"Parties" shall mean both Acquired Corporation and
BancGroup.
Permit..................... Any federal, state, local, and foreign governmental
approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or
right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
Person..................... A natural person or any legal, commercial or
governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture,
limited partnership, limited liability company,
trust, business association, group acting in
concert, or any person acting in a representative
capacity.
Proxy Statement............ The proxy statement used by Acquired Corporation to
solicit the approval of its stockholders of the
transactions contemplated by this Agreement, which
shall include the prospectus of BancGroup relating
to the issuance of the BancGroup Common Stock to
the shareholders of Acquired Corporation.
Registration Statement..... The registration statement on Form S-4, or such
other appropriate form, to be filed with the SEC by
BancGroup, and which has been agreed to by Acquired
Corporation, to register the shares of BancGroup
Common Stock offered to stockholders of the Bank
pursuant to his Agreement, including the Proxy
Statement.
Resulting Corporation...... BancGroup, as the surviving corporation resulting
from the Merger.
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SEC........................ United States Securities and Exchange Commission.
Stockholders Meeting....... The special meeting of stockholders of Acquired
Corporation called to approve the transactions
contemplated by this Agreement.
Subsidiaries............... Shall mean all those corporations, banks,
associations, or other entities of which the entity
in question owns or controls 5% or more of the
outstanding equity securities either directly or
through an unbroken chain of entities as to each of
which 5% or more of the outstanding equity
securities is owned directly or indirectly by its
parent; provided, however, there shall not be
included any such entity acquired through
foreclosure or any such entity the equity
securities of which are owned or controlled in a
fiduciary capacity.
Tax or Taxes............... Means any federal, state, county, local, foreign,
and other taxes, assessments, charges, fares, and
impositions, including interest and penalties
thereon or with respect thereto.
1933 Act................... The Securities Act of 1933, as amended.
1934 Act................... The Securities Exchange Act of 1934, as amended.
ARTICLE 15
MISCELLANEOUS
15.1 Expenses. Each Party hereto shall bear its own legal, auditing,
trustee, investment banking, regulatory and other expenses in connection with
this Agreement and the transactions contemplated hereby.
15.2 Benefit. This Agreement shall inure to the benefit of and be binding
upon Acquired Corporation and BancGroup, and their respective successors. This
Agreement shall not be assignable by any Party without the prior written consent
of the other Party.
15.3 Governing Law. Except to the extent that the laws of the State of
Alabama apply to the Merger, this Agreement shall be governed by, and construed
in accordance with the Laws of the State of Delaware without regard to any
conflict of Laws.
15.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to constitute an original. Each such counterpart shall
become effective when one counterpart has been signed by each Party thereto.
15.5 Headings. The headings of the various articles and sections of this
Agreement are for convenience of reference only and shall not be deemed a part
of this Agreement or considered in construing the provisions thereof.
15.6 Severability. Any term or provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining terms and provisions thereof or affecting the
validity or enforceability of such provision in any other jurisdiction, and if
any term or provision of this Agreement is held by any court of competent
jurisdiction to be void, voidable, invalid or unenforceable in any given
circumstance or situation, then all other terms and provisions, being severable,
shall remain in full force and effect in such circumstance or situation and the
term or provision shall remain valid and in effect in any other circumstances or
situation.
15.7 Construction. Use of the masculine pronoun herein shall be deemed to
refer to the feminine and neuter genders and the use of singular references
shall be deemed to include the plural and vice versa, as appropriate. No
inference in favor of or against any Party shall be drawn from the fact that
such Party or such Party's counsel has drafted any portion of this Agreement.
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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), the prevailing Party in such action shall be
entitled to recover from the other Party its costs and expenses incurred in
connection with such action (including fees, disbursements and expenses of
attorneys and costs of investigation).
15.11 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or Default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or Default, nor shall it be construed to be a wavier of any such right,
power or remedy, or an acquiescence in any similar breach or Default; nor shall
any waiver of any single breach or Default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Agreement must be in writing and be executed by the Parties
to this Agreement and shall be effective only to the extent specifically set
forth in such writing.
15.12 Remedies Cumulative. All remedies provided in this Agreement, by law
or otherwise, shall be cumulative and not alternative.
15.13 Entire Contract. This Agreement and the documents and instruments
referred to herein constitute the entire contract between the parties to this
Agreement and supersede all other understandings with respect to the subject
matter of this Agreement.
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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: GREAT SOUTHERN BANCORP
/s/ J. RUSSELL GREENE /s/ C. ROBERT STOCK
- -------------------------------------------- --------------------------------------------
By: J. Russell Greene By: C. Robert Stock
Its: President & CEO Its: Chairman
(CORPORATE SEAL)
ATTEST: THE COLONIAL BANCGROUP, INC.
/s/ DONNA R. PIEL /s/ ROBERT E. LOWDER
- -------------------------------------------- --------------------------------------------
By: Donna R. Piel By: Robert E. Lowder
Its: Assistant Secretary Its: Chief Financial Officer
(CORPORATE SEAL)
</TABLE>
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APPENDIX B
Date of Proxy Statement/Prospectus
Board of Directors
Great Southern Bancorp, Inc.
2000 Palm Beach Lakes Boulevard
West Palm Beach, FL 33409
Members of the Board:
Great Southern Bancorp, Inc., a Florida corporation ("Great Southern") and
The Colonial BancGroup, Inc., an Alabama corporation ("Colonial") have entered
into an Agreement and Plan of Merger ("Agreement"), dated as of March 6, 1997,
pursuant to which Great Southern will be merged with and into Colonial, which
will be the surviving entity (the "Merger"). As set forth in the Agreement, each
issued and outstanding share of Great Southern common stock ("Great Southern
Common Stock") shall be converted into a number of shares of Colonial common
stock ("Colonial Common Stock") equal to $13.05 divided by the Market Value. 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 closing prices of Colonial Common Stock as reported by the NYSE on each
of the ten (10) consecutive trading days ending on the trading day five calendar
days immediately preceding the Effective Date, as defined in the Agreement;
provided, however, that the Market Value shall not be less than $19.88 nor more
than $26.88, regardless of the actual Market Value as calculated. Accordingly,
the maximum number of shares of Colonial Common Stock to be issued in the Merger
shall be 1,044,292 (based upon a minimum Market Value of $19.88) and the minimum
number of shares of Colonial Common Stock to be issued in the Merger shall be
772,341 (based upon a maximum Market Value of $26.88), assuming 1,590,845 shares
of Great Southern Common Stock are outstanding at the Effective Date, subject to
certain adjustments detailed in the Agreement.
You have requested our opinion as to the fairness of the consideration to
be paid (the "Merger Consideration"), from a financial point of view, to the
shareholders of Great Southern, as of the date hereof.
During the course of our engagement, we have, among other things: (i)
reviewed the Agreement, the Proxy Statement/Prospectus, and certain other
related documents; (ii) reviewed certain publicly available financial and other
data, including the audited and unaudited financial statements of Great Southern
and Colonial for each of the three fiscal years ended December 31, 1996, 1995,
and 1994, and the interim financial statements through March 31, 1997, as well
as certain other relevant internally generated Great Southern and Colonial
reports relating to asset/liability management, asset quality and so forth, as
made available to us; (iii) reviewed and analyzed other materials bearing upon
the financial and operating condition of Great Southern and Colonial and
materials prepared in connection with the proposed transaction; (iv) reviewed
the operating characteristics of certain other financial institutions deemed
relevant to the contemplated transaction; (v) reviewed the nature and terms of
recent sale and merger transactions involving banks, thrifts, bank and thrift
holding companies and other financial institutions that we considered relevant;
(vi) considered other indications of interest including those submitted by 1st
United Bancorp, Inc.; (vii) reviewed historical and current market data for
Colonial Common Stock; (viii) conducted meetings with members of the senior
managements of Great Southern and Colonial for the purpose of reviewing the
future prospects of Great Southern and Colonial, the strategic objectives of
each, and the possible financial benefits which might be realized following the
Merger; (ix) evaluated the pro forma ownership of Colonial Common Stock by Great
Southern shareholders, relative to the pro forma contribution of Great
Southern's assets, liabilities, equity and earnings to Colonial; and (x)
performed such other analyses and examinations as we deemed appropriate.
In rendering this opinion, we have relied upon, without independent
verification, the accuracy and completeness of the financial and other
information and representations provided to us by Great Southern and Colonial.
We have relied upon the managements of Great Southern and Colonial as to the
reasonableness and achievability of the financial forecasts and projections (and
the assumptions and bases therefore) utilized in our analyses, and have assumed
that such forecasts and projections represent the best available estimates of
management. We are not experts in the evaluation of loan portfolios or the
allowances for loan losses with respect thereto and have assumed that such
allowances by Great Southern and Colonial are in the aggregate
<PAGE> 140
adequate to cover such losses. In addition, we have not reviewed individual
credit files nor have we made an independent appraisal of the assets and
liabilities of Great Southern and Colonial or any of their subsidiaries and we
have not been furnished with any such evaluation or appraisal. Finally we have
assumed that the Merger will be recorded as a pooling of interests in accordance
with generally accepted accounting principles as stipulated in the Agreement.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as of
the date hereof.
