COLONIAL BANCGROUP INC, S-4/A, 1997-03-07

COLONIAL BANCGROUP INC
S-4/A, 1997-03-07
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1997
REGISTRATION NOS. 333-22135 AND 333-22135-01

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D. C. 20549
----------------------------------
AMENDMENT NO. 1
TO
FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------------

<TABLE>
<S> <C>
THE COLONIAL BANCGROUP, INC. COLONIAL CAPITAL II

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CHARTER)

DELAWARE
(STATE OF INCORPORATION) DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR
ORGANIZATION)

6711
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE
NUMBER) 6719
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE
63-0661573 NUMBER)
(I.R.S. EMPLOYER IDENTIFICATION NO.)
APPLIED FOR
ONE COMMERCE STREET, SUITE 800 (I.R.S. EMPLOYER IDENTIFICATION NO.)
MONTGOMERY, ALABAMA 36104
(334) 240-5000 C/O THE COLONIAL BANCGROUP, INC.
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND TELEPHONE ONE COMMERCE STREET, SUITE 800
NO.) MONTGOMERY, ALABAMA 36104
(334) 240-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
W. FLAKE OAKLEY, IV INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE
SECRETARY OFFICES)
POST OFFICE BOX 1108
MONTGOMERY, ALABAMA 36102
(NAME AND ADDRESS OF AGENT FOR SERVICE)
</TABLE>

COPIES TO:

MICHAEL D. WATERS, ESQUIRE
MILLER, HAMILTON, SNIDER & ODOM, L.L.C.
ONE COMMERCE STREET, SUITE 802
MONTGOMERY, ALABAMA 36101-0019
FACSIMILE 334-265-4533

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. [ ]
<PAGE> 2

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON EACH SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS 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> 3

THE COLONIAL BANCGROUP, INC.
CROSS REFERENCE SHEET
TO ITEMS IN FORM S-4

<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION CAPTION IN PROSPECTUS OR OTHER
LOCATION IN REGISTRATION STATEMENT
<S> <C> <C>

Item 1. Forepart of Registration Statement Facing page,
and Outside Front Cover Page of Cross Reference Sheet,
Prospectus Outside front cover page of
Prospectus

Item 2. Inside Front and Outside Back "AVAILABLE INFORMATION,"
Cover Pages of Prospectus "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE,"
"TABLE OF CONTENTS"

Item 3. Risk Factors, Ratio of Earnings "SUMMARY," "RISK FACTORS,"
to Fixed Charges and Other "THE COLONIAL BANCGROUP,
Information INC. - Consolidated Ratios of Earnings to Fixed Charges and Ratios of
Earnings to Combined Fixed Charges and Preferred Stock Dividends,"
"SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION"

Item 4. Terms of the Transaction "INCORPORATION OF CERTAIN DOCUMENTS" BY REFERENCE," Outside Front
Cover Page; "SUMMARY"; "THE COLONIAL BANCGROUP, INC." "COLONIAL
CAPITAL II," "USE OF PROCEEDS;" "CAPITALIZATION;" "ACCOUNTING
TREATMENT;" "THE EXCHANGE OFFER;" "DESCRIPTION OF NEW SECURITIES";
"DESCRIPTION OF OLD SECURITIES"; "RELATIONSHIP AMONG THE CAPITAL
SECURITIES, THE SUBORDINATED DEBENTURES, THE

</TABLE>
<PAGE> 4

<TABLE>
<S> <C>
GUARANTEE AND THE EXPENSE AGREEMENT; "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES"; "CERTAIN ERISA CONSIDERATIONS"; "PLAN OF DISTRIBUTION"

Item 5. Pro Forma Financial Information "CAPITALIZATION"

Item 6. Material Contacts with the Company Not Applicable

Item 7. Additional Information Required for Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters

Item 8. Interests of Named Experts and "VALIDITY OF NEW
Counsel SECURITIES" and
"EXPERTS"

Item 9. Disclosure of Commission Position Not Applicable; See Items
on Indemnification for Securities 20 and 22 below
Act Liabilities

Item 10. Information with Respect to S-3 "INCORPORATION OF CERTAIN
Registrants DOCUMENTS BY REFERENCE,"
"THE COLONIAL BANCGROUP,
INC."

Item 11. Incorporation of Certain Information "INCORPORATION OF CERTAIN
by Reference DOCUMENTS INCORPORATED BY
REFERENCE"

Item 12. Information with Respect to S-2 or Not Applicable
S-3 Registrants

Item 13. Incorporation of Certain Information Not Applicable
by Reference

Item 14. Information with Respect to "AVAILABLE INFORMATION,"
Registrants Other Than S-3 or S-2 "COLONIAL CAPITAL I,"
Registrants "COLONIAL CAPITAL II"

Item 15. Information with Respect to S-3 Not Applicable
Companies
</TABLE>
<PAGE> 5

<TABLE>
<S> <C> <C>
Item 16. Information with Respect to S-2 or Not Applicable
S-3 Companies

Item 17. Information with Respect to Not Applicable
Companies Other than S-3 or S-2
Companies

Item 18. Information if Proxies, Consents or Not Applicable
Authorizations are to be Solicited

Item 19. Information if Proxies, Consents or "INCORPORATION OF CERTAIN
Authorizations are not to be DOCUMENTS BY REFERENCE."
Solicited or in an Exchange Offer

Item 20. Indemnification of Directors and PART II, Item 20
Officers

Item 21. Exhibits and Financial Statement PART II, Item 21
Schedules

Item 22. Undertakings PART II, Item 22
</TABLE>
<PAGE> 6

PROSPECTUS

COLONIAL CAPITAL (LOGO)
$70,000,000
COLONIAL CAPITAL II

OFFER TO EXCHANGE ITS 8.92% CAPITAL SECURITIES,
SERIES A, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, FOR ANY AND ALL OF THE OUTSTANDING 8.92%
CAPITAL SECURITIES, SERIES A, OF COLONIAL CAPITAL I

(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
THE COLONIAL BANCGROUP, INC.

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,

NEW YORK CITY TIME, ON APRIL, 14, 1997, UNLESS EXTENDED.

---------------------
Colonial Capital II, a business trust created under the laws of the State
of Delaware (the "Issuer"), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying Letter
of Transmittal (which together constitute the "Exchange Offer"), to exchange up
to $70,000,000 aggregate Liquidation Amount of its 8.92% Capital Securities,
Series A (Liquidation Amount $1,000 per Capital Security) (the "New Capital
Securities") which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as defined
herein) of which this Prospectus constitutes a part, for a like Liquidation
Amount of the outstanding 8.92% Capital Securities, Series A, of Colonial
Capital I (Liquidation Amount $1,000 per Capital Security) (the "Old Capital
Securities"), of which $70,000,000 aggregate Liquidation Amount is outstanding.
Colonial Capital I is also a business trust formed under the laws of the State
of Delaware (the "Old Issuer"), pursuant to an Amended and Restated Trust
Agreement dated January 29, 1997 (the "Old Trust Agreement") among The Colonial
BancGroup, Inc., a Delaware corporation (the "Corporation"), as Depositor,
Wilmington Trust Company, as Property Trustee, and Wilmington Trust Company as
Delaware Trustee. Pursuant to the Exchange Offer, the Corporation is also
exchanging (i) its guarantee with respect to the payment of Distributions (as
defined herein) and payments on liquidation or redemption of the Old Capital
Securities (the "Old Guarantee") for a like guarantee with respect to the New
Capital Securities (the "New Guarantee"), and (ii) all of its outstanding 8.92%
Junior Subordinated Deferrable Interest Debentures issued on January 29, 1997
(the "Old Subordinated Debentures"), of which $72,165,000 aggregate principal
amount is outstanding, for a like aggregate principal amount of its 8.92% Junior
Subordinated Deferrable Interest Debentures (the "New Subordinated Debentures"),
which New Guarantee and New Subordinated Debentures also have been registered
under the Securities Act. The Old Capital Securities, the Old Guarantee and the
Old Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New
Subordinated Debentures are collectively referred to herein as the "New
Securities".
(Cover continued on next page)

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE CAPITAL SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE CAPITAL SECURITIES MAY BE
DEFERRED AND CERTAIN RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
---------------------
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
---------------------

THESE SECURITIES 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 date of this Prospectus is March 12, 1997

<PAGE> 7

(cover page continued)

The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered for sale under the Securities Act and therefore will not be
subject to certain restrictions on transfer applicable to the Old Securities,
(ii) the New Capital Securities will not provide for any increase in the
Distribution rate thereon and (iii) the New Subordinated Debentures will not
provide for any increase in the interest rate thereon. See "Description of New
Securities" and "Description of Old Securities". The New Capital Securities are
being offered for exchange in order to satisfy certain obligations of the
Corporation and the Old Issuer under the Exchange and Registration Rights
Agreement, dated as of January 29, 1997 (the "Registration Rights Agreement"),
among the Corporation, the Old Issuer and the Initial Purchasers (as defined
herein) of the Old Capital Securities.

The Old Capital Securities represent preferred undivided beneficial
interests in the assets of the Old Issuer. The Corporation is the owner of all
of the beneficial interests represented by the common securities of the Old
Issuer (the "Old Common Securities" and, collectively with the Old Capital
Securities, the "Old Trust Securities"). The Old Issuer was created for the sole
purpose of issuing the Old Trust Securities and investing the proceeds thereof
in the Old Subordinated Debentures. The Old Subordinated Debentures will mature
on January 15, 2027 (the "Stated Maturity"). The Old Capital Securities will
have a preference under certain circumstances with respect to cash distributions
and amounts payable on liquidation, redemption or otherwise over the Old Common
Securities. In the event that the Exchange Offer is consummated, any Old Capital
Securities which have not been exchanged and which remain outstanding after the
consummation of the Exchange Offer will continue to have the same rights (and
restrictions) as they currently have, except those rights which terminate upon
consummation of the Exchange Offer.

The New Capital Securities represent preferred undivided beneficial
ownership interests in the assets of the Issuer. The Corporation is the owner of
all of the beneficial interests represented by common securities of the Issuer
(the "New Common Securities" and, collectively with the New Capital Securities,
the "New Trust Securities"). Wilmington Trust Company is the Property Trustee of
the Issuer. The Issuer exists for the sole purposes of (i) effecting the
Exchange Offer for the New Capital Securities, (ii) acquiring the New
Subordinated Debentures, and (iii) engaging in other activities necessary,
advisable or incidental thereto. The New Subordinated Debentures will mature on
the Stated Maturity, January 15, 2027. The New Capital Securities will have a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation or redemption over the New Common Securities. See
"Description of New Securities -- Subordination of Common Securities."

As used herein, (i) the "Indenture" means the Junior Subordinated Indenture
dated January 29, 1997, as amended and supplemented from time to time, pursuant
to which the Old Subordinated Debentures were issued and the New Subordinated
Debentures will be issued, between the Corporation and Wilmington Trust Company,
as trustee (the "Debenture Trustee"), (ii) the "New Trust Agreement" means the
Amended and Restated Trust Agreement to be dated on or about the date of the
Expiration Date relating to the Issuer among the Corporation, as Depositor,
Wilmington Trust Company, as Property Trustee (the "Property Trustee") and
Wilmington Trust Company, as Delaware Trustee (the "Delaware Trustee") (the
Property Trustee and Delaware Trustee collectively, the "Issuer Trustees"),
(iii) the "New Guarantee Agreement" means the Guarantee Agreement between the
Corporation and Wilmington Trust Company, as trustee (the "Guarantee Trustee")
to be dated on or about the date of the Expiration Date, providing the New
Guarantee, on the terms and conditions described herein, for the benefit of
holders of the New Capital Securities (the "Guarantee"), and (iv) the "New
Expense Agreement" means the Expense Agreement between the Corporation and the
Issuer to be dated on or about the date of the Expiration Date, respecting the
payment of certain expenses by the Corporation. In addition, as the context may
require, unless expressly stated otherwise, (i) the "Capital Securities"
includes the Old Capital Securities and the New Capital Securities, (ii) the
"Subordinated Debentures" includes the Old Subordinated Debentures and the New
Subordinated Debentures, (iii) the "Guarantee" includes the Old Guarantee and
the New Guarantee, (iv) the "Common Securities" includes the Old Common
Securities and the New Common Securities, (v) the "Trust Agreement" includes the
Old Trust Agreement and the New Trust Agreement, and (vi) the "Expense
Agreement" includes the Old Expense Agreement and the New Expense Agreement. The
"Old Expense

ii
<PAGE> 8

(cover page continued)

Agreement" means the Expense Agreement dated January 29, 1997, pursuant to which
the Corporation has guaranteed payment of certain expenses of the Old Issuer.

Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds. The Capital
Securities will be issued, and may be transferred, only in blocks having a
Liquidation Amount of not less than $100,000 (100 Capital Securities). See
"Description of New Securities -- Book-Entry, Delivery and Form."

Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions accruing from January 15, 1997 and payable
semi-annually in arrears on July 15 and January 15 of each year, commencing July
15, 1997, at the annual rate of 8.92% of the Liquidation Amount of $1,000 per
Capital Security ("Distributions"). The Corporation has the right to defer
payment of interest on the Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with respect
to each deferral period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity of the Subordinated
Debentures. Upon the termination of any such Extension Period and the payment of
all amounts then due, the Corporation may elect to begin a new Extension Period,
subject to the requirements set forth herein. If interest payments on the
Subordinated Debentures are so deferred, Distributions on the Capital Securities
will also be deferred and the Corporation will not be permitted, subject to
certain exceptions described herein, to declare or pay any cash distributions
with respect to the Corporation's capital stock or debt securities of the
Corporation that rank pari passu with or junior to the Subordinated Debentures.
During an Extension Period, interest on the Subordinated Debentures will
continue to accrue (and the amount of Distributions to which holders of the
Capital Securities are entitled will accumulate) at the rate of 8.92% per annum,
compounded semi-annually, and holders of the Capital Securities will be required
to accrue interest income for United States federal income tax purposes. See
"Description of Subordinated Debentures -- Option to Extend Interest Payment
Period" and "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount".

The Corporation has, through the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully and unconditionally guaranteed all of the Issuer's obligations
under the Capital Securities (as is the case with the Old Issuer). See
"Relationship Among The Capital Securities, The Subordinated Debentures, The
Guarantee and the Expense Agreement -- Full and Unconditional Guarantee". The
Guarantee of the Corporation guarantees the payment of Distributions and
payments on liquidation or redemption of the Capital Securities, but only in
each case to the extent of funds held by the Issuer, as described herein. See
"Description of Guarantee". If the Corporation does not make interest payments
on the Subordinated Debentures held by the Issuer, the Issuer will have
insufficient funds to pay Distributions on the Capital Securities. The Guarantee
does not cover payment of Distributions when the Issuer does not have sufficient
funds to pay such Distributions. In such event, under the Indenture a holder of
the Capital Securities may institute a legal proceeding directly against the
Corporation to enforce payment of such amounts. See "Description of Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Capital Securities".
The obligations of the Corporation under the Guarantee and the Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness (as defined herein) of the Corporation. See "Description of
Subordinated Debentures -- Subordination".

The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Subordinated Debentures at maturity or their earlier
redemption. The Subordinated Debentures are redeemable prior to maturity at the
option of the Corporation (i) on or after January 29, 2007, in whole at any time
or in part from time to time at the redemption prices set forth herein, or (ii)
in whole (but not in part), at any time within 90 days following the occurrence
and continuation of a Tax Event, Investment Company Event or Capital Treatment
Event (as defined herein), at redemption prices set forth herein. See
"Description of New Securities -- Redemption".

iii
<PAGE> 9

(cover page continued)

The holder of the Common Securities (i.e., the Corporation) will have the
right at any time to dissolve the Issuer, and, after satisfaction of liabilities
to creditors of the Issuer in accordance with applicable law and the Expense
Agreement, cause the Subordinated Debentures to be distributed to the holders of
the Capital Securities in liquidation of the Issuer, subject to the Issuer
having received an opinion of counsel to the effect that such distribution will
not be a taxable event to holders of Capital Securities. See "Description of New
Securities -- Liquidation Distribution Upon Dissolution".

The Subordinated Debentures are unsecured and are subordinated and junior
in right of payment to all Senior Indebtedness of the Corporation.

In the event of the dissolution of the Issuer, after satisfaction of
liabilities to creditors of the Issuer in accordance with applicable law and the
Expense Agreement, the holders of the Capital Securities will be entitled to
receive as a preference a Liquidation Amount of $1,000 per Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of a Like Amount (as defined herein) in
Subordinated Debentures, subject to certain exceptions. See "Description of New
Securities -- Liquidation Distribution Upon Dissolution".

The Issuer is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance of
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither the Corporation nor the Issuer has sought its own interpretive
letter, and there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar determination with
respect to the Exchange Offer as it has in such interpretive letters to third
parties. Based on these interpretations by the staff of the Division of
Corporation Finance, and subject to the two immediately following sentences, the
Corporation and the Issuer believe that New Capital Securities issued pursuant
to this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Corporation, the
Issuer or the Old Issuer within the meaning of Rule 405 under the Securities Act
(an "Affiliate") or who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities, or any broker-dealer who
purchased Old Capital Securities from the Old Issuer to resell pursuant to Rule
144A under the Securities Act ("Rule 144A") or any other available exemption
under the Securities Act, (i) will not be able to rely on the interpretations of
the staff of the Division of Corporation Finance of the Commission set forth in
the above-mentioned interpretive letters, and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements. In addition,
as described below, if any broker-dealer (a "Participating Broker-Dealer") holds
Old Capital Securities acquired for its own account as a result of market-making
or other trading activities and exchanges such Old Capital Securities for New
Capital Securities, then such Participating Broker-Dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such New Capital Securities.

iv
<PAGE> 10

(cover page continued)

"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), on behalf of whom such
holder holds Old Capital Securities to be exchanged in the Exchange Offer. Each
Participating Broker-Dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it acquired the Old
Capital Securities for its own account as the result of market-making activities
or other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Capital Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a Participating Broker-Dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Corporation and the Issuer believe that Participating Broker-Dealers
may fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities (other
than Old Capital Securities which represent an unsold allotment from the
original sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Corporation and the Issuer have agreed that
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such New
Capital Securities for a period ending 90 days after the Expiration Date (as
defined herein) or, if earlier, when all such New Capital Securities have been
disposed of by such Participating Broker-Dealer. See "Plan of Distribution". Any
person, including any Participating Broker-Dealer, who is an Affiliate may not
rely on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. See "The Exchange Offer -- Resales of New Capital
Securities".

In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein) that, upon receipt of notice from the Corporation or the Issuer
of the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in the light of the circumstances under which they were made,
not misleading, or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of New Securities pursuant to this Prospectus until the Corporation or the
Issuer has amended or supplemented this Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented Prospectus
to such Participating Broker-Dealer, or the Corporation or the Issuer has given
notice that the sale of the New Capital Securities (or the New Guarantee or the
New Subordinated Debentures, as applicable) may be resumed, as the case may be.

Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently is no market.
Although the Initial Purchasers have informed the Corporation and the Issuer
that they each currently intend to make a market in the New Capital Securities,
they are not obligated to do so, and any such market making may be discontinued
at any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. The
Corporation currently does not intend to apply for listing of the New Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System.

Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will be
subject to the same limitations applicable thereto under the Old

v
<PAGE> 11

(cover page continued)

Trust Agreement (except for those rights which terminate upon consummation of
the Exchange Offer). Following consummation of the Exchange Offer, the holders
of Old Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Corporation, the Issuer nor
the Old Issuer will have any further obligation to such holders (other than
under certain limited circumstances) to provide for registration under the
Securities Act of the Old Capital Securities held by them. To the extent that
Old Capital Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Capital Securities could be adversely
affected. See "Risk Factors -- Consequences of a Failure to Exchange Old Capital
Securities".

THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.

Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on April 14, 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation and the Issuer (in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offer is extended).
Tenders of Old Capital Securities may be withdrawn at any time on or prior to
the Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Issuer and to the terms and provisions
of the Registration Rights Agreement. Old Capital Securities may be tendered in
whole or in part having a Liquidation Amount of not less than $100,000 (100
Capital Securities) and or any integral multiple of $1,000 Liquidation Amount (1
Capital Security) in excess thereof. The Corporation has agreed to pay all
expenses of the Exchange Offer, except as otherwise specified herein. See "The
Exchange Offer -- Fees and Expenses". Each New Capital Security will pay
cumulative Distributions from the most recent Distribution Date (as defined
herein) on the Old Capital Securities surrendered in exchange for such New
Capital Securities or, if no Distributions have been paid on such Old Capital
Securities, from January 29, 1997. Holders of the Old Capital Securities whose
Old Capital Securities are accepted for exchange will not receive accumulated
Distributions on such Old Capital Securities for any period from and after the
last Distribution Date on such Old Capital Securities prior to the original
issue date of the New Capital Securities or, if no such Distributions have been
paid, will not receive any accumulated Distributions on such Old Capital
Securities, and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after such
Distribution Date or, if no such interest has been paid or duly provided for,
from and after January 29, 1997. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders of Old Capital Securities
as of March 10, 1997.

Neither the Corporation nor the Issuer will receive any proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution".

THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND CAPITAL SECURITIES MAY BE
TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000. ANY TRANSFER, SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A
BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT
TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT
LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.

NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975

vi
<PAGE> 12

(cover page continued)

OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"),
NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT IT EITHER (I) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING
SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OR ANY PLAN, OR (II) IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1
OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING.

vii
<PAGE> 13

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................... viii
Incorporation of Certain Documents by Reference............. ix
Summary..................................................... 1
Risk Factors................................................ 7
The Colonial BancGroup, Inc................................. 13
Colonial Capital II......................................... 19
Colonial Capital I.......................................... 19
Use of Proceeds............................................. 20
Capitalization.............................................. 21
Accounting Treatment........................................ 21
The Exchange Offer.......................................... 22
Description of New Securities............................... 30
Description of Old Securities............................... 43
Description of Subordinated Debentures...................... 44
Description of Guarantee.................................... 52
The Expense Agreement....................................... 54
Relationship Among The Capital Securities, The Subordinated
Debentures, The Guarantee and The Expense Agreement....... 54
Certain Federal Income Tax Consequences..................... 56
Certain ERISA Considerations................................ 59
Plan of Distribution........................................ 60
Validity of New Securities.................................. 61
Experts..................................................... 61
</TABLE>

---------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE CORPORATION OR THE ISSUER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO
ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE CORPORATION OR THE ISSUER SINCE THE DATE HEREOF.

---------------------

AVAILABLE INFORMATION

The Corporation is subject to the informational requirements of The
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
may also be accessed

viii
<PAGE> 14

electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. In addition, the Corporation's Common Stock is listed for
trading on the New York Stock Exchange, and such reports, proxy statements and
other information concerning the Corporation can be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

The Corporation and the Issuer have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Corporation and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
and the financial statements, notes and schedules filed as part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.

No separate financial statements of the Issuer and the Old Issuer have been
included herein. The Corporation, the Issuer and the Old Issuer do not consider
that such financial statements would be material to holders of the Capital
Securities because the Issuer and the Old Issuer are newly formed special
purpose entities, have no operating history or independent operations and are
not engaged in and do not propose to engage in any activity other than holding
as trust assets the Subordinated Debentures of the Corporation and issuing the
Old Trust Securities and the New Trust Securities. The Corporation has, through
the Guarantee, the Trust Agreement, the Subordinated Debentures, the Indenture
and the Expense Agreement, taken together, fully and unconditionally guaranteed
all of the Issuer's and the Old Issuer's obligations under the Capital
Securities. See "The Colonial BancGroup, Inc.", "Colonial Capital II" and
"Description of New Securities". In addition, the Corporation does not expect
that the Issuer or the Old Issuer will be filing reports under the Exchange Act
with the Commission.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE, WITHOUT CHARGE,
UPON REQUEST FROM THE PERSON SPECIFIED BELOW. IN ORDER TO INSURE TIMELY DELIVERY
OF SUCH DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE AT LEAST FIVE BUSINESS DAYS
PRIOR TO THE EXPIRATION DATE.

The following documents filed by the Corporation with the Commission (File
No. 1-13508) are hereby incorporated by reference into this Prospectus:

(1) The Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;

(2) The Corporation's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996;

(3) The Corporation's Report on Form 8-K dated July 17, 1996;

(4) The Corporation's Report on Form 8-K/A dated October 9, 1996;

(5) The Corporation's Report on Form 8-K dated January 20, 1997; and

(6) The Corporation's Report on Form 8-K dated February 13, 1997.

All documents filed by the Corporation 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
termination of any offering of securities made by this Prospectus, 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 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,

ix
<PAGE> 15

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.

The Corporation will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any and all of the documents which have
been incorporated herein by reference but not delivered herewith (other than the
exhibits to such documents unless specifically incorporated herein). Such
request, in writing or by telephone, should be directed to W. Flake Oakley, IV,
Secretary, The Colonial BancGroup, Inc., One Commerce Street, Post Office Box
1108, Montgomery, Alabama 36192 (telephone 334-240-5000). The foregoing address
and telephone number constitute the mailing address and telephone number of the
Corporation, the Issuer and the Old Issuer.

x
<PAGE> 16

SUMMARY

The following is a summary of certain information contained herein and
should be read in conjunction with such information contained elsewhere in this
Prospectus and is subject to, and qualified in its entirety by reference to,
such information. Capitalized terms used herein have the respective meanings
ascribed to them elsewhere in this Prospectus.

THE CORPORATION

The Corporation is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended, and incorporated under the laws of Delaware. It
was organized in 1974. The Corporation operates wholly owned commercial banking
subsidiaries in the states of Alabama, Florida, Georgia and Tennessee, each
under the name "Colonial Bank," and a federal savings bank in Florida, Colonial
Bank, FSB, (collectively the "Bank Subsidiaries"). 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 Dalton. In Florida, Colonial
Bank operates eleven branches in the Orlando and Ormond Beach areas and nine
branches in Dade, Broward and Palm Beach Counties, and Colonial Bank, FSB,
operates 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 billion in residential loans and which originates
mortgages in 37 states through 6 regional offices. The Corporation's commercial
banking loan portfolio is comprised primarily of commercial real estate loans
(35%) and residential real estate loans (46%), a significant portion of which is
located within the State of Alabama. The Corporation's growth in loans over the
past several years has been concentrated in commercial and residential real
estate loans. See "The Colonial BancGroup, Inc."

THE ISSUER

The Issuer is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on February 14, 1997, and governed by the New Trust Agreement between the
Corporation, as Depositor, and Wilmington Trust Company, as Property Trustee and
as Delaware Trustee and the Administrative Trustees named therein. The Issuer's
business and affairs are conducted by its trustees: initially, Wilmington Trust
Company, as Property Trustee, and Wilmington Trust Company, as Delaware Trustee,
and the Administrative Trustees. The Issuer exists for the exclusive purposes of
(i) complying with the Registration Rights Agreement by offering and issuing the
New Capital Securities pursuant to the Exchange Offer, (ii) acquiring the New
Subordinated Debentures and (iii) engaging in only those other activities
necessary, convenient or incidental thereto (such as registering the transfer of
the New Trust Securities). Accordingly, the New Subordinated Debentures will be
the sole assets of the Issuer, and payments under the New Subordinated
Debentures will be the sole source of revenue of the Issuer. See "Colonial
Capital II."

THE OLD ISSUER

The Old Issuer is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on January 24, 1997 and governed by the Old Trust Agreement between the
Corporation, as Depositor, and Wilmington Trust Company, as Property Trustee and
as Delaware Trustee, and the Administrative Trustees named therein. The Old
Issuer's business and affairs are conducted by its trustees: Wilmington Trust
Company, as Property Trustee, and Wilmington Trust Company, as Delaware Trustee,
and the Administrative Trustees. The Old Issuer exists for the exclusive
purposes of (i) issuing and selling the Old Trust Securities, (ii) using the
proceeds from the sale of the Old Trust Securities to acquire the Old
Subordinated Debentures and (iii) engaging in only those other activities
necessary, convenient or incidental thereto (such as registering the transfer of
the Old Trust Securities). Accordingly, the Old Subordinated Debentures are the
sole assets of the Old Issuer, and payments under the Old Subordinated
Debentures are the sole source of revenue of the Old Issuer. See "Colonial
Capital I."

1
<PAGE> 17

THE EXCHANGE OFFER

SECURITIES EXCHANGED

Up to $70,000,000 aggregate Liquidation Amount of New Capital Securities
are being offered in exchange for a like aggregate Liquidation Amount of Old
Capital Securities. Old Capital Securities may be tendered for exchange in whole
or in part in a liquidation amount of $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof. The Corporation and the Issuer
are making the Exchange Offer in order to satisfy the Corporation's and the Old
Issuer's obligations under the Registration Rights Agreement relating to the Old
Capital Securities. For a description of the procedures for tendering Old
Capital Securities, see "The Exchange Offer -- Procedures for Tendering Old
Capital Securities".

EXPIRATION DATE

The Expiration Date of the Exchange Offer will be 5:00 p.m., New York City
time, on April 14, 1997 unless the Exchange Offer is extended by the Corporation
and the Issuer. See "The Exchange Offer -- Expiration Date; Extensions;
Amendments".

CONDITIONS TO EXCHANGE OFFER

The Exchange Offer is subject to certain conditions, which may be waived by
the Corporation and the Issuer in their sole discretion. The Exchange Offer is
not conditioned upon any minimum Liquidation Amount of Old Capital Securities
being tendered. See "The Exchange Offer -- Conditions to Exchange Offer". The
Corporation and the Issuer reserve the right in their sole discretion, subject
to applicable law, at any time and from time to time, (i) to delay the
acceptance of the Old Capital Securities for exchange, (ii) to terminate the
Exchange Offer if certain specified conditions have not been satisfied, (iii) to
extend the Expiation Date of the Exchange Offer and retain all Old Capital
Securities subject, however, to the rights of holders of Old Capital Securities
to withdraw their tendered Old Capital Securities, or (iv) to waive any
condition or otherwise amend the terms of the Exchange Offer in any respect. See
"The Exchange Offer -- Expiration Date; Extensions; Amendments".

WITHDRAWAL RIGHTS

Tenders of Old Capital Securities may be withdrawn at any time on or prior
to the Expiration Date by delivering a written notice of such withdrawal to
Wilmington Trust Company, as Exchange Agent (the "Exchange Agent"), in
conformity with certain procedures set forth below under "The Exchange Offer --
Withdrawal Rights".

PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES

Tendering holders of Old Capital Securities must complete and sign a Letter
of Transmittal in accordance with the instructions contained therein and forward
the same by mail, facsimile, or hand delivery, together with any other required
documents, to the Exchange Agent, either with the Old Capital Securities to be
tendered or in compliance with the specified procedures for guaranteed delivery
of Old Capital Securities. Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect tenders by book-entry transfer,
including an Agent's Message in lieu of the Letter of Transmittal. Holders of
Old Capital Securities registered in the name of the broker, dealer, commercial
bank, trust company or other nominee are urged to contact such person promptly
if they wish to tender Old Capital Securities pursuant to the Exchange Offer.
See "The Exchange Offer -- Procedures for Tendering Old Capital Securities".
Letters of Transmittal and certificates representing Old Capital Securities
should not be sent to the Corporation or the Issuer. Such documents should only
be sent to the Exchange Agent. Questions regarding how to tender and requests
for information should be directed to the Exchange Agent. See "The Exchange
Offer -- Exchange Agent".

RESALES OF NEW CAPITAL SECURITIES

The Corporation and the Issuer are making the Exchange Offer in reliance on
the position of the staff of the Division of Corporation Finance of the
Commission as set forth in certain interpretive letters addressed to third
2
<PAGE> 18

parties in other transactions. However, neither the Corporation nor the Issuer
has sought its own interpretive letter and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two immediately
following sentences, the Corporation and the Issuer believe that the New Capital
Securities issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of the Old Capital Securities
who is an Affiliate or who intends to participate in the Exchange Offer for the
purpose of distributing the New Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the Issuer to resell pursuant to Rule
144A or any other available exemption under the Securities Act, (i) will not be
able to rely on the interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned interpretive letters,
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale is made pursuant to exemptions from such
requirements. In addition, as described below, any Participating Broker-Dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.

Each holder of Old Capital Securities that wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of its business, (iii)
it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Capital
Securities, and (iv) if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution, (within the
meaning of the Securities Act) of such New Capital Securities, otherwise the
limitations on transfer described above may apply. Each Participating
Broker-Dealer must acknowledge that it acquired the Old Capital Securities for
its own account as the result of market-making activities or other trading
activities and must agree that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of New Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Issuer believe that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon the exchange of such Old Capital Securities (other than Old
Capital Securities which represent an unsold allotment from the original sale of
the Old Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of New Capital Securities received in
exchange for Old Capital Securities where such Old Capital Securities were
acquired by such Participating Broker-Dealer for its own account as a result of
market-making or other trading activities. Subject to certain provisions set
forth in the Registration Rights Agreement and to the limitations described
below under "The Exchange Offer -- Resale of New Capital Securities", the
Corporation and the Issuer have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 90 days after the Expiration Date or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution". Any person, including any
Participating Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer -- Resales of New Capital Securities".
3
<PAGE> 19

EXCHANGE AGENT

The Exchange Agent is Wilmington Trust Company. The address, telephone and
facsimile numbers of the Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of Transmittal.

USE OF PROCEEDS

Neither the Corporation nor the Issuer will receive any proceeds from the
issuance of the New Capital Securities offered hereby. See "Use of Proceeds".

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS; CERTAIN ERISA CONSIDERATIONS

Holders of Old Capital Securities should review the information set forth
under "Certain Federal Income Tax Considerations" and "Certain ERISA
Considerations" prior to tendering Old Capital Securities in the Exchange Offer.

RATING

The New Capital Securities are expected to be rated BBB- by Fitch Investors
Service, L.P. and BB by Standard & Poor's Ratings Services. A security rating is
not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time by the assigning rating organization.

DESCRIPTION OF THE NEW SECURITIES

General. The New Capital Securities represent preferred undivided
beneficial interests in the assets of the Issuer and will have a preference
under certain circumstances with respect to Distributions and amounts payable on
liquidation, redemption or otherwise over the New Common Securities. See
"Description of New Securities -- Subordination of Common Securities". The sole
assets of the Issuer will be the New Subordinated Debentures, and payment under
the New Subordinated Debentures will be the sole revenue of the Issuer. The New
Subordinated Debentures are unsecured subordinated debt securities issued under
the Indenture between the Corporation and Wilmington Trust Company, as trustee.