ABN AMRO Chicago Corporation ("AACC"), as part of its investment banking
business, is continually engaged in the valuation of banks and bank holding
companies and thrifts and thrift holding companies in connection with mergers
and acquisitions, as well as initial and secondary offerings of securities and
valuations for other purposes. AACC is a member of all principal U.S. securities
exchanges and may from time to time purchase securities from, or sell securities
to, Great Southern or Colonial and, either directly or through affiliates, buy
or sell the equity securities of Great Southern or Colonial as principal or for
the accounts of customers.
The Board of Directors has requested that AACC issue this opinion and AACC
will receive a fee from Great Southern for delivering this opinion to be used in
evaluating the proposed merger.
This opinion is limited to the fairness, from a financial point of view, to
the holders of Great Southern Common Stock, of the Merger Consideration.
Moreover, this letter, and the opinion expressed herein, is directed to the
Board of Directors of Great Southern and does not constitute a recommendation to
any shareholder as to how such shareholder should vote on the Merger.
Based on the foregoing and our experience as investment bankers, we are of
the opinion that, as of the date hereof, the Merger Consideration to be paid to
the shareholders of Great Southern, as described in the Agreement, is fair from
a financial point of view.
Sincerely,
ABN AMRO Chicago Corporation
<PAGE> 141
APPENDIX C
607.1301 DISSENTER'S RIGHTS; DEFINITIONS. -- The following definitions
apply to sec.sec. 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 sec. 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 sec. 607.1104, and the shareholders would have been
entitled to vote on action taken, except for the applicability of
sec. 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
course of business, if the shareholder is entitled to vote on the sale or
exchange pursuant to sec. 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 sec. 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 sec. 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 sec.sec. 607.1301, 607.1302, and 607.1320. A
shareholder who wishers 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
sec. 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of sec.sec. 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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(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
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
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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> 145
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to section 145 of the Delaware General Corporation Law, as
amended, and the Restated Certificate of Incorporation of the Registrant,
officers, directors, employees, and agents of the Registrant are entitled to
indemnification against liabilities incurred while acting in such capacities on
behalf of the Registrant, including reimbursement of certain expenses. In
addition, the Registrant maintains an officers and directors insurance policy
pursuant to which certain officers and all directors of the Registrant are
entitled to indemnification against certain liabilities, including
reimbursement of certain expenses, and the Registrant has indemnity agreements
("Indemnification Agreements") with certain officers and all of its directors
pursuant to which such persons may be indemnified by the Registrant against
certain liabilities, including expenses.
The Indemnification Agreements are intended to provide additional
indemnification to directors and officers of BancGroup beyond the specific
provisions of the Delaware General Corporation Law. Under the Delaware General
Corporation Law, a company may indemnify its directors and officers in
circumstances other than those under which indemnification and the advance of
expenses are expressly permitted by applicable statutory provisions.
Under the Delaware General Corporation Law, a director, officer,
employee or agent of a corporation (i) must be indemnified by the corporation
for all expenses incurred by him (including attorneys' fees) when he is
successful on the merits or otherwise in defense of any action, suit or
proceeding brought by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, (ii) may be indemnified by the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of any such proceeding (other than a proceeding by
or in the right of the corporation) even if he is not successful on the merits
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the corporation (and, in the case of a
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful), and (iii) may be indemnified by the corporation for expenses
(including attorneys' fees) incurred by him in the defense or settlement of a
proceeding brought by or in the right of the corporation, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation; provided that no indemnification may be made
under the circumstances described in clause (iii) if the director, officer,
employee or agent is adjudged liable to the corporation, unless a court
determines that, despite the adjudication of liability but in view of all of
the circumstances, he is fairly and reasonably entitled to indemnification for
the expenses which the court shall deem proper. The indemnification described
in clauses (ii) and (iii) above (unless ordered by a court) may be made only as
authorized in a specific case upon determination by (i) a majority of a quorum
of disinterested directors, (ii) independent legal counsel in a written
opinion, or (iii) the stock holders, that indemnification is proper in the
circumstances because the applicable
<PAGE> 146
standard of conduct has been met. Expenses (including attorneys' fees)
incurred by an officer or director in defending a proceeding may be advanced by
the corporation prior to the final disposition of the proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay the
advance if it is ultimately determined that he is not entitled to be
indemnified by the corporation. Expenses (including attorneys' fees) incurred
by other employees and agents may be advanced by the corporation upon terms and
conditions deemed appropriate by the board of directors.
The indemnification provided by the Delaware General Corporation Law
has at least two limitations that are addressed by the Indemnification
Agreements: (i) BancGroup is under no obligation to advance expenses to a
director or officer, and (ii) except in the case of a proceeding in which a
director or officer is successful on the merits or otherwise, indemnification
of a director or officer is discretionary rather than mandatory.
The Indemnification Agreements, therefore, cover any and all expenses
(including attorneys' fees and all other charges paid or payable in connection
therewith) incurred in connection with investigating, defending, being a
witness or participating in (including an appeal), or preparing to defend, be a
witness in or participate in, any threatened, pending or completed action, suit
or proceeding, or any inquiry or investigation, whether civil, criminal,
administrative or otherwise, related to the fact that such director or officer
is or was a director, officer, employee or agent of BancGroup or is or was
serving at the request of BancGroup as a director, officer, employee, agent,
partner, committee member or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust or other enterprise, or by reason
of anything done or not done by such director or officer in any such capacity.
The Indemnification Agreements also provide for the prompt advancement
of all expenses incurred in connection with any proceeding and obligate the
director or officer to reimburse BancGroup for all amounts so advanced if it is
subsequently determined, as provided in the Indemnification Agreements, that
the director or officer is not entitled to indemnification.
The Indemnification Agreements further provide that the director or
officer is entitled to indemnification for, and advancement of, all expenses
(including attorneys' fees) incurred in any proceeding seeking to collect from
BancGroup an indemnity claim or advancement of expenses under the
Indemnification Agreements, BancGroup's Certificate of Incorporation, or the
Delaware General Corporation Law, regardless of whether the director or officer
is successful in such proceeding.
The Indemnification Agreements impose upon BancGroup the burden of
proving that the director or officer is not entitled to indemnification in any
particular case, and the Indemnification Agreements negate certain presumptions
which might otherwise be drawn against a director or officer in certain
circumstances. Further, the Indemnification Agreements provide that if
BancGroup pays a director or officer pursuant to an Indemnification Agreement,
BancGroup will be subrogated to such director's or officer's rights to recover
from third parties.
<PAGE> 147
The Indemnification Agreements stipulate that a director's or
officer's rights under such contracts are not exclusive of any other indemnity
rights a director or officer may have; however, the Indemnification Agreements
prevent double payment. The Indemnification Agreements require the maintenance
of directors' and officers' liability insurance if such insurance can be
maintained on terms, including rates, satisfactory to BancGroup.
The benefits of the Indemnification Agreements would not be available
if (i) the action with respect to which indemnification is sought was initiated
or brought voluntarily by the officer or director (other than an action to
enforce the right to indemnification under the Indemnification Agreements);
(ii) the officer or director is paid for such expense or liability under an
insurance policy; (iii) the proceeding is for an accounting of profits pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as amended; (iv) the
conduct of the officer or director is adjudged as constituting an unlawful
personal benefit, or active or deliberate dishonesty or willful fraud or
illegality; or (v) a court determines that indemnification or advancement of
expenses is unlawful under the circumstances.
The Indemnification Agreements would provide indemnification for
liabilities arising under the Securities Act of 1933, as amended. BancGroup
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in such act and is,
therefore, unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following is a list of exhibits that are included in Part
II of the Registration Statement. Such exhibits are
separately indexed elsewhere in the Registration Statement.
DESCRIPTION
Exhibit 2 Plan of acquisition, reorganization, arrangement, liquidation
of successor:
(A) Agreement and Plan of Merger between The Colonial BancGroup,
Inc. and Great Southern Bancorp, dated as of March 6, 1997,
included in the Prospectus portion of this Registration
Statement at Appendix A and incorporated herein by reference.
(B) Great Southern Bancorp Executive Incentive Stock Option Plan
and form of 1989 Executive Incentive Stock Option Agreement
Exhibit 4 Instruments defining the rights of security holders:
7
<PAGE> 148
(A)(1) Article 4 of the Restated Certificate of Incorporation of the
Registrant filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K, dated February 21, 1995, and incorporated
herein by reference.
(A)(2) Amendment to Article 4 of Registrant's Restated Certificate of
Incorporation, dated April 16, 1997.
(B) Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.
(C) Dividend Reinvestment and Class A Common Stock Purchase Plan
of the Registrant dated January 15, 1986, and Amendment No. 1
thereto dated as of June 10, 1986, filed as Exhibit 4(C) to
the Registrant's Registration Statement on Form S-4 (File No.
33-07015), effective July 15, 1986, and incorporated herein by
reference.
(D) Trust Indenture dated as of March 25, 1986, included as
Exhibit 4 to the Registrant's Amendment No. 1 to Registration
Statement on Form S-2, file number 33-4004, effective March
25, 1986, and incorporated herein by reference.
(E) All other instruments defining the rights of holders of
long-term debt of the Registrant and its subsidiaries - not
filed pursuant to clause 4(iii) of Item 601(b) of Regulation
S-K, to be furnished upon request of the Commission.
Exhibit 5 Opinion of Miller, Hamilton, Snider & Odom, L.L.C. as to
certain Delaware law issues of the securities being
registered.
Exhibit 8 Tax Opinion of Coopers & Lybrand, LLP
Exhibit 23 Consents of experts and counsel:
(A) Consent of Coopers & Lybrand, L.L.P.
8
<PAGE> 149
(B) Consent of Miller, Hamilton, Snider and Odom, L.L.C.
(C) Consent of Osburn, Henning and Company, P.A.
(D) Consent of ABN AMRO Chicago Corporation
(E) Consent of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.
Exhibit 24 Power of Attorney, filed as Exhibit 24 to the registrant's
Registration Statement on Form S-4, Registration No.
333-20291, and incorporated herein by reference.
Exhibit 99 Additional exhibits:
(A) Form of Proxy of Great Southern Bancorp
(b) Financial Statement Schedules
The financial statement schedules required to be included
pursuant to this Item are not included herein because they are
not applicable or the required information is shown in the
financial statements or notes thereto.
ITEM 22. UNDERTAKINGS.
(a) The undersigned hereby undertakes as follows as required by
Item 512 of Regulation S-K:
(1) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus
which is a part of this Registration Statement, by
any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus
will contain the information called for by the
applicable registration form with respect to
reofferings by persons who may be deemed
underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately above, or (ii) that
purports to meet the requirements of section 10(a)(3)
of the Act and is used in connection with an offering
of securities subject to Rule 415, will be filed as a
part of an amendment to the Registration Statement
and will not be used until such amendment is
effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such
post- effective
9
<PAGE> 150
amendment shall be deemed to be a new Registration
Statement relating to such securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(3) Insofar as indemnification for liabilities arising
under the Act may be permitted to directors,
officers, and controlling persons of the Registrant,
the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such
indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the
successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling
person in connection with the securities being
registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the
final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of
Form S-4, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
contained in documents filed subsequent to the effective date
of the Registration Statement through the date of responding
to the request.
(c) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
Registration Statement when it became effective.
(d) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent
10
<PAGE> 151
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(e) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
11
<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Montgomery, Alabama, on the 25th day of April, 1997.
THE COLONIAL BANCGROUP, INC.
By: /s/ Robert E. Lowder
--------------------------
Robert E. Lowder
Its Chairman of the Board
of Directors, Chief
Executive Officer, and
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Robert E. Lowder Chairman of the Board **
- --------------------------- of Directors, President
Robert E. Lowder and Chief Executive
Officer
/s/ W. Flake Oakley, IV Chief Financial **
- --------------------------- Officer, Secretary
W. Flake Oakley, IV and Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
Director
- --------------------------
Lewis Beville
* Director **
- --------------------------
Young J. Boozer
</TABLE>
12
<PAGE> 153
<TABLE>
<S> <C> <C> <C>
* Director **
- --------------------------
William Britton
* Director **
- --------------------------
Jerry J. Chesser
* Director **
- --------------------------
Augustus K. Clements, III
* Director **
- -------------------------
Robert C. Craft
Director
- -------------------------
Patrick F. Dye
* Director **
- -------------------------
Clinton O. Holdbrooks
* Director **
- -------------------------
D. B. Jones
* Director **
- -------------------------
Harold D. King
* Director **
- -------------------------
John Ed Mathison
</TABLE>
13
<PAGE> 154
<TABLE>
<S> <C> <C>
* Director **
- -------------------------
Milton E. McGregor
* Director **
- -------------------------
John C. H. Miller, Jr.
* Director **
- -------------------------
Joe D. Mussafer
* Director **
- -------------------------
William E. Powell
Director
- -------------------------
Donald J. Prewitt
* Director **
- -------------------------
Jack H. Rainer
Director
- -------------------------
Jimmy Rane
* Director **
- -------------------------
Frances E. Roper
Director
- -------------------------
Simuel Sippial
</TABLE>
14
<PAGE> 155
<TABLE>
<S> <C> <C>
* Director **
- -------------------------
Ed V. Welch
</TABLE>
* The undersigned, acting pursuant to a power of attorney, has signed
this Registration Statement on Form S-4 for and on behalf of the
persons indicated above as such persons' true and lawful
attorney-in-fact and in their names, places and stead, in the
capacities indicated above and on the date indicated below.
/s/ W. Flake Oakley, IV
- ------------------------
W. Flake Oakley, IV
Attorney-in-Fact
** Dated: April 25, 1997
15
<PAGE> 156
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________
EXHIBITS TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
THE COLONIAL BANCGROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
16
<PAGE> 157
EXHIBIT INDEX
EXHIBIT PAGE
- ------- ----
Exhibit 2 Plan of acquisition, reorganization, arrangement, liquidation
of successor:
(A) Agreement and Plan of Merger between The Colonial BancGroup,
Inc., and Great Southern Bancorp, dated as of March 6, 1997,
included in the Prospectus portion of this registration
statement at Appendix A and incorporated herein by reference.
(B) Great Southern Bancorp Executive Incentive Stock Option Plan
and form of 1989 Executive Incentive Stock Option Agreement.
Exhibit 4 Instruments defining the rights of security holders:
(A)(1) Article 4 of the Restated Certificate of Incorporation of the
Registrant filed as Exhibit 4.1 to the Registrant's Current
Report on Form 8-K, dated February 21, 1995, including the
amendment to Article 4 noted at Exhibit 4(B) above, and
incorporated herein by reference.
(A)(2) Amendment to Article 4 or Registrant's Restated Certificate of
Incorporation, dated April 16, 1997.
(B) Article II of the Bylaws of the Registrant filed as Exhibit
4.2 to the Registrant's Current Report on Form 8-K, dated
February 21, 1995, and incorporated herein by reference.
(C) Dividend Reinvestment and Class A Common Stock Purchase Plan
of the Registrant dated January 15, 1986, and Amendment No. 1
thereto dated as of June 10, 1986, filed as Exhibit 4(C) to
the Registrant's Registration Statement on Form S-4 (File No.
33- 07015), effective July 15, 1986, and incorporated herein
by reference.
(D) Trust Indenture dated as of March 25, 1986, included as
Exhibit 4 to the Registrant's Amendment No. 1 to Registration
Statement on Form S-2, file number 33-4004, effective March
25, 1986, and incorporated herein by
17
<PAGE> 158
reference.
(E) All other instruments defining the rights of holders of
long-term debt of the Registrant and its subsidiaries - not
filed pursuant to clause 4(iii) of Item 601(b) of Regulation
S-K to be furnished upon request of the Commission.
Exhibit 5 Opinion of Miller, Hamilton, Snider & Odom, L.L.C. as to
certain Delaware law issues of the securities being
registered.
Exhibit 8 Tax Opinion of Coopers & Lybrand, LLP
Exhibit 23 Consents of experts and counsel:
(A) Consent of Coopers & Lybrand, L.L.P.
(B) Consent of Miller, Hamilton, Snider and Odom, L.L.C.
(C) Consent of Osburn, Henning and Company, P.A.
(D) Consent of ABN AMRO Chicago Corporation
(E) Consent of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.
Exhibit 24 Power of Attorney, filed as Exhibit 24 to the registrant's
Registration Statement on Form S-4, Registration No.
333-20291, and incorporated herein by reference.
Exhibit 99 Additional exhibits:
(A) Form of Proxy of Great Southern Bancorp
18
<PAGE> 1
EXHIBIT 2(B)
GREAT SOUTHERN BANCORP EXECUTIVE INCENTIVE STOCK OPTION PLAN
AND FORM OF 1989 EXECUTIVE INCENTIVE STOCK OPTION AGREEMENT.
19
<PAGE> 2
GREAT SOUTHERN BANK
EXECUTIVE INCENTIVE STOCK OPTION PLAN
ARTICLE I
THE PLAN
1.1 NAME. The plan described herein shall be named the "Great
Southern Bank Executive Incentive Stock Option Plan".
1.2 PURPOSES. The purpose of the plan is to advance the
interests of Great Southern Bank ("the Company") and its shareholders by
affording to key management employees and officers of the Company and the
Company's subsidiaries (as such term is defined by Section 425 of the Internal
Revenue Code of 1986, as amended (the "Code")) an opportunity to acquire or
increase their proprietary interest in the Company by the grant to such
employees or officers of options under the terms set forth herein. By thus
encouraging such employees or officers to become owners of the Company's stock,
the Company seeks to motivate, retain, and attract those highly competent
individuals upon whose judgment, initiative, leadership, and continued efforts
the success of the Company and its subsidiaries in large measure depends. The
plan and options granted hereunder are intended to constitute incentive stock
options within the meaning and provisions of Section 422A of the Code, and to
provide to the optionees the tax benefits arising from the applicability of
said Section.
1.3 EFFECTIVE DATE. The plan shall not become effective until
adopted by a majority of the Board of Directors of the Company at any regular
or special meeting and approved by the holders of a majority of the shares of
outstanding stock (as hereinafter defined) represented at any annual or
special meeting of the shareholders of the Company
20
<PAGE> 3
at which a quorum is present. The plan shall become effective as of the date
upon which the plan is adopted by the board or approved by the shareholders,
whichever date is later.