Securities Offered. The Issuer is offering up to $70,000,000 aggregate
Liquidation Amount of the Issuer's 8.92% Capital Securities which have been
registered under the Securities Act (Liquidation Amount $1,000 per Capital
Securities). The New Capital Securities will be issued under the New Trust
Agreement. The New Trust Agreement and the Old Trust Agreement are identical in
all material respects except for matters relating to the Registration Rights
Agreement and restrictions on transfer of the Old Capital Securities. If the
Exchange Offer is consummated, any Old Capital Securities which remain
outstanding after the consummation of the Exchange Offer will continue to have
the same rights (and restrictions) as they currently have, except for those
rights which terminate upon consummation of the Exchange Offer. See "Description
of New Securities". The terms of the New Capital Securities are identical in all
material respects to the terms of Old Capital Securities, except that the New
Capital Securities have been registered under the Securities Act and therefore
are not subject to certain restrictions on transfer applicable to the Old
Capital Securities and will not provide for any increase in the Distribution
rate thereon. See "The Exchange Offer -- Purpose and Effect of Exchange Offer",
"Description of New Securities" and "Description of Old Securities".

Distributions. Holders of the New Capital Securities will be entitled to
receive as a preference cumulative cash Distributions accruing from January 29,
1997 and payable semi-annually in arrears on July 15 and January 15 of each
year, commencing July 15, 1997, at the per annum rate set forth on the cover
page of the Prospectus to the persons in whose names the New Capital Securities
are registered at the close of business on the relevant record dates. See
"Description of New Securities -- Distributions".

The New Subordinated Debentures are unsecured and rank subordinate and
junior in right of payment to all Senior Indebtedness of the Corporation. The
ability of the Issuer to pay amounts due on the New Capital
4
<PAGE> 20

Securities is solely dependant upon the Corporation making payments on the New
Subordinated Debentures as and when required. See "Risk Factors -- Ranking of
Subordinated Obligations Under the Guarantee and the Subordinated Debentures".

Option to Extend Interest Payment Period. So long as no Debenture Event of
Default (as defined herein) has occurred and is continuing, the Corporation has
the right to defer payment of interest on the New Subordinated Debentures at any
time or from time to time by extending the interest payment period thereon for
Extension Periods of up to 10 consecutive semi-annual periods with respect to
each deferral period; provided, however, that no Extension Period may extend
beyond the Stated Maturity of the Subordinated Debentures. If interest payments
on the New Subordinated Debentures are deferred, Distributions on the New
Capital Securities also will be deferred and the Corporation will not be
permitted, subject to certain exceptions set forth herein, to declare or pay any
cash distributions with respect to the Corporation's capital stock or debt
securities of the Corporation that rank pari passu with or junior to the New
Subordinated Debentures. During an Extension Period, Distributions on the New
Capital Securities will continue to accumulate and Distributions that are in
arrears will bear interest on the amount thereof at the per annum rate set forth
on the cover page of this Prospectus (to the extent permitted by applicable
law), compounded semi-annually, and holders of the New Capital Securities will
be required to accrue interest income for United States federal income tax
purposes in advance of receipt of cash related to such income. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Corporation may elect to begin a new Extension Period, subject to the
requirements set forth herein.

The Corporation has no current plan to exercise its right to defer payments
of interest by extending the interest payment period on the New Subordinated
Debentures. However, should the Corporation elect to exercise such right in the
future, the market price of the New Capital Securities is likely to be affected.
See "Risk Factors -- Option to Extend Interest Payment Period; Tax
Consequences", "Description of Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Certain Federal Income Tax Consequences --
Interest Income and Original Issue Discount".

Redemption; Special Event. The New Capital Securities are subject to
mandatory redemption, in whole or in part, upon repayment of the New
Subordinated Debentures at maturity or upon their earlier redemption. The New
Subordinated Debentures are redeemable, at the option of the Corporation, (i) on
or after January 29, 2007, in whole at any time or in part from time to time, or
(ii) in whole (but not in part), at any time within 90 days following the
occurrence and continuation of a Tax Event, Investment Company Event or Capital
Treatment Event (each as defined herein). See "Risk Factors -- Tax Event,
Investment Company Event or Capital Treatment Event Redemption" and "Description
of New Securities -- Redemption".

See "Risk Factors -- Possible Tax Law Changes Affecting Capital Securities"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Corporation to cause a redemption of
the Capital Securities prior to January 29, 2007.

No sinking fund will be established for the benefit of the Capital
Securities.

EXCHANGE OF CAPITAL SECURITIES FOR SUBORDINATED DEBENTURES

The holder of the New Common Securities (i.e., the Corporation) has the
right to terminate the Issuer at any time and, after satisfaction of liabilities
to creditors of the Issuer in accordance with applicable law and the New Expense
Agreement, cause the New Subordinated Debentures to be distributed to the
holders of the New Capital Securities in liquidation of the Issuer, subject to
the Issuer having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of New Capital Securities.
The Corporation has committed to the Federal Reserve that, so long as the
Corporation is a holder of the New Common Securities, it will not exercise such
right without having received the prior approval of the Federal Reserve to do
so, if then required under applicable Federal Reserve capital guidelines or
policies. See "Description of New Securities -- Liquidation Distribution Upon
Dissolution".
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<PAGE> 21

GUARANTEE

The payment of Distributions and payment on the liquidation of the Issuer
or the redemption of the New Capital Securities are guaranteed by the
Corporation to the extent that the Issuer has sufficient funds available
therefor. Such guarantee is subordinate and junior in right of payment to all
Senior Indebtedness of the Corporation. See "Risk Factors -- Rights Under the
Guarantee" and "Description of Guarantee".

TRANSFER

The New Capital Securities will be issued, and may be transferred, only in
blocks having a Liquidation Amount of not less than $100,000 (100 Capital
Securities). Any transfer, sale or other disposition of New Capital Securities
resulting in a block having a Liquidation Amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever.

ABSENCE OF MARKET FOR NEW CAPITAL SECURITIES

The New Capital Securities will be a new issue of securities for which
there currently is no market. Although Bear, Stearns & Co., Inc. and Keefe,
Bruyette & Woods, Inc., the initial purchasers of the Old Capital Securities
(the "Initial Purchasers"), have informed the Corporation and the Issuer that
they each currently intend to make a market in the New Capital Securities, they
are not obligated to do so, and any such market making may be discontinued at
any time without notice. Accordingly, there can be no assurance as to the
development of liquidity of any market for the New Capital Securities. The
Corporation and the Issuer do not intend to apply for listing the New Capital
Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System. See "Risk
Factors -- Absence of Public Market".

RISK FACTORS

Holders of Old Capital Securities should carefully consider the matters set
forth under "Risk Factors."
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<PAGE> 22

RISK FACTORS

Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in the
Exchange Offer.

RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE SUBORDINATED
DEBENTURES

The obligations of the Corporation under the New Guarantee issued by the
Corporation for the benefit of the holders of the New Capital Securities and
under the New Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness of the Corporation. Substantially all of the
Corporation's existing indebtedness constitutes Senior Indebtedness. Because the
Corporation is a holding company, the right of the Corporation to participate in
any distribution of assets of any subsidiary, including its Bank Subsidiaries,
upon such subsidiary's dissolution, winding-up, liquidation or reorganization or
otherwise (and thus the ability of holders of the New Capital Securities to
benefit indirectly from such distribution), is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be a creditor of that subsidiary and its claims are recognized. There are
various legal limitations on the extent to which certain of the Corporation's
subsidiaries may extend credit, pay dividends or otherwise supply funds to, or
engage in transactions with, the Corporation or certain of its other
subsidiaries. Accordingly, the New Subordinated Debentures and New Guarantee
will be effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of New Subordinated Debentures and the
New Guarantee should look only to the assets of the Corporation for payments on
the New Subordinated Debentures and the New Guarantee. See "The Colonial
BancGroup, Inc." None of the Indenture, the New Guarantee, the New Trust
Agreement or the New Expense Agreement places any limitation on the amount of
secured or unsecured debt, including Senior Indebtedness, that may be incurred
by the Corporation. See "Description of Guarantee -- Status of the Guarantee"
and "Description of Subordinated Debentures -- Subordination."

The ability of the Issuer to pay amounts due on the New Capital Securities
is solely dependent upon the Corporation's making payments on the New
Subordinated Debentures as and when required.

OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES

So long as no Event of Default (as defined in the Indenture) has occurred
and is continuing with respect to the New Subordinated Debentures (a "Debenture
Event of Default"), the Corporation has the right under the Indenture to defer
the payment of interest on the New Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the New Subordinated Debentures. See "Description
of New Subordinated Debentures -- Debenture Events of Default." As a consequence
of any such deferral, semi-annual Distributions on the New Capital Securities by
the Issuer will be deferred (and the amount of Distributions to which holders of
the New Capital Securities are entitled will accumulate additional Distributions
thereon at the rate of 8.92% per annum, compounded semi-annually from the
relevant payment date for such Distributions) during any such Extension Period.
During any such Extension Period, the Corporation may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to the New Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) the purchase of fractional interests in shares of the
Corporation's capital stock

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<PAGE> 23

pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder rights plan, or the issuance of rights, stock or
other property under any stockholder rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend beyond
the Stated Maturity of the New Subordinated Debentures. Upon the termination of
any Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of 8.92%, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period subject to the above conditions. There is
no limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of New Securities -- Distributions" and
"Description of Subordinated Debentures -- Option to Extend Interest Payment
Period."

Should an Extension Period occur, a holder of New Capital Securities will
continue to accrue income (in the form of original issue discount) in respect of
its pro rata share of the New Subordinated Debentures held by the Issuer for
United States federal income tax purposes. As a result, a holder of New Capital
Securities will include such income in gross income for United States federal
income tax purposes in advance of the receipt of cash, and will not receive the
cash related to such income from the Issuer if the holder disposes of the New
Capital Securities prior to the record date for the payment of Distributions.
See "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount" and "-- Sales or Redemption of Capital Securities."

The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the New
Subordinated Debentures. However, should the Corporation elect to exercise such
right in the future, the market price of the New Capital Securities is likely to
be affected. A holder that disposes of its New Capital Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its New Capital Securities. In addition, as a
result of the existence of the Corporation's right to defer interest payments,
the market price of the New Capital Securities (which represent preferred
undivided beneficial interests in the assets of the Issuer) may be more volatile
than the market prices of other securities on which original issue discount
accrues that are not subject to such deferrals.

TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT EVENT REDEMPTION

Upon the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event, the Corporation has the right to
redeem the New Subordinated Debentures in whole (but not in part) at any time
within 90 days following the occurrence of such Tax Event, Investment Company
Event or Capital Treatment Event and thereby cause a mandatory redemption of the
New Capital Securities. Any such redemption shall be at a price equal to the
Make-Whole Amount (as defined in "Description of New Securities -- Redemption"),
together with accumulated Distributions to but excluding the date fixed for
redemption. The Corporation has committed to the Federal Reserve that the
Corporation will not exercise such right without having received prior approval
of the Federal Reserve to do so, if then required under applicable Federal
Reserve capital guidelines or policies.

A "Tax Event" means the receipt by the Issuer of an opinion of counsel to
the Corporation experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the New Capital Securities, there is more than an insubstantial risk that (i)
the Issuer is, or will be within 90 days of the delivery of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the New Subordinated Debentures, (ii) interest payable by the
Corporation on the New Subordinated Debentures is not, or within 90 days of the
delivery of such opinion will not be, deductible by the Corporation, in whole or
in part, for United States federal income

8
<PAGE> 24

tax purposes or (iii) the Issuer is, or will be within 90 days of the delivery
of the opinion, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.

See "-- Possible Tax Law Changes Affecting the Capital Securities" for a
discussion of certain legislative proposals that, if adopted, could give rise to
a Tax Event, which may permit the Corporation to cause a redemption of the
Capital Securities prior to January 29, 2007.

"Investment Company Event" means the receipt by the Issuer of an opinion of
counsel to the Corporation experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
is or will be considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the New Capital Securities.

A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the New
Capital Securities, there is more than an insubstantial risk that the
Corporation will not be entitled to treat an amount equal to the Liquidation
Amount of the New Capital Securities as "Tier 1 Capital" (or the then equivalent
thereof) for purposes of the capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Corporation.

EXCHANGE OF CAPITAL SECURITIES FOR SUBORDINATED DEBENTURES

The holders of all of the outstanding New Common Securities have the right
at any time to terminate the Issuer and, after satisfaction of liabilities to
creditors of the Issuer as provided by applicable law, cause the New
Subordinated Debentures to be distributed to the holders of the New Capital
Securities and New Common Securities in liquidation of the Issuer. The
Corporation has committed to the Federal Reserve that, so long as the
Corporation (or any affiliate) is a holder of New Common Securities, the
Corporation will not exercise such right without having received the prior
approval of the Federal Reserve to do so, if then required under applicable
Federal Reserve capital guidelines or policies. See "Description of New
Securities -- Liquidation Distribution Upon Dissolution."

Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer will not be taxable as a corporation, a
distribution of the New Subordinated Debentures upon a liquidation of the Issuer
should not be a taxable event to holders of the New Capital Securities. However,
if a Tax Event were to occur that would cause the Issuer to be subject to United
States federal income tax with respect to income received or accrued on the New
Subordinated Debentures, a distribution of the New Subordinated Debentures by
the Issuer could be a taxable event to the Issuer and the holders of the New
Capital Securities. See "Certain Federal Income Tax Consequences -- Distribution
of Subordinated Debentures to Securityholders."

MARKET PRICES

There can be no assurance as to the market prices for New Capital
Securities, or for New Subordinated Debentures that may be distributed in
exchange for New Capital Securities if a liquidation of the Issuer occurs.
Accordingly, the New Capital Securities or the New Subordinated Debentures that
a holder of New Capital Securities may receive on liquidation of the Issuer may
trade at a discount to the price that the investor paid to purchase the New
Capital Securities offered hereby (or the price the investor paid to purchase
the Old Capital Securities exchanged for New Capital Securities). Because
holders of New Capital Securities may receive New Subordinated Debentures on
termination of the Issuer, prospective purchasers of New Capital Securities are
also making an investment decision with regard to the New Subordinated
Debentures and should carefully review all

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<PAGE> 25

the information regarding the New Subordinated Debentures contained herein. See
"Description of Subordinated Debentures."

RIGHTS UNDER THE GUARANTEE

Wilmington Trust Company serves as trustee under the Old Guarantee and the
New Guarantee (the "Guarantee Trustee") and will hold the New Guarantee for the
benefit of the holders of the New Capital Securities. Wilmington Trust Company
will also act as Debenture Trustee for the New Subordinated Debentures and as
Property Trustee and as Delaware Trustee under the New Trust Agreement. The
Guarantee guarantees to the holders of the New Capital Securities the following
payments, to the extent not paid by the Issuer: (i) any accumulated and unpaid
Distributions required to be paid on the New Capital Securities, to the extent
that the Issuer has funds on hand available therefor at such time, (ii) the
Redemption Price with respect to any New Capital Securities called for
redemption, to the extent that the Issuer has funds on hand available therefor
at such time, and (iii) upon a voluntary or involuntary termination, winding-up
or liquidation of the Issuer (unless the New Subordinated Debentures are
distributed to holders of the New Capital Securities), the lesser of (a) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions
to the date of payment, to the extent that the Issuer has funds on hand
available therefor at such time, and (b) the amount of assets of the Issuer
remaining available for distribution to holders of the New Capital Securities on
liquidation of the Issuer. The New Guarantee is subordinate as described under
"-- Ranking of Subordinated Obligations Under the Guarantee and the Subordinated
Debentures." The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding New Capital Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of the New Guarantee or to direct the exercise
of any trust power conferred upon the Guarantee Trustee under the New Guarantee.
Any holder of the New Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the New Guarantee
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other person or entity. If the Corporation were to default on its
obligation to pay amounts payable under the New Subordinated Debentures, the
Issuer may lack funds for the payment of Distributions or amounts payable on
redemption of the New Capital Securities or otherwise, and, in such event,
holders of the New Capital Securities would not be able to rely upon the New
Guarantee for payment of such amounts. Instead, if a Debenture Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Corporation to pay any amounts payable in respect of the New Subordinated
Debentures on the payment date on which such payment is due and payable, then a
holder of New Capital Securities may institute a legal proceeding directly
against the Corporation for enforcement of payment to such holder of any amounts
payable in respect of such New Subordinated Debentures having a principal amount
equal to the aggregate Liquidation Amount of the New Capital Securities of such
holder (a "Direct Action"). In connection with such Direct Action, the
Corporation will have a right of set-off under the Indenture to the extent of
any payment made by the Corporation to such holder of New Capital Securities in
the Direct Action. Except as described herein, holders of New Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the New Subordinated Debentures or assert directly any other rights in
respect of the New Subordinated Debentures. See "Description of Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Capital Securities,"
"-- Debenture Events of Default" and "Description of Guarantee." The New Trust
Agreement provides that each holder of New Capital Securities by acceptance
thereof agrees to the provisions of the New Guarantee and the Indenture.

LIMITED VOTING RIGHTS

Holders of New Capital Securities will have limited voting rights relating
generally to the modification of the New Capital Securities and the New
Guarantee and the exercise of the Issuer's rights as holder of New Subordinated
Debentures. Holders of New Capital Securities will not be entitled to appoint,
remove or replace the Property Trustee or the Delaware Trustee except upon the
occurrence of certain events described herein. The Issuer Trustees and the
holders of all of the New Common Securities may, subject to certain conditions,
amend the New Trust Agreement without the consent of holders of New Capital
Securities to cure any ambiguity or make other provisions not inconsistent with
other provisions under the New Trust Agreement or to ensure that the Issuer (i)
will not be taxable as a corporation or as other than a grantor trust for United
States federal income tax purposes, or (ii) will not be required to register as
an "investment company" under the Investment Company Act.

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<PAGE> 26

See "Description of New Securities -- Voting Rights; Amendment of Trust
Agreement" and "-- Removal of Issuer Trustees; Appointment of Successors."

POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES

On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Revenue
Reconciliation Bill"), the revenue portion of President Clinton's budget
proposal, was released. If enacted, the Revenue Reconciliation Bill would have
generally denied interest deductions for interest on an instrument issued by a
corporation that has a maximum term of more than 20 years and that is not shown
as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. If a similar
provision were to apply to the New Subordinated Debentures, the Corporation
would be unable to deduct interest on the New Subordinated Debentures. On March
29, 1996, the Chairmen of the Senate Finance and House Ways and Means Committees
issued a joint statement to the effect that it was their intention that the
effective date of the President's legislative proposals, if adopted, would be no
earlier than the date of appropriate Congressional action. Under current law,
the Corporation will be able to deduct interest on the New Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the New Subordinated Debentures. Such a change
could give rise to a Tax Event, which may permit the Corporation to cause a
redemption of the New Capital Securities before January 29, 2007. See
"Description of Subordinated Debentures -- Redemption" and "Description of New
Securities -- Redemption." See also "Certain Federal Income Tax Consequences --
Possible Tax Law Changes."

CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES

The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Corporation, the Issuer and the Old Issuer do not
intend to register under the Securities Act any Old Capital Securities which
remain outstanding after consummation of the Exchange Offer (subject to such
limited exceptions, if applicable).

To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
Through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.

The Old Capital Securities provide that, if the Exchange Offer is not
consummated within 35 days after the effective date of the Registration
Statement, the Distribution rate borne by the Old Capital Securities will
increase by 0.25% per annum commencing on the 36th day after such effective
date, until the Exchange Offer is consummated. See "Description of Old
Securities". Following consummation of the Exchange Offer, the Old Capital
Securities will not be entitled to any increase in the Distribution rate
thereon. The New Capital Securities will not be entitled to any such increase in
the Distribution rate thereon. Any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will continue to have the
same rights as before the Exchange Offer, except as stated above. See
"Description of New Securities".

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<PAGE> 27

ABSENCE OF PUBLIC MARKET

The Old Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability to the extent that
they are not exchanged for the New Capital Securities. Although the New Capital
Securities will generally be permitted to be resold or otherwise transferred by
the holders (who are not Affiliates) without compliance with the registration
requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. New Capital Securities may be
transferred by the holders thereof only in blocks having a Liquidation Amount of
not less than $100,000 (100 Capital Securities). The Corporation and the Issuer
have been advised by the Initial Purchasers that the Initial Purchasers
presently intend to make a market in the New Capital Securities. However, the
Initial Purchasers are not obligated to do so and any market-making activity
will be subject to the limits imposed by the Securities Act and the Exchange Act
and may be limited during the Exchange Offer. Accordingly, no assurance can be
given that an active public or other market will develop for the New Capital
Securities or the Old Capital Securities or as to the liquidity of or the
trading market for the New Capital Securities or the Old Capital Securities. If
an active market does not develop, the market price and liquidity of the New
Capital Securities may be adversely affected.

If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Corporation, the New Capital Securities may trade at a discount.

Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are Affiliates may publicly offer for sale or resell
the New Capital Securities only in compliance with the provisions of Rule 144
under the Securities Act.

Each Participating Broker-Dealer that receives New Capital Securities for
its own account must acknowledge that it will deliver a prospectus in connection
with any resale of such New Capital Securities. See "Plan of Distribution".

EXCHANGE OFFER PROCEDURES

Issuance of the New Capital Securities in exchange for the Old Capital
Securities pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal or Agent's Message in lieu thereof and all
other required documents. Therefore, holders of the Old Capital Securities
desiring to tender such Old Capital Securities in exchange for New Capital
Securities should allow sufficient time to ensure timely delivery. Neither the
Corporation, the Issuer, the Old Issuer nor the Exchange Agent is under any duty
to give notification of defects or irregularities with respect to the tenders of
Old Capital Securities for exchange. See "The Exchange Offer".

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THE COLONIAL BANCGROUP, INC.

GENERAL

The Corporation is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended, and incorporated under the laws of Delaware. It
was organized in 1974. The Corporation operates wholly owned commercial banking
subsidiaries in the states of Alabama, Florida, Georgia and Tennessee, each
under the name "Colonial Bank," and a federal savings bank in Florida, Colonial
Bank, FSB. 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 and nine branches in Dade, Broward and Palm Beach
Counties, and Colonial Bank, FSB, operates 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 billion in
residential loans and which originates mortgages in 37 states through 6 regional
offices. The Corporation's commercial banking loan portfolio is comprised
primarily of commercial real estate loans (35%) and residential real estate
loans (46%), a significant portion of which is located within the State of
Alabama. The Corporation's growth in loans over the past several years has been
concentrated in commercial and residential real estate loans.

The Corporation is a legal entity separate and distinct from its
subsidiaries, including the Bank Subsidiaries. There are various legal
limitations governing the extent to which certain of the Corporation's
subsidiaries may extend credit, pay dividends or otherwise supply funds to, or
engage in transactions with, the Corporation or certain of its other
subsidiaries. The rights of the Corporation to participate in any distribution
of assets of any subsidiary upon its dissolution, winding-up, liquidation or
reorganization or otherwise are subject to the prior claims of creditors of that
subsidiary, except to the extent that the Corporation may itself be a creditor
of that subsidiary and its claims are recognized. Claims on the Corporation's
subsidiaries by creditors other than the Corporation include long-term debt and
substantial obligations with respect to deposit liabilities, trading
liabilities, federal funds purchased, securities sold under repurchase
agreements, as well as short-term borrowings and accounts payable.

Certain information regarding the ownership of voting securities, the
biographies of the directors of the Corporation, executive compensation and
related party transactions is included in the Corporation's Annual Report on
Form 10-K for the fiscal year ending December 31, 1995, at items 10, 11, 12 and
13 and is incorporated herein by reference.

RECENT BUSINESS COMBINATIONS

On January 3, 1997, Jefferson Bancorp, Inc. ("Jefferson") was merged into
the Corporation. Jefferson was a Florida corporation and a holding company for
Jefferson Bank of Florida located in Miami Beach, Florida. The name of this bank
was changed to Colonial Bank of South Florida and the bank was merged with the
Corporation's Florida subsidiary, Colonial Bank. 3,854,952 shares of the
Corporation's Common Stock were issued to the stockholders of Jefferson. At
December 31, 1996, Jefferson had assets of $472.7 million, deposits of $405.8
million and stockholders' equity of $32.3 million.

On January 3, 1997, Tomoka Bancorp, Inc. ("Tomoka") was merged into the
Corporation. Tomoka was a Florida corporation and a holding company for Tomoka
State Bank located in Ormond Beach, Florida. Tomoka State Bank was merged with
the Corporation's Florida bank subsidiary, Colonial Bank. 661,992 shares of the
Corporation's Common Stock were issued to the stockholders of Tomoka. At
December 31, 1996, Tomoka had assets of $76.7 million, deposits of $68.2 million
and stockholders' equity of $6.5 million.

On January 9, 1997, First Family Financial Corporation ("First Family") was
merged into the Corporation. First Family was a Florida corporation and a
holding company for First Family Bank, fsb located in Eustis, Florida. The name
of First Family Bank, fsb has been changed to Colonial Bank, FSB, and this bank
will merge with the Corporation's Florida subsidiary bank, Colonial Bank.
330,400 shares of the Corporation's Common

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<PAGE> 29

Stock and $6,491,875 in cash were issued to the stockholders of First Family. At
December 31, 1996, First Family had assets of $167.3 million, deposits of $156.7
million and stockholders' equity of $8.7 million.

On January 31, 1997, D/W Bankshares, Inc. ("Bankshares") was merged into
the Corporation. Bankshares was a Georgia corporation and a holding company for
Dalton/Whitfield Bank & Trust located in Dalton, Georgia ("Dalton/Whitfield").
Dalton/Whitfield was merged with the Corporation's Georgia bank subsidiary,
Colonial Bank. 1,016,548 shares of the Corporation's Common Stock were issued to
the stockholders of Bankshares. At December 31, 1996, Bankshares had assets of
$138.7 million, deposits of $124.4 million and stockholders' equity of $11.0
million.

The shares issued in the above acquisitions are shown after adjustment for
a 2 for 1 stock split of the Corporation undertaken on February 11, 1997.

On March 5, 1997, the Corporation acquired Shamrock Holding, Inc., parent
of The Union Bank in Evergreen, Alabama, ("Shamrock"). The Corporation paid an
aggregate cash price of $11,482,000 in this transaction. The Union Bank has
total assets of approximately $54.5 million, deposits of $46.4 million, and
stockholders' equity of $7.9 million and will be merged with the Corporation's
Alabama subsidiary, Colonial Bank.

The Corporation has also entered into definitive agreements to acquire Fort
Brook Bancorporation and its subsidiary bank, Fort Brooke Bank, located in Tampa
Florida, and Great Southern Bancorp and its subsidiary bank, Great Southern
Bank, located in West Palm Beach Florida. The Corporation has entered into a
letter of intent to acquire First Commerce Banks of Florida and its subsidiary
bank, First Commerce Bank of Polk County, located in Winter Haven Florida. These
acquisitions, when completed, would add approximately $433.9 million of total
assets and $37.2 million of stockholders' equity to the Corporation.

CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth the Corporation's consolidated ratios of
earnings to fixed charges and to combined fixed charges and preferred stock
dividends, in each case, calculated excluding and including interest on
deposits. The following ratios should be read in conjunction with the
consolidated financial statements, the notes thereto and other financial
information incorporated by reference herein. For the purpose of computing the
consolidated ratios of earnings to fixed charges, earnings represent
consolidated income before income taxes plus fixed charges. Fixed charges
excluding interest on deposits consist of interest on long-term debt and
short-term borrowings and one-third of rental expense (which is deemed
representative of the interest factor). Fixed charges including interest on
deposits consist of the foregoing items plus interest on deposits. Fixed charges
are then combined with preferred stock dividend requirements, (Distributions) on
the outstanding preferred stock (Capital Securities).

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1996 1995 1994 1993 1992
------------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits(1)................. 2.68 2.84 3.92 3.94 3.69
Including Interest on Deposits(1)................. 1.38 1.41 1.49 1.45 1.31
Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements:
Excluding Interest on Deposits(1)................. 2.47 2.57 3.13 2.91 2.60
Including Interest on Deposits(1)................. 1.36 1.40 1.46 1.41 1.29
</TABLE>

- ---------------

(1) Restated to give retroactive effect to the business combination with
Jefferson Bancorp, Inc. on January 3, 1997.

14
<PAGE> 30

RECENT DEVELOPMENTS -- BANCGROUP

The following table presents certain unaudited data for the Corporation for
the period ended December 31, 1996 (as restated to reflect the business
combination with Jefferson Bancorp, Inc. on January 3, 1997 which was accounted
for as a pooling of interests.) Unaudited restated data reflect, in the opinion
of management, all adjustments (consisting of normal recurring adjustments)
necessary to a fair presentation of such data.

THE COLONIAL BANCGROUP, INC.

SELECTED FINANCIAL DATA
(AS RESTATED)

<TABLE>
<CAPTION>
% CHANGE
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 TO 1995
------------ ------------ --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
STATEMENT OF CONDITION SUMMARY
Total assets............................................ $5,329,364 $4,635,198 15%
Loans, net of unearned income........................... 4,001,772 3,442,159 16%
Deposits................................................ 3,989,505 3,575,485 12%
Shareholders' equity.................................... 375,985 327,088 15%
Book value per share**.................................. $ 10.30 $ 9.41 9%
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
% CHANGE
1996 1995 96 TO 95
-------- -------- --------
<S> <C> <C> <C>
EARNINGS SUMMARY
Net interest income......................................... $186,927 $157,489 19%
Provision for loan losses................................... 11,291 7,500 51%
Noninterest income.......................................... 69,323 58,599 18%
Noninterest expense (excl SAIF special assessment)*......... 166,762 141,112 18%
SAIF special assessment*.................................... 3,817 -- --
Net income (excl SAIF special assessment)*.................. 50,624 43,462 16%
Net income.................................................. $ 48,158 $ 43,462 11%
Average primary shares outstanding**........................ 36,898 35,258
Average fully diluted shares outstanding**.................. 37,640 37,034
Earnings per share excluding SAIF special assessment*:
Primary**................................................. $ 1.38 $ 1.23 12%
Fully diluted**........................................... $ 1.36 $ 1.21 12%
Earnings per common share:
Primary**................................................. $ 1.31 $ 1.23 7%
Fully-diluted**........................................... $ 1.29 $ 1.21 7%
</TABLE>

15
<PAGE> 31

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
1996 1995
----- -----
<S> <C> <C>
SELECTED RATIOS:
Return on average assets.................................... 0.97% 1.07%
Return on average assets (excl SAIF assessment)*............ 1.02 1.07
Return on average equity.................................... 13.51 15.27
Return on average equity (excl SAIF assessment)*............ 14.20 15.27
Efficiency ratio (excl SAIF assessment)*.................... 65.02 64.63
Equity to assets............................................ 7.05 7.06
Tier one capital............................................ 9.12 8.70
</TABLE>

- ---------------

* Legislation approving a one-time special assessment on SAIF deposits resulted
in $3,817,000 in expense before income taxes and $2,466,000 net of applicable
income taxes in the third quarter of 1996.

** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.

16
<PAGE> 32

SELECTED FINANCIAL DATA (AS RESTATED)

The following table sets forth selected financial information on a
historical (as restated) basis for the Corporation as of and for the nine months
ended September 30, 1996 and 1995 and as of and for the five years ended
December 31, 1995, 1994, 1993, 1992, and 1991.

The information has been restated to reflect the January 3, 1997 business
combination with Jefferson Bancorp, Inc. which was accounted for as a pooling of
interests.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income
Interest income................................. $282,190 $229,550 $317,933 $237,009 $187,291 $175,249 $182,850
Interest expense................................ 143,496 114,402 160,444 98,335 73,739 77,682 104,487
-------- -------- -------- -------- -------- -------- --------
Net interest income............................. 138,694 115,148 157,489 138,674 113,552 97,567 78,363
Provision for possible loan losses.............. 6,118 4,305 7,500 7,836 11,185 12,700 10,083
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for possible
loan losses................................... 132,576 110,843 149,989 130,838 102,367 84,867 68,280
Noninterest income.............................. 53,162 42,132 58,599 52,098 48,795 43,909 37,166
Noninterest expense............................. 121,773 100,583 141,112 133,829 117,251 104,098 88,135
-------- -------- -------- -------- -------- -------- --------
Income before income taxes...................... 63,965 52,392 67,476 49,107 33,911 24,678 17,311
Applicable income taxes......................... 22,566 18,572 24,014 16,349 10,308 6,668 4,658
-------- -------- -------- -------- -------- -------- --------
Income before extraordinary items and the
cumulative effect of a change in accounting
for income taxes.............................. 41,399 33,820 43,462 32,758 23,603 18,010 12,653
Extraordinary items, net of income taxes........ (463) 831
Cumulative effect of a change in accounting for
income taxes.................................. 3,650
-------- -------- -------- -------- -------- -------- --------
Net income...................................... $ 41,399 $ 33,820 $ 43,462 $ 32,758 $ 26,790 $ 18,010 $ 13,484
======== ======== ======== ======== ======== ======== ========
Earnings Per Common Share
Income before extraordinary items and the
cumulative effect of a change in accounting
for income taxes:
Primary**....................................... $ 1.13 $ 1.01 $ 1.23 $ 0.98 $ 0.82 $ 0.71 $ 0.52
Fully-diluted**................................. $ 1.11 $ 0.99 $ 1.21 $ 0.97 $ 0.81 $ 0.71 $ 0.52
Net Income:
Primary**....................................... $ 1.13 $ 1.01 $ 1.23 $ 0.98 $ 0.93 $ 0.71 $ 0.56
Fully-diluted**................................. $ 1.11 $ 0.99 $ 1.21 $ 0.97 $ 0.92 $ 0.71 $ 0.55
Average shares outstanding:
Primary**....................................... 36,777 33,385 35,258 33,378 28,816 25,456 24,156
Fully-diluted**................................. 37,467 35,034 37,034 34,912 31,022 28,122 26,840
Cash dividends per common share(1):
Common**........................................ $ 0.405 $ .225 $ .3375
Class A**....................................... $ .1125 $ .1125 $ .40 $ .355 $ .335 $ .315
Class B**....................................... $ .0625 $ .0625 $ .20 $ .155 $ .135 $ .115
</TABLE>

- ---------------

(1) On February 21, 1995, the Class A and Class B Common Stock were reclassified
into one class of Common Stock.

17
<PAGE> 33

<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
SEPTEMBER 30, --------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Statement of Condition Summary
At year-end:
Total assets......................... $5,171,999 $4,635,198 $3,583,357 $3,457,261 $2,415,930 $2,256,065
Loans, net of unearned income........ 3,877,183 3,422,159 2,554,238 2,128,408 1,501,456 1,401,173
Mortgage loans held for sale......... 162,821 112,203 61,556 368,515 150,835 105,219
Deposits............................. 3,947,778 3,575,485 2,811,329 2,741,990 2,032,246 1,925,997
Long-term debt....................... 24,605 29,142 69,203 57,397 22,979 27,225
Shareholders' equity................. 367,368 327,088 253,389 236,039 146,486 145,298
Average balances:
Total assets......................... $4,883,604 $4,071,450 $3,430,220 $2,753,585 $2,354,542 $2,160,908
Interest-earning assets.............. 4,460,798 3,711,269 3,095,963 2,441,029 2,076,097 1,927,815
Loans, net of unearned income........ 3,651,785 2,931,666 2,312,422 1,656,255 1,460,366 1,403,980
Mortgage loans held for sale......... 139,035 98,785 135,046 248,502 121,820 65,373
Deposits............................. 4,451,849 3,181,066 2,768,866 2,188,618 1,983,221 1,842,306
Shareholders' equity................. 350,756 284,632 248,133 179,989 141,645 137,971
Book value per share at year-end**... $ 10.12 $ 9.41 $ 7.90 $ 7.63 $ 6.20 $ 6.20
Tangible book value per share at
year-end**......................... $ 8.96 $ 8.54 $ 7.24 $ 7.04 $ 5.96 $ 5.20
Selected Ratios:
Income before extraordinary items and
the cumulative effect of a change
in accounting for income taxes to:
Average assets....................... 0.84% 1.07% 0.95% 0.86% 0.78% 0.62%
Average shareholders' equity......... 11.96 15.27 13.20 13.11 12.71 10.15
Net income:
Average assets....................... 0.84 1.07 0.95 0.97 0.78 0.62
Average shareholders' equity......... 11.96 15.27 13.20 14.88 12.71 10.15
Efficiency ratio..................... 63.47 64.63 69.37 71.82 73.03 76.17
Dividend payout ratio................ 31.88 28.39 27.99 27.73 32.83 43.68
Average equity to average total
assets............................. 7.06 6.99 7.23 6.54 6.02 6.38
Total nonperforming assets to net
loans, other real estate and
repossessions...................... 0.82 0.83 1.26 1.80 2.33 2.00
Net charge-offs to average loans..... 0.08 0.17 0.13 0.36 0.58 0.61
Allowance for possible loan losses to
total loans (net of unearned
income)............................ 1.23 1.28 1.57 1.63 1.55 1.36
Allowance for possible loan losses to
nonperforming loans*............... 214% 256% 237% 211% 129% 124%
</TABLE>

- ---------------

* Nonperforming loans consist of the aggregate loans for which interest is not
being accrued and loans renegotiated to provide a reduction or deferral of
principal or interest because of a deterioration in the financial condition
of the borrower.
** Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.

18
<PAGE> 34

COLONIAL CAPITAL II

The Issuer is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on February 14, 1997, and governed by the New Trust Agreement between the
Corporation, as Depositor, and Wilmington Trust Company, as Property Trustee and
as Delaware Trustee, and the Administrative Trustees named therein. The Issuer's
business and affairs are conducted by its trustees: Wilmington Trust Company, as
Property Trustee and Delaware Trustee, and the Administrative Trustees. Two
individuals who are employees or officers of or affiliated with the holder of a
majority of the New Common Securities will act as the Administrative Trustees
with respect to the Issuer. The Administrative Trustees will be selected by the
holders of the New Common Securities. See "Description of Capital
Securities -- Miscellaneous." The Issuer exists for the exclusive purposes of
(i) complying with the Registration Rights Agreement by offering and issuing the
New Capital Securities pursuant to the Exchange Offer, (ii) acquiring the New
Subordinated Debentures and (iii) engaging in only those other activities
necessary, convenient or incidental thereto (such as registering the transfer of
the New Trust Securities). Accordingly, the New Subordinated Debentures will be
the sole assets of the Issuer, and payments under the New Subordinated
Debentures will be the sole source of revenue of the Issuer.

All of the New Common Securities will initially be owned by the
Corporation. The New Common Securities will rank pari passu, and payments will
be made thereon pro rata, with the New Capital Securities, except that upon the
occurrence and during the continuation of a Debenture Event of Default arising
as a result of any failure by the Corporation to pay any amounts in respect of
the New Subordinated Debentures when due, the rights of the holders of the New
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the New Capital Securities. See "Description of New
Securities -- Subordination of Common Securities." The Corporation will acquire
New Common Securities in an aggregate maximum liquidation amount equal to 3% of
the total capital of the Issuer. The Issuer has a term of 31 years, but may
terminate earlier as provided in the New Trust Agreement. The principal
executive office of the Issuer is Colonial Financial Center, One Commerce
Street, Montgomery, Alabama 36104, Attention: W. Flake Oakley, and its telephone
number is (334) 240-5000.

COLONIAL CAPITAL I

The Old Issuer is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on January 24, 1997 and governed by the Old Trust Agreement between the
Corporation, as Depositor, and Wilmington Trust Company, as Property Trustee and
as Delaware Trustee, and the Administrative Trustees named therein. The Old
Issuer's business and affairs are conducted by its trustees: Wilmington Trust
Company, as Property Trustee and Delaware Trustee, and the Administrative
Trustees. Two individuals, W. Flake Oakley, Executive Vice President and Chief
Financial Officer of the Corporation, and Young J. Boozer, III, Executive Vice
President of the Corporation, serve as the Administrative Trustees. The Old
Issuer exists for the exclusive purposes of (i) issuing and selling the Old
Trust Securities, (ii) using the proceeds from the sale of the Old Trust
Securities to acquire the Old Subordinated Debentures and (iii) engaging in only
those other activities necessary, convenient or incidental thereto (such as
registering the transfer of the Old Trust Securities). Accordingly, the Old
Subordinated Debentures are the sole assets of the Old Issuer, and payments
under the Old Subordinated Debentures will be the sole source of revenue of the
Old Issuer.

All of the Old Common Securities are owned by the Corporation. The Old
Common Securities rank pari passu, and payments will be made thereon pro rata,
with the Old Capital Securities, except that upon the occurrence and during the
continuation of a Debenture Event of Default arising as a result of any failure
by the Corporation to pay any amounts in respect of the Old Subordinated
Debentures when due, the rights of the holders of the Old Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Old Capital
Securities. The Corporation acquired Old Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Old Issuer. The Old
Issuer has a term of 31 years, but may terminate earlier as provided in the Old
Trust Agreement. The principal executive office of the Old Issuer is Colonial
Financial Center, One Commerce Street, Montgomery, Alabama 36104. Attention: W.
Flake Oakley, and its telephone number is (334) 240-5000.

19
<PAGE> 35

The Old Issuer is a party to the Registration Rights Agreement, which
provides for the Exchange Offer pursuant to the Registration Statement.

USE OF PROCEEDS

Neither the Corporation nor the Issuer will receive cash proceeds from the
issuance of the New Capital Securities offered hereby. In consideration for
issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Issuer will receive Old Capital Securities in
like Liquidation Amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities will be retired and canceled.

The proceeds to the Old Issuer from the offering of the Old Capital
Securities was $70 million in cash (before deducting expenses associated with
the offering). All of the proceeds from the sale of the Old Capital Securities
were invested by the Old Issuer in the Old Subordinated Debentures. The net
proceeds from the sale of the Old Subordinated Debentures were added by the
Corporation to its general corporate funds and have been and will be used for
general corporate purposes, including acquisitions. Pending such application by
the Corporation, such net proceeds may be temporarily invested in short-term
interest bearing securities. See "Capitalization".

The Corporation is required by the Federal Reserve Board to maintain
certain levels of capital for bank regulatory purposes. On October 21, 1996, The
Federal Reserve Board announced that cumulative preferred securities having the
characteristics of the Capital Securities and which qualify as a minority
interest could be included as tier 1 capital for bank holding companies. Such
tier 1 capital treatment, together with the Corporation's ability to deduct, for
income tax purposes, interest payable on the Subordinated Debentures, will
provide the Corporation with a more cost-effective means of obtaining capital
for regulatory purposes than other tier 1 capital alternatives currently
available to it.

20
<PAGE> 36

CAPITALIZATION

The following table sets forth (i) the unaudited consolidated
capitalization of the Corporation at December 31, 1996, and (ii) such
capitalization as adjusted for the offering of the Old Capital Securities.

<TABLE>
<CAPTION>
COLONIAL COLONIAL
BANCGROUP BANCGROUP
RESTATED(3) ADJUSTED
----------- ---------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Short term borrowings
Fed funds & repos........................................... 139,262 139,262
FHLB........................................................ 715,000 715,000
-------- --------
Total short term borrowings................................. 854,262 854,262
Long term debt..............................................
Subordinated debt........................................... 7,187 7,187
Other....................................................... 30,480 480(1)
-------- --------
Total long term debt........................................ 37,667 7,667
Corporation-Obligated Mandatory Redeemable Capital
Securities of Subsidiary Trust(2)......................... -- 70,000
-------- --------
Total debt.................................................. $891,929 $931,929
======== ========
Shareholders' Equity........................................
Preference Stock, $2.50 par value; 1,000,000 shares
authorized, none issued...................................
Common Stock, $2.50 par value; 44,000,000 shares authorized,
and 36,528,560 (restated) issued and outstanding*......... 91,321 91,321
Additional paid in capital*................................. 155,833 155,833
Retained earnings........................................... 129,871 129,871
Unearned compensation....................................... (1,603) (1,603)
Unrealized gain/loss on securities available for sale, net
of taxes.................................................. 563 563
-------- --------
Total shareholders' equity.................................. $375,985 $375,985
======== ========
Capital Ratios:
Tier 1 Capital(2)......................................... 9.12% 10.96%
Risk Adjusted Capital(2).................................. 10.50% 12.34%
Leverage Ratio............................................ 6.65% 8.00%
</TABLE>

- ---------------

(1) Assumes approximately $30 million of proceeds from the issuance of Capital
Securities will be used to pay off existing debt and the remainder will be
invested in U.S. Treasury securities which have a zero percent risk weight.
(2) The "Corporation-Obligated Mandatorily Redeemable Capital Securities of
Subsidiary Trust" reflects the Old Capital Securities at their issue price.
As described herein, the sole assets of the Old Issuer are approximately $72
million of Subordinated Debentures, which will mature on January 15, 2027.
The Corporation owns all of the Common Securities of the Old Issuer. It is
anticipated that the Issuer following the Exchange Offer will not be subject
to the reporting requirements under the Securities Exchange Act of 1934
(3) Restated to give retroactive effect to the business combination of Jefferson
Bancorp, Inc., consummated on January 3, 1997.

* Restated to reflect the impact of a two-for-one stock split in the form of a
100% stock dividend paid February 11, 1997.

ACCOUNTING TREATMENT

For financial reporting purposes, the Issuer and the Old Issuer will be
treated as subsidiaries of the Corporation and, accordingly, the accounts of the
Issuer and the Old Issuer will be included in the consolidated financial
statements of the Corporation. The Capital Securities will be presented as a
separate line item in the consolidated balance sheets of the Corporation,
entitled "Corporation-Obligated Mandatorily Redeemable Capital Securities of
Subsidiary Trusts Holding Solely New Subordinated Deferrable Interest Debentures
of the Corporation" and appropriate disclosures about the Capital Securities,
the Guarantee and the Subordinated Debentures will be included in the notes to
the consolidated financial statements. For financial reporting

21
<PAGE> 37

purposes, the Corporation will record Distributions payable on the Capital
Securities as an expense in the consolidated statements of income.

THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

In connection with the sale of the Old Capital Securities, the Corporation
and the Old Issuer entered into the Registration Rights Agreement with the
Initial Purchasers, pursuant to which the Corporation agreed to file a
registration statement relating to an offer to exchange any and all of the Old
Capital Securities for a like aggregate liquidation amount of capital securities
issued by an issuer trust substantially identical to the Old Issuer, with
capital securities with terms identical in all material respects to the terms of
the Old Capital Securities. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part.

Among other things, the Registration Rights Agreement provides that the
Corporation will file under the Securities Act, as soon as practicable, but no
later than 60 days after January 29, 1997, a registration statement relating to
the Exchange Offer. The Corporation has agreed to use its best efforts to cause
the registration statement to become effective under the Securities Act as soon
as practicable, but no later than 180 days after January 29, 1997. The
Corporation has also agreed to use its best efforts to commence and complete the
Exchange Offer promptly, but no later than 35 days after such registration
statement has become effective.

If (i) the registration statement has not been filed on or before the date
on which such registration statement is required to be filed, or (ii) such
registration statement has not become effective or been declared effective by
the Commission on or before the date on which such registration statement is
required to become or be declared effective, or (iii) if the Exchange Offer has
not been completed within 35 days after the initial effective date of the
Registration Statement, then additional interest (the "Special Interest") shall
accrue in respect of the Old Subordinated Debentures, and additional
distributions ("Special Distributions") shall accumulate in respect of the Old
Capital Securities, in each case at a per annum rate of 0.25% applicable to the
principal amount of the Old Subordinated Debentures or the liquidation amount of
the Old Capital Securities, as the case may be, for the period from and
including the date on which such failure to comply with the Registration Rights
Agreement occurs to but excluding the date on which such failure to comply is
cured.

The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Old Issuer under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the same in all material
respects as the form and terms of the Old Capital Securities, except that the
New Capital Securities (i) have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable to
the Old Capital Securities and (ii) will not provide for any increase in the
Distribution rate thereon. Upon consummation of the Exchange Offer, holders of
Old Capital Securities that have not been tendered and exchanged pursuant to the
Exchange Offer will not be entitled to any increase in the Distribution rate
thereon or any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Risk Factors -- Consequences
of a Failure to Exchange Old Capital Securities" and "Description of Old
Securities".

The Exchange Offer is not being made to, nor will the Issuer or the
Corporation accept tenders for exchange from, holders of Old Capital Securities
in any jurisdiction in which the Exchange Offer or the acceptance thereof would
not be in compliance with the securities or blue sky laws of such jurisdiction.

Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Old Issuer or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by DTC who desires to deliver such Old
Capital Securities by book-entry transfer at DTC.

Pursuant to the Exchange Offer, the Corporation will exchange as soon as
practicable after the date hereof, the Old Guarantee in its entirety for the New
Guarantee (provided that all Old Capital Securities have been

22
<PAGE> 38

exchanged in the Exchange Offer, otherwise the Old Guarantee will continue to
apply to any Old Capital Securities which have not been exchanged). The
Corporation will also exchange all of the Old Subordinated Debentures, of which
$72,165,000 aggregate principal amount is outstanding, for a like, aggregate
principal amount of the New Subordinated Debentures, which will be issued under
the Indenture as part of the same series as the Old Subordinated Debentures. The
New Guarantee and New Subordinated Debentures have been registered under the
Securities Act.

TERMS OF EXCHANGE

The Issuer hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter Transmittal, to exchange
up to $70,000,000 aggregate Liquidation Amount of New Capital Securities for a
like aggregate Liquidation Amount of Old Capital Securities properly tendered on
or prior to the Expiration Date and not properly withdrawn in accordance with
the procedures described below. The Issuer will issue, promptly after the
Expiration Date, an aggregate Liquidation Amount of up to $70,000,000 of New
Capital Securities in exchange for a like Liquidation Amount of outstanding Old
Capital Securities tendered and accepted in connection with the Exchange Offer.
Holders may tender their Old Capital Securities in whole or in part in a
Liquidation Amount of not less than $100,000 or any integral multiple of $1,000
in excess thereof.

The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
$70,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.

Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered or are tendered but not accepted in connection with the Exchange
Offer will remain outstanding and be entitled to the benefits of the Old Trust
Agreement, the Old Guarantee and the Old Expense Agreement, but will not be
entitled to any further registration rights under the Registration Rights
Agreement, or to Special Distributions, and will continue to be subject to
restrictions on transfer. See "Risk Factors -- Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Old Securities".

If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.

Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Corporation will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "-- Fees and
Expenses".

NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY ADMINISTRATOR OR
TRUSTEE OF THE ISSUER OR THE OLD ISSUER MAKES ANY RECOMMENDATION TO HOLDERS OF
OLD CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
OLD CAPITAL SECURITIES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT
TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES
TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" means 5:00 p.m., New York City time, on April
14, 1997, unless the Exchange Offer is extended by the Issuer (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended).

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<PAGE> 39

The Corporation and the Issuer expressly reserve the right in their sole
discretion, subject to applicable law, at any time and from time to time, (i) to
delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Corporation and the Issuer
determine, in their sole discretion, that any of the events or conditions
referred to under "-- Conditions to the Exchange Offer" have occurred or exist
or have not been satisfied, (iii) to extend the Expiration Date of the Exchange
Offer and retain all Old Capital Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of holders of Old Capital Securities to
withdraw their tendered Old Capital Securities as described under "-- Withdrawal
Rights", and (iv) to waive any condition or otherwise amend the terms of the
Exchange Offer in any respect. If the Exchange Offer is amended in a manner
determined by the Corporation and the Issuer to constitute a material change, or
if the Corporation and the Issuer waive a material condition of the Exchange
Offer, the Corporation and the Issuer will promptly disclose such amendment by
means of an amended or supplemental prospectus that will be distributed to the
registered holders of the Old Capital Securities, and the Issuer will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.

Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Issuer may choose to make any public
announcement, and subject to applicable law, the Corporation and the Issuer
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.

ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES

Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.

In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter or
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or (in the
case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal, and (iii) any other documents required by the Letter of
Transmittal.

The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgement from the tendering
participant, which acknowledgement states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Issuer and the
Corporation may enforce such Letter of Transmittal against such participant.

Subject to the terms and conditions of the Exchange Offer, the Corporation
and the Issuer will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if and
when the Issuer gives oral or written notice to the Exchange Agent of the
Corporation's and the Issuer's acceptance of such Old Capital Securities for
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent
for the Corporation and the Issuer for the purpose of receiving tenders of Old
Capital Securities, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving Old Capital Securities,
Letters of Transmittal and related documents, and transmitting New Capital
Securities to validly tendering holders. Such exchange will be made promptly
after the Expiration Date. If for any reason whatsoever, acceptance for exchange
or the exchange of any Old Capital Securities tendered pursuant to the Exchange
Offer is delayed (whether before or after the Corporation's and the Issuer's
acceptance for exchange of Old Capital Securities) or the Corporation and the
Issuer extend the Exchange Offer or are unable to accept for

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<PAGE> 40

exchange or exchange Old Capital Securities tendered pursuant to the Exchange
Offer, then, without prejudice to the Corporation's and the Issuer's rights set
forth herein, the Exchange Agent may, nevertheless, on behalf of the Corporation
and the Issuer and subject to Rule 14e-1(c) under the Exchange Act, retain
tendered Old Capital Securities and such Old Capital Securities may not be
withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "-- Withdrawal Rights".

Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Issuer will acquire good,
marketable and unencumbered title to the tendered Old Capital Securities, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Capital Securities tendered for exchange are not subject to any adverse claims
or proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Corporation, the
Issuer or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment, and transfer of the Old Capital Securities tendered
pursuant to the Exchange Offer.

PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES

Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or (in the case of a book-entry tender) an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "-- Exchange Agent", and either (i) tendered Old Capital Securities
must be received by the Exchange Agent, or (ii) such Old Capital Securities must
be tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation, including an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal, must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be satisfied.

If less than all of the Capital Securities are tendered, a tendering holder
should fill in the amount of Old Capital Securities being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Capital
Securities delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.

THE METHOD OF DELIVERY OF CERTIFICATES, OF THE LETTER OF TRANSMITTAL AND OF
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

Book Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfer. However, although delivery of Old
Capital Securities may be effected through book-entry transfer into the Exchange
Agent's account at DTC, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must in any case be delivered to and received by the Exchange Agent
at its address set forth under "-- Exchange Agent" on or prior to the Expiration
Date, or the guaranteed delivery procedure set forth below must be complied
with.

DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT

Signature Guarantees. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is

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<PAGE> 41

registered in a name other than that of the person surrendering the certificate
or (ii) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (i) or (ii) above, such certificates for Old Capital Securities
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.

Guaranteed Delivery. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:

(i) such tenders are made by or through an Eligible Institution;

(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and

(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.

The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.

Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile thereof
or Agent's Message in lieu thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmations with respect to Old Capital Securities and
other required documents are received by the Exchange Agent.

The Corporation's and the Issuer's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement between the tendering holder and the Issuer upon
the terms and subject to the conditions of the Exchange Offer.

Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Issuer, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Issuer reserve the absolute
right, in their sole discretion, to reject any and all tenders determined by
them not to be in proper form or the acceptance of which, or exchange for, may,
in the view of counsel to the Corporation or the Issuer, be unlawful. The
Corporation and the Issuer also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer as set
forth under "-- Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
the other holders.

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<PAGE> 42

The Corporation's and the Issuer's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Corporation,
the Issuer, any affiliates or assigns of the Corporation or the Issuer, the
Exchange Agent nor any other person shall be under any duty to give notification
of any irregularities in tenders or incur any liability for failure to give any
such notification.

If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Issuer,
proper evidence satisfactory to the Corporation and the Issuer, in their sole
discretion, of such person's authority to so act must be submitted.

A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other nominee
or custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.

RESALES OF NEW CAPITAL SECURITIES

The Issuer is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporate Finance of
the Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Corporation nor the Issuer
sought its own interpretive letter, and there can be no assurance that the staff
of the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such interpretive
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance, and subject to the two immediately following
sentences, the Corporation and the Issuer believe that the New Capital
Securities issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that no such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an Affiliate or who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities, or any broker-dealer who
purchased Old Capital Securities from the Old Issuer to resell pursuant to Rule
144A or any other available exemption under the Securities Act, (i) will not be
able to rely on the interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned interpretive letters,
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, Participating Broker-Dealers must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of New Capital Securities.

Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required to
represent that (i) it is not an Affiliate, (ii) any New Capital Securities to be
received by it are being acquired in the ordinary course of its business, (iii)
it has no arrangement or understanding with any person to participate in a
distribution (within the meaning of the Securities Act) of such New Capital
Securities, and (iv) if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution (within the meaning
of the Securities Act) of such New Capital Securities, otherwise the limitations
on transfer described above may apply. In addition, the Corporation and the
Issuer may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the Issuer
(or an agent thereof) in writing information as to the number of "beneficial
owners" (within the meaning of the Rule 13d-3 under the Exchange Act) on behalf
of whom such holder holds the Capital Securities to be exchanged in the Exchange
Offer. Each Participating Broker-Dealer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such New Capital Securities. The Letter of Transmittal states that by
so acknowledging and by

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<PAGE> 43

delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Corporation
and the Issuer believe that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities which may represent an unsold allotment from the original sale of the
Old Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus, as it
may be amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Capital Securities received in exchange for Old Capital Securities where
such Old Capital Securities were acquired by such Participating Broker-Dealer
for its own account as a result of market-making or other trading activities.
Subject to certain provisions set forth in the Registration Rights Agreement,
the Corporation and the Issuer have agreed that this Prospectus, as it may be
amended or supplemented from time to time may be used by a Participating
Broker-Dealer in connection with the resale of such New Capital Securities for a
period ending 90 days after the Expiration Date or, if earlier, when all such
New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution". Any person, including any
Participating Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.

In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in lieu
thereof, that, upon receipt of notice from the Corporation or the Issuer of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in this Prospectus untrue in any material
respect or which causes this Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
herein, in light if the circumstances under which they were made, not misleading
or of the occurrence of certain other events specified in the Registration
Rights Agreement, such Participating Broker-Dealer will suspend the sale of New
Capital Securities (or the New Guarantee or the New Subordinated Debentures, as
applicable) pursuant to this Prospectus until the Corporation or the Issuer has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer of the Corporation or the Issuer has given notice
that the sale of the New Capital Securities (or the New Guarantee or the New
Subordinated Debentures, as applicable) may be resumed, as the case may be.

WITHDRAWAL RIGHTS

Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.

In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name of
the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the certificate numbers
shown on the particular Old Capital Securities to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,
except in the case of Old Capital Securities tendered for the account of an
Eligible Institution. If Old Capital Securities have been tendered pursuant to
the procedures for book-entry transfer set forth in "-- Procedures for Tendering
Old Capital Securities", the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders

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<PAGE> 44

of Old Capital Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for the purposes of the Exchange
Offer, but may be retendered at any subsequent time prior to the Expiration Date
by following any of the procedures described above under "-- Procedures for
Tendering Old Capital Securities".

All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Issuer, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Corporation, the Issuer, the Old Issuer, any
affiliates or assigns of the Corporation or the Issuer, the Old Issuer, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital Securities
which have been tendered but which are withdrawn will be returned to the holder
thereof promptly after withdrawal.

DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES

Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date (as defined
herein) with respect to such Old Capital Securities prior to the original issue
date of the New Capital Securities or, if no such Distributions have been made,
will not receive any accumulated Distributions on such Old Capital Securities
accumulated from and after such Distribution Date or, if no such Distributions
have been made, from and after January 29, 1997.

CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Issuer will not be
required to accept for exchange, or to exchange, any Old Capital Securities,
and, as described below, may terminate the Exchange Offer (whether or not any
Old Capital Securities have theretofore been accepted for exchange) or may waive
any conditions to or amend the Exchange Offer, if any of the following
conditions have occurred or exist or have not been satisfied:

(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an Affiliate)
without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Capital Securities are
acquired in the ordinary course of such holder's business and such holders
have no arrangement or understanding with any person to participate in the
distribution of such New Capital Securities;

(b) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect
to the Exchange Offer which, in the Corporation's and the Issuer's
judgement, would reasonably be expected to impair the ability of the Issuer
or the Corporation to proceed with the Exchange Offer;

(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Corporation's and the Issuer's judgement, would
reasonably be expected to impair the ability of the Issuer or the
Corporation to proceed with the Exchange Offer;

(d) a banking moratorium shall have been declared by the United States
federal or Alabama or New York state authorities which, in the
Corporation's and the Issuer's judgement, would reasonably be expected to
impair the ability of the Issuer or the Corporation to proceed with the
Exchange Offer;

(e) trading on the New York Stock Exchange or generally in the United
states over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Issuer's
judgement, would reasonably be expected to impair the ability of the Issuer
or the Corporation to proceed with the Exchange Offer;

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<PAGE> 45

(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Corporation or the Issuer, threatened for that purpose or any
governmental approval has not been obtained, which approval the Corporation
and the Issuer shall, in their sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby; or

(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Issuer or the Corporation or any
of its subsidiaries has occurred which, in the judgement of the Corporation
and the Issuer, might materially impair the ability of the Issuer or the
Corporation to proceed with the Exchange Offer.

If the Corporation and the Issuer determine in their sole discretion that
any of the foregoing events or conditions have occurred or exist or have not
been satisfied, the Corporation and the Issuer may, subject to applicable law,
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the
Corporation and the Issuer will promptly disclose such waiver by means of an
amended or supplemental Prospectus that will be distributed to the registered
holders of the Old Capital Securities, and the Corporation and the Issuer will
extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.

EXCHANGE AGENT

Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:

Wilmington Trust Company, Rodney Square, North, 1100 North Market Street,
Wilmington, Delaware 19890-0001 Attention: Jill Rylee, Telephone: (302)
651-8869, Facsimile: (302) 651-1079.

Delivery to other than the above address or facsimile number will not
constitute a valid delivery.

FEES AND EXPENSES

The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its reasonable out-of-pocket expenses in connection herewith.
The Corporation will also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Prospectus and related documents to the beneficial
owners of Old Capital Securities, and in handling or tendering for their
customers.

Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemptions therefrom is not submitted with the
Letter of Transmittal, the amount of such transfer taxes will be billed directly
to such tendering holder.

Neither the Corporation nor the Issuer will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.

DESCRIPTION OF NEW SECURITIES

Pursuant to the terms of the New Trust Agreement, the Issuer will issue the
New Trust Securities. The New Capital Securities will represent preferred
undivided beneficial interests in the assets of the Issuer and the holders
thereof will be entitled to a preference in certain circumstances with respect
to Distributions and amounts payable on redemption or liquidation over the New
Common Securities, as well as other benefits as described in the New

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<PAGE> 46

Trust Agreement. This summary of certain provisions of the New Securities and
the New Trust Agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the New Trust
Agreement, including the definitions therein of certain terms. Wherever
particular defined terms of the New Trust Agreement are referred to herein, such
defined terms are incorporated herein by reference. The New Trust Agreement has
been qualified under the Trust Indenture Act of 1939 (the "Trust Indenture
Act").

The terms of the New Capital Securities are the same in all material
respects as the terms of the Old Capital Securities, except that the New Capital
Securities have been registered for issue and exchange under the Securities Act,
the New Capital Securities will not provide for any Special Distribution, and
the New Subordinated Debentures will not provide for any Special Interest. See
"Description of Old Securities." When used in this section, "Description of New
Securities, " the term "Issuer" includes the Issuer or the Old Issuer as the
context requires.

GENERAL

The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $70,000,000 aggregate Liquidation Amount
at any one time outstanding. The Capital Securities will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities except as
described under "-- Subordination of Common Securities." Legal title to the
Subordinated Debentures will be held by the Property Trustee in trust for the
benefit of the holders of the Capital Securities and Common Securities. The
Guarantee will be a guarantee on a subordinated basis with respect to the
Capital Securities but will not guarantee payment of Distributions or amounts
payable on redemption or liquidation of such Capital Securities when the Issuer
does not have funds on hand available to make such payments. See "Description of
Guarantee."

DISTRIBUTIONS

The Capital Securities represent preferred undivided beneficial interests
in the assets of the Issuer and Distributions on each Capital Security will be
payable at the annual rate of 8.92% of the stated Liquidation Amount of $1,000,
payable semi-annually in arrears on January 15 and July 15 of each year (each a
"Distribution Date"), to the holders of the Capital Securities at the close of
business on the fifteenth day (whether or not a Business Day (as defined below))
next preceding the relevant Distribution Date. Distributions on the Capital
Securities will be cumulative. Distributions will accumulate from January 29,
1997. The first Distribution Date for the Capital Securities will be July 15,
1997. The amount of Distributions payable for any period less than a full
Distribution period will be computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such period.
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by two. If any date on which Distributions are
payable on the Capital Securities is not a Business Day, then payment of the
Distributions payable on such date will be made on the next succeeding day that
is a Business Day (without any additional Distributions or other payment in
respect of any such delay), with the same force and effect as if made on the
date such payment was originally payable.

So long as no Debenture Event of Default (as defined in the Indenture) has
occurred and is continuing, the Corporation has the right under the Indenture to
defer the payment of interest on the Subordinated Debentures at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Subordinated Debentures. As a consequence of
any such election, semi-annual Distributions on the Capital Securities will be
deferred by the Issuer during any such Extension Period. Distributions to which
holders of the Capital Securities are entitled will accumulate additional
Distributions thereon at the rate per annum of 8.92% thereof, compounded
semi-annually from the relevant payment date for such Distributions, computed on
the basis of a 360-day year of twelve 30-day months and the actual days elapsed
in a partial month in such period. Additional Distributions payable for each
full Distribution period will be computed by dividing the rate per annum by two.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Corporation may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Corporation's capital
stock or (ii) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Corporation that
rank pari passu in all respects with or junior in interest to the Subordinated
Debentures (other

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<PAGE> 47

than (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Corporation in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Corporation (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder rights plan, or the
issuance of rights, stock or other property under any stockholder rights plan,
or the redemption or repurchase of rights pursuant thereto, or (e) any dividend
in the form of stock, warrants, options or other rights where the dividend stock
or the stock issuable upon exercise of such warrants, options or other rights is
the same stock as that on which the dividend is being paid or ranks pari passu
with or junior to such stock). Prior to the termination of any such Extension
Period, the Corporation may further defer the payment of interest, provided that
no Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Subordinated Debentures. Upon the termination
of any such Extension Period and the payment of all amounts then due, the
Corporation may elect to begin a new Extension Period. There is no limitation on
the number of times that the Corporation may elect to begin an Extension Period.
See "Description of Subordinated Debentures -- Option To Extend Interest Payment
Period" and "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."

The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Subordinated Debentures.

The revenue of the Issuer available for distribution to holders of the
Capital Securities will be limited to payments under the Subordinated
Debentures. If the Corporation does not make payments on the Subordinated
Debentures, the Issuer may not have funds available to pay Distributions or
other amounts payable on the Capital Securities. The payment of Distributions
and other amounts payable on the Capital Securities (if and to the extent the
Issuer has funds legally available for and cash sufficient to make such
payments) is guaranteed by the Corporation on a limited basis as set forth
herein under "Description of Guarantee."

REDEMPTION

Upon the repayment or redemption, in whole or in part, of the Subordinated
Debentures, whether at Stated Maturity or upon earlier redemption as provided in
the Indenture, the proceeds from such repayment or redemption shall be applied
by the Property Trustee to redeem a Like Amount (as defined below) of the
Capital Securities, upon not less than 30 nor more than 60 days' notice, at a
redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount of such Capital Securities plus accumulated but unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related amount
of the premium, if any, paid by the Corporation upon the concurrent redemption
of such Subordinated Debentures. See "Description of Subordinated
Debentures -- Redemption." If less than all of the Subordinated Debentures are
to be repaid or redeemed on a Redemption Date, then the proceeds from such
repayment or redemption shall be allocated to the redemption pro rata of the
Capital Securities and the Common Securities. The amount of premium, if any,
paid by the Corporation upon the redemption of all or any part of the
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall be
allocated to the redemption pro rata of the Capital Securities and the Common
Securities.

The Corporation has the right to redeem the Subordinated Debentures (i) on
or after January 29, 2007, in whole at any time or in part from time to time, or
(ii) in whole (but not in part) at any time within 90 days following the
occurrence and during the continuation of a Tax Event, Investment Company Event
or Capital Treatment Event (each as defined below). A redemption of the
Subordinated Debentures would cause a mandatory redemption of a Like Amount of
the Capital Securities and Common Securities.

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<PAGE> 48

The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the Liquidation Amount
(as defined below), together with accumulated Distributions to but excluding the
date fixed for redemption, if redeemed during the 12-month period beginning
January 29:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2007........................................................ 104.460%
2008........................................................ 104.014
2009........................................................ 103.568
2010........................................................ 103.122
2011........................................................ 102.676
2012........................................................ 102.230
2013........................................................ 101.784
2014........................................................ 101.338
2015........................................................ 100.892
2016........................................................ 100.446
</TABLE>

and at 100% on or after January 29, 2017.

The Redemption Price, in the case of a redemption prior to January 29, 2007
following a Tax Event, Investment Company Event or Capital Treatment Event as
described under (ii) above, will equal for each Capital Security the Make-Whole
Amount for a corresponding $1,000 principal amount of Subordinated Debentures
together with accumulated Distributions to but excluding the date fixed for
redemption. The "Make-Whole Amount" will be equal to the greater of (i) 100% of
the principal amount of such Subordinated Debentures or (ii) as determined by a
Quotation Agent (as defined below), the sum of the present values of the
principal amount and premium payable as part of the Redemption Price with
respect to an optional redemption of such Subordinated Debentures on January 29,
2007, together with the present values of scheduled payments of interest from
the Redemption Date to January 29, 2007 (the "Remaining Life"), in each case
discounted to the Redemption Date on a semi-annual basis (assuming a 360-day
year consisting of 30-day months) at the Adjusted Treasury Rate.

"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus (i) 2.00% if such Redemption Date occurs on or before January
29, 1998 or (ii) 1.50% if such Redemption Date occurs after January 29, 1998.

"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, appearing in the
most recently published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.

"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York are authorized or required
by law or executive order to remain closed, or (c) a day on which the Property
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.

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<PAGE> 49

"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after January 29, 2007, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.

"Quotation Agent" means Bear, Stearns & Co. Inc. and its successors;
provided, however, that if the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Corporation shall substitute therefor another Primary Treasury Dealer.

"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.

"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five such Reference Treasury Dealer Quotations, the
average of all such Quotations.

"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.