ARTICLE II
DEFINITIONS
As used in the plan, the following terms shall be defined as set forth
below unless the context indicates to the contrary:
(a) "Board" Shall mean the Board of Directors of the
Company.
(b) "Cause" shall mean the negligent or willful failure
of an optionee to perform his duties in a manner consistent with the best
interests of the Company or its subsidiaries and in accordance with the
directives of management.
(c) "Committee" shall mean the stock option committee of
the board, as elected by the board from time to time.
(d) "Company" shall mean Great Southern Bank.
(e) "Fair Market Value" shall mean the fair market value
of the stock as determined by the board from time to time.
(f) "Option" shall mean an option to purchase stock
granted pursuant to the provisions of this plan.
(g) "Optionee" shall mean an employee or officer of the
Company or any of the Company's subsidiaries to whom an option has been granted
hereunder.
(h) "Plan" shall mean the Great Southern Bank Executive
Incentive Stock Option Plan, the terms of which are set forth herein.
(i) "Stock" shall mean the single class of common stock
of the Company, par value $5.00, presently authorized by the articles of
incorporation of the Company.
21
<PAGE> 4
Should the amount of authorized stock be increased or decreased, or should the
stock be changed into or exchanged for shares of a different stock or form of
securities of the Company or some other corporation, "stock" shall include and
mean such other stock or securities.
(j) "Stock Option Agreement" shall mean the agreement
between the Company and the optionee by which the optionee may receive and
exercise an option and thereby purchase stock under the plan.
ARTICLE III
ELIGIBILITY OF OPTIONEES
Any officer or other key management employee who is employed on a
full-time basis by the Company or any of the Company's subsidiaries shall be
eligible to be an optionee, except the following:
(i) An officer or employee who is a member of the
committee at the time the option is granted; or
(ii) An officer or employee with beneficial ownership of
stock representing more than ten (10%) percent of the total combined voting
power of the Company's outstanding stock or of the outstanding stock of the
Company's subsidiary banks; provided, however, that such officer or employee
shall be eligible to participate if, at the time the option is granted, the
option price is at least one hundred ten (110%) percent of the fair market
value of the stock subject to the option and such option by its terms is not
exercisable after the expiration of five (5) years from the date such option is
granted.
ARTICLE IV
ADMINISTRATION BY THE STOCK OPTION COMMITTEE
22
<PAGE> 5
4.1 DUTIES AND POWERS OF COMMITTEE AND BOARD. The plan shall be
administered by the committee. Subject to the express provisions of the plan
and approval by the board, the committee shall have sole discretion and
authority to determine from among those persons eligible to be optionees those
to whom options should be granted; a proposed date for granting each option; a
proposed option price; and the number of shares of stock to be included in each
option.
The committee shall furnish to the board its recommendations
as to the proposed optionee, the proposed date for granting the option, the
proposed option price and proposed number of shares to be included in the
option. The board shall approve, modify or disapprove such option terms, grant
the option to the optionee as of a specified date, and authorize the Company to
enter into a Stock Option Agreement. If a member of the board is the proposed
optionee, such member shall abstain from discussing or voting upon his proposed
option.
Subject to the express provisions of the plan and ratification
by the board, the committee shall have authority to interpret the plan; to
prescribe and, with the approval of the Department of Banking and Finance,
amend rules and regulations relating to the plan; to determine the details and
provisions of each Stock Option Agreement; and to make all other determinations
deemed convenient, desirable, necessary or advisable in the administration of
the plan.
4.2 MAJORITY RULE. A majority of the members of the committee
shall constitute a quorum, and any action taken by a majority of those present
at a meeting at which a quorum is present, or any action taken without a
meeting evidenced by a writing executed
23
<PAGE> 6
by every member of the committee, shall be considered an action of the
committee.
4.3 COMPANY ASSISTANCE. The Company or any of its subsidiary
banks shall supply full and timely information to the committee and the board
at either's request on all matters relating to eligible optionees, their
employment, death, retirement, disability or other termination of employment,
and such other pertinent facts as the committee or board may require. The
Company or any of its subsidiary banks shall also furnish the committee or
board with such clerical and other assistance as is requested or necessary in
the performance of their duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 LIMITATIONS.
(a) The aggregate number of shares of stock which may be
issued under options shall not exceed 100,000 shares of stock. Such shares may
be authorized but previously unissued shares of stock.
(b) Existing shareholders of the Company shall have no
preemptive rights in the shares of stock subject to options.
(c) The aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by an optionee during any calendar
year (under all incentive stock option plans of the optionee's employer
corporation and its parent and subsidiary corporations, if any) shall not
exceed $100,000. An optionee may exercise options for the purchase of stock
valued in excess of $100,000 (determined at the time of grant of the options)
in a calendar year, but only if the right to exercise such options shall have
first become available in prior
24
<PAGE> 7
calendar years.
5.2 CORPORATE RECAPITALIZATION OR REORGANIZATION. In the event
that the number of shares of outstanding stock is increased or decreased, or
said shares are changed into or exchanged for a different kind of stock or
other form of securities of the Company or another corporation by reason of
merger, consolidation, liquidation, reorganization, recapitalization,
reclassification, combination of shares, stock split, or stock dividend:
(a) The aggregate number and kind of shares of stock
which may be granted under the plan shall be adjusted appropriately so as to
avoid dilution;
(b) Rights under outstanding options, both as to the
number of subject shares and the option price, as defined in Section 6.2, shall
be adjusted appropriately so as to avoid dilution and to maintain an option
price following such adjustment which is equal to the option price prior to the
adjustment; and
(c) Where a merger, consolidation, liquidation or
reorganization of the Company occurs in which the Company is not a surviving
corporation, each outstanding option shall be subject to substitution for new
options and appropriate adjustment made so that the aggregate fair market value
of each new option is equal to the aggregate fair market value of the option
for which the new option is substituted, and so that the new option does not
give the optionee additional benefits which he did not have under the
pre-existing option.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the board; any such adjustments may
provide for the elimination of fractional share interests.
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<PAGE> 8
ARTICLE VI
GRANT AND EXERCISE OF OPTIONS
6.1 OPTION AND GRANT AND AGREEMENT. Each option granted hereunder
shall be evidenced by minutes of a meeting or the written consent of the board,
and by a written Stock Option Agreement dated as of the date the option is
granted by the board. The Stock Option Agreement shall be executed by the
optionee, and by such person on behalf of the Company as the board shall
designate.
6.2 OPTION PRICE. The price of the stock subject to each option
shall be not less than the fair market value of such stock on the date the
option is granted, as determined by the board, and in no event shall the price
per share of the stock subject to an option be less than the par value thereof.
6.3 OPTION PERIOD. The period of time during which an option may
be exercised shall be as approved by the board and shall be stated in the Stock
Option Agreement, but in no instance shall such period extend beyond that date
which is ten (10) years from the date the option is granted.
6.4 OPTION EXERCISE. An option may be exercised at any time or
from time to time after the date the option is granted, within the period
described in Section 6.3, but in no case prior to the third anniversary of the
date on which the Company began business, that is, April 17, 1989. An optionee
may exercise his option as to all or any number of the shares subject to his
option, up to the total shares subject to the option, except that the optionee
may not purchase fractional shares. The option shall be exercised by delivery
of a written notice stating the optionee's intent to exercise the option with
respect to a specified number of shares, accompanied by payment in full of the
option price for such
26
<PAGE> 9
shares, to the Company at its principal office located at 6266 S. Congress
Avenue, Suite L-2, Lantana, Florida 33462. Regardless of any delays in the
issuance or delivery of a stock certificate to optionee caused by a delay in
fulfillment of the conditions set forth in Article VII, the date upon which
said written notice accompanied by full payment is delivered to the Company by
optionee shall be considered the date of exercise of the option and also the
effective date of the transfer of the stock subject to the option as exercised.
In lieu of cash, the optionee may use stock as partial or full payment of the
option price.
6.5 NONTRANSFERABILITY OF OPTION. No option shall be transferable
by an optionee other than by will or the laws of descent and distribution. An
option shall be exercisable, during optionee's lifetime, only by optionee.
Should optionee die while still an employee of, or within three (3) months of
terminating his employment with, the Company or any of the Company's
subsidiaries, optionee's estate or the person who acquires the option by
inheritance or intestate succession may exercise the option at any time during
the remainder of the option period as stated in the Stock Option Agreement with
optionee.
6.6 EFFECT OF TERMINATION OF EMPLOYMENT.
(a) If the optionee's employment with the Company and all
of its subsidiaries by which optionee is employed, if any, shall be terminated
by the Company and such subsidiaries, for cause, or by a voluntary act of the
optionee other than retirement, the optionee's right to exercise his option
shall terminate as of the date his employment terminates, and all of optionee's
rights under the plan shall cease.
(b) If an optionee's employment with the Company and the
Company subsidiaries shall be terminated by the Company and the Company's
subsidiaries without
27
<PAGE> 10
cause, the optionee shall be entitled, within thirty (30) days following such
termination, to exercise such option to the extent that it was exercisable at
the date of such termination of employment.