"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and (ii) with respect to a distribution of
Subordinated Debentures to holders of Trust Securities in connection with a
dissolution or liquidation of the Issuer, Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Subordinated Debentures are distributed.

"Liquidation Amount" means the stated amount of $1,000 per Trust Security.

"Tax Event" means the receipt by the Issuer of an opinion of counsel to the
Corporation experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Old Capital Securities, there is more than an insubstantial risk that (i)
the Issuer is, or will be within 90 days of the delivery of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Subordinated Debentures, (ii) interest payable by the Corporation
on the Subordinated Debentures is not, or within 90 days of the delivery of such
opinion, will not be, deductible by the Corporation, in whole or in part, for
United States federal income tax purposes or (iii) the Issuer is, or will be
within 90 days of the delivery of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.

"Investment Company Event" means the receipt by the Issuer of an opinion of
counsel to the Corporation experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Capital Securities.

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<PAGE> 50

"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the Old
Capital Securities, there is more than an insubstantial risk that the
Corporation will not be entitled to treat an amount equal to the Liquidation
Amount of the Capital Securities as "Tier 1 Capital" (or the then equivalent
thereof) for purposes of the capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Corporation.

Payment of Additional Sums. If a Tax Event described in clause (i) or
(iii) of the definition of Tax Event above has occurred and is continuing and
the Issuer is the holder of all of the Subordinated Debentures, the Corporation
will pay Additional Sums (as defined below), if any, on the Subordinated
Debentures.

"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer on the
outstanding Capital Securities and Common Securities of the Issuer will not be
reduced as a result of any additional taxes, duties and other governmental
charges to which the Issuer has become subject as a result of a Tax Event.

REDEMPTION PROCEDURES

Capital Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Subordinated Debentures. Redemptions of the Capital Securities
shall be made and the Redemption Price shall be payable on each Redemption Date
only to the extent that the Issuer has funds on hand available for the payment
of such Redemption Price. See also "-- Subordination of Common Securities."

If the Issuer gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, in the case of Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. With respect to Capital Securities not held in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the Capital Securities funds sufficient to pay
the applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing the Capital Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Securities called for redemption shall be
payable to the holders of the Capital Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of such Capital Securities so called for redemption will
cease, except the right of the holders of such Capital Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Capital Securities will cease to be outstanding. If any date fixed for
redemption of Capital Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Capital Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer or by the Corporation pursuant to the Guarantee as described under
"Description of Guarantee," Distributions on such Capital Securities will
continue to accumulate at the then applicable rate, from the Redemption Date
originally established by the Issuer for such Capital Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the Redemption
Price.

Subject to applicable law (including, without limitation, United States
federal securities laws), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Capital Securities by tender, in the
open market or by private agreement.

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<PAGE> 51

If less than all of the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Capital Securities and Common Securities to be redeemed shall be allocated pro
rata to the Capital Securities and the Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities to be
redeemed shall be selected on a pro rata basis not more than 60 days prior to
the Redemption Date by the Property Trustee from the outstanding Capital
Securities not previously called for redemption, or if the Capital Securities
are then held in the form of a Global Capital Security (as defined below), in
accordance with DTC's customary procedures, provided, in each case, that each
holder of any Capital Securities has at least 100 Capital Securities remaining
after the redemption. The Property Trustee shall promptly notify the securities
registrar for the Trust Securities in writing of the Capital Securities selected
for redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Capital Securities which has been or is
to be redeemed.

Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Capital
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Corporation defaults in payment of the
Redemption Price on the Subordinated Debentures, on and after the Redemption
Date interest will cease to accrue on the Subordinated Debentures or portions
thereof (and, unless payment of the Redemption Price in respect of the Capital
Securities is withheld or refused and not paid either by the Issuer or the
Corporation pursuant to the Guarantee, Distributions will cease to accumulate on
the Capital Securities or portions thereof) called for redemption.

SUBORDINATION OF COMMON SECURITIES

Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of such Capital Securities and Common Securities.
However, if on any Distribution Date or Redemption Date a Debenture Event of
Default has occurred and is continuing as a result of any failure by the
Corporation to pay any amounts in respect of the Subordinated Debentures when
due, no payment of any Distribution on, or Redemption Price of, any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding Capital Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all of the outstanding Capital Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.

In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effect of all such Events of Default with respect
to such Capital Securities have been cured, waived or otherwise eliminated. See
"-- Events of Default; Notice" and "Description of Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreement with respect to the Capital Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Capital Securities and not on behalf of the holders
of the Common Securities, and only the holders of the Capital Securities will
have the right to direct the Property Trustee to act on their behalf.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

The amount payable on the Capital Securities in the event of any
liquidation of the Issuer is $1,000 per Capital Security plus accumulated and
unpaid Distributions, subject to certain exceptions, which may be in the form of
a distribution of such amount in Subordinated Debentures.

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<PAGE> 52

The holder of all of the outstanding Common Securities (i.e., the
Corporation) has the right at any time to dissolve the Issuer and, after
satisfaction of liabilities to creditors of the Issuer as provided by applicable
law, cause the Subordinated Debentures to be distributed to the holders of the
Capital Securities and Common Securities in liquidation of the Issuer. The
Corporation has committed to the Federal Reserve that, so long as the
Corporation (or an affiliate) is a holder of Common Securities, it will not
exercise such right without having received the prior approval of the Federal
Reserve to do so, if then required under applicable Federal Reserve capital
guidelines or policies.

Pursuant to the Trust Agreement, the Issuer will automatically dissolve,
and its affairs wound up, upon expiration of its term or, if earlier, will
dissolve on the first to occur of: (i) certain events of bankruptcy, dissolution
or liquidation of the Corporation; (ii) the distribution of a Like Amount of the
Subordinated Debentures to the holders of the Trust Securities, if the holders
of Common Securities have given written direction to the Property Trustee to
dissolve the Issuer (which direction, subject to the foregoing restrictions, is
optional and wholly within the discretion of the holders of Common Securities);
(iii) redemption of all of the Trust Securities as described under
"-- Redemption" and (iv) the entry of an order for the dissolution of the Issuer
by a court of competent jurisdiction.

If dissolution of the Issuer occurs as described in clause (i) , (ii) or
(iv) above, the Issuer will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Issuer as provided by
applicable law, to the holders of such Trust Securities a Like Amount of the
Subordinated Debentures, unless such distribution is determined by the Property
Trustee not to be practical, in which event such holders will be entitled to
receive out of the assets of the Issuer available for distribution to holders,
after satisfaction of liabilities to creditors of the Issuer as provided by
applicable law, an amount equal to, in the case of holders of Capital
Securities, the aggregate of the Liquidation Amount plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Issuer has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Issuer on its Capital Securities shall be paid on a pro rata basis. The holders
of the Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that if
a Debenture Event of Default has occurred and is continuing as a result of any
failure by the Corporation to pay any amounts in respect of the Subordinated
Debentures when due, the Capital Securities shall have a priority over the
Common Securities.

After the liquidation date fixed for any distribution of Subordinated
Debentures (i) the Capital Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the registered holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Subordinated Debentures to be delivered upon such distribution
with respect to Capital Securities held by DTC or its nominee and (iii) any
certificates representing the Capital Securities not held by DTC or its nominee
will be deemed to represent the Subordinated Debentures having a principal
amount equal to the stated Liquidation Amount of the Capital Securities and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on the Capital Securities until such certificates are
presented to the security registrar for the Trust Securities for transfer or
reissuance.

If the Corporation does not redeem the Subordinated Debentures prior to
maturity and the Issuer is not liquidated and the Subordinated Debentures are
not distributed to holders of the Capital Securities, the Capital Securities
will remain outstanding until the repayment of the Subordinated Debentures and
the distribution of the Liquidation Distribution to the holders of the Capital
Securities.

There can be no assurance as to the market prices for the Capital
Securities or the Subordinated Debentures that may be distributed in exchange
for Capital Securities if a dissolution and liquidation of the Issuer were to
occur. Accordingly, the Capital Securities that an investor may acquire, or the
Subordinated Debentures that the investor may receive on dissolution and
liquidation of the Issuer, may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby.

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<PAGE> 53

EVENTS OF DEFAULT; NOTICE

Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Capital Securities
(whatever the reason for such Event of Default and whether it is voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(i) the occurrence of a Debenture Event of Default (see "Description
of Subordinated Debentures -- Debenture Events of Default"); or

(ii) default by the Issuer in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of
30 days; or

(iii) default by the Issuer in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or

(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Corporation by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Trust Agreement; or

(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.

Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities, the
Administrative Trustees and the Corporation, unless such Event of Default has
been cured or waived. The Corporation, as Depositor, and the Administrative
Trustees are required to file annually with the Property Trustee a certificate
as to whether or not they are in compliance with all the conditions and
covenants applicable to them under the Trust Agreement.

If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Corporation to pay any amounts in respect of the
Subordinated Debentures when due, the Capital Securities will have a preference
over the Common Securities with respect to payments of any amounts in respect of
the Capital Securities as described above. See "-- Subordination of Common
Securities," "-- Liquidation Distribution Upon Dissolution" and "Description of
Subordinated Debentures -- Debenture Events of Default."

The existence of an Event of Default does not entitle the holders of
Capital Securities to accelerate the maturity thereof.

REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS

Unless a Debenture Event of Default has occurred and is continuing, any
Issuer Trustee may be removed at any time by the holder of all the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the holder of all the Common Securities.
No resignation or removal of an Issuer Trustee and no appointment of a successor
trustee will be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the Trust Agreement.

CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE

Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal standards of the Trust
Indenture Act or of any jurisdiction in which any part of the assets of the

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Issuer may at the time be located, the Property Trustee shall have power to
appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of such assets, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the Trust Agreement.

MERGER OR CONSOLIDATION OF ISSUER TRUSTEES

Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.

MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER

The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer may, at the request of
the holders of the Common Securities (i.e., the Corporation) and with the
consent of the Administrative Trustees, but without the consent of the holders
of the outstanding Capital Securities, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State, so long as (i) such successor entity either (a) expressly assumes
all of the obligations of the Issuer with respect to the Capital Securities or
(b) substitutes for the Capital Securities other securities having substantially
the same terms as the Capital Securities (the "Successor Securities") so long as
the Successor Securities have the same priority as the Capital Securities with
respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) a trustee of such successor entity, possessing the same powers
and duties as the Property Trustee, is appointed to hold the Subordinated
Debentures, (iii) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect, (v) such successor entity has
a purpose substantially identical to that of the Issuer, (vi) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
the Issuer has received an opinion from independent counsel experienced in such
matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (vii) the Corporation
or any permitted successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer may not, except with the consent of
holders of 100% in aggregate Liquidation Amount of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer or the successor entity to
be taxable as a corporation or as other than a grantor trust for United States
federal income tax purposes.

The Exchange Offer will not be prohibited by the foregoing provisions.

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VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT

Except as provided below and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights.

The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Issuer Trustees, without the consent
of the holders of the Capital Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement, which are not inconsistent with the
other provisions of the Trust Agreement, provided that any such amendment does
not adversely affect in any material respect the interests of any holder of
Trust Securities, or (ii) to modify, eliminate or add to any provisions of the
Trust Agreement to such extent as may be necessary to ensure that the Issuer
Trust will not be taxable as a corporation or as other than a grantor trust for
United States federal income tax purposes at any time that any Trust Securities
are outstanding or to ensure that the Issuer will not be required to register as
an "investment company" under the Investment Company Act, provided that any such
amendment does not adversely affect in any material respect the interests of any
holder of Trust Securities. Any amendments of the Trust Agreement pursuant to
the foregoing sentence will become effective when notice of such amendment is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the holders of a majority of the Common Securities and the Issuer Trustees with
(i) the consent of holders representing not less than a majority in aggregate
Liquidation Amount of the outstanding Capital Securities and (ii) receipt by the
Issuer Trustees of an opinion of counsel to the effect that such amendment or
the exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not cause the Issuer Trust to be taxable as a corporation or as
other than a grantor trust for United States federal income tax purposes or the
Issuer's exemption from status as an "investment company" under the Investment
Company Act. Without the consent of each holder of Trust Securities, the Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.

So long as any Subordinated Debentures are held by the Issuer, the Property
Trustee will not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or execute any
trust or power conferred on the Property Trustee with respect to the
Subordinated Debentures, (ii) waive any past default that is waivable under
Section 513 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the Subordinated Debentures shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture or the
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the holders of at least a majority in
aggregate Liquidation Amount of the outstanding Capital Securities, except that
if a consent under the Indenture would require the consent of each holder of
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Capital
Securities. The Property Trustee may not revoke any action previously authorized
or approved by a vote of the holders of the Capital Securities except by
subsequent vote of the holders of the Capital Securities. The Property Trustee
will notify each holder of Capital Securities of any notice of default with
respect to the Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Capital Securities, before taking any of the
foregoing actions, the Property Trustee will obtain an opinion of counsel
experienced in such matters to the effect that the Issuer Trust will not be
taxable as a corporation or as other than a grantor trust for United States
federal income tax purposes on account of such action.

Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each registered holder of Capital Securities in the manner set forth in the
Trust Agreement.

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No vote or consent of the holders of Capital Securities will be required to
redeem and cancel Capital Securities in accordance with the Trust Agreement.

Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustee, will, for purposes of such
vote or consent, be treated as if they were not outstanding.

BOOK ENTRY, DELIVERY AND FORM

The Capital Securities will be issued in fully registered form in minimum
blocks of at least 100 (representing a minimum of $100,000 aggregate Liquidation
Amount) and the Capital Securities must at all times be held in blocks of at
least 100.

Global Capital Security; Book-Entry Form. New Capital Securities initially
will be evidenced by a global Capital Security (the "Global Capital Security")
which will be deposited with, or on behalf of, DTC and registered in the name of
Cede & Co. ("Cede") as DTC's nominee. Except as set forth below, record
ownership of the Global Capital Security may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.

DTC holds securities for its participating organizations ("Participants").
Transfers between Participants will be effected in the ordinary way in
accordance with DTC rules and will be settled in same-day funds.

Access to DTC's system is also available to other entities such as banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through
Participants or the Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the Participants and Indirect
Participants.

Depositary Procedures. Payment of Distributions on, and the Redemption
Price of, the Global Capital Security will be made to Cede, the nominee for DTC,
as the registered holder of the Global Capital Security, by wire transfer of
immediately available funds on each Distribution Date or Redemption Date.
Neither the Corporation nor the Issuer Trustees (or any Administrator,
securities registrar, paying agent or exchange agent under the Trust Agreement)
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Capital Security, for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests or for the performance by DTC or its
Participants or Indirect Participants of their respective obligations under the
rules and procedures governing their operations.

The Corporation and the Issuer have been informed by DTC that, with respect
to any payment of Distributions on, or the Redemption Price of, the Global
Capital Security, DTC's practice is to credit Participants' accounts on the
payment date therefor with payments in amounts proportionate to their respective
beneficial interests in the Capital Securities represented by the Global Capital
Security, as shown on the records of DTC (adjusted as necessary so that such
payments are made with respect to whole Capital Securities only), unless DTC has
reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in Capital Securities
represented by the Global Capital Security held through such Participants will
be the responsibility of such Participants, as is the case with securities held
for the accounts of customers registered in "street name."

Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Capital Securities represented by the Global
Capital Security to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest. Furthermore, the laws of some states require that certain persons take
physical delivery of securities in definitive form. Consequently, the ability to
transfer beneficial interests in the Global Capital Security to such persons may
be limited.

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DTC has advised the Corporation and the Issuer that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction of
one or more Participants to whose account with DTC interests in the Global
Capital Security are credited and only in respect of the aggregate Liquidation
Amount of the Capital Securities represented by the Global Capital Security as
to which such Participant or Participants has or have given such direction.

DTC has advised the Corporation and the Issuer as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchasers. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Capital Security among Participants of DTC,
it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. The Global Capital Security is
not exchangeable for definitive Capital Securities in registered certificated
form unless (i) DTC advises the Corporation and the Property Trustee that it is
no longer willing or able to properly discharge its responsibilities with
respect to the Global Capital Security, and the Property Trustee is unable to
locate a qualified successor, (ii) the Issuer at its option advises DTC in
writing that it elects to terminate the book-entry system through DTC, or (iii)
after the occurrence of a Debenture Event of Default. In all cases, certificated
Capital Securities delivered in exchange for any Global Capital Security or
beneficial interests therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of DTC (in accordance with its
customary procedures).

So long as DTC or its nominee is the registered holder of the Global
Capital Security, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Capital Securities represented by the Global
Capital Security for all purposes under the Trust Agreement. Except as provided
above, owners of beneficial interests in the Global Capital Security will not be
entitled to have any of the individual Capital Securities represented by the
Global Capital Security registered in their names, will not receive or be
entitled to receive physical delivery of any such Capital Securities in
definitive form and will not be considered the owners or holders thereof under
the Trust Agreement.

PAYMENT AND PAYING AGENCY

Payments in respect of the Capital Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Capital Securities are not held by DTC, such payments will be made by
check mailed to the address of the holder entitled thereto as such address
appears on the securities register for the Trust Securities. The paying agent
(the "Paying Agent") will initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrative
Trustees. The Paying Agent will be permitted to resign as Paying Agent upon 30
days' written notice to the Property Trustee and the Administrative Trustees. If
the Property Trustee is no longer the Paying Agent, the Administrative Trustees
will appoint a successor (which must be a bank or trust company reasonably
acceptable to the Corporation) to act as Paying Agent.

REGISTRAR AND TRANSFER AGENT

The Property Trustee will act as registrar and transfer agent for the
Capital Securities.

Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer

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or exchange. The Issuer will not be required to register or cause to be
registered the transfer of the Capital Securities after the Capital Securities
have been called for redemption.

INFORMATION CONCERNING THE PROPERTY TRUSTEE

The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative courses of
action, or construe ambiguous provisions in the Trust Agreement, or is unsure of
the application of any provision of the Trust Agreement, and the matter is not
one on which holders of Trust Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as it deems advisable
and in the best interests of the holders of the Trust Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.

For information concerning the relationships between Wilmington Trust
Company, the Property Trustee, and the Corporation, see "Description of
Subordinated Debentures -- Information Concerning the Debenture Trustee."

MISCELLANEOUS

The Administrative Trustees and the Property Trustee are authorized and
directed to conduct the affairs of and to operate the Issuer in such a way that
the Issuer will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation or as
other than a grantor trust for United States federal income tax purposes and so
that the Subordinated Debentures will be treated as indebtedness of the
Corporation for United States federal income tax purposes. In this connection,
the Property Trustee and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of the
Issuer or the Trust Agreement, that the Property Trustee and the Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the Capital Securities.

Holders of the Capital Securities have no preemptive or similar rights.

The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.

DESCRIPTION OF OLD SECURITIES

The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will be terminated upon consummation of the Exchange Offer, except under
limited circumstances); (ii) the New Capital Securities will not provide for any
Special Distribution, and (iii) the New Subordinated Debentures will not provide
for any Special Interest. The Old Securities provide that, in the event that the
Exchange Offer is not consummated on or prior to 180 days after January 29,
1997, or, in certain limited circumstances, in the event a shelf registration
statement (the "Shelf Registration Statement") with respect to the resale of the
Old Capital Securities is not declared effective on or prior to 180 days after
January 29, 1997, then Special Interest will accrue (in addition to the interest
rate on the Subordinated Debentures) at the rate of 0.25% per annum on the
principal amount of the Subordinated Debentures and Special Distributions will
accrue (in addition to the stated Distribution rate on the Capital Securities)
at a rate of 0.25% per annum on the Liquidation Amount of the Capital
Securities, for the period from the occurrence of such event until such time as
the Exchange Offer is consummated or any required Shelf Registration Statement
is effective. The New Securities are not, and upon consummation of the Exchange
Offer the Old Securities will not be, entitled to any such additional interest
or distributions. Accordingly, holders

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of Old Capital Securities should review the information set forth under "Risk
Factors -- Certain Consequences of a Failure to Exchange Old Capital Securities"
and "Description of New Securities".

DESCRIPTION OF SUBORDINATED DEBENTURES

The Old Subordinated Debentures were issued, and the New Subordinated
Debentures will be issued as part of the same series as the Old Subordinated
Debentures, pursuant the Indenture, under which Wilmington Trust Company is
acting as Debenture Trustee. The Indenture has been qualified under the Trust
Indenture Act. This summary of certain terms and provisions of the Subordinated
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Indenture, including the definitions therein of certain terms, as well as by
reference to the Trust Indenture Act as it applies to the Indenture. Whenever
particular defined terms of the Indenture (as amended or supplemented from time
to time) are referred to herein, such defined terms are incorporated herein by
reference.

GENERAL

Concurrently with the issuance of the Old Capital Securities, the Old
Issuer invested the proceeds thereof, together with the consideration paid by
the Corporation for the Old Common Securities, in the Old Subordinated
Debentures issued by the Corporation. Pursuant to the Exchange Offer, the
Corporation will exchange the Old Subordinated Debentures for the New
Subordinated Debentures as soon as practicable after the date hereof. No Old
Subordinated Debentures will remain outstanding after such exchange. The
material terms of the New Subordinated Debentures are the same as the material
terms of the Old Subordinated Debentures, except that the New Subordinated
Debentures have been registered under the Securities Act and no Special Interest
will be paid on the New Subordinated Debentures. In this section, "Description
of Subordinated Debentures," the term "Issuer" includes the Issuer and the Old
Issuer as the context requires.

The Subordinated Debentures will bear interest, accruing from January 29,
1997, at the annual rate of 8.92% of the principal amount thereof, payable
semi-annually in arrears on January 15 and July 15 of each year (each, an
"Interest Payment Date"), commencing July 15, 1997, to the person in whose name
each Subordinated Debenture is registered at the close of business on the
fifteenth day (whether or not a Business Day) next preceding such Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Issuer, each Subordinated Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period less than a full interest period will
be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full interest period will be computed by dividing the rate per
annum by two. If any date on which interest is payable on the Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (without any
interest or other payment in respect of any such delay), with the same force and
effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of 8.92%, compounded semi-annually and computed on the basis
of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. The amount of additional interest payable for any
full interest period will be computed by dividing the rate per annum by two. The
term "interest" as used herein includes semi-annual interest payments, interest
on semi-annual interest payments not paid on the applicable Interest Payment
Date and Additional Sums (as defined below), as applicable.

The Subordinated Debentures will mature on January 15, 2027.

The Subordinated Debentures will be unsecured and will rank junior and be
subordinate in right of payment to all Senior Indebtedness of the Corporation.
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary, including its Bank
Subsidiaries, upon such subsidiary's dissolution, winding-up, liquidation or
reorganization or otherwise (and thus the ability of holders of the Subordinated
Debentures to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary, except to the extent that the
Corporation may itself be a creditor of that subsidiary and its claims are
recognized. There are various legal limitations on the extent to which certain
of the

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Corporation's subsidiaries may extend credit, pay dividends or otherwise supply
funds to the Corporation or certain of its other subsidiaries. Accordingly, the
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Subordinated Debentures. See "The Colonial BancGroup, Inc." The
Indenture does not limit the incurrence or issuance of other secured or
unsecured debt by the Corporation, including Senior Indebtedness, whether under
the Indenture or any existing or other indenture that the Corporation may enter
into in the future or otherwise. See "-- Subordination."

OPTION TO EXTEND INTEREST PAYMENT PERIOD

So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right at any time during the term of the Subordinated
Debentures to defer the payment of interest at any time or from time to time for
a period not exceeding 10 consecutive semi-annual periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Subordinated Debentures. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of 8.92%, compounded semi-annually and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full interest
period will be computed by dividing the rate per annum by two. During an
Extension Period, interest will continue to accrue and holders of Subordinated
Debentures (or holders of Capital Securities while outstanding) will be required
to accrue interest income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences -- Interest Income and Original Issue
Discount."

During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to the Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Corporation may further defer the payment of
interest, provided that no Extension Period may exceed 10 consecutive semiannual
periods or extend beyond the Stated Maturity of the Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all amounts
then due, the Corporation may elect to begin a new Extension Period subject to
the above conditions. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Corporation must give the Property
Trustee notice of its election of such Extension Period at least one Business
Day prior to the earlier of (i) the date the Distributions on the Capital
Securities would have been payable but for the election to begin such Extension
Period and (ii) the date the Property Trustee is required to give notice to
holders of the Capital Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date. The Property Trustee will give notice of the Corporation's
election to begin a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Corporation
may elect to begin an Extension Period.

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REDEMPTION

The Subordinated Debentures are redeemable prior to maturity at the option
of the Corporation (i) on or after January 29, 2007, in whole at any time or in
part from time to time, or (ii) in whole (but not in part) at any time within 90
days following the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event (each as defined under
"Description of Capital Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer to redeem the Trust Securities. The Corporation has committed
to the Federal Reserve that the Corporation will not exercise its right to
redeem the Subordinated Debentures prior to the Stated Maturity without having
received the prior approval of the Federal Reserve to do so, if then required
under applicable Federal Reserve capital guidelines or policies.

The Redemption Price for Subordinated Debentures in the case of a
redemption under (i) above shall equal the following prices, expressed in
percentages of the principal amount, together with accrued interest to but
excluding the date fixed for redemption. If redeemed during the 12-month period
beginning January 29:

and at 100% on or after January 29, 2017.

The Redemption Price for Subordinated Debentures, in the case of a
redemption prior to January 29, 2007, following a Tax Event, Investment Company
Event or Capital Treatment Event, as described under (ii) above, will equal the
Make-Whole Amount (as defined under "Description of New
Securities -- Redemption"), together with accrued interest to but excluding the
date fixed for redemption.

ADDITIONAL SUMS

The Corporation has covenanted in the Indenture that, if and for so long as
(i) the Issuer is the holder of all Subordinated Debentures and (ii) the Issuer
is required to pay any additional taxes, duties or other governmental charges as
a result of a Tax Event, the Corporation will pay as additional sums on the
Subordinated Debentures such amounts as may be required so that the
Distributions payable by the Issuer will not be reduced as a result of any such
additional taxes, duties or other governmental charges. See "Description of New
Securities -- Redemption."

REGISTRATION, DENOMINATION AND TRANSFER

The Subordinated Debentures will initially be registered in the name of the
Property Trustee, as trustee of the Issuer. If the Subordinated Debentures are
distributed to holders of Capital Securities, it is anticipated that the
depositary arrangements for the Subordinated Debentures will be substantially
identical to those in effect for the Capital Securities. See "Description of New
Securities -- Book Entry, Delivery and Form."

Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time

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unwilling or unable to continue as depositary and a successor depositary is not
appointed by the Corporation within 90 days of receipt of notice from DTC to
such effect, the Corporation will cause the Subordinated Debentures to be issued
in definitive form.

Payments on Subordinated Debentures represented by a global security will
be made to Cede, the nominee for DTC, as the registered holder of the
Subordinated Debentures, as described under "Description of the New
Securities -- Book Entry, Delivery and Form." If Subordinated Debentures are
issued in certificated form, principal and interest will be payable, the
transfer of the Subordinated Debentures will be registrable, and Subordinated
Debentures will be exchangeable for Subordinated Debentures of other authorized
denominations of a like aggregate principal amount, at the corporate trust
office of the Debenture Trustee in Wilmington, Delaware or at the offices of any
Paying Agent or transfer agent appointed by the Corporation, provided that
payment of interest may be made at the option of the Corporation by check mailed
to the address of the persons entitled thereto or by wire transfer.

The Subordinated Debentures will be issuable only in registered form
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. Subordinated Debentures will be exchangeable for other
Subordinated Debentures of like tenor, of any authorized denominations, and of a
like aggregate principal amount.

Subordinated Debentures may be presented for exchange as provided above,
and may be presented for registration of transfer (with the form of transfer
endorsed thereon, or a satisfactory written instrument of transfer, duly
executed), at the office of the securities registrar appointed under the
Subordinated Debenture or at the office of any transfer agent designated by the
Corporation for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Indenture. The
Corporation will appoint the Debenture Trustee as securities registrar under the
Subordinated Indenture. The Corporation may at any time designate additional
transfer agents with respect to the Subordinated Debentures.

In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Subordinated Debentures during a period beginning at the opening of business 15
days before the day of selection for redemption of the Subordinated Debentures
to be redeemed and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Subordinated
Debentures so selected for redemption, except, in the case of any Subordinated
Debentures being redeemed in part, any portion thereof not to be redeemed.

Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.

RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE CORPORATION

The Corporation has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock or
(ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to the Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable event, (b) as a result of an
exchange or conversion of any class or series of the Corporation's capital stock
(or any capital stock of a subsidiary of the Corporation) for any class or
series of the Corporation's capital stock or of any class or series of the
Corporation's indebtedness for any class or series of the Corporation's capital
stock, (c) the purchase of fractional interests in shares of the Corporation's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being

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converted or exchanged, (d) any declaration of a dividend in connection with any
stockholder rights plan, or the issuance of rights, stock or other property
under any stockholder rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock), if at
such time (i) there has occurred any event (a) of which the Corporation has
actual knowledge that with the giving of notice or the lapse of time, or both,
would constitute a Debenture Event of Default and (b) that the Corporation has
not taken reasonable steps to cure, (ii) if the Subordinated Debentures are held
by the Issuer, the Corporation is in default with respect to its payment of any
obligations under the Guarantee or (iii) the Corporation has given notice of its
selection of an Extension Period as provided in the Subordinated Indenture and
has not rescinded such notice, or such Extension Period, or any extension
thereof, is continuing.

The Corporation has covenanted in the Indenture (i) to continue to hold,
directly or indirectly, 100% of the Common Securities, provided that certain
successors that are permitted pursuant to the Indenture may succeed to the
Corporation's ownership of the Common Securities, (ii) as holder of the Common
Securities, not to voluntarily terminate, wind-up or liquidate the Issuer, other
than (a) in connection with a distribution of Subordinated Debentures to the
holders of the Capital Securities in liquidation of the Issuer or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause the Issuer to continue not
to be taxable as a corporation for United States federal income tax purposes. In
addition, the Corporation has committed to the Federal Reserve that, so long as
the Corporation is the holder of the Common Securities, the Corporation will not
voluntarily terminate or liquidate the Issuer prior to the Stated Maturity
without having received the prior approval of the Federal Reserve to do so, if
then required under applicable Federal Reserve capital guidelines or policies.

MODIFICATION OF INDENTURE

From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of the Subordinated Debentures, amend, waive or
supplement the provisions of the Indenture for specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies (provided
that any such action does not materially adversely affect the interests of the
holders of the Subordinated Debentures or the holders of the Capital Securities
so long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Corporation and the Debenture Trustee, with
the consent of the holders of not less than a majority in principal amount of
the Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of the Subordinated Debentures, except that no such
modification may, without the consent of the holder of each outstanding
Subordinated Debenture so affected, (i) change the Stated Maturity of the
Subordinated Debentures, or reduce the principal amount thereof, the rate of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the currency in which, any such amount is payable
or impair the right to institute suit for the enforcement of any Subordinated
Debenture or (ii) reduce the percentage of principal amount of Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Indenture. Furthermore, so long as any of the Capital
Securities remain outstanding, no such modification may be made that adversely
affects the holders of such Capital Securities in any material respect, and no
termination of the Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the outstanding Capital Securities unless and until the
principal of (and premium, if any, on) the Subordinated Debentures and all
accrued and unpaid interest thereon have been paid in full and certain other
conditions are satisfied.

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DEBENTURE EVENTS OF DEFAULT

The Indenture provides that any one or more of the following described
events with respect to the Subordinated Debentures that has occurred and is
continuing constitutes an "Event of Default" with respect to the Subordinated
Debentures:

(i) failure for 30 days to pay any interest on the Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or

(ii) failure to pay any principal of or premium, if any, on the
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or

(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least
25% in aggregate outstanding principal amount of the outstanding
Subordinated Debentures; or

(iv) certain events of bankruptcy, insolvency or reorganization of the
Corporation.

For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Subordinated Debenture is referred to as a "Debenture Event of
Default." As described in "Description of New Securities -- Events of Default;
Notice," the occurrence of a Debenture Event of Default will also constitute an
Event of Default in respect of the Trust Securities.

The holders of at least a majority in aggregate principal amount of
outstanding Subordinated Debentures have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
principal amount of outstanding Subordinated Debentures may declare the
principal due and payable immediately upon a Debenture Event of Default, and,
should the Debenture Trustee or such holders of Subordinated Debentures fail to
make such declaration, the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities shall have such right. The holders
of a majority in aggregate principal amount of outstanding Subordinated
Debentures may annul such declaration and waive the default if all defaults
(other than the non-payment of the principal of Subordinated Debentures which
has become due solely by such acceleration) have been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee. Should the holders
of Subordinated Debentures fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount of the
outstanding Capital Securities shall have such right.

The holders of at least a majority in aggregate principal amount of the
outstanding Subordinated Debentures affected thereby may, on behalf of the
holders of all the Subordinated Debentures, waive any past default, except a
default in the payment of principal (or premium if any) or interest (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Subordinated Debenture. See "-- Modification of
Indenture." The Corporation is required to file annually with the Debenture
Trustee a certificate as to whether or not the Corporation is in compliance with
all the conditions and covenants applicable to it under the Indenture.

If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Subordinated Debentures, and any other amounts payable under the Indenture, to
be forthwith due and payable and to enforce its other rights as a creditor with
respect to the Subordinated Debentures.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES

If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay any amounts
payable in respect of the Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Capital Securities may institute a
legal proceeding directly against the Corporation for enforcement of payment to
such holder of an amount equal to the amount payable in respect

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of Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Capital Securities held by such holder (a "Direct
Action"). The Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Capital Securities. The Corporation has the right under the
Indenture to set-off any payment made to such holder of Capital Securities by
the Corporation in connection with a Direct Action.

The holders of the Capital Securities would not be able to exercise
directly any remedies available to the holders of the Subordinated Debentures
except under the circumstances described in the preceding paragraph. See
"Description of Capital Securities -- Events of Default; Notice."

CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS

The Indenture provides that the Corporation may not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person may consolidate
with or merge into the Corporation or convey, transfer or lease its properties
and assets substantially as an entirety to the Corporation, unless (i) if the
Corporation consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Corporation's obligations in respect of the Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would constitute a Debenture
Event of Default, has occurred and is continuing; and (iii) certain other
conditions as prescribed in the Indenture are satisfied.

The provisions of the Indenture do not afford holders of the Subordinated
Debentures protection in the event of a highly leveraged or other transaction
involving the Corporation that may adversely affect holders of the Subordinated
Debentures.

SATISFACTION AND DISCHARGE

The Indenture provides that when, among other things, all Subordinated
Debentures not previously delivered to the Debenture Trustee for cancellation
(i) have become due and payable or (ii) will become due and payable at the
Stated Maturity within one year, and the Corporation deposits or causes to be
deposited with the Debenture Trustee funds, in trust, for the purpose and in an
amount sufficient to pay and discharge the entire indebtedness on the
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal (and premium, if any) and interest to the date
of the deposit or to the Stated Maturity, as the case may be, then the Indenture
will cease to be of further effect (except as to the Corporation's obligations
to pay all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Corporation
will be deemed to have satisfied and discharged the Indenture.

SUBORDINATION

The Subordinated Debentures will be subordinate and junior in right of
payment, to the extent set forth in the Indenture, to all Senior Indebtedness
(as defined below) of the Corporation. If the Corporation defaults in the
payment of any principal, premium, if any, or interest, if any, or any other
amount payable on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for redemption or by declaration of
acceleration or otherwise, then, unless and until such default has been cured or
waived or has ceased to exist or all Senior Indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) may be made or agreed to be made on the Subordinated Debentures, or
in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Subordinated Debentures.

As used herein, "Senior Indebtedness" means any obligation of the
Corporation to its creditors, whether now outstanding or subsequently incurred,
other than any obligation as to which, in the instrument creating or evidencing
the obligation or pursuant to which the obligation is outstanding, it is
provided that such obligation is not Senior Indebtedness, but does not include
trade accounts payable and accrued liabilities arising in the ordinary course of
business. Senior Indebtedness includes the Corporation's outstanding
subordinated debt

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securities and any subordinated debt securities issued in the future with
substantially similar subordination terms, but does not include the Subordinated
Debentures or any junior subordinated debt securities issued in the future with
subordination terms substantially similar to those of the Subordinated
Debentures. Substantially all of the existing indebtedness of the Corporation
constitutes Senior Indebtedness. As of December 31, 1996, the amount of Senior
Indebtedness outstanding was $936 million.

In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv) any
other marshalling of the assets of the Corporation, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Subordinated Debentures. In such event, any payment or distribution on account
of the Subordinated Debentures, whether in cash, securities or other property,
that would otherwise (but for the subordination provisions) be payable or
deliverable in respect of the Subordinated Debentures will be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the priorities
then existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) has
been paid in full.

In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Subordinated
Debentures, together with the holders of any obligations of the Corporation
ranking on a parity with the Subordinated Debentures, will be entitled to be
paid from the remaining assets of the Corporation the amounts at the time due
and owing on the Subordinated Debentures and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, will be
made on account of any capital stock or obligations of the Corporation ranking
junior to the Subordinated Debentures and such other obligations. If any payment
or distribution on account of the Subordinated Debentures of any character or
any security, whether in cash, securities or other property is received by any
holder of any Subordinated Debentures in contravention of any of the terms
hereof and before all the Senior Indebtedness has been paid in full, such
payment or distribution or security will be received in trust for the benefit
of, and must be paid over or delivered and transferred to, the holders of the
Senior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. By reason of such subordination, in the event of the
insolvency of the Corporation, holders of Senior Indebtedness may receive more,
ratably, and holders of the Subordinated Debentures may receive less, ratably,
than the other creditors of the Corporation. Such subordination will not prevent
the occurrence of any Event of Default in respect of the Subordinated
Debentures.

The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.

GOVERNING LAW

The Indenture and the Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.

INFORMATION CONCERNING THE DEBENTURE TRUSTEE

The Debenture Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of its obligations under the
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities that might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Debenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.

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Wilmington Trust Company, the Debenture Trustee, may serve from time to
time as trustee under other indentures or trust agreements with the Corporation
or its subsidiaries relating to other issues of their securities. In addition,
the Corporation and certain of its affiliates may have other banking
relationships with the Wilmington Trust Company.

DESCRIPTION OF GUARANTEE

The Old Guarantee was entered into by the Corporation concurrently with the
issuance by the Old Issuer of the Old Capital Securities for the benefit of the
holders from time to time of the Old Capital Securities. As soon as practicable
after the date hereof, the Old Guarantee will be exchanged by the Corporation
for the New Guarantee, provided all Old Capital Securities have been exchanged
for New Capital Securities in the Exchange Offer. Otherwise, the Old Guarantee
will apply to any Old Securities which have not been exchanged. The New
Guarantee and the Old Guarantee as they relate to obligations of the Issuer and
the Old Issuer, respectively, are identical in all material respects except that
the New Guarantee has been registered under the Securities Act and qualified
under the Trust Indenture Act. For purposes of this section, "Description of
Guarantee," reference to the "Issuer" includes the Issuer and the Old Issuer as
the context requires. Wilmington Trust Company will act as Guarantee Trustee
under the Guarantee. This summary of certain provisions of the Guarantee does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including the definitions
therein of certain terms, and the Trust Indenture Act as it relates to the New
Guarantee. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Capital Securities.

GENERAL

The Corporation will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer may have or assert
other than the defense of payment. The following payments with respect to the
Capital Securities, to the extent not paid by or on behalf of the Issuer (the
"Guarantee Payments"), will be subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on such Capital Securities, to the
extent that the Issuer has funds on hand available therefor at such time, (ii)
the Redemption Price with respect to any Capital Securities called for
redemption, to the extent that the Issuer has funds on hand available therefor
at such time, and (iii) upon a voluntary or involuntary termination, winding-up
or liquidation of the Issuer (unless the Subordinated Debentures are distributed
to holders of the Capital Securities), the lesser of (a) the Liquidation
Distribution, and (b) the amount of assets of the Issuer remaining available for
distribution to holders of the Capital Securities on liquidation of the Issuer.
The Corporation's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Corporation to the holders of the
Capital Securities or by causing the Issuer to pay such amounts to such holders.

The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer's obligations under the Capital Securities, but will apply only to
the extent that the Issuer has funds sufficient to make such payments, and is
not a guarantee of collection.

If the Corporation does not make payments on the Subordinated Debentures
held by the Issuer, the Issuer will not be able to pay any amounts payable in
respect of the Capital Securities and will not have funds legally available
therefor. The Guarantee will rank subordinate and junior in right of payment to
all Senior Indebtedness of the Corporation. See "-- Status of the Guarantee."
Moreover, the Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Corporation, including Senior Indebtedness,
whether under the Indenture, any other indenture that the Corporation may enter
into in the future or otherwise. Moreover, because the Corporation is a holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's dissolution, winding-up,
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be a creditor of that subsidiary and its claims are recognized. There are
also various legal limitations on the extent to which certain of the
Corporation's subsidiaries may extend credit, pay dividends or otherwise supply
funds to the Corporation or certain of its other subsidiaries. Accordingly, the
Corporation's obligations under the Guarantee

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will be effectively subordinated and junior in right of payment to all existing
and future liabilities of the Corporation's subsidiaries, and claimants under
the Guarantee should look only to the assets of the Corporation for payments
thereunder. See "The Colonial BancGroup, Inc."

The Corporation has, through the Guarantee, the Trust Agreement, the
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the Issuer's
obligations under the Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations in respect of the Capital Securities. See "Relationship
Among the Capital Securities, The Subordinated Debentures, The Guarantee and The
Expense Agreement."

STATUS OF THE GUARANTEE

The Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Corporation in the same manner as the Subordinated
Debentures.

The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Capital Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
or distribution to the holders of the Capital Securities of the Subordinated
Debentures.

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Capital Securities. The manner of obtaining any such approval will
be as set forth under "Description of the Capital Securities -- Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the Capital Securities then outstanding.

EVENTS OF DEFAULT

An event of default under the Guarantee will occur upon the failure of the
Corporation to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such nonpayment default remains unremedied
for 30 days. The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.

Any registered holder of Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer, the
Guarantee Trustee or any other person or entity.

The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.

INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Corporation in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after the occurrence of an event of default with respect to the Guarantee, must
exercise the same

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degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of the Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.

For information concerning the relationship between Wilmington Trust
Company, the Guarantee Trustee, and the Corporation, see "Description of
Subordinated Debentures -- Information Concerning the Debenture Trustee."

TERMINATION OF THE GUARANTEE

The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Capital Securities, upon full
payment of the amounts payable with respect to the Capital Securities upon
liquidation of the Issuer or upon distribution of Subordinated Debentures to the
holders of the Capital Securities. The Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any holder of the
Capital Securities must restore payment of any sums paid under the Capital
Securities or the Guarantee.

GOVERNING LAW

The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.

THE EXPENSE AGREEMENT

Pursuant to the New Expense Agreement and the Old Expense Agreement entered
into by the Corporation under the Trust Agreement (as amended or supplemented
from time to time, the "Expense Agreement"), the Corporation will irrevocably
and unconditionally guarantee to each person or entity to whom the Issuer or the
Old Issuer becomes indebted or liable, the full payment of any costs, expenses
or liabilities of the Issuer, other than obligations of the Issuer or the Old
Issuer to pay to holders of the Trust Securities the amounts due such holders
pursuant to the terms of the Trust Securities. The New Expense Agreement and the
Old Expense Agreement constitute unsecured obligations of the Corporation and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Corporation in the same manner as the Guarantee and the Subordinated
Debentures.

RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE SUBORDINATED DEBENTURES, THE
GUARANTEE AND THE EXPENSE AGREEMENT

The relationship among the New Capital Securities, the New Subordinated
Debentures, the New Guarantee and the New Expense Agreement is the same as the
relationship among the comparable documents respecting the Old Capital
Securities. References in this section to the "Issuer" includes the Issuer and
the Old Issuer as the context requires.

FULL AND UNCONDITIONAL GUARANTEE

Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer has funds available for such payment) are irrevocably
guaranteed by the Corporation as and to the extent set forth under "Description
of Guarantee." Taken together, the Corporation's obligations under the
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of Distributions and other amounts due on
the Capital Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations in respect of the Capital Securities. If and to the extent
that the Corporation does not make payments on the Subordinated Debentures, the
Issuer will not have sufficient funds to pay Distributions or other amounts due
on the Capital Securities. The Guarantee does not cover payment of amounts
payable with respect to the Capital Securities when the Issuer does not have
sufficient funds to pay such amounts. In such event, the remedy of a holder of
the Capital Securities is to

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institute a legal proceeding directly against the Corporation for enforcement of
payment of the Corporation's obligations under Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Capital Securities held
by such holder.

The obligations of the Corporation under the Subordinated Debentures, the
Guarantee and the Expense Agreement are subordinate and junior in right of
payment to all Senior Indebtedness.

SUFFICIENCY OF PAYMENTS

As long as payments are made when due on the Subordinated Debentures, such
payments will be sufficient to cover Distributions and other payments
distributable on the Capital Securities, primarily because (i) the aggregate
principal amount of the Subordinated Debentures will be equal to the sum of the
aggregate stated Liquidation Amount of the Capital Securities and Common
Securities; (ii) the interest rate and interest and other payment dates on the
Subordinated Debentures will match the Distribution rate, Distribution Dates and
other payment dates for the Capital Securities; (iii) the Corporation will pay
for all and any costs, expenses and liabilities of the Issuer except the
Issuer's obligations to holders of the Trust Securities; and (iv) the Trust
Agreement further provides that the Issuer will not engage in any activity that
is not consistent with the limited purposes of the Issuer.

Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
against and to the extent the Corporation has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee.

ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES

A holder of any Capital Security may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any
other person or entity. See "Description of Guarantee."

A default or event of default under any Senior Indebtedness of the
Corporation would not constitute a default or Event of Default in respect of the
Capital Securities. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Corporation, the subordination
provisions of the Indenture provide that no payments may be made in respect of
the Subordinated Debentures until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. See "Description of
Subordinated Debentures -- Subordination."

LIMITED PURPOSE OF ISSUER

The Capital Securities represent preferred undivided beneficial interests
in the assets of the Issuer, and the Issuer exists for the sole purpose of
issuing its Capital Securities and Common Securities and investing the proceeds
thereof in Subordinated Debentures. A principal difference between the rights of
a holder of a Capital Security and a holder of a Subordinated Debenture is that
a holder of a Subordinated Debenture is entitled to receive from the Corporation
payments on Subordinated Debentures held, while a holder of Capital Securities
is entitled to receive Distributions or other amounts distributable with respect
to the Capital Securities from the Issuer (or from the Corporation under the
Guarantee) only if and to the extent the Issuer has funds available for the
payment of such Distributions.

RIGHTS UPON DISSOLUTION

Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Issuer, other than any such termination, winding-up or liquidation involving
the distribution of the Subordinated Debentures, after satisfaction of
liabilities to creditors of the Issuer as required by applicable law, the
holders of the Capital Securities will be entitled to receive, out of assets
held by the Issuer, the Liquidation Distribution in cash. See "Description of
New Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary
or involuntary liquidation or bankruptcy of the Corporation, the Property
Trustee, as registered holder of the Subordinated Debentures, would be a
subordinated creditor of the Corporation, subordinated and junior in right of
payment to all Senior

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Indebtedness as set forth in the Indenture, but entitled to receive payment in
full of all amounts payable with respect to the Subordinated Debentures before
any stockholders of the Corporation receive payments or distributions. Since the
Corporation is the guarantor under the Guarantee and has agreed under the
Expense Agreement to pay for all costs, expenses and liabilities of the Issuer
(other than the Issuer's obligations to the holders of the Trust Securities),
the positions of a holder of the Capital Securities and a holder of such
Subordinated Debentures relative to other creditors and to stockholders of the
Corporation in the event of liquidation or bankruptcy of the Corporation are
expected to be substantially the same.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
This summary only addresses the tax consequences to a person that acquires
Capital Securities on their original issue at their original offering price and
that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust the
income of which is subject to United States federal income tax regardless of
source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
beneficial owner of Capital Securities, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons that may be
subject to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in
securities or currencies, (iii) persons that will hold Capital Securities as
part of a position in a "straddle" or as part of a "hedging," "conversion" or
other integrated investment transaction for United States federal income tax
purposes, (iv) persons whose functional currency is not the United States dollar
or (v) persons that do not hold Capital Securities as capital assets.

The statements of law or legal conclusion set forth in this summary
constitute the opinion of Miller, Hamilton, Snider & Odom, L.L.C., counsel to
the Corporation and the Issuer. This summary is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury regulations, Internal Revenue
Service ("IRS") rulings and pronouncements and judicial decisions now in effect,
all of which are subject to change at any time. Such changes may be applied
retroactively in a manner that could cause the tax consequences to vary
substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Capital Securities. In particular, legislation
has been proposed that could adversely affect the Corporation's ability to
deduct interest on the Subordinated Debentures, which may in turn permit the
Corporation to cause a redemption of the Capital Securities. See "-- Possible
Tax Law Changes." The authorities on which this summary is based are subject to
various interpretations, and it is therefore possible that the United States
federal income tax treatment of the purchase, ownership and disposition of
Capital Securities may differ from the treatment described below.

PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.

CLASSIFICATION OF THE SUBORDINATED DEBENTURES AND THE ISSUER

In connection with the issuance of the New Capital Securities, Miller,
Hamilton, Snider & Odom, L.L.C. have rendered their opinion to the effect that,
under then current law and assuming compliance with the terms of the Trust
Agreement, the Issuer will not be taxable as a corporation for United States
federal income tax purposes. As a result, each beneficial owner of Capital
Securities (a "Securityholder") will be required to include in its gross income
its pro rata share of the interest income, including original issue discount
("OID"), paid or accrued with respect to the Subordinated Debentures whether or
not cash is actually distributed to the Securityholders. See "-- Interest Income
and Original Issue Discount."

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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT

Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely paid will be ignored in determining
whether a debt instrument is issued with OID. The Corporation believes that the
likelihood of its exercising its option to defer payments of interest is remote.
Based on the foregoing, the Corporation believes that the Subordinated
Debentures will not be considered to be issued with OID at the time of their
original issuance and, accordingly, a Securityholder should include in gross
income such Securityholder's allocable share of interest on the Subordinated
Debentures.

Under the Regulations, if the Corporation exercised its option to defer any
payment of interest, the Subordinated Debentures would at that time be treated
as issued with OID, and all stated interest on the Subordinated Debentures would
thereafter be treated as OID as long as the Subordinated Debentures remained
outstanding. In such event, all of a Securityholder's taxable interest income
with respect to the Subordinated Debentures would be accounted for as OID on an
economic accrual basis regardless of such Securityholder's method of tax
accounting, and actual distributions of stated interest would not be reported as
taxable income. Consequently, a Securityholder would be required to include in
gross income OID even though the Corporation would not make any actual cash
payments during an Extension Period.

The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.

Because income on the Capital Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Capital Securities.

Subsequent uses of the term "interest" in this summary include income in
the form of OID.

DISTRIBUTION OF SUBORDINATED DEBENTURES TO SECURITYHOLDERS

Under current law, a distribution by the Issuer of the Subordinated
Debentures as described under the caption "Description of New
Securities -- Liquidation Distribution Upon Termination" will be non-taxable and
will result in the Securityholder receiving directly his or her pro rata share
of the Subordinated Debentures previously held indirectly through the Issuer,
with a holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in its Capital Securities before
such distribution. If, however, the liquidation of the Issuer were to occur
because the Issuer is subject to United States federal income tax with respect
to income accrued or received on the Subordinated Debentures, the distribution
of Subordinated Debentures to Securityholders by the Issuer would be a taxable
event to the Issuer and each Securityholder, and the Securityholder would
recognize gain or loss as if the Securityholder had exchanged its Capital
Securities for the Subordinated Debentures it received upon the liquidation of
the Issuer. A Securityholder will accrue interest in respect of Subordinated
Debentures received from the Issuer in the manner described above under
"-- Interest Income and Original Issue Discount."

SALES OR REDEMPTIONS OF CAPITAL SECURITIES

A Securityholder that sells (including a redemption for cash) Capital
Securities will recognize gain or loss equal to the difference between its
adjusted tax basis in the Capital Securities and the amount realized on the sale
of such Capital Securities. Assuming that the Corporation does not exercise its
option to defer payment of interest on the Subordinated Debentures, and the
Capital Securities are not considered issued with OID, a Securityholder's
adjusted tax basis in the Capital Securities generally will be its initial
purchase price. If the Subordinated Debentures are deemed to be issued with OID
as a result of the Corporation's deferral of any interest payment, a
Securityholder's tax basis in the Capital Securities generally will be its
initial purchase price, increased by OID previously includable in such
Securityholder's gross income to the date of disposition and decreased by
distributions or other payments received on the Capital Securities since and
including the date of the first Extension Period. Such gain or loss generally
will be a capital gain or loss (except to the extent any amount realized is
treated as a payment of accrued interest with respect to such Securityholder's
pro rata share of the

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Subordinated Debentures required to be included in income) and generally will be
a long-term capital gain or loss if the Capital Securities have been held for
more than one year.

Should the Corporation exercise its option to defer any payment of interest
on the Subordinated Debentures, the Capital Securities may trade at a price that
does not accurately reflect the value of accrued but unpaid interest with
respect to the underlying Subordinated Debentures. In the event of such a
deferral, a Securityholder who disposes of its Capital Securities between record
dates for payments of distributions thereon will be required to include in
income as ordinary income accrued but unpaid interest on the Subordinated
Debentures to the date of disposition as OID, but may not receive the cash
related thereto. However, such Securityholder will add such amount to its
adjusted tax basis in the Capital Securities. To the extent the selling price is
less than the Securityholder's adjusted tax basis, such Securityholder will
recognize a capital loss. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income tax
purposes.

Although the matter is not free from doubt, an exchange of Old Capital
Securities for New Capital Securities should not be taxable to Securityholders.

BACKUP WITHHOLDING TAX AND INFORMATION REPORTING

The amount of interest income paid or accrued on the Capital Securities
held of record by United States Persons (other than corporations and other
exempt Securityholders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.

Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the Securityholder establishes an exemption from
information reporting and backup withholding.

Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.

It is anticipated that income on the Capital Securities will be reported to
Securityholders on Form 1099 and mailed to Securityholders by January 31
following each calendar year.

POSSIBLE TAX LAW CHANGES

On March 19, 1996, the Revenue Reconciliation Bill, the revenue portion of
President Clinton's budget proposal, was released. If enacted, the Revenue
Reconciliation Bill would have generally denied interest deductions for interest
on an instrument issued by a corporation that has a maximum term of more than 20
years and that is not shown as indebtedness on the separate balance sheet of the
issuer or, where the instrument is issued to a related party (other than a
corporation), where the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's consolidated
balance sheet. For purposes of determining the weighted average maturity or the
term of an instrument, any right to extend would be treated as exercised. The
above-described provision of the Revenue Reconciliation Bill was proposed to be
effective generally for instruments issued on or after December 7, 1995. If a
similar provision were to apply to the Subordinated Debentures, the Corporation
would be unable to deduct interest on the Subordinated Debentures. However, on
March 29, 1996, the Chairmen of the Senate Finance and House Ways and Means
Committees issued a joint statement to the effect that it was their intention
that the effective date of the President's legislative proposals, if adopted,
will be no earlier than the date of appropriate Congressional action. Under
current law, the Corporation will be able to deduct interest on the Subordinated
Debentures. There can be no assurance, however, that current or future
legislative proposals or final legislation will not affect the ability of the
Corporation to deduct interest on the Subordinated Debentures. Such a change
could give rise to a Tax Event, which may permit

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the Corporation to cause a redemption of the Capital Securities, as described
more fully in this Prospectus under "Description of New
Securities -- Redemption."

CERTAIN ERISA CONSIDERATIONS

Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.

Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b) (5) of ERISA)
are not subject to the requirements of ERISA or Section 4975 of the Code.

Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Issuer Trust would be deemed
to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code
if "plan assets" of the Plan were used to acquire an equity interest in the
Issuer and no exception were applicable under the Plan Assets Regulation. An
"equity interest" is defined under the Plan Assets Regulation as any interest in
an entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.

Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Issuer would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in the
Issuer, less than 25% of the value of each class of equity interests in the
Issuer were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets" of any Plan (collectively,
"Benefit Plan Investors"). No assurance can be given that the Issuer is an
entity of the type intended to be described in the Plan Assets Regulation or, if
it is, that the value of the Capital Securities held by Benefit Plan Investors
will be less than 25% of the total value of such Capital Securities at the
completion of the initial offering or thereafter, and no monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception. All of the Common Securities will be purchased and initially
held by the Corporation.

Certain transactions involving the Issuer and/or the Capital Securities
could be deemed to constitute direct or indirect prohibited transactions under
ERISA and Section 4975 of the Code with respect to a Plan if the Capital
Securities were acquired with "plan assets" of such Plan and/or assets of the
Issuer were deemed to be "plan assets" of Plans investing in the Issuer. For
example, if the Corporation is a Party in Interest with respect to an investing
Plan (either directly or by reason of its ownership of a bank or other
subsidiaries), extensions of credit between the Corporation and the Issuer (as
represented by the Subordinated Debentures and the Guarantee) would likely be
prohibited by Section 406(a) (1)(B) of ERISA and Section 4975(c) (1)(B) of the
Code, unless exemptive relief were available under an applicable administrative
exemption (see below).

The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the Capital
Securities if the Capital Securities are acquired directly or indirectly from a
Party in Interest and/or if assets of the Issuer were deemed to be "plan assets"
of Plans investing in the Issuer as described above. Those class exemptions are
PTCE 96-23 (for certain transactions determined by in-house asset managers),
PTCE 95-60

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(for certain transactions involving insurance company general accounts), PTCE
91-38 (for certain transactions involving bank collective investment funds),
PTCE 90-1 (for certain transactions involving insurance company separate
accounts), and PTCE 84-14 (for certain transactions determined by independent
qualified asset managers).

Because the Capital Securities may be deemed to be equity interests in the
Issuer for purposes of applying ERISA and Section 4975 of the Code, the Capital
Securities may not be purchased or held by any Plan, any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity") or any person investing "plan assets" of any Plan, unless
such purchaser or holder is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption. Any
purchaser or holder of the Capital Securities or any interest therein will be
deemed to have represented by its purchase and holding thereof that it either
(a) is not a Plan or a Plan Asset Entity and is not purchasing such securities
on behalf of or with "plan assets" of any Plan or (b) is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption with respect to such purchase or holding. If a
purchaser or holder of the Capital Securities that is a Plan or a Plan Asset
Entity elects to rely on an exemption other than PTCE 96-23, 95-60, 91-38, 90-1
or 84-14, the Corporation and the Issuer may require a satisfactory opinion of
counsel or other evidence with respect to the availability of such exemption for
such purchase and holding.

Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering acquiring the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Issuer were
deemed to be "plan assets" and the availability of exemptive relief under PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 or any other applicable exemption.

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Issuer has agreed that this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 90 days after the Expiration Date (subject to
extension under certain limited circumstances described herein) or, if earlier,
when all such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "The Exchange Offer -- Resales of New Capital Securities".

The Issuer will not receive any proceeds from the issuance of the New
Capital Securities offered hereby. New Capital Securities received by
broker-dealers for their own accounts pursuant to the Exchange Offer may be
resold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the New
Capital Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Capital Securities. Any broker-dealer that resells
New Capital Securities that were received by it for its own account in
connection with the Exchange Offer and any broker or dealer that participated in
a distribution of such New Capital Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act, any profit on any such
resale of New Capital Securities and any commissions or concessions received by
any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.

60
<PAGE> 76

VALIDITY OF NEW SECURITIES

Certain matters of Delaware law relating to the validity of the New Capital
Securities, the enforceability of the New Trust Agreement and the creation of
the Issuer will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Corporation and the Issuer. The validity of the New Securities
will be passed upon for the Corporation by Miller, Hamilton, Snider & Odom,
L.L.C., Montgomery, Alabama. Certain matters relating to United States federal
income tax considerations will be passed upon for the Corporation by Miller,
Hamilton, Snider & Odom, L.L.C. Richards, Layton & Finger is also serving as
counsel to Wilmington Trust Company, in its various capacities, in connection
with the issuance of the New Capital Securities. Richards, Layton & Finger
performs other services for Wilmington Trust Company from time to time. John C.
H. Miller, Jr., a member of the law firm of Miller, Hamilton, Snider & Odom,
L.L.C., is a director of the Corporation and certain of the Bank Subsidiaries.
Mr. Miller's firm performs services for the Corporation and its subsidiaries,
and in 1996 received $1,474,853 for such services. Mr. Miller also received from
the Corporation $41,000 as compensation for additional services in 1996 and Mr.
Miller owns 20,240 shares of the Corporation's common stock, including 10,000
shares subject to stock options.

EXPERTS

Coopers & Lybrand L.L.P. serves as the independent accountants for the
Corporation. The consolidated financial statements of the Corporation and the
supplemental consolidated financial statements of the Corporation, both as of
December 31, 1995 and 1994 and for each of the three years ended December 31,
1995, are incorporated by reference in this Prospectus in reliance upon the
report of such firm, given on the authority of that firm as experts in
accounting and auditing.

61
<PAGE> 77

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to section 145 of the Delaware General Corporation Law, as
amended, and the Restated Certificate of Incorporation of the Registrant,
officers, directors, employees, and agents of the Registrant are entitled to
indemnification against liabilities incurred while acting in such capacities on
behalf of the Registrant, including reimbursement of certain expenses. In
addition, the Registrant maintains an officers and all of its directors
insurance policy pursuant to which officers and directors of the Registrant are
entitled to indemnification against certain liabilities, including
reimbursement of certain expenses, and the Registrant has indemnity agreements
("Indemnification Agreements") with certain officers and all of its directors
pursuant to which such persons may be indemnified by the Registrant against
certain liabilities, including expenses.

The Indemnification Agreements are intended to provide additional
indemnification to directors and officers of BancGroup beyond the specific
provisions of the Delaware General Corporation Law. Under the Delaware General
Corporation Law, a company may indemnify its directors and officers in
circumstances other than those under which indemnification and the advance of
expenses are expressly permitted by applicable statutory provisions.

Under the Delaware General Corporation Law, a director, officer,
employee or agent of a corporation (i) must be indemnified by the corporation
for all expenses incurred by him (including attorneys' fees) when he is
successful on the merits or otherwise in defense of any action, suit or
proceeding brought by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, (ii) may be indemnified by the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement of any such proceeding (other than a proceeding by
or in the right of the corporation) even if he is not successful on the merits
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the corporation (and, in the case of a
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful), and (iii) may be indemnified by the corporation for expenses
(including attorneys' fees) incurred by him in the defense or settlement of a
proceeding brought by or in the right of the corporation, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation; provided that no indemnification may be made
under the circumstances described in clause (iii) if the director, officer,
employee or agent is adjudged liable to the corporation, unless a court
determines that, despite the adjudication of liability but in view of all of
the circumstances, he is fairly and reasonably entitled to indemnification for
the expenses which the court shall deem proper. The indemnification described
in clauses (ii) and (iii) above (unless ordered by a court) may be made only as
authorized in a specific case upon determination by (i) a majority of a quorum
of disinterested directors, (ii) independent legal counsel in a written
opinion, or (iii) the stock holders, that indemnification is proper in the
circumstances because the applicable

II-1
<PAGE> 78

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.

II-2
<PAGE> 79

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.

Under the Amended and Restated Trust Agreement, the Corporation has
agreed to indemnify each of the Issuer Trustees and Administrators, and to hold
such Issuer Trustees and Administrators harmless, against any loss, damage,
claims, liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance of administration of
such Trust Agreement, including the costs and expenses of defense against any
claim or liability in connection with the exercise or performance of any of
their powers or duties under the Trust Agreement or the Amended and Restated
Trust Agreement each of which is filed as an exhibit to this Registration
Statement.

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.

II-3
<PAGE> 80
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION LOCATION
<S> <C> <C>
Exhibit 4 Instruments defining the rights of security holders:

(A) Indenture dated as of January 29, 1997 between
the Corporation and Wilmington Trust Company,
as Debenture Trustee. *

(B) Certificate of Trust of Colonial Capital II. *

(D) Form of Amended and Restated Trust Agreement
of Colonial Capital II. Filed herewith

(E) Form of Capital Security Certificate for Colonial
Capital II. *

(F) Form of 8.92% Junior Subordinated Deferrable
Interest Debentures to be offered in Exchange. *

(G) Form of Guarantee Agreement relating to Colonial
Capital II. *

(H) Form of Expense Agreement relating to Colonial
Capital II. *

(I) Registration Rights Agreement, dated as of January 29,
1997, among the Corporation, Colonial Capital I, Bear,
Stearns & Co., Inc., and Keefe, Bruyette & Woods, Inc. *

(J) Original Amended and Restated Trust Agreement
of Colonial Capital I dated January 29, 1997. *

(K) Original Guarantee Agreement dated January 29, 1997. *

(L) Original Expense Agreement date January 29, 1997. *

(M) All instruments defining the rights of holders of
long-term debt of the Corporation 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.
</TABLE>

II-4
<PAGE> 81
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION LOCATION
<S> <C> <C>
Exhibit 5

(A) Opinion of Miller, Hamilton, Snider & Odom, L.L.C.
as to validity of New Subordinated Debentures and
New guarantee. *

(B) Opinion of Richards, Layton & Finger as to validity
of the New Capital Securities. *

Exhibit 8 Opinion of Miller, Hamilton, Snider & Odom, L.L.C.,
as to certain federal income tax matters. *

Exhibit 12

(A) Computation of Consolidated Ratios of Earnings
to Fixed Charges. Included in the Prospectus to this
Registration Statement under the
heading "The Colonial BancGroup, Inc.
- Consolidated Ratios of Earnings to
Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends" and incorporated
herein by reference.

(B) Computation of Consolidated ratios of Earnings
to Fixed Charges and Preferred Stock Dividends. Included in the Prospectus to this
Registration Statement under the
heading "The Colonial BancGroup, Inc.
- Consolidated Ratios of Earnings to
Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends" and incorporated
herein by reference.

Exhibit 23 Consents of experts and counsel:

(A) Consent of Coopers & Lybrand, L.L.P. *
</TABLE>

II-5
<PAGE> 82

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION LOCATION
<S> <C> <C>
(B) Consent of Miller, Hamilton, Snider & Odom, L.L.C. *

Exhibit 24 Power of Attorney, as to the Corporation Filed as Exhibit
24 to the registrant's
Registration Statement
Form S-4,
Registration No.
333-20291, and
incorporated
herein by
reference

Exhibit 25

(A) Form T-1 Statement of Eligibility of Wilmington
Trust Company to act as trustee under the Indenture. Filed herewith

(B) Form T-1 Statement of Eligibility of Wilmington
Trust Company to act as trustee under the Amended
and Restated Trust Agreement. Filed herewith

(C) Form T-1 Statement of Eligibility of Wilmington
Trust Company under the Guarantee for the benefit
of the holders of Capital Securities. Filed herewith

Exhibit 99

(A) Form of Letter of Transmittal and instructions thereto. Filed herewith

(B) Form of Notice of Guaranteed Delivery. Filed herewith

- ---------------------------------

* Previously filed

(b) Financial Statement Schedules
-----------------------------

</TABLE>

II-6
<PAGE> 83

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.

For purposes of the following undertakings of this Item 22,
the term "Registrant" means each Registrant that has signed
this Registration Statement.

(a) The undersigned hereby undertakes as follows as required by
Item 512 of Regulation S-K: 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

II-7
<PAGE> 84

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 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.

II-8
<PAGE> 85

(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.

II-9
<PAGE> 86

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused the Amendment No. 1 to this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Montgomery, Alabama, on the 6th day of March, 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, the
Amendment No. 1 to 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 **
- ---------------------------
Robert E. Lowder of Directors, President
and Chief Executive
Officer

/s/ W. Flake Oakley, IV Chief Financial **
- ---------------------------
W. Flake Oakley, IV Officer, Secretary
and Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)

* Director **
- --------------------------
Young J. Boozer

* Director **
- --------------------------
William Britton

</TABLE>

II-10
<PAGE> 87

<TABLE>
<S> <C> <C>
* Director **
- --------------------------
Jerry J. Chesser

* Director **
- --------------------------
Augustus K. Clements, III

* Director **
- -------------------------
Robert C. Craft

* Director **
- -------------------------
Patrick F. Dye

* Director **
- -------------------------
Clinton O. Holdbrooks

* Director **
- -------------------------
D. B. Jones

* Director **
- -------------------------
Harold D. King

* Director **
- -------------------------
John Ed Mathison

* Director **
- -------------------------
Milton E. McGregor
</TABLE>

II-11

<PAGE> 88

<TABLE>
<S> <C> <C>
* Director **
- -------------------------
John C. H. Miller, Jr.

* Director **
- -------------------------
Joe D. Mussafer

* Director **
- -------------------------
William E. Powell

* Director **
- -------------------------
Donald J. Prewitt

* Director **
- -------------------------
Jack H. Rainer

* Director **
- -------------------------
Frances E. Roper

* Director **
- -------------------------
Ed V. Welch
</TABLE>

* The undersigned, acting pursuant to a power of attorney, has signed
this Registration Statement on Form S-4 for and on behalf of the
persons indicated above as such persons' true and lawful
attorney-in-fact and in their names, places and stead, in the
capacities indicated above and on the date indicated below.

/s/ W. Flake Oakley, IV
- -----------------------
W. Flake Oakley, IV
Attorney-in-Fact

** Dated: March 6, 1997

II-12
<PAGE> 89

Pursuant to the requirements of the Securities Act of 1933, as
amended, Colonial Capital II has duly caused this Registration Statement Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Montgomery, State of Alabama, as of the 6th day of March, 1997.