(c) If the optionee shall become "permanently and totally
disabled", the optionee shall have the right at any time during the period
ending one year from the date of optionee's employment with the Company and any
of its subsidiaries is terminated as a result of such disability, to exercise
his option to the extent it was exercisable at the date of such disability. An
individual is "permanently and totally disabled" if he is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not less
than twelve (12) months.
(d) No exercise of an option by an optionee's estate or
person who acquired the option by inheritance or intestate succession shall be
effective to bind the Company unless the Company shall have been furnished with
written notice of such exercise and of the capacity of the person so exercising
the option, together with an authenticated copy of the will, court order and/or
such other evidence as the Company may deem necessary to establish the valid
capacity of such person to exercise the option under Section 6.5.
6.7 RIGHTS AS SHAREHOLDER. An optionee shall have no rights as a
shareholder with respect to any stock subject to the option he holds prior to
the purchase of such stock by exercise of that option.
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<PAGE> 11
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for shares of stock purchased pursuant to the exercise of any option prior to
fulfillment of all of the following conditions:
(a) The completion of any registration or other
qualification of such shares under any federal or state law, or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the committee or board shall deem legally
required;
(b) The receipt of any approval or other clearance from
any federal or state governmental agency which the committee or board shall
deem legally required; and
(c) The lapse of such reasonable period of time following
the exercise of the option as the committee or board may establish from time to
time for reasons of administrative convenience.
The Company shall pay for any applicable documentary stamp or stock
issuance taxes pertaining to the issuance of stock pursuant to the exercise of
any option.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
8.1 BOARD ACTION. The board may at any time and from time to
time, whether or not upon recommendation of the committee, terminate, or, with
the approval of the Department of Banking and Finance, amend or modify the
plan, provided however, that the board may not, without approval of the
shareholders of the Company:
(a) Increase the total number of shares of stock subject
to the plan; or
29
<PAGE> 12
(b) Modify the class of employees or the designation of
corporation whose employees are eligible to become optionees under Article III
of the plan; or
(c) Permit any person, while acting as a member of the
committee, to receive an option under the plan, but an officer or employee who
has previously received an option may serve on the committee so long as such
person abstains from discussing or voting on any matter affecting his option
which does not equally affect all other options.
8.2 EXISTING RIGHTS. No termination, amendment, or modification
of the plan shall in any manner affect any option theretofore granted under the
plan without the consent of the optionee.
8.3 AUTOMATIC TERMINATION. Unless terminated earlier by the
board, the plan shall terminate ten (10) years from the date of adoption by
the board or date of approval by the shareholders of the Company, whichever is
earlier.
ARTICLE IX
INDEMNIFICATION OF BOARD OF DIRECTORS
9.1 INDEMNITY. In addition to and not exclusive of such other
rights of indemnification as they may have as directors of the Company by
statute or the bylaws of the Company, the current members and former members of
the board, including those who serve or have served on the committee, shall be
indemnified by the Company in connection with any acts or failures to act with
respect to the plan or any option granted under the plan against expenses
actually and necessarily incurred by them in connection with the defense of any
claim, action, appeal or other proceeding relating thereto, including all
amounts for expenses, investigation costs prior to and after suit, and
attorneys' fees all amounts paid in a settlement or compromise of the matter,
provided that the settlement is first approved by
30
<PAGE> 13
independent legal counsel selected by the Company; and any amounts paid in
satisfaction of a judgment of the matter.
9.2 EXCEPTION FOR INTENTIONAL ILLEGAL ACTS. No person described
in Section 9.1 shall be entitled to indemnity from the Company for an illegal
act if the board finds that such person knew at the time of committing the act
that the act was a violation of the law.
9.3 NOTICE TO COMPANY. Should a current or former member of the
board receive notice of any claim, action or other proceeding with respect to
the plan or any option, he shall immediately so advise the secretary of the
Company in writing and shall offer the Company the opportunity at its own
expense to handle and defend such proceeding. He shall also, at the same time,
deliver to the secretary a copy of any documents he received in connection with
the claim, action or proceeding.
ARTICLE X
MISCELLANEOUS
10.1 EMPLOYMENT AND EXERCISE OF OPTION. Nothing in the plan or in
any option granted hereunder or in any Stock Option Agreement relating hereto
shall confer upon any employee a right to continue in the employ of the Company
or any of its subsidiaries or an obligation to exercise any option granted
hereunder.
10.2 OTHER COMPENSATION PLANS. The adoption and existence of the
plan or any option or any Stock Option Agreement shall not affect any other
present or future stock option, incentive or compensation plan in effect for
the Company or any of its subsidiaries; nor preclude the Company or any of its
subsidiaries from establishing any other forms of stock option, incentive, or
compensation plans for employees of the Company; nor affect an optionee's right
to participate in such other forms of stock option, incentive or
31
<PAGE> 14
compensation plans.
10.3 APPLICATION OF FUNDS. The proceeds received by the Company
from the sale of stock pursuant to the exercise of any option may be used for
any purpose for which the Company is incorporated.
10.4 PLAN BINDING ON SUCCESSORS. The plan shall be binding upon
the successors and assigns of the Company.
10.5 SINGULAR, PLURAL; GENDER. Wherever used in the plan, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender.
10.6 HEADINGS NO PART OF PLAN. Headings of articles and sections
used in the plan are inserted for convenience and reference only, and
constitute no part of the plan.
10.7 INTERPRETATION. Each and every provision of the plan is
intended to be construed to be effective and valid under applicable law.
Should any provision be held illegal or invalid, such holding shall not be
deemed to affect any other provision herein.
32
<PAGE> 15
GREAT SOUTHERN BANK
1989 EXECUTIVE INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, effective the _______ day of ___________________,
1989, by and between GREAT SOUTHERN BANK, a corporation organized and existing
under the laws of the State of Florida (hereinafter the "Company") and
_______________________________________________________, (hereinafter the
"Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Great Southern Bank Executive
Incentive Stock Option Plan (hereinafter referred to as the "Plan") for key
employees and officers of the Company, intended to qualify for certain tax
treatment under Section 422A of the Internal Revenue Code of 1986, as amended,
which Plan is incorporated herein and made a part hereof by reference and a
copy of which is attached; and
WHEREAS, the board of directors of the Company regards the Optionee as
a key employee upon whose judgment, initiative, leadership and continued
efforts the success of the Company in large measure depends, and has determined
that it would be to the advantage and interest of the Company and its
shareholders to grant an incentive stock option to the Optionee as an
inducement to remain in the service of the Company and as an incentive for
continued top performance during such service; and
WHEREAS, the board of directors of the Company did approve and
authorize at a meeting held on March 9, 1989, the issuance of an incentive
stock option (the "Option") to Optionee upon the terms and conditions set forth
in this agreement; and
WHEREAS, the stock option committee of the board (the "Committee") at
a meeting held on August _______, 1989, concurred in such approval; and
33
<PAGE> 16
WHEREAS, the Optionee desires to agree to and accept the Option in
accordance with the terms and conditions set forth in this agreement; and
WHEREAS, this agreement constitutes a Stock Option Agreement as
defined in Article II(j) of the Plan.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. The Company hereby grants to the Optionee as of
_____________________ (the date of grant), and Optionee accepts, the right and
option to purchase an aggregate of __________ shares of common stock of the
Company, par value of $5.00 per share, at the purchase price of $10.00 per
share, upon the terms and conditions hereinafter set forth.
2. This Option shall be exercisable at any time beginning April
17, 1992 through April 17, 1999, hereinafter referred to as the "Option
Period". This Option may be exercised in whole or in part at any time or from
time to time during the Option Period. No partial exercise of the Option may
be for less than ten (10) full shares. In no event shall the Company be
required to issue fractional shares.
3. The Optionee must remain in the continuous employ of the
Company from the date of grant through the date of exercising the Option or
through such date prescribed in Paragraph 4 below (whichever is earlier) in
order to exercise the Option. Should the Optionee choose to exercise the
Option in part from time to time, the Optionee must remain continuously and be
in the employ of the Company and/or its subsidiaries through the date of each
subsequent exercise of the Option or through such date described in Paragraph 4
below (whichever is earlier) in order to exercise subsequently any part of the
Option.
4. In the event of termination of employment of the Optionee, the
following time
34
<PAGE> 17
periods shall apply:
a) If the Optionee's employment with the Company shall
be terminated by the Company for cause or by a voluntary act of the Optionee
other than retirement, the Optionee's rights to exercise his Option shall
terminate as of the date his employment terminates, and all of the Optionee's
rights under the Plan shall cease.
b) If the Optionee's employment with the Company shall
be terminated by the Company without cause or by the Optionee's retirement, the
Optionee shall be entitled, within thirty (30) days following such termination,
to exercise such Option to the extent that it was exercisable at the date of
such termination of employment.
c) If the Optionee shall become "permanently and totally
disabled", the Optionee shall have the right, at any time during the period
ending one year from the date that Optionee's employment with the Company is
terminated as a result of such disability, to exercise his Option to the extent
it was exercisable at the date of such disability. An individual is
"permanently and totally disabled" if he is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12)
months.
d) No exercise of an Option by an Optionee's estate or
person who acquired the Option by inheritance or intestate succession shall be
effective to bind the Company unless the Company shall have been furnished with
written notice of such exercise and of the capacity of the person so exercising
the Option, together with an authenticated copy of the will, court order and/or
such other evidence as the Company may deem necessary to establish the valid
capacity of such person to exercise the Option under Section 6.5 of the plan.