COLONIAL CAPITAL II

By: The Colonial BancGroup, Inc., as Depositor

By: W. Flake Oakley
-----------------------------------
Executive Vice President
and Chief Financial Officer

II-13
<PAGE> 90

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION LOCATION
<S> <C> <C>
Exhibit 4 Instruments defining the rights of security holders:

(A) Indenture dated as of January 29, 1997 between
the Corporation and Wilmington Trust Company,
as Debenture Trustee. *

(B) Certificate of Trust of Colonial Capital II. *

(D) Form of Amended and Restated Trust Agreement
of Colonial Capital II. Filed herewith

(E) Form of Capital Security Certificate for Colonial
Capital II. *

(F) Form of 8.92% Junior Subordinated Deferrable
Interest Debentures to be offered in Exchange. *

(G) Form of Guarantee Agreement relating to Colonial
Capital II. *

(H) Form of Expense Agreement relating to Colonial
Capital II. *

(I) Registration Rights Agreement, dated as of January 29,
1997, among the Corporation, Colonial Capital I, Bear,
Stearns & Co., Inc., and Keefe, Bruyette & Woods, Inc. *

(J) Original Amended and Restated Trust Agreement
of Colonial Capital I dated January 29, 1997. *

(K) Original Guarantee Agreement dated January 29, 1997. *

(L) Original Expense Agreement date January 29, 1997. *

(M) All instruments defining the rights of holders of
long-term debt of the Corporation and its subsidiaries. Not filed
pursuant to
clause 4(iii) of
</TABLE>

<PAGE> 91

<TABLE>
<S> <C> <C>
Item 601(b) of
Regulation S-K;
to be furnished
upon request of
the Commission

Exhibit 5

(A) Opinion of Miller, Hamilton, Snider & Odom, L.L.C.
as to validity of New Subordinated Debentures and
New guarantee. *

(B) Opinion of Richards, Layton & Finger as to validity
of the New Capital Securities. *

Exhibit 8 Opinion of Miller, Hamilton, Snider & Odom, L.L.C.,
as to certain federal income tax matters. *

Exhibit 12

(A) Computation of Consolidated Ratios of Earnings Included in the Prospectus to this
to Fixed Charges Registration Statement under the
heading "The Colonial BancGroup, Inc.
- Consolidated Ratios of Earnings to
Fixed Charges and Ratio of Earnings to
Combined Fixed Charges and Preferred
Stock Dividends" and incorporated
herein by reference.

Exhibit 23 Consents of experts and counsel:

</TABLE>

<PAGE> 92

<TABLE>
<S> <C>
(A) Consent of Coopers & Lybrand, L.L.P. *

(B) Consent of Miller, Hamilton, Snider & Odom, L.L.C. *

Exhibit 24 Power of Attorney, as to the Corporation Filed as Exhibit 24
to the
registrant's
Registration
Statement on
Form S-4,
Registration No.
333-20291, and
incorporated
herein by
reference

Exhibit 25

(A) Form T-1 Statement of Eligibility of Wilmington
Trust Company to act as trustee under the Indenture. Filed herewith

(B) Form T-1 Statement of Eligibility of Wilmington
Trust Company to act as trustee under the Amended
and Restated Trust Agreement. Filed herewith

(C) Form T-1 Statement of Eligibility of Wilmington
Trust Company under the Guarantee for the benefit
of the holders of Capital Securities. Filed herewith

Exhibit 99

(A) Form of Letter of Transmittal and instructions thereto. Filed herewith

(B) Form of Notice of Guaranteed Delivery. Filed herewith

__________________________________

* Previously filed

</TABLE>

<PAGE> 93

(b) Financial Statement Schedules

<PAGE> 1

EXHIBIT 4(D)

================================================================================

AMENDED AND RESTATED TRUST AGREEMENT

AMONG

THE COLONIAL BANCGROUP, INC.,
as Depositor

WILMINGTON TRUST COMPANY,
as Property Trustee

WILMINGTON TRUST COMPANY,
as Delaware Trustee

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN

and the several Holders of the Trust Securities

-------------------

Dated as of ____________, 1997

-------------------

COLONIAL CAPITAL II

================================================================================
<PAGE> 2

COLONIAL CAPITAL II

Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- ----------- -------
<S> <C> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)(ii)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15(c)
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a), 8.3(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2, 10.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1, 8.3
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9, 5.10
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10
</TABLE>

Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE I

DEFINED TERMS

SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II

CONTINUATION OF THE ISSUER TRUST

SECTION 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.2 Office of the Delaware Trustee; Principal Place of Business . . . . . . . . . 12
SECTION 2.3 Initial Contribution of Trust Property; Organizational
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.4 Issuance of the Capital Securities . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5 Issuance of the Common Securities; Subscription and
Purchase of Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.6 Continuation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.7 Authorization to Enter into Certain Transactions . . . . . . . . . . . . . . . 13
SECTION 2.8 Assets of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.9 Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE III

PAYMENT ACCOUNT

SECTION 3.1 Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE IV

DISTRIBUTIONS; REDEMPTION

SECTION 4.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3 Subordination of Common Securities . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.5 Tax Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.6 Payment of Taxes, Duties, Etc. of the Issuer Trust . . . . . . . . . . . . . . 22
SECTION 4.7 Payments under Indenture or Pursuant to Direct Actions . . . . . . . . . . . . 23
</TABLE>

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<PAGE> 4

<TABLE>
<S> <C>
SECTION 4.8 Liability of the Holder of Common Securities . . . . . . . . . . . . . . . . . 23

ARTICLE V

TRUST SECURITIES CERTIFICATES

SECTION 5.1 Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.2 The Trust Securities Certificates . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.3 Execution and Delivery of Trust Securities Certificates . . . . . . . . . . . 24
SECTION 5.4 Book-Entry Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5.5 Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends . . . . . . . . . . . . . . 26
SECTION 5.6 Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.7 Persons Deemed Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.8 Access to List of Holders' Names and Addresses . . . . . . . . . . . . . . . . 31
SECTION 5.9 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10 Appointment of Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.11 Ownership of Common Securities by Depositor . . . . . . . . . . . . . . . . . 32
SECTION 5.12 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.13 Rights of Holders; Waivers of Past Defaults . . . . . . . . . . . . . . . . . 32

ARTICLE VI

ACTS OF HOLDERS; MEETINGS; VOTING

SECTION 6.1 Limitations on Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.2 Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.3 Meetings of Holders of the Capital Securities . . . . . . . . . . . . . . . . 36
SECTION 6.4 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.5 Proxies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.6 Holder Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.7 Record Date for Voting and Other Purposes . . . . . . . . . . . . . . . . . . 37
SECTION 6.8 Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.9 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>

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<PAGE> 5

<TABLE>
<S> <C>
ARTICLE VII

REPRESENTATIONS AND WARRANTIES

SECTION 7.1 Representations and Warranties of the Property Trustee and
the Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.2 Representations and Warranties of Depositor . . . . . . . . . . . . . . . . . 40

ARTICLE VIII

THE ISSUER TRUSTEES; PAYING AGENTS

SECTION 8.1 Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.2 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.3 Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.4 Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . 45
SECTION 8.5 May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.6 Compensation; Indemnity; Fees . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.7 Corporate Property Trustee Required; Eligibility of Issuer
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.9 Co-Trustees and Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.10 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . 49
SECTION 8.11 Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . 51
SECTION 8.13 Preferential Collection of Claims Against Depositor or
Issuer Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.14 Property Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . 51
SECTION 8.15 Reports by Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.16 Reports to the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.17 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . 53
SECTION 8.18 Number of Issuer Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.19 Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.20 Appointment of Administrative Trustees . . . . . . . . . . . . . . . . . . . . 54

ARTICLE IX

TERMINATION, LIQUIDATION AND MERGER

SECTION 9.1 Termination Upon Expiration Date . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.2 Early Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.4 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>

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<PAGE> 6

<TABLE>
<S> <C>
SECTION 9.5 Mergers, Consolidations, Amalgamations or Replacements
of Issuer Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1 Limitation of Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.3 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.5 Payments Due on Non-Business Day . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.6 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.8 Reports, Notices and Demands . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.9 Agreement Not to Petition . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.10 Trust Indenture Act; Conflict with Trust Indenture Act . . . . . . . . . . . 61
SECTION 10.11 Acceptance of Terms of Trust Agreement, Guarantee
Agreement, Indenture and Registration Rights Agreement . . . . . . . . . . 62

Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Capital Securities Certificate
Exhibit F Form of Restricted Securities Certificate
</TABLE>

-iv-
<PAGE> 7

AMENDED AND RESTATED TRUST AGREEMENT, dated as of __________, 1997,
among (i) The Colonial BancGroup, Inc., a Delaware corporation (including any
successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
banking corporation duly organized and existing under the laws of the State of
Delaware, as property trustee (in such capacity, the "Property Trustee" and, in
its separate corporate capacity and not in its capacity as Property Trustee,
the "Bank"), (iii) Wilmington Trust Company, a banking corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (in such capacity, the "Delaware Trustee"), (iv) W. Flake Oakely, an
individual, and Young J. Boozer, III, an individual, each of whose address is
c/o The Colonial BancGroup, Inc., One Commerce Street, Montgomery, Alabama
36104 (each an "Administrative Trustee"), (the Property Trustee, the Delaware
Trustee and the Administrative Trustees being referred to collectively as the
"Issuer Trustees"), and (v) the several Holders, as hereinafter defined.

WITNESSETH

WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by entering into the Trust Agreement, dated as of February 14, 1997
(the "Original Trust Agreement"), and by the execution and filing by the
Delaware Trustee with the Secretary of State of the State of Delaware of the
Certificate of Trust, filed on February 14, 1997, attached as Exhibit A; and

WHEREAS, the Depositor and the Issuer Trustees desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Capital
Securities by the Issuer Trust pursuant to the Registration Rights Agreement,
(iii) the acquisition by the Issuer Trust from the Depositor of all of the
right, title and interest in the Debentures, and (iv) the appointment of the
Property Trustee and the Administrative Trustees;

NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates
the Original Trust Agreement in its entirety and agrees as follows:
<PAGE> 8

ARTICLE I

DEFINED TERMS

SECTION 1.1. Definitions.

For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:

(a) The terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;

(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;

(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;

(e) Unless the context otherwise requires, any reference to an
"Article", a "Section" or an "Exhibit" refers to an Article, a Section or an
Exhibit, as the case may be, of or to this Trust Agreement; and

(f) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.

"Act" has the meaning specified in Section 6.8.

"Additional Distributions" means, with respect to Trust Securities of
a given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Indenture) paid by the Depositor on a Like Amount
of Debentures for such period.

"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.

"Administrative Trustee" means each Person appointed in accordance
with Section 8.20 solely in such Person's capacity as Administrative Trustee of
the Issuer Trust heretofore created and continued hereunder and not in such
Person's individual capacity, or any successor Administrative Trustee appointed
as herein provided.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified

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<PAGE> 9

Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

"Applicable Procedures" means, with respect to any transfer or
transaction involving a Book-Entry Capital Security, the rules and procedures
of the Clearing Agency for such Book-Entry Capital Security, in each case to
the extent applicable to such transaction and as in effect from time to time.

"Bank" has the meaning specified in the preamble to this Trust
Agreement.

"Bankruptcy Event" means, with respect to any Person:

(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or

(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due and its
willingness to be adjudicated a bankrupt, or the taking of corporate action by
such Person in furtherance of any such action.

"Bankruptcy Laws" has the meaning specified in Section 10.9.

"Board of Directors" means the board of directors of the Depositor or
the Executive Committee of the board of directors of the Depositor (or any
other committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.

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<PAGE> 10

"Book-Entry Capital Securities Certificate" means a Capital Securities
Certificate evidencing ownership of Book-Entry Capital Securities.

"Book-Entry Capital Security" means a Capital Security, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 5.4.

"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.

"Capital Security" means an undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $1,000 and having
the rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution to the extent provided
herein, and designated as 8.92% Capital Securities, Series A.

"Capital Securities Certificate" means a certificate evidencing
ownership of Capital Securities, substantially in the form attached as Exhibit
E.

"Certificate Depository Agreement" means the agreement among the
Issuer Trust, the Depositor and DTC, as the initial Clearing Agency, dated as
of the Closing Date, substantially in the form attached as Exhibit B, as the
same may be amended and supplemented from time to time.

"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC will be the initial Clearing Agency.

"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.

"Closing Date" means the Time of Delivery, which date is also the date
of execution and delivery of this Trust Agreement.

"Code" means the Internal Revenue Code of 1986, as amended.

"Colonial Capital I" means the Delaware Business trust formed on
January 24, 1997, by the Depositor in accordance with an Amended and Restated
Trust Agreement dated as of January 29, 1997.

"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
C.

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<PAGE> 11

"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution to the extent provided
herein.

"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located in
Wilmington, Delaware, and (ii) when used with respect to the Debenture Trustee,
the principal office of the Debenture Trustee located in Wilmington, Delaware.

"Debenture Event of Default" means any "Event of Default" specified in
Section 5.1 of the Indenture.

"Debenture Redemption Date" means, with respect to any Debentures to
be redeemed under the Indenture, the date fixed for redemption of such
Debentures under the Indenture.

"Debenture Trustee" means the Person identified as the "Trustee" in
the Indenture, solely in its capacity as Trustee pursuant to the Indenture and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Trustee appointed as provided in the Indenture.

"Debentures" means the Depositor's 8.92% Junior Subordinated
Deferrable Interest Debentures, Series A, issued pursuant to the Indenture and
the Registration Rights Agreement.

"Definitive Capital Securities Certificates" means either or both (as
the context requires) of (i) Capital Securities Certificates issued as
Book-Entry Capital Securities Certificates as provided in Section 5.2 or 5.4,
and (ii) Capital Securities Certificates issued in certificated, fully
registered form as provided in Section 5.2, 5.4 or 5.5.

"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., or any successor statute
thereto, in each case as amended from time to time.

"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Delaware Trustee of the trust heretofore created and continued hereunder and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Delaware trustee appointed as herein provided.

"Depositor" has the meaning specified in the preamble to this Trust
Agreement.

"Distribution Date" has the meaning specified in Section 4.1(a).

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<PAGE> 12

"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.

"DTC" means The Depository Trust Company.

"Early Termination Event" has the meaning specified in Section 9.2.

"Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):

(a) the occurrence of a Debenture Event of Default; or

(b) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or

(c) default by the Issuer Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and
payable; or

(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this
Trust Agreement (other than those specified in clause (b) or (c)
above) and continuation of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to
the Issuer Trustees and to the Depositor by the Holders of at least
25% in aggregate Liquidation Amount of the Outstanding Capital
Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or

(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee if a successor Property Trustee has not been
appointed within 90 days thereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute thereto.

"Exchange Offer" means the offer to exchange Capital Securities for
the Original Capital Securities pursuant to the Registration Rights Agreement.

"Expense Agreement" means the Agreement as to Expenses and
Liabilities, dated as of the Closing Date, between The Colonial BancGroup, Inc.
and the Issuer Trust, substantially in the form attached as Exhibit D, as
amended from time to time.

"Expiration Date" has the meaning specified in Section 9.1.

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<PAGE> 13

"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Wilmington Trust Company, as guarantee trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Holders of the Capital Securities, as amended from time to
time.

"Holder" means a Person in whose name a Trust Security or Trust
Securities are registered in the Securities Register; any such Person shall be
deemed to be a beneficial owner within the meaning of the Delaware Business
Trust Act.

"Indenture" means the Junior Subordinated Indenture, dated as of
January 29, 1997, between the Depositor and the Debenture Trustee, as trustee,
as amended or supplemented from time to time.

"Issuer Trust" means the Delaware business trust known as "Colonial
Capital II", which was created on February 14, 1997, under the Delaware
Business Trust Act pursuant to the Original Trust Agreement and is continued
pursuant to this Trust Agreement.

"Issuer Trustees" means, collectively, the Property Trustee, the
Delaware Trustee and the Administrative Trustees.

"Investment Company Act" means the Investment Company Act of 1940, or
any successor statute thereto, in each case as amended from time to time.

"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.

"Like Amount" means (a) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
the Issuer Trust, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Debentures are
distributed, and (c) with respect to any distribution of Additional
Distributions to Holders of Trust Securities, Debentures having a principal
amount equal to the Liquidation Amount of the Trust Securities in respect of
which such distribution is made.

"Liquidation Amount" means the stated amount of $1,000 per Trust
Security.

"Liquidation Date" means the date of the dissolution, winding-up or
termination of the Issuer Trust pursuant to Section 9.4.

"Liquidation Distribution" has the meaning specified in Section
9.4(d).

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<PAGE> 14

"Majority in Liquidation Amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, Capital Securities representing
more than 50% of the aggregate Liquidation Amount of all then Outstanding
Capital Securities.

"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or one of the Executive
Vice Presidents, and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Depositor, and delivered to the Issuer Trustees.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Trust Agreement shall include:

(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and
the definitions relating thereto;

(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering
the Officers' Certificate;

(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.

"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.

"Original Trust Agreement" has the meaning specified in the recitals
to this Trust Agreement.

"Original Capital Securities" means the capital securities in the
aggregate amount of $70,000,000, issued by Colonial Capital I on January 29,
1997, pursuant to the Purchase Agreement.

"Outstanding", when used with respect to Trust Securities, means, as
of the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:

(a) Trust Securities theretofore cancelled by the Property
Trustee or delivered to the Property Trustee for cancellation;

(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying

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<PAGE> 15

Agent; provided that, if such Trust Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Trust
Agreement; and

(c) Trust Securities that have been paid or in exchange for or
in lieu of which other Capital Securities have been executed and
delivered pursuant to Sections 5.4, 5.5, 5.6 and 5.11;

provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Capital Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Capital Securities owned by the Depositor, any Issuer Trustee or any Affiliate
of the Depositor or any Issuer Trustee shall be disregarded and deemed not to
be Outstanding, except that (a) in determining whether any Issuer Trustee shall
be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Capital Securities that such Issuer
Trustee knows to be so owned shall be so disregarded, and (b) the foregoing
clause (a) shall not apply at any time when all of the Outstanding Capital
Securities are owned by the Depositor, one or more of the Issuer Trustees
and/or any such Affiliate. Capital Securities so owned that have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrative Trustees the pledgee's right so to act with
respect to such Capital Securities and that the pledgee is not the Depositor or
any Affiliate of the Depositor.

"Owner" means each Person who is the beneficial owner of Book-Entry
Capital Securities as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).

"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Bank.

"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Holders in which all amounts paid in respect
of the Debentures will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Holders in accordance with Sections
4.1 and 4.2.

"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.

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<PAGE> 16

"Plan" means an employee benefit or other plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended, or Section
4975 of the Internal Revenue Code of 1986.

"Plan Asset Entity" means any Person whose underlying assets include
"plan assets" by reason of any Plan's investment in such Person.

"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Property Trustee of the trust heretofore created and continued hereunder and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as herein provided.

"PTCE" means a U.S. Department of Labor Prohibited Transaction Class
Exemption.

"Purchase Agreement" means the Purchase Agreement, dated as of January
24,1997, among Colonial Capital I, the Depositor and the Purchasers.

"Purchasers" has the meaning specified in the Purchase Agreement.

"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.

"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures.

"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement among the Depositor, Colonial Capital I and the Purchasers,
dated as of January 29, 1997.

"Relevant Trustee" has the meaning specified in Section 8.10.

"Securities Act" means the Securities Act of 1933, and any successor
statute thereto, in each case as amended from time to time.

"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.

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<PAGE> 17

"Successor Capital Securities" of any particular Capital Securities
Certificate means every Capital Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Capital Securities Certificate; and, for
the purposes of this definition, any Capital Securities Certificate executed
and delivered under Section 5.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Capital Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Capital Securities Certificate.

"Time of Delivery" means the date and time at which the Capital
Securities are issued in exchange for the Original Capital Securities.

"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (i) all Exhibits, and (ii) for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that if the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account, and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.

"Trust Security" means any one of the Common Securities or the Capital
Securities.

"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.

ARTICLE II

CONTINUATION OF THE ISSUER TRUST

SECTION 2.1. Name.

The trust continued hereby shall be known as "Colonial Capital II", as
such name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Issuer Trustees, in which name the Issuer

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<PAGE> 18

Trustees may conduct the business of the Issuer Trust, make and execute
contracts and other instruments on behalf of the Issuer Trust and sue and be
sued.

SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.

The address of the Delaware Trustee in the State of Delaware is Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attention:
Corporate Trust Administration, or such other address in the State of Delaware
as the Delaware Trustee may designate by written notice to the Holders, the
Depositor, the Property Trustee and the Administrative Trustees. The principal
executive office of the Issuer Trust is c/o The Colonial BancGroup, Inc., One
Commerce Street, Montgomery, Alabama 36104, Attention: W. Flake Oakley.

SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses.

The Property Trustee acknowledges receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Issuer Trust as they arise or shall, upon request of any Issuer
Trustee, promptly reimburse such Issuer Trustee for any such expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.

SECTION 2.4. Issuance of the Capital Securities.

As of January 29, 1997, the Depositor, both on its own behalf and on
behalf of Colonial Capital I, executed and delivered the Registration Rights
Agreement. Contemporaneously with the consummation of the Exchange Offer, an
Administrative Trustee, on behalf of the Issuer Trust, shall manually execute
in accordance with Section 5.2 and 5.3 and the Property Trustee shall deliver
Capital Securities Certificates, evidencing an aggregate of 70,000 Capital
Securities having an aggregate Liquidation Amount of $70,000,000, in accordance
with the terms of the Exchange Offer and any related letters of transmittal
which form a part thereof.

SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Debentures.

Upon completion of the Exchange Offer, an Administrative Trustee, on
behalf of the Issuer Trust, shall execute in accordance with Section 5.2 and
5.3 and the Property Trustee shall deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, evidencing up to an
aggregate of 2,165 Common Securities having an aggregate Liquidation Amount of
up to $2,165,000. Contemporaneously therewith, the Depositor shall issue to
the Issuer Trust, and the Issuer Trust shall acquire from the Depositor,
Debentures having an aggregate principal amount equal to a maximum of
$72,165,000 registered in the

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<PAGE> 19

name of the Property Trustee on behalf of the Issuer Trust and, in satisfaction
of the Registration Rights Agreement.

SECTION 2.6. Continuation of Trust.

The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Debentures in accordance with the Registration Rights Agreement, and (b) to
engage in only those activities necessary or incidental thereto. The Depositor
hereby appoints the Issuer Trustees as trustees of the Issuer Trust, to have
all the rights, powers and duties to the extent set forth herein, and the
respective Issuer Trustees hereby accept such appointment. The Property Trustee
hereby declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Issuer Trust and the
Holders. The Administrative Trustees shall have all rights, powers and duties
set forth herein and in accordance with applicable law. The Delaware Trustee
shall not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Property Trustee or the
Administrative Trustees set forth herein. The Delaware Trustee shall be one of
the trustees of the Issuer Trust for the sole and limited purpose of fulfilling
the requirements of Section 3807 of the Delaware Business Trust Act and for
taking such actions as are required to be taken by a Delaware trustee under the
Delaware Business Trust Act.

SECTION 2.7. Authorization to Enter into Certain Transactions.

(a) The Issuer Trustees shall conduct the affairs of the Issuer Trust
in accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section 2.7, and in accordance
with the following provisions (i) and (ii), the Issuer Trustees shall have the
authority to enter into all transactions and agreements determined by the
Issuer Trustees to be appropriate in exercising the authority, express or
implied, otherwise granted to the Issuer Trustees, as the case may be, under
this Trust Agreement, and to perform all acts in furtherance thereof, including
the following:

(i) Each Administrative Trustee shall have the power and
authority to act on behalf of the Issuer Trust with respect to the
following matters:

(A) the issuance and sale of the Trust Securities;

(B) causing the Issuer Trust to enter into, and to
execute, deliver and perform on behalf of the Issuer Trust,
the Expense Agreement, and such other agreements as may be
necessary or desirable in connection with the purposes and
function of the Issuer Trust;

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<PAGE> 20

(C) assisting in compliance with the duties and
obligations of the Issuer Trust under the Registration Rights
Agreement and the Securities Act and under applicable state
securities or blue sky laws (including by means of
registration of the Capital Securities thereunder from time to
time), and the Trust Indenture Act;

(D) registering the Capital Securities under the
Exchange Act, if required, and the preparation and filing of
all periodic and other reports and documents pursuant to the
foregoing, and assisting in obtaining the registration or
listing of the Capital Securities on any securities exchange
or national trading market;

(E) assisting in the sending of notices (other than
notices of default) and other information regarding the Trust
Securities and the Debentures to the Holders in accordance
with this Trust Agreement;

(F) consenting to the appointment of a Paying Agent,
authenticating agent and Securities Registrar in accordance
with this Trust Agreement (which consent shall not be
unreasonably withheld);

(G) executing the Trust Securities on behalf of the
Issuer Trust in accordance with this Trust Agreement;

(H) executing and delivering closing certificates, if
any, and application for a taxpayer identification number for
the Issuer Trust;

(I) unless otherwise determined by the Property
Trustee or Holders of at least a Majority in Liquidation
Amount of the Capital Securities or as otherwise required by
the Delaware Business Trust Act or the Trust Indenture Act,
executing on behalf of the Issuer Trust (either acting alone
or together with any other Administrative Trustee) any
documents that the Administrative Trustees have the power to
execute pursuant to this Trust Agreement; and

(J) taking any action incidental to the foregoing as
the Issuer Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement.

(ii) The Property Trustee shall have the power, duty and
authority to act on behalf of the Issuer Trust with respect to the
following matters:

(A) establishing the Payment Account;

(B) receiving the Debentures;

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<PAGE> 21

(C) collecting interest, principal and any other
payments made in respect of the Debentures and the holding of
such amounts in the Payment Account;

(D) distributing through any Paying Agent of amounts
distributable to the Holders in respect of the Trust
Securities;

(E) exercising all of the rights, powers and
privileges of a holder of the Debentures;

(F) sending notices of default and other information
regarding the Trust Securities and the Debentures to the
Holders in accordance with this Trust Agreement;

(G) distributing the Trust Property in accordance
with the terms of this Trust Agreement;

(H) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidating the Issuer Trust and
preparing, executing and filing the certificate of
cancellation with the Secretary of State of the State of
Delaware;

(I) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if such Event of Default is by or with respect to the Property
Trustee) taking any action incidental to the foregoing as
the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement and to protect and conserve the Trust Property
for the benefit of the Holders (without consideration of the
effect of any such action on any particular Holder);

(J) performing any of the duties, liabilities, powers
or the authority of the Administrative Trustees set forth in
Section 2.7(a)(i)(D), (E) and (I).

(b) So long as this Trust Agreement remains in effect, the Issuer
Trust (or the Issuer Trustees acting on behalf of the Issuer Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, the Issuer Trustees shall not (i)
acquire any investments or engage in any activities not authorized by this
Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge,
set-off or otherwise dispose of any of the Trust Property or interests therein,
including to Holders, except as expressly provided herein, (iii) take any
action that would reasonably be expected to cause the Issuer Trust to become
taxable as a corporation or classified as other than a grantor trust for United
States Federal income tax purposes, (iv) incur any indebtedness for borrowed
money or issue any other debt, or (v) take or consent to any

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<PAGE> 22

action that would result in the placement of a Lien on any of the Trust
Property. The Administrative Trustees shall defend all claims and demands of
all Persons at any time claiming any Lien on any of the Trust Property adverse
to the interest of the Issuer Trust or the Holders in their capacity as
Holders.

(c) In connection with the issue and sale of the Capital Securities,
the Depositor shall have the right and responsibility to assist the Issuer
Trust with respect to, or effect on behalf of the Issuer Trust, the following
(and any actions taken by the Depositor in furtherance of the following prior
to the date of this Trust Agreement are hereby ratified and confirmed in all
respects):

(i) the preparation by the Issuer Trust of a prospectus and
registration statement under the Securities Act and the Trust
Indenture Act in relation to the Capital Securities, including any
amendments thereto and the taking of any action necessary or desirable
to effect the Exchange Offer;

(ii) the determination of the States, or other jurisdictions,
if any, in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and the determination of
any and all such acts, other than actions that must be taken by or on
behalf of the Issuer Trust, and the advice to the Issuer Trustees of
actions they must take on behalf of the Issuer Trust, and the
preparation for execution and filing of any documents to be executed
and filed by the Issuer Trust or on behalf of the Issuer Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States in connection with the sale of the
Capital Securities;

(iii) the compliance by the Issuer Trust with the Registration
Rights Agreement;

(iv) the preparation and filing by the Issuer Trust with the
Commission and the execution on behalf of the Issuer Trust of a
registration statement on the appropriate form in relation to the
Capital Securities, including any amendments thereto and the taking of
any action necessary or desirable to sell the Capital Securities in a
transaction or a series of transactions pursuant thereto;

(v) if so determined by the Depositor, the preparation for
filing by the Issuer Trust and execution on behalf of the Issuer Trust
of an application to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing upon notice
of issuance of any Capital Securities;

(vi) if so determined by the Depositor, the preparation for
filing by the Issuer Trust with the Commission and the execution on
behalf of the Issuer Trust of a registration statement on Form 8-A
relating to the registration of the Capital

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<PAGE> 23

Securities under Section 12(b) or 12(g) of the Exchange Act, including
any amendments thereto; and

(vii) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.

(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act, and will not be taxable as a corporation or classified
as other than a grantor trust for United States Federal income tax purposes and
so that the Debentures will be treated as indebtedness of the Depositor for
United States Federal income tax purposes. In this connection, each
Administrative Trustee and the Holder of the Common Securities are authorized
to take any action, not inconsistent with applicable law, the Certificate of
Trust or this Trust Agreement, that such Administrative Trustee or Holder of
the Common Securities determines in its discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect in any
material respect the interests of the Holders of the Outstanding Capital
Securities. In no event shall the Issuer Trustees be liable to the Issuer Trust
or the Holders for any failure to comply with this section that results from a
change in law or regulation or in the interpretation thereof.

SECTION 2.8. Assets of Trust.

The assets of the Issuer Trust shall consist of the Trust Property.

SECTION 2.9. Title to Trust Property.

Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered
by the Property Trustee in trust for the benefit of the Issuer Trust and the
Holders in accordance with this Trust Agreement.

ARTICLE III

PAYMENT ACCOUNT

SECTION 3.1. Payment Account.

(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account

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<PAGE> 24

shall be held by the Property Trustee in the Payment Account for the exclusive
benefit of the Holders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.

(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.

ARTICLE IV

DISTRIBUTIONS; REDEMPTION

SECTION 4.1. Distributions.

(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and Distributions (including any Additional Distributions)
will be made on the Trust Securities at the rate and on the dates that payments
of interest (including any Additional Interest, as defined in the Indenture)
are made on the Debentures. Accordingly:

(i) Distributions on the Trust Securities shall be cumulative,
and shall accumulate whether or not there are funds of the Issuer
Trust available for the payment of Distributions. Distributions shall
accumulate from January 29, 1997, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
semi-annually in arrears on January 15 and July 15 of each year,
commencing on July 15, 1997. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then
the payment of such Distribution shall be made on the next succeeding
day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if
made on the date on which such payment was originally payable (each
date on which distributions are payable in accordance with this
Section 4.1(a), a "Distribution Date").

(ii) The Trust Securities shall be entitled to Distributions
payable at a rate, not including Additional Distributions, of 8.92%
per annum of the Liquidation Amount of the Trust Securities. The
amount of Distributions payable for any period less than a full
Distribution period shall be computed on the basis of a 360-day year
of twelve 30-day months and the actual number of days elapsed in a
partial month in a period. Distributions payable for each full
Distribution period will be computed by dividing the rate per annum by
two. The amount of Distributions payable for any period shall include
any Additional Distributions in respect of such period.

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(iii) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be payable on
each Distribution Date only to the extent that the Issuer Trust has
funds then on hand and available in the Payment Account for the
payment of such Distributions.

(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be at the close of business on the fifteenth
day (whether or not a Business Day) next preceding the relevant Distribution
Date.

SECTION 4.2. Redemption.

(a) On each Debenture Redemption Date and on the stated maturity of
the Debentures, the Issuer Trust will be required to redeem a Like Amount of
Trust Securities at the Redemption Price.

(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to (and as defined
in) the Indenture together with a statement that it is an estimate and
that the actual Redemption Price will be calculated on the third
Business Day prior to the Redemption Date (and, if an estimate is
provided, that a further notice shall be sent of the actual Redemption
Price on the date on which such Redemption Price is calculated);

(iii) the CUSIP number or CUSIP numbers of the Capital
Securities affected;

(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the identification and the aggregate Liquidation Amount
of the particular Trust Securities to be redeemed;

(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accumulate on and after
such date, except as provided in Section 4.2(d) below; and

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(vi) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.

The Issuer Trust in issuing the Trust Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall
indicate the "CUSIP" numbers of the Trust Securities in notices of redemption
and related materials as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Trust Securities or as contained in any notice
of redemption and related materials.

(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the
extent that the Issuer Trust has funds then on hand and available in the
Payment Account for the payment of such Redemption Price.

(d) If the Property Trustee gives a notice of redemption in respect of
any Capital Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Book-Entry Capital Securities, irrevocably deposit with the Clearing
Agency for such Book-Entry Capital Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Capital Securities. With respect to
Capital Securities that are not Book-Entry Capital Securities, the Property
Trustee, subject to Section 4.2(c), will irrevocably deposit with the Paying
Agent or Paying Agents, to the extent available therefor, funds sufficient to
pay the applicable Redemption Price and will give the Paying Agent or Paying
Agents irrevocable instructions and authority to pay the Redemption Price to
the Holders of the Capital Securities upon surrender of their Capital
Securities Certificates. Notwithstanding the foregoing, Distributions payable
on or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as they
appear on the Securities Register on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of
Holders holding Trust Securities so called for redemption will cease, except
the right of such Holders to receive the Redemption Price and any Distribution
payable in respect of the Trust Securities on or prior to the Redemption Date,
but without interest, and such Securities will cease to be Outstanding. In the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
any Trust Securities called for redemption is improperly

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<PAGE> 27

withheld or refused and not paid either by the Issuer Trust or by the Depositor
pursuant to the Guarantee Agreement, Distributions on such Trust Securities
will continue to accumulate, as set forth in Section 4.1, from the Redemption
Date originally established by the Issuer Trust for such Trust Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.

(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Capital Securities based upon the
relative Liquidation Amounts of such classes. The particular Capital Securities
to be redeemed shall be selected on a pro rata basis based upon their
respective Liquidation Amounts not more than 60 days prior to the Redemption
Date by the Property Trustee from the Outstanding Capital Securities not
previously called for redemption, provided that so long as the Capital
Securities are in book-entry-only form, such selection shall be made in
accordance with the customary procedures for the Clearing Agency for the
Capital Securities, and provided further that, after giving effect to such
redemption, no Holder shall hold Capital Securities with an aggregate
Liquidation Amount of less than $100,000. The Property Trustee shall promptly
notify the Securities Registrar in writing of the Capital Securities selected
for redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Capital Securities that has been or is
to be redeemed.

SECTION 4.3. Subordination of Common Securities.

(a) Payment of Distributions (including any Additional Distributions)
on, the Redemption Price of, and the Liquidation Distribution in respect of the
Trust Securities, as applicable, shall be made, subject to Section 4.2(e), pro
rata among the Common Securities and the Capital Securities based on the
Liquidation Amount of the Trust Securities; provided, however, that if on any
Distribution Date, Redemption Date or Liquidation Date any Event of Default
resulting from a Debenture Event of Default specified in Section 5.1(1) or
5.1(2) of the Indenture shall have occurred and be continuing, no payment of
any Distribution (including any Additional Distributions) on, Redemption Price
of, or Liquidation Distribution in respect of any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including any Additional Distributions)
on all Outstanding Capital Securities for all Distribution periods terminating
on or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all Outstanding Capital Securities then
called for redemption, or in the case of payment of the Liquidation
Distribution the full amount of such Liquidation Distribution on all
Outstanding Capital

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<PAGE> 28

Securities, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including any Additional Distributions) on, the
Redemption Price of or the Liquidation Distribution in respect of the Capital
Securities then due and payable.

(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effect of all such Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Capital Securities and
not on behalf of the Holder of the Common Securities, and only the Holders of
the Capital Securities will have the right to direct the Property Trustee to
act on their behalf.

SECTION 4.4. Payment Procedures.

Payments of Distributions (including any Additional Distributions) or
of the Redemption Price, Liquidation Amount or any other amounts in respect of
the Capital Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities Register
or, if the Capital Securities are held by a Clearing Agency, such Distributions
shall be made to the Clearing Agency in immediately available funds. Payments
in respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of all the Common
Securities.

SECTION 4.5. Tax Returns and Reports.

The Administrative Trustees shall prepare (or cause to be prepared),
at the Depositor's expense, and file all United States Federal, state and local
tax and information returns and reports required to be filed by or in respect
of the Issuer Trust. In this regard, the Administrative Trustees shall (a)
prepare and file (or cause to be prepared and filed) all Internal Revenue
Service forms required to be filed in respect of the Issuer Trust in each
taxable year of the Issuer Trust, and (b) prepare and furnish (or cause to be
prepared and furnished) to each Holder all Internal Revenue Service forms
required to be provided by the Issuer Trust. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Issuer Trustees
shall comply with United States Federal withholding and backup withholding tax
laws and information reporting requirements with respect to any payments to
Holders under the Trust Securities.

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<PAGE> 29

SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust.

Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority.

SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions.

Any amount payable hereunder to any Holder of Capital Securities (or
any Owner with respect thereto) shall be reduced by the amount of any
corresponding payment such Holder (or Owner) has directly received pursuant to
Section 5.8 of the Indenture or Section 5.13 of this Trust Agreement.

ARTICLE V

TRUST SECURITIES CERTIFICATES

SECTION 5.1. Initial Ownership.

Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are Outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.

SECTION 5.2. The Trust Securities Certificates.

(a) The Capital Securities Certificates shall be issued in fully
registered form in minimum denominations of $100,000 Liquidation Amount (and in
blocks of at least 100 Capital Securities) and integral multiples of $1,000 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $1,000 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Issuer Trust
by manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Issuer Trust, shall be validly issued and entitled to the benefits of this
Trust Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Holder, and shall be entitled to the rights and subject to the
obligations of a Holder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.5.

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<PAGE> 30

(b) Upon their original issuance, Capital Securities Certificates may
be issued in the form of one or more Book-Entry Capital Securities Certificates
registered in the name of DTC, as Clearing Agency, or its nominee and deposited
with DTC or a custodian for DTC for credit by DTC to the respective accounts of
the Owners thereof (or such other accounts as they may direct).

(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.

SECTION 5.3. Execution and Delivery of Trust Securities Certificates.

At the Time of Delivery, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust and
delivered to or upon the written order of the Depositor, executed by an
authorized officer thereof, without further corporate action by the Depositor,
in authorized denominations.

SECTION 5.4. Book-Entry Capital Securities.

(a) Each Book-Entry Capital Securities Certificate issued under this
Trust Agreement shall be registered in the name of the Clearing Agency or a
nominee thereof and delivered to such Clearing Agency or a nominee thereof or
custodian therefor, and each such Book-Entry Capital Securities Certificate
shall constitute a single Capital Securities Certificate for all purposes of
this Agreement.

(b) Notwithstanding any other provision in this Trust Agreement, no
Book-Entry Capital Securities Certificate may be exchanged in whole or in part
for Capital Securities Certificates registered, and no transfer of a Book-Entry
Capital Securities Certificate in whole or in part may be registered, in the
name of any Person other than the Clearing Agency or a nominee thereof unless
(i) the Clearing Agency advises the Property Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book-Entry Capital Securities
Certificates, and the Property Trustee is unable to locate a qualified
successor, (ii) the Issuer Trust at its option advises the Clearing Agency in
writing that it elects to terminate the book-entry system through the Clearing
Agency, or (iii) a Debenture Event of Default has occurred and is continuing.
Upon the occurrence of any event specified in clause (i), (ii) or (iii) above,
the Property Trustee shall notify the Clearing Agency and instruct the Clearing
Agency to notify all Owners of Book-Entry Capital Securities, the Delaware
Trustee and the Administrative Trustees of the occurrence of such event and of
the availability of the Definitive Capital Securities Certificates to Owners of
the Capital Securities requesting the same; provided, however, that no
Definitive Capital Securities Certificate shall be issued in an amount
representing less than 100 Capital Securities.

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<PAGE> 31

(c) If any Book-Entry Capital Securities Certificate is to be
exchanged for other Capital Securities Certificates or canceled in whole, it
shall be surrendered by or on behalf of the Clearing Agency or its nominee for
exchange or cancellation as provided in this Article V. If any Book-Entry
Capital Securities Certificate is to be exchanged for other Capital Securities
Certificates or canceled in part, or if any other Capital Securities
Certificate is to be exchanged in whole or in part for Book-Entry Capital
Securities represented by a Book-Entry Capital Securities Certificate, then
either (i) such Book-Entry Capital Securities Certificate shall be so
surrendered for exchange or cancellation as provided in this Article V or (ii)
the aggregate Liquidation Amount represented by such Book-Entry Capital
Securities Certificate shall be reduced, subject to Section 5.2, or increased
by an amount equal to that portion of the Liquidation Amount represented by the
Book-Entry Capital Securities Certificate to be so exchanged or cancelled, or
equal to that portion of the Liquidation Amount represented by such other
Capital Securities Certificates to be so exchanged for Book-Entry Capital
Securities represented thereby, as the case may be, by means of an appropriate
adjustment made on the records of the Securities Registrar with notice to the
Property Trustee, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Book-Entry Capital Securities Certificate by the
Clearing Agency, accompanied by registration instructions, the Administrative
Trustees, or any one of them, shall, subject to Section 5.5(b) and as otherwise
provided in this Article V, execute the Definitive Capital Securities
Certificates issuable in exchange for such Book-Entry Capital Securities
Certificate (or any portion thereof) in accordance with the instructions of the
Clearing Agency; provided, however, that no Definitive Capital Securities
Certificate shall be issued in an amount representing less than 100 Capital
Securities. None of the Securities Registrar or the Issuer Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. The Definitive
Capital Securities Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.

(d) Every Capital Securities Certificate executed and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Book-Entry
Capital Securities Certificate or any portion thereof, whether pursuant to this
Article V or Section 4.2 or otherwise, shall be executed and delivered in the
form of, and shall be, a Book-Entry Capital Securities Certificate, unless such
Capital Securities Certificate is registered in the name of a Person other than
the Clearing Agency or a nominee thereof.

(e) The Clearing Agency or its nominee, as registered owner of a
Book-Entry Capital Securities Certificate, shall be the Holder of such
Book-Entry Capital Securities Certificate for all purposes under this Agreement
and the Capital Securities, and Owners with respect to a Book-Entry Capital
Securities Certificate shall hold such interests pursuant to the Applicable
Procedures. The Securities Registrar and the Issuer Trustees shall be entitled
to deal with the Clearing Agency for all purposes of this Trust Agreement
relating to the

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<PAGE> 32

Book-Entry Capital Securities Certificates (including the payment of the
Liquidation Amount of and Distributions on the Book-Entry Capital Securities
represented thereby and the giving of instructions or directions by or to
Owners of Book-Entry Capital Securities represented thereby) as the sole
Holder of the Book-Entry Capital Securities represented thereby and shall have
no obligations to the Owners thereof. None of the Depositor, the Issuer
Trustees nor the Securities Registrar shall have any liability in respect of
any transfers effected by the Clearing Agency.

(f) The rights of the Owners of the Book-Entry Capital Securities
shall be exercised only through the Clearing Agency and shall be limited to
those established by law, the Applicable Procedures and agreements between such
Owners and the Clearing Agency and/or the Clearing Agency Participants.

SECTION 5.5. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges.

(a) The Property Trustee shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 5.9, a register or registers (the
"Securities Register") in which the registrar and transfer agent with respect
to the Trust Securities (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Capital Securities Certificates and (subject to Section 5.11) Common
Securities Certificates and of transfers and exchanges of Capital Securities
Certificates as herein provided. The Property Trustee is hereby appointed
Securities Registrar for the purpose of registering Capital Securities
Certificates and (subject to Section 5.11) Common Securities and transfers and
exchanges thereof as provided herein.

Upon surrender for registration of transfer of any Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.9, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, in the name of the
designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
and bearing such restrictive legends as may be required by this Agreement,
dated the date of execution by such Administrative Trustee or Trustees;
provided that no Holder may transfer any Capital Security if giving effect to
such transfer would cause any Holder to hold less than $100,000 aggregate
Liquidation Amount of Capital Securities. Any purported transfer prohibited by
the preceding proviso shall be null and void and of no force or effect and the
purported transferee of the affected Capital Securities shall be deemed to have
no interest whatsoever in such Capital Securities.

At the option of the Holder, Capital Securities Certificates may be
exchanged for other Capital Securities Certificates of the same series of any
authorized denominations, of like tenor and aggregate Liquidation Amount,
bearing such restrictive legends as may be required by this Agreement and
bearing a number not contemporaneously Outstanding, upon surrender of the
Capital Securities Certificates to be exchanged at such office or

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agency. Whenever any Capital Securities Certificates are so surrendered for
exchange, the Administrative Trustees or any one of them shall execute and
deliver to the Property Trustee, and the Property Trustee shall deliver, the
Capital Securities Certificates that the Holder making the exchange is entitled
to receive.

All Capital Securities issued upon any transfer or exchange of Capital
Securities shall evidence the same interest in the assets of the Issuer Trust,
and entitled to the same benefits under this Agreement, as the Capital
Securities surrendered upon such transfer or exchange.

The Securities Registrar shall not be required, (i) to issue, register
the transfer of or exchange any Capital Security during a period beginning at
the opening of business 15 days before the day of selection for redemption of
such Capital Securities pursuant to Article IV and ending at the close of
business on the day of mailing of the notice of redemption, or (ii) to register
the transfer of or exchange any Capital Security so selected for redemption in
whole or in part, except, in the case of any such Capital Security to be
redeemed in part, any portion thereof not to be redeemed.

Every Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to an Administrative
Trustee and the Securities Registrar duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Capital Securities
Certificate surrendered for registration of transfer or exchange shall be
cancelled and subsequently disposed of by the Property Trustee in accordance
with its customary practice.

No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Issuer Trust may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Capital Securities
Certificates.

(b) Notwithstanding any other provision of this Trust Agreement,
transfers and exchanges of Capital Securities Certificates and Book-Entry
Capital Securities shall be made only in accordance with this Section 5.5(b).

(i) Non-Book-Entry Capital Securities Certificate to
Book-Entry Capital Securities Certificate. If the Holder of a Capital
Securities Certificate (other than a Book-Entry Capital Securities
Certificate) wishes at any time to transfer all or any portion of such
Capital Securities Certificate to a Person who wishes to take delivery
thereof in the form of a beneficial interest in a Book-Entry Capital
Securities Certificate, such transfer may be effected only in
accordance with the provisions of this Clause (b)(i) and subject to
the Applicable Procedures. Upon receipt by the Securities Registrar of
(A) such Capital Securities Certificate as provided in Section 5.5(a)
and instructions satisfactory to the Securities Registrar directing
that

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<PAGE> 34

a specified number of Book-Entry Capital Securities to be represented
by such Book-Entry Capital Securities Certificate not greater than the
number of Capital Securities represented by such Capital Securities
Certificate be credited to a specified Clearing Agency Participant's
account and (B) if the Capital Securities Certificate to be
transferred evidences Restricted Capital Securities, a Restricted
Securities Certificate duly executed by such Holder or such Holder's
attorney duly authorized in writing, then the Securities Registrar
shall cancel such Capital Securities Certificate (and issue a new
Capital Securities Certificate in respect of any untransferred portion
thereof) as provided in Section 5.5(a) and increase the aggregate
Liquidation Amount of the Book-Entry Capital Securities Certificate by
the Liquidation Amount of such Capital Securities so transferred as
provided in Section 5.4(c).

(ii) Non-Book-Entry Capital Securities Certificate to
Non-Book-Entry Capital Securities Certificate. A Capital Securities
Certificate that is not a Book-Entry Capital Securities Certificate
may be transferred, in whole or in part, to a Person who takes
delivery in the form of another Capital Securities Certificate that is
not a Book-Entry Capital Securities Certificate as provided in Section
5.5(a), provided that if the Capital Securities Certificate to be
transferred evidences Restricted Capital Securities, then the
Securities Registrar shall have received a Restricted Securities
Certificate duly executed by the transferor Holder or such Holder's
attorney duly authorized in writing.

(iii) Book-Entry Capital Securities Certificate to
Non-Book-Entry Capital Securities Certificate. A beneficial interest
in a Book-Entry Capital Securities Certificate may be exchanged for a
Capital Securities Certificate that is not a Book-Entry Capital
Securities Certificate as provided in Section 5.4.

(iv) Certain Initial Transfers of Non-Book-Entry Capital
Securities Certificates. In the case of Capital Securities
Certificates initially issued other than in global form, an initial
transfer or exchange of such Capital Securities Certificates that does
not involve any change in beneficial ownership may be made to an
Institutional Accredited Investor or Investors as if such transfer or
exchange were not an initial transfer or exchange, provided that
written certification shall be provided by the transferor and
transferee of such Capital Securities to the Securities Registrar that
such transfer or exchange does not involve a change in beneficial
ownership.

(v) Limitations Relating to Size of Blocks. Notwithstanding
any other provision of this Trust Agreement, Capital Securities may be
transferred or exchanged only in blocks having a Liquidation Amount of
not less than $100,000, and only if, following such transfer or
exchange, each Holder would hold Capital Securities with an aggregate
Liquidation Amount of not less than $100,000. Any transfer, exchange
or other disposition of Capital Securities in contravention of this
Section 5.5(b)(v) shall be deemed to be void and of no legal effect
whatsoever, any such transferee shall be deemed not to be the Holder
or Owner of such Capital

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<PAGE> 35

Security for any purpose, including but not limited to the receipt of
Distributions on such Capital Securities, and such transferee shall be
deemed to have no interest whatsoever in such Capital Securities.

(c) The Depositor or an Administrative Trustee shall inform the
Property Trustee in writing of the effective date of any registration statement
registering the Capital Securities under the Securities Act and shall notify
the Property Trustee at any time when prospectuses may not be delivered with
respect to Capital Securities to be sold pursuant to such registration
statement. The Property Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the aforementioned
registration statement.

(d) Any purchaser or Holder of any Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (i) is not a Plan or a Plan Asset Entity and is not purchasing
such Capital Securities on behalf of or with "plan assets" of any Plan, or (ii)
is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38,
90-1 or 84-14 or another applicable exemption with respect to such purchase or
holding. The Securities Registrar may, and if the Depositor shall so request,
the Securities Registrar shall, before registering for transfer or exchange any
Capital Securities Certificates as provided in Sections 5.2, 5.4 or 5.5 of this
Trust Agreement, (A) require the purchaser or Holder of such Capital Securities
Certificates to confirm that it either (x) is not a Plan, a Plan Asset Entity
or a Person investing "plan assets" of any Plan or (y) is eligible for the
exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14, and
(B) if such purchaser or Holder does not provide such confirmation, require an
Opinion of Counsel or other evidence satisfactory to the Depositor of the
availability to such purchaser or Holder of another applicable exemption with
respect to such purchase or holding.

SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.

If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate, and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Issuer Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 5.6, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section 5.6
shall constitute conclusive evidence of an undivided beneficial interest

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<PAGE> 36

in the assets of the Issuer Trust corresponding to that evidenced by the lost,
stolen or destroyed Trust Securities Certificate, as if originally issued,
whether or not the lost, stolen or destroyed Trust Securities Certificate shall
be found at any time.

SECTION 5.7. Persons Deemed Holders.

The Issuer Trustees and the Securities Registrar shall each treat the
Person in whose name any Trust Securities Certificate shall be registered in
the Securities Register as the owner of such Trust Securities Certificate for
the purpose of receiving Distributions and for all other purposes whatsoever,
and none of the Issuer Trustees and the Securities Registrar shall be bound by
any notice to the contrary.

SECTION 5.8. Access to List of Holders' Names and Addresses.

Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor or the Issuer Trustees accountable by reason of the disclosure of
its name and address, regardless of the source from which such information was
derived.

SECTION 5.9. Maintenance of Office or Agency.

The Administrative Trustees shall maintain an office or offices or
agency or agencies where Capital Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate The Colonial BancGroup,
Inc., One Commerce Street, Montgomery, Alabama 36104 as its office and agency
for such purposes. The Administrative Trustees shall give prompt written notice
to the Depositor, the Property Trustee and to the Holders of any change in the
location of the Securities Register or any such office or agency.

SECTION 5.10. Appointment of Paying Agents.

The Paying Agent or Agents shall make Distributions to Holders from
the Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Administrative
Trustees may revoke such power and remove the Paying Agent in its sole
discretion. The Paying Agent shall initially be the Bank and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrative
Trustees and the Depositor. Any Person acting as Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees and the Property Trustee. If the Bank shall no longer
be the Paying Agent or a successor Paying Agent shall resign or its authority
to act be revoked, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company) that is reasonably acceptable to the
Depositor to act as Paying Agent. Such successor Paying Agent or any additional
Paying Agent shall execute

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and deliver to the Issuer Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Issuer Trustees that as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Holders in trust for the
benefit of the Holders entitled thereto until such sums shall be paid to such
Holders. The Paying Agent shall return all unclaimed funds to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of
Sections 8.1, 8.3 and 8.6 herein shall apply to the Bank also in its role as
Paying Agent, for so long as the Bank shall act as Paying Agent and, to the
extent applicable, to any other paying agent appointed hereunder. Any reference
in this Agreement to the Paying Agent shall include any co-paying agent unless
the context requires otherwise.

SECTION 5.11. Ownership of Common Securities by Depositor.

At the Time of Delivery, the Depositor shall acquire, and thereafter
shall retain, beneficial and record ownership of the Common Securities. Neither
the Depositor nor any successor Holder of the Common Securities may transfer
less than all the Common Securities, and the Depositor or any such successor
Holder may transfer the Common Securities only (i) in connection with a
consolidation or merger of the Depositor into another corporation, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 8.1 of the
Indenture, or (ii) to the Depositor or an Affiliate of the Depositor in
compliance with applicable law (including the Securities Act of 1933, as
amended, and applicable state securities and blue sky laws). To the fullest
extent permitted by law, any attempted transfer of the Common Securities other
than as set forth in the next proceeding sentence shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating substantially "THIS CERTIFICATE IS
NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN
COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."

SECTION 5.12. Notices to Clearing Agency.

To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Capital Securities are
represented by a Book-Entry Capital Securities Certificate, the Issuer Trustees
shall give all such notices and communications specified herein to be given to
the Clearing Agency, and shall have no obligations to the Owners.

SECTION 5.13. Rights of Holders; Waivers of Past Defaults.

(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer

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Trust conferred by their Trust Securities and they shall have no right to call
for any partition or division of property, profits or rights of the Issuer
Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this
Trust Agreement. The Trust Securities shall have no preemptive or similar
rights and when issued and delivered to Holders against payment of the purchase
price therefor will be fully paid and nonassessable by the Issuer Trust. The
Holders of the Trust Securities, in their capacities as such, shall be entitled
to the same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware.

(b) For so long as any Capital Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Capital Securities then
Outstanding shall have the right to make such declaration by a notice in
writing to the Property Trustee, the Depositor and the Debenture Trustee.

At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Property Trustee fails to annul any such declaration and
waive such default, the Holders of at least a Majority in Liquidation Amount of
the Capital Securities, by written notice to the Property Trustee, the
Depositor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:

(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay

(A) all overdue installments of interest on all of
the Debentures,

(B) any accrued Additional Interest on all of the
Debentures,

(C) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and

(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee
and the Property Trustee, their agents and counsel; and

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(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.

The Holders of at least a Majority in Liquidation Amount of the
Capital Securities may, on behalf of the Holders of all the Trust Securities,
waive any past default or Event of Default under the Indenture, except a
default or Event of Default in the payment of principal or interest (unless
such default or Event of Default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default or
Event of Default in respect of a covenant or provision that under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Debenture. No such rescission shall affect any subsequent default
or impair any right consequent thereon.

Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities, a record date shall be established for determining
Holders of Outstanding Capital Securities entitled to join in such notice,
which record date shall be at the close of business on the day the Property
Trustee receives such notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to join in such
notice, whether or not such Holders remain Holders after such record date;
provided, that, unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 5.13(b).

(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 5.1(1) or 5.1(2) of the Indenture, any Holder of Capital Securities
shall have the right to institute a proceeding directly against the Depositor,
pursuant to Section 5.8 of the Indenture, for enforcement of payment to such
Holder of any amounts payable in respect of Debentures having an aggregate
principal amount equal to the aggregate Liquidation Amount of the Capital
Securities of such Holder (a "Direct Action"). Except as set forth in Section
5.13(b) and this Section 5.13(c), the Holders of Capital Securities shall have
no right to exercise directly any right or remedy available to the holders of,
or in respect of, the Debentures.

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(d) Except as otherwise provided in paragraphs (a), (b) and (c) of
this Section 5.13, the Holders of at least a Majority in Liquidation Amount of
the Capital Securities may, on behalf of the Holders of all the Trust
Securities, waive any past default or Event of Default and its consequences.
Upon such waiver, any such default or Event of Default shall cease to exist,
and any default or Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

ARTICLE VI

ACTS OF HOLDERS; MEETINGS; VOTING

SECTION 6.1. Limitations on Voting Rights.

(a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer Trust or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute
the Holders from time to time as partners or members of an association.

(b) So long as any Debentures are held by the Property Trustee on
behalf of the Issuer Trust, the Property Trustee shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or execute any trust or power conferred on the Property
Trustee with respect to the Debentures, (ii) waive any past default that may be
waived under Section 5.13 of the Indenture, (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due
and payable, or (iv) consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent shall be required, without,
in each case, obtaining the prior approval of the Holders of at least a
Majority in Liquidation Amount of the Capital Securities, provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of Capital
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities,
except by a subsequent vote of the Holders of the Capital Securities. The
Property Trustee shall notify all Holders of the Capital Securities of any
notice of default received with respect to the Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Capital Securities,
prior to taking any of the foregoing actions, the Issuer Trustees shall, at the
expense of the Depositor, obtain an Opinion of Counsel experienced in such
matters to the effect that such action shall not cause the Issuer Trust to be
taxable as a corporation or classified as other than a grantor trust for United
States Federal income tax purposes.

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(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Capital Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or termination of
the Issuer Trust, other than pursuant to the terms of this Trust Agreement,
then the Holders of Outstanding Capital Securities as a class will be entitled
to vote on such amendment or proposal and such amendment or proposal shall not
be effective except with the approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Issuer Trust to be
taxable as a corporation or classified as other than a grantor trust for United
States Federal income tax purposes.

SECTION 6.2. Notice of Meetings.

Notice of all meetings of the Holders of the Capital Securities,
stating the time, place and purpose of the meeting, shall be given by the
Property Trustee pursuant to Section 10.8 to each Holder of Capital Securities,
at such Holder's registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.

SECTION 6.3. Meetings of Holders of the Capital Securities.

No annual meeting of Holders is required to be held. The
Administrative Trustees, however, shall call a meeting of the Holders of the
Capital Securities to vote on any matter upon the written request of the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Capital Securities and the Administrative Trustees or the Property Trustee may,
at any time in their discretion, call a meeting of the Holders of the Capital
Securities to vote on any matters as to which such Holders are entitled to
vote.

The Holders of at least a Majority in Liquidation Amount of the
Capital Securities, present in person or by proxy, shall constitute a quorum at
any meeting of the Holders of the Capital Securities.

If a quorum is present at a meeting, an affirmative vote by the
Holders present, in person or by proxy, holding Capital Securities representing
at least a majority of the aggregate Liquidation Amount of the Capital
Securities held by the Holders present, either in person or by proxy, at such
meeting shall constitute the action of the Holders of the Capital Securities,
unless this Trust Agreement requires a greater number of affirmative votes.

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SECTION 6.4. Voting Rights.

Holders shall be entitled to one vote for each $1,000 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.

SECTION 6.5. Proxies, etc.

At any meeting of Holders, any Holder entitled to vote thereat may
vote by proxy, provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Administrative Trustees, or with such
other officer or agent of the Issuer Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be solicited in
the name of the Property Trustee or one or more officers of the Property
Trustee. Only Holders of record shall be entitled to vote. When Trust
Securities are held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Holder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. No proxy shall be valid more than
three years after its date of execution.

SECTION 6.6. Holder Action by Written Consent.

Any action that may be taken by Holders of Capital Securities at a
meeting may be taken without a meeting if Holders holding at least a Majority
in Liquidation Amount of the Capital Securities entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
other provision of this Trust Agreement) shall consent to the action in
writing. Any action that may be taken by the Holder of all the Common
Securities may be taken if such Holder shall consent to the action in writing.

SECTION 6.7. Record Date for Voting and Other Purposes.

For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Holders or the payment of a
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.

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SECTION 6.8. Acts of Holders.

Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to an Administrative Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Trust Agreement and (subject to
Section 8.1) conclusive in favor of the Issuer Trustees, if made in the manner
provided in this Section 6.8.

The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner that any Issuer Trustee receiving
the same deems sufficient.

The ownership of Trust Securities shall be proved by the Securities
Register.

Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees, the Depositor or the Issuer Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.

Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to
such appointment with regard to all or any part of such Liquidation Amount.

If any dispute shall arise among the Holders or the Issuer Trustees
with respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such Holder
or Issuer Trustee under this Article VI, then the determination of such matter
by the Property Trustee shall be conclusive with respect to such matter.

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SECTION 6.9. Inspection of Records.

Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
during normal business hours for any purpose reasonably related to such
Holder's interest as a Holder.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

SECTION 7.1. Representations and Warranties of the Property Trustee
and the Delaware Trustee.

The Property Trustee and the Delaware Trustee, each severally on
behalf of and as to itself, hereby represents and warrants for the benefit of
the Depositor and the Holders that:

(a) the Property Trustee is a banking corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware;

(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;

(c) the Delaware Trustee is a banking corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware;

(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;

(e) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;

(f) the execution, delivery and performance of this Trust Agreement
has been duly authorized by all necessary corporate or other action on the part
of the Property Trustee and the Delaware Trustee and does not require any
approval of stockholders of the Property Trustee and the Delaware Trustee and
such execution, delivery and performance

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will not (i) violate the Charter or By-laws of the Property Trustee or the
Delaware Trustee, (ii) violate any provision of, or constitute, with or without
notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Property Trustee or the
Delaware Trustee is a party or by which it is bound, or (iii) violate any law,
governmental rule or regulation of the United States or the State of Delaware,
as the case may be, governing the banking, trust or general powers of the
Property Trustee or the Delaware Trustee (as appropriate in context) or any
order, judgment or decree applicable to the Property Trustee or the Delaware
Trustee;

(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein requires the consent or approval
of, the giving of notice to, the registration with or the taking of any other
action with respect to any governmental authority or agency under any existing
law of the United States or the State of Delaware governing the banking, trust
or general powers of the Property Trustee or the Delaware Trustee, as the case
may be; and

(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal that,
individually or in the aggregate, would materially and adversely affect the
Issuer Trust or would question the right, power and authority of the Property
Trustee or the Delaware Trustee, as the case may be, to enter into or perform
its obligations as one of the Issuer Trustees under this Trust Agreement.

SECTION 7.2. Representations and Warranties of Depositor.

The Depositor hereby represents and warrants for the benefit of the
Holders that:

(a) the Trust Securities Certificates issued at the Time of Delivery
on behalf of the Issuer Trust have been duly authorized and will have been duly
and validly executed, issued and delivered by the Issuer Trustees pursuant to
the terms and provisions of, and in accordance with the requirements of, this
Trust Agreement and the Holders will be, as of such date, entitled to the
benefits of this Trust Agreement; and

(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either Issuer
Trustee of this Trust Agreement.

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ARTICLE VIII

THE ISSUER TRUSTEES; PAYING AGENTS

SECTION 8.1. Certain Duties and Responsibilities.

(a) The duties and responsibilities of the Issuer Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, but subject to Section
8.1(c), no provision of this Trust Agreement shall require any of the Issuer
Trustees to expend or risk its or their own funds or otherwise incur any
financial liability in the performance of any of its or their duties hereunder,
or in the exercise of any of its or their rights or powers, if it or they shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it or
them. Whether or not therein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees shall be subject to the provisions
of this Section 8.1. Nothing in this Trust Agreement shall be construed to
release an Administrative Trustee from liability for his or her own gross
negligent action, his or her own gross negligent failure to act, or his or her
own wilful misconduct. To the extent that, at law or in equity, an Issuer
Trustee has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee shall not be liable to the Issuer Trust or to any
Holder for such Issuer Trustee's good faith reliance on the provisions of this
Trust Agreement. The provisions of this Trust Agreement, to the extent that
they restrict the duties and liabilities of the Issuer Trustees otherwise
existing at law or in equity, are agreed by the Depositor and the Holders to
replace such other duties and liabilities of the Issuer Trustees.

(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms hereof.
Each Holder, by its acceptance of a Trust Security, agrees that it will look
solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the Issuer
Trustees are not personally liable to it for any amount distributable in
respect of any Trust Security or for any other liability in respect of any
Trust Security. This Section 8.1(b) does not limit the liability of the Issuer
Trustees expressly set forth elsewhere in this Trust Agreement or, in the case
of the Property Trustee, in the Trust Indenture Act.

(c) If an Event of Default has occurred and is continuing, the
Property Trustee shall enforce this Trust Agreement for the benefit of the
Holders.

(d) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only

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such duties as are specifically set forth in this Trust Agreement (including
pursuant to Section 10.10), and no implied covenants shall be read into this
Trust Agreement against the Property Trustee. If an Event of Default has
occurred (that has not been cured or waived pursuant to Section 5.13), the
Property Trustee shall exercise such of the rights and powers vested in it by
this Trust Agreement, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.

(e) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee or the Delaware Trustee from liability for its own
negligent action, its own negligent failure to act, or its own wilful
misconduct, except that:

(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:

(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Trust Agreement (including pursuant to Section 10.10),
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Trust Agreement (including pursuant to
Section 10.10); and

(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Trust Agreement; but in the case of any
such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be
furnished to the Property Trustee, the Property Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Trust Agreement.

(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;

(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;

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(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Payment Account shall be to deal with such Property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;

(v) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law; and

(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or misconduct of
any other Issuer Trustee or the Depositor.

(f) The Administrative Trustees shall not be responsible for
monitoring the compliance by the Issuer Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall either Administrative
Trustee be liable for the default or misconduct of any other Issuer Trustee or
the Depositor.

SECTION 8.2. Certain Notices.

Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such Event of
Default to the Holders and the Administrative Trustee, unless such Event of
Default shall have been cured or waived.

Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such exercise
to the Holders and the Administrative Trustees, unless such exercise shall have
been revoked.

The Property Trustee shall not be deemed to have knowledge of any
Event of Default unless the Property Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this Trust
Agreement shall have obtained actual knowledge, of such Event of Default.

SECTION 8.3. Certain Rights of Property Trustee.

Subject to the provisions of Section 8.1:

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(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;

(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein, or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to
which the Holders of the Capital Securities are entitled to vote under the
terms of this Trust Agreement, the Property Trustee shall deliver a notice to
the Depositor requesting the Depositor's opinion as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be instructed in writing to
take, or to refrain from taking, by the Depositor; provided, however, that if
the Property Trustee does not receive such instructions of the Depositor within
ten Business Days after it has delivered such notice, or such reasonably
shorter period of time set forth in such notice (which to the extent
practicable shall not be less than two Business Days), it may, but shall be
under no duty to, take or refrain from taking such action not inconsistent with
this Trust Agreement as it shall deem advisable and in the best interests of
the Holders, in which event the Property Trustee shall have no liability except
for its own bad faith, negligence or wilful misconduct;

(c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;

(d) any direction or act of an Administrative Trustee contemplated by
this Trust Agreement shall be sufficiently evidenced by a certificate executed
by such Administrative Trustee and setting forth such direction or act;

(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or re-registration thereof;

(f) the Property Trustee may consult with counsel (which counsel may
be counsel to the Depositor or any of its Affiliates, and may include any of
its employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;

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(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction; provided that, nothing
contained in this Section 8.3(g) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;

(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;

(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible
for its own negligence, bad faith or wilful misconduct with respect to
selection of any agent or attorney appointed by it hereunder;

(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders (which
instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action), (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received, and (iii)
shall be protected in acting in accordance with such instructions; and

(k) except as otherwise expressly provided by this Trust Agreement,
the Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Trust Agreement.

No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on any Issuer Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which it shall be unqualified
or incompetent in accordance with applicable law, to perform any such act or
acts, or to exercise any such right, power, duty or obligation. No permissive
power or authority available to any Issuer Trustee shall be construed to be a
duty.

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SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
do not assume any responsibility for their correctness. The Issuer Trustees
shall not be accountable for the use or application by the Depositor of the
proceeds of the Debentures.

The Property Trustee may conclusively assume that any funds held by it
hereunder are legally available unless an officer of the Property Trustee
assigned to its Corporate Trust Administration department shall have received
written notice from the Depositor, any Holder or any other Issuer Trustee that
such funds are not legally available.

SECTION 8.5. May Hold Securities.

Any Issuer Trustee or any agent of any Issuer Trustee or the Issuer
Trust, in its individual or any other capacity, may become the owner or pledgee
of Trust Securities and, subject to Sections 8.8 and 8.13 and, except as
provided in the definition of the term "Outstanding" in Article I, may
otherwise deal with the Issuer Trust with the same rights it would have if it
were not an Issuer Trustee or such agent.

SECTION 8.6. Compensation; Indemnity; Fees.