35
<PAGE> 18
5. Subject to the terms of any employment contract to the
contrary, nothing contained herein or in the Plan shall be construed or
interpreted as restricting or limiting the right of the Company to terminate or
change the terms of the employment of the Optionee at any time for any reason
whatsoever. A leave of absence or an interruption of service (including an
interruption during military service), authorized or approved by the Company,
shall not be deemed a termination of employment for the purposes of Paragraph
3 and 4 hereof.
6. The Option granted to Optionee by this agreement is not
intended to be, nor shall it be, transferable by Optionee, nor exercisable
during Optionee's lifetime by any person other than Optionee (or Optionee's
duly authorized agent). However, it is understood and agreed that an Option
shall be transferable by will or by the laws of descent and distribution upon
Optionee's death.
7. The Company shall not be required to issue or deliver any
certificate for shares of stock purchased pursuant to the exercise of any
Option prior to fulfillment of all of the following conditions:
a) The completion of any registration or other
qualification of such shares under federal or state law, or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee or board shall deem legally
required;
b) The receipt of any approval or other clearance from
any federal or state governmental agency which the Committee or board shall
deem legally required; and
c) The lapse of such reasonable period of time following
the exercise of the Option as the Committee or board may establish from time to
time for reasons of administrative convenience.
36
<PAGE> 19
The Company shall pay for any applicable documentary stamp or stock
issuance taxes pertaining to the issuance of stock pursuant to the exercise of
any Option.
8. This Stock Option Agreement, and all rights pertaining hereto,
shall be construed with the Plan, and the Optionee hereby acknowledges receipt
of a copy of the Plan at the time of executing this agreement. Should any term
of this agreement conflict with any term of the Plan, the terms contained in
the Plan shall be controlling.
9. Any communications which the Company desires to make to the
Optionee with respect to this agreement shall be in writing and, if mailed,
addressed to the Optionee at his address now on file with the Company, or to
such other address as the Optionee may designate in writing and, if mailed,
addressed to the secretary of the Company, 6266 South Congress Avenue, Suite
L-2, Lantana, Florida 33462. Communications shall be hand-delivered or sent by
U.S. Mail, return receipt, with postage prepaid.
10. The Committee shall have the authority to construe and
interpret this agreement and to correct any defect or supply an omission or
reconcile any inconsistency herein, and to prescribe reasonable rules and
regulations relating to the administration of this Option and other similar
options granted under the Plan. All decisions of the Committee upon any
questions arising under the Plan, the Option or this agreement shall be
conclusive.
11. The interpretation, performance and enforcement of this
agreement shall be governed by the laws of the State of Florida. Any
modification of this agreement must be in writing and signed by both parties.
Each and every provision of this agreement is intended to be construed as to be
effective and valid under applicable law. Should any provision be held illegal
or invalid, such holding shall not be deemed to affect any other provision
hereof.
37
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this agreement as of the
_______ day of _________________, 1989.
ATTEST: GREAT SOUTHERN BANK
- ------------------------------ ------------------------------
______________________________
WITNESS
OPTIONEE
______________________________ ______________________________
______________________________
WITNESS
38
<PAGE> 1
EXHIBIT 4(A)(2)
AMENDMENT TO ARTICLE 4 OF REGISTRANT'S RESTATED CERTIFICATE
OF INCORPORATION, DATED APRIL 16, 1997.
THE TOTAL NUMBER OF SHARES OF ALL CLASSES OF STOCK WHICH THE
CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS 101,000,000 SHARES, OF
WHICH 1,000,000 SHARES OF THE PAR VALUE OF $2.50 PER SHARE ARE TO BE
PREFERENCE STOCK (HEREINAFTER CALLED "PREFERENCE STOCK") AND
100,000,000 SHARES OF THE PAR VALUE OF $2.50 PER SHARE ARE TO BE
COMMON STOCK (HEREINAFTER SOMETIMES CALLED "COMMON STOCK").
[THE REMAINDER OF ARTICLE 4 IS NOT INCLUDED.]
39
<PAGE> 1
EXHIBIT 5
OPINION AS TO CERTAIN DELAWARE LAW ISSUES OF THE SECURITIES
BEING REGISTERED
40
<PAGE> 2
April 17, 1997
Montgomery Office
The Colonial BancGroup, Inc.
P. O. Box 1108
Montgomery, AL 36101
Re: Registration Statement on Form S-4 relating to the issuance of
shares of Common Stock of The Colonial BancGroup, Inc., in
connection with the acquisition by merger of Great Southern
Bancorp ("Merger")
Gentlemen:
We are familiar with the proceedings taken and proposed to be taken by
The Colonial BancGroup, Inc., a Delaware corporation (the "Company"), in
connection with the proposed issuance by the Company of shares of its Common
Stock, par value of $2.50 per share, in connection with the Merger and in
accordance with an Agreement and Plan of Merger, dated as of March 6, 1997 (the
"Agreement"), by and between the Company and Great Southern Bancorp and the
issuance by the Company of its Common Stock pursuant to stock options being
assumed by the Company in accordance with the Agreement. We have also acted as
counsel for the Company in connection with the preparation and filing with the
Securities and Exchange Commission under the Securities Act of 1933, of the
Registration Statement on Form S-4 referred to in the caption above. In this
connection we have reviewed such documents and matters of law as we have deemed
relevant and necessary as a basis for the opinions expressed herein.
Upon the basis of the foregoing, we are of the opinion that:
(i) The Company is a corporation duly organized and existing under
the laws of the State of Delaware;
<PAGE> 3
The Colonial BancGroup
April 17, 1997
Page 2
(ii) The shares of Common Stock of the Company referred to above,
to the extent actually issued pursuant to the Agreement will, when so issued,
be duly and validly authorized and issued and will be fully paid and
nonassessable shares of Common Stock of the Company;
(iii) Under the laws of the State of Delaware, no personal liability
attaches to the ownership of the shares of Common Stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced registration statement. In consenting to the inclusion of our
opinion in the Registration Statement, we do not thereby admit that we are a
person whose consent is required pursuant to Section 7 of the Securities Act of
1933, as amended.
Sincerely yours,
MILLER, HAMILTON, SNIDER & ODOM,
L.L.C.
By: /s/ Michael D. Waters
-----------------------------
Michael D. Waters
MDW/mfm
42
<PAGE> 1
EXHIBIT 8
TAX OPINION
43
<PAGE> 2
April 17, 1997
Mr. Flake Oakley
Chief Financial Officer
Colonial BancGroup, Inc.
P.O. Box 1109
Montgomery, AL 36101
Dear Mr. Oakley:
For various business reasons, Great Southern Bancorp (Acquired Corporation) and
The Colonial BancGroup, Inc. (BancGroup) have entered into an Agreement and Plan
of Merger (Agreement). Pursuant to your request, our letter addresses the income
tax consequences of the proposed transaction as outlined below. We will address
whether the merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986 (I.R.C.). We will also
address additional income tax consequences to Acquired Corporation, BancGroup,
and shareholders.
BACKGROUND
Acquired Corporation, a Florida corporation, operates as a bank holding company
for its wholly owned subsidiary, Great Southern Bank (Bank), with its principal
office in West Palm Beach, Florida. BancGroup, a Delaware corporation, is a bank
holding company with Subsidiary banks in Florida (Colonial Bank), Alabama,
Georgia and Tennessee.
CERTAIN TERMS OF THE MERGER
At the effective date of the merger, Acquired Corporation will merge with and
into BancGroup, with BancGroup as the surviving corporation. Pursuant to the
terms of the transaction, each share of common stock of Acquired Corporation
outstanding and held by Acquired Corporation's shareholders other than shares
held by shareholders who perfect their dissenter's rights, will be converted by
operation of law and without any action on the part of the parties or the
holders thereof into shares of BancGroup Common Stock at a rate $13.05 divided
by the Market Value of BancGroup Common Stock as determined by the Agreement. On
the effective date and as a result of the merger, BancGroup will assume all the
outstanding options of Acquired Corporation, whether or not vested or
exercisable. Each such option will cease to represent a right to acquire
Acquired Corporation Common Stock and will, instead, represent a right to
acquire BancGroup common stock on substantially the same terms applicable to the
Acquired Corporation Options except as specified in the Agreement.
<PAGE> 3
No fractional shares of BancGroup Common Stock will be issued. Instead, 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. Any
shareholder of Acquired Corporation who does not vote in favor of the Agreement
and who complies with certain procedures relating to the rights of dissenting
shareholders will be entitled to receive payment for the fair value of his or
her Acquired Corporation Stock.
Further, after consummation of the merger, BancGroup and Acquired Corporation
anticipate merging two bank subsidiaries, the Bank and Colonial Bank. Colonial
Bank will be the surviving entity.
REPRESENTATIONS OF PARTIES
- BancGroup and Acquired Corporation intend that the merger will qualify
for federal income tax purposes as a "reorganization" within the
meaning of I.R.C. Section 368(a) of the Code.
- The fair market value of the BancGroup stock received by each
shareholder of Acquired Corporation pursuant to the terms of the
Agreement will be approximately equal to the fair market value of
Acquired Corporation surrendered in the exchange. The terms of the
Agreement are the result of arm's-length negotiations between unrelated
parties.
- There is no plan or intention by the shareholders of Acquired
Corporation to sell, exchange, or otherwise dispose of a number of
shares of acquiring stock received in the transaction that will reduce
the Acquired Corporation shareholders' ownership of BancGroup stock to
a number of shares having a value, as of the date of the transaction,
of less than fifty percent of the value of all of the formerly
outstanding stock of Acquired Corporation as of the same date. For
purposes of this representation, shares of Acquired stock exchanged for
cash, and surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of BancGroup stock will be treated as outstanding
Acquired Corporation stock on the date of the transaction. Shares of
Acquired stock and shares of BancGroup stock held by Acquired
Corporation shareholders and otherwise sold, redeemed or disposed of
prior or subsequent to the transaction will be considered in making
this representation.
- Following the merger, BancGroup will continue the historic business of
Acquired Corporation or use a significant portion of Acquired
Corporation's historic business assets in a business.
- Acquired Corporation, BancGroup and Acquired Shareholders will pay
their respective expenses, if any, incurred in connection with the
transaction.
- No part of the consideration received by the Acquired Corporation
shareholders will
<PAGE> 4
be received by them in their capacity as debtor, creditor, employee, or
any way other than as shareholder.
- The fair market value of the assets of Acquired Corporation transferred
to BancGroup will equal or exceed the sum of the liabilities assumed by
BancGroup plus the amount of liabilities, if any, to which the assets
transferred are subject.
- The total adjusted basis of the assets of Acquired Corporation
transferred to BancGroup will equal or exceed the sum of the
liabilities assumed by BancGroup plus the amount of liabilities, if
any, to which the assets transferred are subject.
- If nonqualified stock options to purchase Acquired Corporation common
stock are exchanged for nonqualified stock options to purchase
BancGroup common stock, then the difference between the option price
and fair market value of BancGroup common stock subject to options
immediately after the exchange will be equal to (or greater than) the
difference between the option price and the fair market value of
Acquired Corporation common stock subject to options immediately before
the exchange. All other terms of the BancGroup nonqualified stock
options will be the same as those of Acquired Corporation's
nonqualified stock options.
- Any incentive stock options acquired from Acquired Corporation as a
part of the merger and reissued by BancGroup will be issued at
substantially the same terms, so as not to create material modification
as defined in I.R.C. Section 424.
TAX CONSEQUENCES TO ACQUIRED CORPORATION AND BANCGROUP
The merger of Acquired Corporation with and into BancGroup will constitute a
merger within the meaning of I.R.C. Section 368(a)(1)(A), provided that the
merger qualifies as a statutory merger pursuant to state law. Acquired
Corporation and BancGroup will each be "a party to the reorganization" within
the meaning of I.R.C. Section 368(b) of the Code. Based upon I.R.C. Sections
357(a) and 361(a), Acquired Corporation will recognize no gain or loss when it
transfers its assets to BancGroup in a constructive exchange solely for
BancGroup's stock and the assumption of Acquired Corporation's liabilities by
BancGroup. Acquired Corporation will also not recognize any gain or loss upon
the receipt of cash in the exchange if it distributes such property as part of
the plan of reorganization under I.R.C. Section 361(b).
Pursuant to I.R.C. Section 1032 of the Code, no gain or loss will be recognized
by BancGroup upon the acquisition by BancGroup of the assets of Acquired
Corporation in exchange for BancGroup common stock and the assumption of
Acquired Corporation's liabilities. BancGroup's basis in the assets acquired in
the transaction will be equal to the basis of the assets in the hands of
Acquired Corporation immediately before the transaction under I.R.C. Section
362(b). I.R.C. Section 1223(2) provides that BancGroup's holding period for each
Acquired Corporation asset received in the merger will include the period during
which the asset was held by Acquired Corporation immediately before the
transaction.
<PAGE> 5
Pursuant to I.R.C. Section 381(a), BancGroup will succeed to and take into
account the items of Acquired Corporation described in I.R.C. Section 381(c),
subject to the conditions and limitations of I.R.C. Sections 381, 382, 383, 384,
and 1502 and the regulations thereunder. BancGroup will succeed to and take into
account the earnings and profits, or deficit in earnings and profits, of
Acquired Corporation as provided by I.R.C. Section 382(c)(2) of the Code and
Section 1.381(c)(2)-1 of the Regulations.
TAX CONSEQUENCES TO BANK AND COLONIAL BANK
The merger of Bank with and into Colonial Bank will constitute a merger within
the meaning of I.R.C. Section 368(a)(1)(A), provided that the merger qualifies
as a statutory merger pursuant to state law. Bank and Colonial Bank will each be
"a party to the reorganization" within the meaning of I.R.C. Section 368(b) of
the Code. Based upon I.R.C. Sections 357(a) and 361(a), Bank will recognize no
gain or loss when it transfers its assets to Colonial Bank's in a constructive
exchange solely for Colonial Bank's stock and the assumption of Colonial Bank's
liabilities by BancGroup. Bank will also not recognize any gain or loss upon the
receipt of cash in the exchange if it distributes such property as part of the
plan of reorganization under I.R.C.
Section 361(b).
Pursuant to I.R.C. Section 1032 of the Code, no gain or loss will be recognized
by Colonial Bank upon the acquisition by Colonial Bank of the assets of Bank in
exchange for Colonial Bank's common stock and the assumption of Bank's
liabilities. Colonial Bank's basis in the assets acquired in the transaction
will be equal to the basis of the assets in the hands of Bank immediately before
the transaction per I.R.C. Section 362(b). I.R.C. Section 1223(2) provides that
Colonial Bank's holding period for each Bank asset received in the merger will
include the period during which the asset was held by Bank immediately before
the transaction.
Pursuant to I.R.C. Section 381(a), Colonial Bank's will succeed to and take into
account the items of Bank described in I.R.C. Section 381(c), subject to the
conditions and limitations of I.R.C. Sections 381, 382, 383, 384, and 1502 and
the regulations thereunder. Colonial Bank will succeed to and take into account
the earnings and profits, or deficit in earnings and profits, of Bank as
provided by I.R.C. Section 382(c)(2) of the Code and Section 1.381(c)(2)-1 of
the Regulations.
TAX CONSEQUENCES TO ACQUIRED CORPORATION SHAREHOLDERS
I.R.C. Section 354 states that a shareholder who receives solely BancGroup
common stock in exchange for Acquired Corporation common stock will recognize no
gain or loss on the exchange, except with respect to cash received in lieu of a
fractional interest in BancGroup common stock. I.R.C. Section 358 of the Code
provides that the shareholder's tax basis in the BancGroup common stock received
in the exchange will be the same as the basis of the Acquired Corporation common
stock surrendered, decreased by the amount of cash (if any) received by the
shareholder and increased by the amount of gain (if any) recognized in the
exchange. I.R.C. Section 1223 of the Code provides that such shareholder will
include the period during which Acquired Corporation stock was held in his
holding period for the
<PAGE> 6
BancGroup common stock received in the exchange.
The payment of cash in lieu of fractional shares of BancGroup common stock will
be treated as if the fractional shares were issued as part of the exchange and
then redeemed by BancGroup. These cash payments will be treated as having been
received as distributions in full payment in exchange for the stock redeemed as
provided in I.R.C. Section 302(a) of the Code. Generally, any gain or loss
recognized upon such exchange will be capital gain or loss, provided the
fractional share constitutes a capital asset in the hands of the exchanging
shareholder. The shareholders will recognize capital gain or loss equal to the
difference between the cash received and the basis of the fractional share
interest that would have been issued.
Holders of shares of Acquired Corporation Common Stock who receive cash upon the
exercise of any appraisal rights will be subject to a taxable transaction for
federal income tax purposes. Such a shareholder will recognize gain or loss
measured by the difference between the tax basis for his or her shares and the
amount of cash received pursuant to I.R.C. Section 1012 of the Code (unless the
receipt of cash is treated as a dividend, as described below).
In certain circumstances, the receipt of solely cash by an Acquired Corporation
shareholder could be treated as a dividend (to the extent of the shareholder's
ratable share of applicable earnings and profits) if the shareholder
constructively owns shares of Acquired Corporation Common Stock that are
exchanged for BancGroup Common Stock in the Merger. Generally, a shareholder
constructively owns stock that is owned by members of the shareholder's family,
and by certain controlled or related partnerships, estates, trusts and
corporations, pursuant to the constructive ownership rules of I.R.C. Section 318
of the Code, as well as any shares that the shareholder has an option to
acquire.
The receipt of solely cash by an Acquired Corporation shareholder in exchange
for his stock will not be treated as a dividend if such exchange or receipt
results in a meaningful reduction or a substantially disproportionate reduction
in the shareholder's ownership interest or results in a complete termination of
the shareholder's interest, taking into account, in each case, the constructive
ownership rules described above. A complete termination of a shareholder's
interest will occur if, after the receipt of cash in exchange for stock, the
shareholder owns no shares of stock in BancGroup. Thus, a shareholder who
receives solely cash for all of the stock actually owned by him will generally
qualify for capital gain treatment under the complete termination test if none
of the shares constructively owned by him are exchanged in the merger for
BancGroup Common Stock and the shareholder does not otherwise own, actually or
constructively, any shares of BancGroup Common Stock after the merger.
Where the complete termination of interest test is not satisfied with respect to
a particular shareholder (because, for example, Acquired Corporation shares
owned by a related party are exchanged for BancGroup Common Stock in the
merger), that shareholder will nonetheless generally be entitled to capital gain
treatment if the receipt of cash in exchange for his shares results in a
"substantially disproportionate" reduction or a "meaningful"
<PAGE> 7
reduction in his ownership interest. I.R.C. Section 302 of the Code provides
that a shareholder's reduction in ownership interest should normally be
"substantially disproportionate," and capital gain treatment should normally
result, if (1) the shareholder owns less than 50% of the total combined voting
power of all classes of stock immediately after the merger, and (2) the
shareholder's proportionate stock interest in BancGroup immediately after the
merger is 20% or more below what his proportionate interest in BancGroup would
have been if he had received solely BancGroup Common Stock in the merger.
Acquired Corporation shareholders who constructively own stock in Acquired
Corporation should consult a tax advisor regarding the characterization of cash
payments received in the reorganization in exchange for Acquired Corporation
stock as either capital gain income or dividend income.
CONVERSION OF ACQUIRED CORPORATION OPTIONS INTO BANCGROUP OPTIONS
INCENTIVE STOCK OPTIONS
The assumption and conversion of Acquired Corporation incentive stock options,
whether vested or exercisable, into rights to acquire BancGroup common stock
pursuant to the terms of the Agreement shall not be considered the granting of a
new option as long as the following requirements of I.R.C. Section 424 are met.
I.R.C. Section 424 provides that the excess of the aggregate fair market value
of the shares subject to the options immediately after the substitution or
assumption over the aggregate option price of such shares is not more than the
excess of the aggregate fair market value of all shares subject to the option
immediately before such substitution or assumption over the aggregate option
price of such shares. Section 424 also provides that the new option or the
assumption of the old option must not give the employee additional benefits
which he did not have under the old option. If the terms of the old option are
modified, extended, or renewed, such modification, extension, or renewal shall
be considered the granting of a new option which will disqualify the option as a
statutory stock option.
NONQUALIFIED STOCK OPTIONS
The assumption and conversion of Acquired Corporation nonqualified stock options
into BancGroup nonqualified stock options pursuant to the merger will not result
in current federal income tax consequences if neither the nonqualified options
to purchase shares of Acquired Corporation stock nor the substituted options to
purchase BancGroup stock have a readily ascertainable value. I.R.C. Section
83(e) provides that I.R.C. Section 83 does not apply to the transfer of an
option without a readily ascertainable fair market value. The regulations under
Section 1.83-7 state that if an option is not actively traded on an established
market, the option does not have a readily ascertainable fair market value when
granted unless a taxpayer can show that the option is transferable by the
optionees; the option is exercisable immediately in full by the optionee; the
option or property subject to the option is not subject to any restriction or
condition that has a significant effect upon the fair market value of the
option; and, the fair market value of the option privilege is readily
<PAGE> 8
ascertainable under the provision for determining fair market value in the case
of options not actively traded on an established market.
SUMMARY
The merger of BancGroup and Acquired Corporation will qualify as a tax-free
reorganization within the meaning of I.R.C. Section 368(a)(1)(A). BancGroup's
basis in Acquired Corporation's assets will be the same as Acquired
Corporation's basis in its assets before the merger. The merger of Colonial Bank
and Bank will also qualify as a tax-free reorganization within the meaning of
I.R.C. Section 368(a)(1)(A). Colonial Bank's basis in Bank's assets will be the
same as Bank's basis in its assets before the merger. Acquired Corporation
shareholders will retain a substituted basis in the shares of BancGroup stock
received in the merger decreased by the amount of cash received and increased by
the amount of gain recognized in the deal. The only taxable consequences will be
to those shareholders who receive cash in lieu of fractional shares and those
shareholders who receive solely cash in the exchange upon perfecting their
dissenter's rights. Shareholders receiving cash must examine their actual and
constructive ownership of Acquired Corporation and BancGroup stock for purposes
of determining the tax consequences of the cash payments.
If you have any questions or comments, please call Thomas Lee or Mark Borden at
(205) 252- 8400.
Very Truly Yours,
Coopers & Lybrand L.L.P.
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-4 of our report dated February 20, 1997, on our audits of the
consolidated financial statements of The Colonial BancGroup, Inc., as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 and our report dated February 20, 1997, except Note 2 as to
which the date is March 5, 1997, on our audits of the supplemental consolidated
financial statements of The Colonial BancGroup Inc., as of December 31, 1996 and
1995, and for each of the three years in the period ended December 31, 1996. We
also consent to the reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Montgomery, Alabama
April 28, 1997
<PAGE> 2
CONSENT OF TAX ACCOUNTANTS
We consent to the reference in this registration statement on Form S-4 of our
firm under the caption "The Merger - Certain Federal Income Tax Consequences",
and to the inclusion of our opinion at Exhibit 8 of the registration statement.
/s/ Coopers & Lybrand L.L.C.
Birmingham, Alabama
April 30, 1997
<PAGE> 1
EXHIBIT 23(B)
CONSENT OF MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
CONSENT OF COUNSEL
THE COLONIAL BANCGROUP, INC.
WE HEREBY CONSENT TO USE IN THIS FORM S-4 REGISTRATION STATEMENT OF
THE COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART OF
SUCH REGISTRATION STATEMENT, UNDER THE HEADING "LEGAL MATTERS," TO THE
SUMMARIZATION OF OUR OPINION REFERENCED THEREIN, AND TO THE INCLUSION OF OUR
OPINION AT EXHIBIT 5 OF THE REGISTRATION STATEMENT.
/S/ MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
APRIL 17, 1997
44
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement of The Colonial
Bancgroup, Inc. on Form S-4 of our report dated February 7, 1997, except for
Note 16, as to which the date is March 6, 1997, of our audit of the
consolidated financial statements of Great Southern Bancorp as of December 31,
1996 and for each of the three years then ended appearing in the Proxy
Statement and Prospectus which is part of this Registration Statement, and to
the reference to our firm under the heading "Experts" in such Proxy Statement
and Prospectus.
OSBURN, HENNING AND COMPANY
Orlando, Florida
April 24, 1997
45
<PAGE> 1
EXHIBIT 23(D)
CONSENT OF ABN AMRO CHICAGO CORPORATION
CONSENT
THE COLONIAL BANCGROUP, INC.
We hereby consent to the summarization of our fairness opinion letter
and references to our firm under the captions "SUMMARY - Opinion of Financial
Advisor" and "THE MERGER" and to the inclusion of such letter as an Appendix to
the Proxy Statement - Prospectus which is part of this Registration Statement
on Form S-4 of The Colonial BancGroup, Inc. By giving such consent, we do not
thereby admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "expert" as used in the Securities and
Exchange Commission promulgated thereunder.
/S/ ABN AMRO CHICAGO CORPORATION
APRIL 25, 1997
46
<PAGE> 1
EXHIBIT 23(E)
CONSENT OF SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS, P.A.
CONSENT OF COUNSEL
THE COLONIAL BANCGROUP, INC.
WE HEREBY CONSENT TO USE IN THIS FORM S-4 REGISTRATION STATEMENT OF THE
COLONIAL BANCGROUP, INC., OF OUR NAME IN THE PROSPECTUS, WHICH IS A PART OF
SUCH REGISTRATION STATEMENT, UNDER THE HEADING "LEGAL MATTERS".
/S/ SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS, P.A.
APRIL 25, 1997
<PAGE> 1
EXHIBIT 99(A)
FORM OF PROXY OF GREAT SOUTHERN BANCORP
47
<PAGE> 2
PROXY
SOLICITED BY THE BOARD OF DIRECTORS
GREAT SOUTHERN BANCORP
SPECIAL MEETING OF SHAREHOLDERS
, 1997
The undersigned hereby appoints Arthur S. Hillbrath and C. Robert Stock, and
either of them, or such other persons as the board of directors of Great
Southern Bancorp ("Great Southern"), 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 Great Southern at the special meeting of
shareholders to be held on , 1997, and at any and all adjournments and
postponements thereof.
1. To ratify and approve the Agreement and Plan of Merger dated as of March 6,
1997, pursuant to which Great Southern 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, and to vote upon matters incident to the conduct of the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GREAT
SOUTHERN 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 AND TO VOTE UPON MATTERS INCIDENT TO THE CONDUCT OF THE SPECIAL
MEETING.
DATED: , 1997
-----------------
PHONE NO:
---------------------
------------------------------
(Signature of Shareholder
------------------------------
(Signature of Shareholder, 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
shareholder must sign. Agents,
executors, administrators,
guardians and trustees must
give full title as such.
Corporations should sign by
their president or authorized
officer.