The Depositor agrees:

(a) to pay to each Issuer Trustee and Paying Agent from time to time
such reasonable compensation for all services rendered by them hereunder as may
be agreed by the Depositor and such Issuer Trustee or Paying Agent, as the case
may be, from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);

(b) except as otherwise expressly provided herein, to reimburse each
Issuer Trustee and Paying Agent upon request for all reasonable expenses,
disbursements and advances incurred or made by each Issuer Trustee and Paying
Agent in accordance with any provision of this Trust Agreement (including the
reasonable compensation and the expenses and disbursements of their agents and
counsel), except any such expense, disbursement or advance as may be
attributable to their negligence, bad faith or wilful misconduct; and

(c) to the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Issuer Trustee, (ii) each Paying Agent, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee
or agent of the Issuer Trust (referred to herein as an "Indemnified Person")
from and against any loss, damage, liability, tax, penalty, expense or claim of
any kind or nature whatsoever incurred by such Indemnified Person by reason of
the creation, operation or termination of the Issuer Trust or any act or
omission performed

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or omitted by such Indemnified Person in good faith on behalf of the Issuer
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence, bad faith or wilful misconduct with
respect to such acts or omissions.

The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement.

No Issuer Trustee or Paying Agent may claim any Lien on any Trust
Property as a result of any amount due pursuant to this Section 8.6.

The Depositor, any Issuer Trustee and any Paying Agent may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities shall
have no rights by virtue of this Trust Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Issuer Trust, shall
not be deemed wrongful or improper. Neither the Depositor, any Paying Agent nor
any Issuer Trustee shall be obligated to present any particular investment or
other opportunity to the Issuer Trust even if such opportunity is of a
character that, if presented to the Issuer Trust, could be taken by the Issuer
Trust, and the Depositor, any Issuer Trustee or any Paying Agent shall have the
right to take for its own account (individually or as a partner or fiduciary)
or to recommend to others any such particular investment or other opportunity.
Any Issuer Trustee or Paying Agent may engage or be interested in any financial
or other transaction with the Depositor or any Affiliate of the Depositor, or
may act as depository for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Depositor or its
Affiliates.

SECTION 8.7. Corporate Property Trustee Required; Eligibility of
Issuer Trustees.

(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such, and that has at the time of such appointment securities
rated in one of the three highest rating categories by a nationally recognized
statistical rating organization and a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section 8.7 and to the
extent permitted by the Trust Indenture Act, the combined capital and surplus
of such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section 8.7, it shall resign
immediately in the manner and with

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the effect hereinafter specified in this Article. At the time of appointment,
the Property Trustee must have securities rated in one of the three highest
rating categories by a nationally recognized statistical rating organization.

(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.

(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware, or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law and that shall
act through one or more persons authorized to bind such entity.

SECTION 8.8. Conflicting Interests.

(a) If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.

(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i)
of the first proviso contained in Section 310(b) of the Trust Indenture Act.

SECTION 8.9. Co-Trustees and Separate Trustee.

Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, Depositor and the Administrative Trustees,
by agreed action of the majority of them shall have power to appoint, and upon
the written request of the Administrative Trustee and the Depositor shall for
such purpose join with the Administrative Trustees in the execution, delivery,
and performance of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Property Trustee either to act as
co-trustee, jointly with the Property Trustee, of all or any part of such
Trust Property, or to the extent required by law to act as separate trustee of
any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section 8.9. Any co-trustee
or separate trustee appointed pursuant to this Section 8.9 shall either be (i)
a natural person who is at least 21 years of age and a resident of the United
States, or (ii) a legal entity with its

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principal place of business in the United States that shall act through one or
more persons authorized to bind such entity. If an Event of Default under the
Indenture shall have occurred and be continuing, the Property Trustee alone
shall have the power to make such appointment.

Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.

Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:

(a) The Trust Securities shall be executed by one or more
Administrative Trustees, and the Trust Securities shall be delivered by the
Property Trustee, and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Property Trustee specified
hereunder shall be exercised solely by the Property Trustee and not by such
co-trustee or separate trustee.

(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.

(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section 8.9, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section
8.9.

(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.

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(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.

(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.

SECTION 8.10. Resignation and Removal; Appointment of Successor.

No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.

Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.

Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by Act of the Holder
of the Common Securities. If a Debenture Event of Default shall have occurred
and be continuing, the Property Trustee or the Delaware Trustee, or both of
them, may be removed at such time by Act of the Holders of a Majority in
Liquidation Amount of the Capital Securities, delivered to the Relevant Trustee
(in its individual capacity and, in the case of the Property Trustee, on behalf
of the Issuer Trust). An Administrative Trustee may be removed by the Holder of
the Common Securities at any time.

If any Issuer Trustee shall resign, be removed or become incapable of
acting as Issuer Trustee, or if a vacancy shall occur in the office of any
Issuer Trustee for any cause, at a time when no Debenture Event of Default
shall have occurred and be continuing, the Holder of the Common Securities, by
Act delivered to the retiring Issuer Trustee, shall promptly appoint a
successor Issuer Trustee or Issuer Trustees, and such successor Issuer Trustee
shall comply with the applicable requirements of Section 8.11. If the Property
Trustee or the Delaware Trustee shall resign, be removed or become incapable of
continuing to act as the Property Trustee or the Delaware Trustee, as the case
may be, at a time when a Debenture Event of Default shall have occurred and be
continuing, the Holders of Capital Securities, by Act of the Holders of a
Majority in Liquidation Amount of the Capital Securities delivered to the
retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee
or Trustees, and such successor Issuer Trustee shall comply with the applicable
requirements of Section 8.11. If an Administrative Trustee shall resign, be
removed or become incapable of acting as Administrative Trustee, at a time when
a Debenture Event of Default shall have occurred and be continuing, the Holder
of the

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Common Securities by Act delivered to the Administrative Trustee shall promptly
appoint a successor Administrative Trustee or Administrative Trustees and such
successor Administrative Trustee or Trustees shall comply with the applicable
requirements of Section 8.11. If no successor Relevant Trustee shall have been
so appointed by the Holder of the Common Securities or the Holders of a
Majority in Liquidation Amount of the Capital Securities, as the case may be,
and accepted appointment in the manner required by Section 8.11, any Holder who
has been a Holder of Trust Securities for at least six months may, on behalf of
such Holder and all others similarly situated, or any other Issuer Trustee, may
petition any court of competent jurisdiction for the appointment of a successor
Relevant Trustee.

The Property Trustee shall give notice of each resignation and each
removal of an Issuer Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.

Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Delaware Trustee who is a natural person dies or becomes, in
the opinion of the Depositor, incompetent or incapacitated, the vacancy created
by such death, incompetence or incapacity may be filled by (a) the unanimous
act of the remaining Administrative Trustees if there are at least two of them
or (b) otherwise by the Depositor (with the successor in either case being a
Person who satisfies the eligibility requirement for the Delaware Trustee set
forth in Section 8.7).

SECTION 8.11. Acceptance of Appointment by Successor.

In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust, and (b) shall add to or change any of
the provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Issuer Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Issuer Trust or any successor Relevant
Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver
to such successor Relevant Trustee all Trust

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Property, all proceeds thereof and money held by such retiring Relevant Trustee
hereunder with respect to the Trust Securities and the Issuer Trust.

Upon request of any Issuer Trustee or any such successor Relevant
Trustee, the retiring Relevant Trustee or the Issuer Trust, as the case may be,
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.

No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.

SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business.

Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person, succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor
of such Relevant Trustee hereunder, provided that such Person shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.

SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust.

If and when the Property Trustee shall be or become a creditor of the
Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor).

SECTION 8.14. Property Trustee May File Proofs of Claim.

In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any
Distributions on the Trust Securities shall then be due and payable and
irrespective of whether the Property Trustee shall have made any demand on the
Issuer Trust for the payment of any past due Distributions) shall be entitled
and empowered, to the fullest extent permitted by law, by intervention in such
proceeding or otherwise:

(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any

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claim for the reasonable compensation, expenses, disbursements and advances of
the Property Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceeding, and

(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.

Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.

SECTION 8.15. Reports by Property Trustee.

(a) Not later than January 31 of each year commencing with January 31,
1998, the Property Trustee shall transmit to all Holders in accordance with
Section 10.8, and to the Depositor, a brief report dated as of the immediately
preceding December 31 with respect to:

(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under
said Section, a written statement to such effect;

(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the
twelve-month period (or, in the case of the initial report, the period
since the Closing Date) ending with such December 31 or, if the
Property Trustee has not complied in any material respect with such
obligations, a description of such noncompliance; and

(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.

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(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.

(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national stock exchange,
the Nasdaq National Market or such other interdealer quotation system or
self-regulatory organization upon which the Trust Securities are listed or
traded, with the Commission and with the Depositor.

SECTION 8.16. Reports to the Property Trustee.

Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a) of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act. The Depositor and the Administrative Trustees on behalf of
the Issuer Trust shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all of the terms and
covenants applicable to such Person hereunder.

SECTION 8.17. Evidence of Compliance with Conditions Precedent.

Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the
form of an Officers' Certificate.

SECTION 8.18. Number of Issuer Trustees.

(a) The number of Issuer Trustees shall be four, provided that the
Property Trustee and the Delaware Trustee may be the same Person.

(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.

(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul, dissolve or terminate the Issuer Trust.

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SECTION 8.19. Delegation of Power.

(a) Any Administrative Trustee, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 such
Administrative Trustee's power for the purpose of executing any documents
contemplated in Section 2.7(a), including any registration statement or
amendment thereto filed with the Commission, or making any other governmental
filing; and

(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things
and the execution of such instruments either in the name of the Issuer Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement.

SECTION 8.20. Appointment of Administrative Trustees.

(a) The Administrative Trustee shall initially be W. Flake Oakley and
Young J. Boozer, III, and their successors shall be appointed by the Holder of
all the Common Securities. The Administrative Trustees may resign or be removed
by the Holder of all the Common Securities at any time. Upon any resignation or
removal of an Administrative Trustee, the Depositor shall appoint a successor
Administrative Trustee. If at any time there is no Administrative Trustee, the
Property Trustee or any Holder who has been a Holder of Trust Securities for at
least six months may petition any court of competent jurisdiction for the
appointment of one or more Administrative Trustees.

(b) Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with this Section 8.20, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other provision of
this Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.

(c) Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Administrative Trustee who is a natural person dies or
becomes, in the opinion of the Holder of all the Common Securities, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the unanimous act of the remaining Administrative Trustees, if
there were at least two of them prior to such vacancy, and by the Depositor, if
there were not two such Administrative Trustees immediately prior to such
vacancy (with the successor being a Person who satisfies the eligibility
requirement for Administrative Trustees set forth in Section 8.7).

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ARTICLE IX

TERMINATION, LIQUIDATION AND MERGER

SECTION 9.1. Termination Upon Expiration Date.

Unless earlier terminated, the Issuer Trust shall automatically
terminate on January 15, 2027 (the "Expiration Date"), following the
distribution of the Trust Property in accordance with Section 9.4.

SECTION 9.2. Early Termination.

The first to occur of any of the following events is an "Early
Termination Event":

(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of all the Common Securities;

(b) the written direction to the Property Trustee from the Holder of
all the Common Securities at any time to terminate the Issuer Trust and to
distribute the Debentures to Holders in exchange for the Capital Securities
(which direction is optional and wholly within the discretion of the Holder of
all the Common Securities);

(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.

SECTION 9.3. Termination.

The respective obligations and responsibilities of the Issuer Trustees
and the Issuer Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property Trustee
to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2; (b) the payment of any
expenses owed by the Issuer Trust; and (c) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Issuer Trust or the Holders.

SECTION 9.4. Liquidation.

(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Issuer Trustees as expeditiously as the Issuer Trustees
determine to be possible by distributing,

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after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to each Holder a Like Amount of Debentures, subject to
Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid mailed not less than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address appearing in the Securities Register. All such notices of
liquidation shall:

(i) state the Liquidation Date;

(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and

(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Property Trustee and the Administrative Trustees
shall deem appropriate.

(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Debentures to
Holders, the Property Trustee, either itself acting as exchange agent or
through the appointment of a separate exchange agent, shall establish a record
date for such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and establish such procedures as it shall deem appropriate to
effect the distribution of Debentures in exchange for the Outstanding Trust
Securities Certificates.

(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such
Trust Securities Certificates to the exchange agent for exchange, (iii) any
Trust Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Trust Securities Certificates with respect to such
Debentures), and (iv) all rights of Holders holding Trust Securities will
cease, except the right of such Holders to receive Debentures upon surrender of
Trust Securities Certificates.

(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner
provided herein is determined by the Property Trustee not to be practical, or
if an Early Termination Event specified in clause (c) of

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Section 9.2 occurs, the Trust Property shall be liquidated, and the Issuer
Trust shall be dissolved, wound-up or terminated, by the Property Trustee in
such manner as the Property Trustee determines. In such event, on the date of
the dissolution, winding-up or other termination of the Issuer Trust, Holders
will be entitled to receive out of the assets of the Issuer Trust available for
distribution to Holders, after satisfaction of liabilities to creditors of the
Issuer Trust as provided by applicable law, an amount equal to the Liquidation
Amount per Trust Security plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If,
upon any such dissolution, winding up or termination, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer
Trust on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holder of all the Common Securities will be entitled
to receive Liquidation Distributions upon any such dissolution, winding-up or
termination pro rata (determined as aforesaid) with Holders of Capital
Securities, except that, if a Debenture Event of Default specified in Section
5.1(1) or 5.1(2) of the Indenture has occurred and is continuing, the Capital
Securities shall have a priority over the Common Securities as provided in
Section 4.3.

SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust.

The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. At the request of the Holder of all the Common Securities,
with the consent of the Administrative Trustees, but without the consent of the
Holders of the Outstanding Capital Securities, the Issuer Trust may merge with
or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer Trust with respect to the Capital Securities, or (b) substitutes for the
Capital Securities other securities having substantially the same terms as the
Capital Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Capital Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee is appointed to hold the Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization that
then assigns a rating to the Capital Securities, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in any material
respect, (v) such successor entity has a purpose substantially identical to
that of the Issuer Trust, (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Depositor has
received an Opinion of Counsel to the effect that (a) such

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merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the Holders
of the Capital Securities (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Issuer Trust nor such
successor entity will be required to register as an "investment company" under
the Investment Company Act, and (vii) the Depositor or its permitted transferee
owns all of the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee Agreement. Notwithstanding the foregoing,
the Issuer Trust shall not, except with the consent of holders of all of the
Capital Securities, consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Issuer Trust or the successor entity to be taxable as a corporation or
classified as other than a grantor trust for United States Federal income tax
purposes.

The transactions contemplated by the Registration Rights
Agreement shall not be prohibited by this Section 9.5.

ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1. Limitation of Rights of Holders.

Except as set forth in Section 9.2, the death or incapacity of any
person having an interest, beneficial or otherwise, in Trust Securities shall
not operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such person or any Holder for such person, to claim
an accounting, take any action or bring any proceeding in any court for a
partition or winding up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.

SECTION 10.2. Amendment.

(a) This Trust Agreement may be amended from time to time by the
Issuer Trustees and the Holder of the Common Securities, without the consent of
any Holder of the Capital Securities, (i) to cure any ambiguity, correct or
supplement any provision herein that may be inconsistent with any other
provision herein, or to make any other provisions with respect to matters or
questions arising under this Trust Agreement, which shall not be inconsistent
with the other provisions of this Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of this Trust Agreement to such extent as shall be
necessary to ensure that the Issuer Trust will not be taxable as a corporation
or will be classified as a grantor trust for

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<PAGE> 65

United States Federal income tax purposes at all times that any Trust
Securities are Outstanding or to ensure that the Issuer Trust will not be
required to register as an "investment company" under the Investment Company
Act; provided, however, that in either case (i) or (ii) such action shall not
adversely affect in any material respect the interests of any Holder.

(b) Except as provided in Section 10.2(c) hereof, any provision of
this Trust Agreement may be amended by the Issuer Trustees and the Holder of
the Common Securities and with (i) the consent of Holders of at least a
Majority in Liquidation Amount of the Capital Securities, and (ii) receipt by
the Issuer Trustees of an Opinion of Counsel to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not cause the Issuer Trust to be taxable as a corporation
for United States Federal income tax purposes or affect the Issuer Trust's
exemption from status as an "investment company" under the Investment Company
Act.

(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date, or (ii) restrict the right of a Holder to institute suit
for the enforcement of any such payment on or after such date; and
notwithstanding any other provision herein, without the unanimous consent of
the Holders (such consent being obtained in accordance with Section 6.3 or 6.6
hereof), this paragraph (c) of this Section 10.2 may not be amended.

(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement that would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or to be taxable as a corporation or to be classified as other than a
grantor trust for United States Federal income tax purposes.

(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrative Trustees, this
Trust Agreement may not be amended in a manner that imposes any additional
obligation on the Depositor or the Administrative Trustees.

(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees or the Property Trustee shall promptly provide to
the Depositor a copy of such amendment.

(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement that affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive

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<PAGE> 66

an Opinion of Counsel and an Officers' Certificate stating that any amendment
to this Trust Agreement is in compliance with this Trust Agreement.

SECTION 10.3. Separability.

In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

SECTION 10.4. Governing Law.

THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR AND THE ISSUER TRUSTEES WITH RESPECT
TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS. THE PROVISIONS OF SECTION 3540 OF
TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THIS TRUST.

SECTION 10.5. Payments Due on Non-Business Day.

If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.1(a) and 4.2(d)), with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount for the period after such date.

SECTION 10.6. Successors.

This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust and any Issuer
Trustee, including any successor by operation of law. Except in connection with
a consolidation, merger or sale involving the Depositor that is permitted under
Article VIII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.

SECTION 10.7. Headings.

The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.

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SECTION 10.8. Reports, Notices and Demands.

(a) Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon any Holder or the Depositor may be given or served in writing
by deposit thereof, first-class postage prepaid, in the United States mail,
hand delivery or facsimile transmission, in each case, addressed, (a) in the
case of a Holder of Capital Securities, to such Holder as such Holder's name
and address may appear on the Securities Register; and (b) in the case of the
Holder of the Common Securities or the Depositor, to The Colonial BancGroup,
Inc., One Commerce Street, Montgomery, Alabama 36104, Attention: W. Flake
Oakley, facsimile no.: (334) 240-6019, or to such other address as may be
specified in a written notice by the Holder of the Common Securities or the
Depositor, as the case may be, to the Property Trustee. Such notice, demand or
other communication to or upon a Holder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission. Such notice, demand or other communication to or upon the
Depositor shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Depositor.

(b) Any notice, demand or other communication that by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon the Issuer Trust or any Issuer Trustee may be given or served in writing
by deposit thereof, first-class postage prepaid, in the United States mail,
hand delivery or facsimile transmission, in each case, addressed, (a) in the
case of the Property Trustee to Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890, facsimile (302) 651-8882,
Attention: Corporate Trust Administration; (b) in the case of the Delaware
Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, facsimile (302) 651-8882, Attention:
Corporate Trust Administration; (c) in the case of the Administrative Trustees,
to them at the address above for notices to the Depositor, marked "Attention:
Administrative Trustees of Colonial Capital II; and (d) in the case of the
Issuer Trust, to its principal executive office specified in Section 2.2, with
a copy to each of the Property Trustee, the Delaware Trustee and the
Administrative Trustees, or, in each such case, to such other address as may be
specified in a written notice by the applicable Person to the Property Trustee,
the Depositor and the Holders. Such notice, demand or other communication to or
upon the Property Trustee, the Delaware Trustee, the Administrative Trustees or
the Issuer Trust shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Property Trustee, the Delaware
Trustee, such Administrative Trustees or the Issuer Trust, as the case may be.

SECTION 10.9. Agreement Not to Petition.

Each of the Issuer Trustees and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer Trust
has been terminated in accordance with Article IX, they shall not file, or join
in the filing of, a petition against the

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<PAGE> 68

Issuer Trust under any bankruptcy, insolvency, reorganization or other similar
law (including the United States Bankruptcy Code) (collectively, "Bankruptcy
Laws") or otherwise join in the commencement of any proceeding against the
Issuer Trust under any Bankruptcy Law. The Property Trustee and the Depositor
agree, for the benefit of Holders, that if the Depositor or any Issuer Trustee
takes action in violation of this Section 10.9, then at the expense of the
Depositor, the Property Trustee or Depositor, as the case may be, shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such petition by the Depositor against the Issuer Trust or the commencement of
such action and raise the defense that the Depositor has agreed in writing not
to take such action and should be estopped and precluded therefrom and such
other defenses, if any, as counsel for the Issuer Trustees or the Issuer Trust
may assert.

SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.

(a) The Trust Indenture Act shall apply as a matter of contract to
this Trust Agreement for purposes of interpretation, construction and defining
the rights and obligations hereunder. Except as otherwise expressly provided
herein, if and to the extent that any provision of this Trust Agreement limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.

(b) The Property Trustee shall be the only Issuer Trustee that is a
trustee for the purposes of the Trust Indenture Act.

(c) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Issuer Trust.

SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee
Agreement, Indenture and Registration Rights Agreement.

THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE
AGREEMENT, AND THE INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND
OTHER TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE
THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS
AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND
EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.

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<PAGE> 69

This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

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<PAGE> 70

IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Trust Agreement as of the day and year first above written.

THE COLONIAL BANCGROUP, INC.
as Depositor

By:
-----------------------------------------
Name: W. Flake Oakley
Title: Executive Vice President
and Chief Financial Officer

WILMINGTON TRUST COMPANY,
as Property Trustee

By:
-----------------------------------------
Name:
Title:

WILMINGTON TRUST COMPANY,
as Delaware Trustee

By:
-----------------------------------------
Name:
Title:

By:
-----------------------------------------
Name: W. Flake Oakley
as Administrative Trustee

By:
-----------------------------------------
Name: Young J. Boozer, III
as Administrative Trustee

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<PAGE> 1
EXHIBIT 25(A)

Registration No. 333-22135 and
333-22135-01

_______________________________________________________________________________
_______________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) ___

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

THE COLONIAL BANCGROUP, INC.

(Exact name of obligor as specified in its charter)

Delaware 63-0661573
(State of incorporation) (I.R.S. employer identification no.)

One Commerce Street, Suite 800
Montgomery, Alabama 36104
(Address of principal executive offices) (Zip Code)

Junior Subordinated Deferrable Interest Debentures
of The Colonial BancGroup, Inc.
(Title of the indenture securities)
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 2

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington
Trust Company.

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 20th day
of February, 1997.

WILMINGTON TRUST COMPANY
[SEAL]

Attest:/s/ Patricia A. Evans By:/s/ Emmett R. Harmon
----------------------------- ----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

2
<PAGE> 3

EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987
<PAGE> 4

AMENDED CHARTER

ACT OF INCORPORATION

WILMINGTON TRUST COMPANY

WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:

FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.

THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:

Corporation shall require, to make by-laws not
inconsistent with the Constitution or laws of the United
States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or
securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers, rights,
privileges and franchises incident to a corporation which are
proper or necessary for the transaction of the business of
the Corporation hereby created.

(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.

(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.

(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.

(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.

(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.

2
<PAGE> 6

(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become surety
upon any bond, recognizance, obligation, judgment, suit,
order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or
hereafter be required by any law, judge, officer or court in
the State of Delaware or elsewhere.

(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by
any persons, corporations, court, officer, or authority, in
the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.

(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.

(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such
bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual

3
<PAGE> 7

owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or
realize such investments; to issue bonds and secure the same
by pledges or deeds of trust or mortgages of or upon the
whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.

(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:

(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.

(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.

(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.

(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures, and
other negotiable or transferable instruments.

(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to purchase
or otherwise acquire, to hold, own, to mortgage, sell, convey
or otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.

4
<PAGE> 8

(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph) be
nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes and
powers specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes and
powers.

FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").

(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:

(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;

(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock of
such series shall be paid, the extent of the preference or
relation, if any, of such dividends to the dividends payable
on any other class or classes, or series of the same or other
class of

5
<PAGE> 9

stock and whether such dividends shall be cumulative or
non-cumulative;

(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series of
the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;

(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.

(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.

(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and

(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or
all series of Preferred Stock as a class, to elect one or
more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.

(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.

(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the holders
of Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to

6
<PAGE> 10

receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.

(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.

(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.

(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.

7
<PAGE> 11

(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.

(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.

(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.

FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.

(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.

(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the

8
<PAGE> 12

Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.

(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.

(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.

(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.

(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.

SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.

SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.

EIGHTH: - This Act shall be deemed and taken to be a private Act.

9
<PAGE> 13

NINTH: - This Corporation is to have perpetual existence.

TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.

ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.

TWELFTH: - The Corporation may transact business in any part of the
world.

THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).

FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.

FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:

(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or

(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or

10
<PAGE> 14

(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or

(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or

(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any similar transaction (whether or not
with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate of any
Interested Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.

(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).

(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.

(1) A "person" shall mean any individual firm, corporation or
other entity.

(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on

11
<PAGE> 15

such business combination, or immediately prior to the consummation
of any such transaction:

(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or

(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.

(3) A person shall be the "beneficial owner" of any Voting Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or

(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or

(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.

(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.

(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.

12
<PAGE> 16

(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.

(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether a
person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or any
Subsidiary has an aggregate fair market value of $1,00,000 or
more.

(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.

SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.

SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.

(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."

13
<PAGE> 17

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON JANUARY 16, 1997
<PAGE> 18

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.

Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.

Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10 days before said meeting,
at his last known address, a written or printed notice fixing the time and
place of such meeting.

Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.

ARTICLE II
DIRECTORS

Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.

Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its
<PAGE> 19

members, or at the call of the Chairman of the Board of Directors or the
President.

Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.

Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.

Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.

Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint at
any time such other committees and elect or appoint such other officers as it
may deem advisable. The Board of Directors may also elect at such meeting one
or more Associate Directors.

Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.

Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.

ARTICLE III
COMMITTEES

Section I. Executive Committee

(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who

2
<PAGE> 20

shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.

(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.

(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.

(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such
disaster shall be available for the transaction of its business, such Executive
Committee shall also be empowered to exercise all of the powers reserved to the
Trust Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of
the Company in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the Board of
Directors presently existing or hereafter passed from time to time for that
purpose, and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such
a disaster period until it shall be determined by any interim Executive
Committee acting under this section that it shall be to the advantage of the
Company to resume the conduct and management of its affairs and business under
all of the other provisions of these By-Laws.

3
<PAGE> 21

Section 2. Trust Committee

(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.

(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.

(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.

(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.

(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

Section 3. Audit Committee

(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.

(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.

(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.

Section 4. Compensation Committee

4
<PAGE> 22

(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors from
its own members who are not officers of the Company and who shall hold office
during the pleasure of the Board.

(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.

(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.

(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.

Section 6. Absence or Disqualification of Any Member of a Committee

(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.

ARTICLE IV
OFFICERS

Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.

5
<PAGE> 23

Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of Directors shall preside at all meetings of the Board of Directors
at which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and direct.

Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.

Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.

Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.

Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal

6
<PAGE> 24

operations of the Company.

There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.

Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.

Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.

Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman
of the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.

ARTICLE V
STOCK AND STOCK CERTIFICATES

Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.

Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.

Section 3. The Board of Directors of the Company is authorized to
fix in advance

7
<PAGE> 25

a record date for the determination of the stockholders entitled to notice of,
and to vote at, any meeting of stockholders and any adjournment thereof, or
entitled to receive payment of any dividend, or to any allotment or rights, or
to exercise any rights in respect of any change, conversion or exchange of
capital stock, or in connection with obtaining the consent of stockholders for
any purpose, which record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholders or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining such consent.

ARTICLE VI
SEAL

Section 1. The corporate seal of the Company shall be in the
following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

ARTICLE VII
FISCAL YEAR

Section 1. The fiscal year of the Company shall be the calendar
year.

ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY

Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver
and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.

8
<PAGE> 26

ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.

ARTICLE X
INDEMNIFICATION

Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust, enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person. The Corporation shall indemnify a person
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Corporation.

(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director or
officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.

(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of payment
of expenses

9
<PAGE> 27

under applicable law.

(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.

(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to
the time of such repeal or modification.

ARTICLE XI
AMENDMENTS TO THE BY-LAWS

Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.

10
<PAGE> 28

EXHIBIT C

SECTION 321(B) CONSENT

Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.

WILMINGTON TRUST COMPANY

Dated: February 20, 1997 By: /s/ Emmett R. Harmon
---------------------
Name: Emmett R. Harmon
Title: Vice President

<PAGE> 29

EXHIBIT D

NOTICE

This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.

REPORT OF CONDITION

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------- -----------------------
Name of Bank City

in the State of DELAWARE, at the close of business on December 31, 1996.

<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>

Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 213,895
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,818
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,297
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,634,003
LESS: Allowance for loan and lease losses. . . . . . 51,847
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,582,156
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,129
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . 52
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,593
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,300
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,359,950

</TABLE>

CONTINUED ON NEXT PAGE
<PAGE> 30

LIABILITIES

<S> <C> <C>
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,749,697
Noninterest-bearing . . . . . . . . 852,790
Interest-bearing. . . . . . . . . . 2,896,907
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,825
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192,295
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,526
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,756
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,929,099
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,371
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . . . . . . . 862
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,851
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . . . . . . . 5,359,950

</TABLE>

<PAGE> 1

EXHIBIT 25(B)

Registration No. 333-22135 and
333-22135-01

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)___

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

THE COLONIAL BANCGROUP, INC.
COLONIAL CAPITAL II

(Exact name of obligor as specified in its charter)

Delaware 63-0661573
Delaware Applied For
(State of incorporation) (I.R.S. employer identification no.)

One Commerce Street, Suite 800
Montgomery, Alabama 36104
(Address of principal executive offices) (Zip Code)

8.92% Capital Securities, Series A of Colonial Capital II
(Title of the indenture securities)

================================================================================
<PAGE> 2

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to
which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor is
not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

B. Copy of By-Laws of Wilmington Trust Company.

C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.

D. Copy of most recent Report of Condition of Wilmington Trust
Company.

WILMINGTON TRUST COMPANY
[SEAL]

Attest:/s/ Patricia A. Evans By:/s/ Emmett R. Harmon
------------------------------ ------------------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

2
<PAGE> 3
EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER

ACT OF INCORPORATION

WILMINGTON TRUST COMPANY

WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:

FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

SECOND: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is WILMINGTON TRUST COMPANY
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.

THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:

(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
<PAGE> 5
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.

(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.

(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other persons
and individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes, safes,
vaults and other receptacles for such property.

(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.

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<PAGE> 6
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to
be entered in any court of record within the State of Delaware
or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or
elsewhere.

(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding, managing,
and disposing of any and all estates and property, real,
personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by any
persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation
is so appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
duties devolving upon it by such appointment.

(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property held
and owned by it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness
and other property, any and all the rights, powers and
privileges of individual

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<PAGE> 7
owners thereof, including the right to vote thereon; to invest
and deal in and with any of the moneys of the Corporation upon
such securities and in such manner as it may think fit and
proper, and from time to time to vary or realize such
investments; to issue bonds and secure the same by pledges or
deeds of trust or mortgages of or upon the whole or any part
of the property held or owned by the Corporation, and to sell
and pledge such bonds, as and when the Board of Directors
shall determine, and in the promotion of its said corporate
business of investment and to the extent authorized by law, to
lease, purchase, hold, sell, assign, transfer, pledge,
mortgage and convey real and personal property of any name and
nature and any estate or interest therein.

(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.

(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to conduct in
any lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.

(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.

(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.

(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.

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<PAGE> 8
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be nowise
limited or restricted by reference to or inference from the
terms of any other clause of this or any other paragraph in
this charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.

FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").

(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article FOURTH,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:

(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like
action of the Board of Directors;

(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of

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<PAGE> 9
stock and whether such dividends shall be cumulative or
non-cumulative;

(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;

(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and

(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.

(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article FOURTH), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article FOURTH), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.

(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to

6
<PAGE> 10
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.

(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article FOURTH, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.

(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.

(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article FOURTH
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.

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<PAGE> 11
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.

(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.

(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.

FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.

(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.

(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the

8
<PAGE> 12
Corporation may be removed at any time without cause, but only by the
affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as
one class) cast at a meeting of the stockholders called for that
purpose.

(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.

(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.

(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.

(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.

SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.

EIGHTH: - This Act shall be deemed and taken to be a private Act.

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<PAGE> 13
NINTH: - This Corporation is to have perpetual existence.

TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.

ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.

TWELFTH: - The Corporation may transact business in any part of the
world.

THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).

FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time designated
by the Board, and the Directors may keep the books of the Company
outside of the State of Delaware at such places as may be from time to
time designated by them.

FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:

(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or

10
<PAGE> 14
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or

(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or

(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with
or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any class
of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.

(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to
any one or more of clauses (A) through (E) of paragraph 1
of the section (a).

(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.

(1) A "person" shall mean any individual firm, corporation or other
entity.

(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on

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<PAGE> 15
such business combination, or immediately prior to the consummation of
any such transaction:

(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding
voting Shares, or

(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession
shall have occurred in the course of a transaction or series
of transactions not involving a public offering within the
meaning of the Securities Act of 1933.

(3) A person shall be the "beneficial owner" of any Voting Shares:

(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or
indirectly, or

(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the
Corporation.

(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.

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<PAGE> 16
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect in December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.

(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person
is an Affiliate or Associate of another, (3) whether a person
has an agreement, arrangement or understanding with another as
to the matters referred to in paragraph (3) of section (c), or
(4) whether the assets subject to any business combination or
the consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,00,000 or more.

(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.

SIXTEENTH: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH
or SIXTEENTH of this Charter or Act of Incorporation.

SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.

(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect to
any act or omission occurring prior to the time of such repeal
or modification."

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<PAGE> 17
EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.

Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10 days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.

Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.

ARTICLE II
DIRECTORS

Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.

Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its

<PAGE> 19
members, or at the call of the Chairman of the Board of Directors or the
President.

Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.

Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.

Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.

Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.

Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.

Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.

ARTICLE III
COMMITTEES

Section I. Executive Committee

(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who

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<PAGE> 20
shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.

(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.

(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.

(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.

3
<PAGE> 21
Section 2. Trust Committee

(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.

(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.

(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.

(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.

Section 3. Audit Committee

(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.

(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.

(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.

Section 4. Compensation Committee

4
<PAGE> 22
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.

(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.

(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.

(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.

Section 6. Absence or Disqualification of Any Member of a Committee

(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.

ARTICLE IV
OFFICERS

Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.

5
<PAGE> 23
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.

Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors in the absence of the Chairman of the Board the
President shall have the powers and duties of the Chairman of the Board.

Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.

6
<PAGE> 24

operations of the Company.

There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.

Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.

There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.

Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.

Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.

ARTICLE V
STOCK AND STOCK CERTIFICATES

Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.

Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.

Section 3. The Board of Directors of the Company is authorized to fix
in advance

7
<PAGE> 25
a record date for the determination of the stockholders entitled to notice of,
and to vote at, any meeting of stockholders and any adjournment thereof, or
entitled to receive payment of any dividend, or to any allotment or rights, or
to exercise any rights in respect of any change, conversion or exchange of
capital stock, or in connection with obtaining the consent of stockholders for
any purpose, which record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholders or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining such consent.

ARTICLE VI
SEAL

Section 1. The corporate seal of the Company shall be in the following
form:

Between two concentric circles the words "Wilmington Trust
Company" within the inner circle the words "Wilmington,
Delaware."

ARTICLE VII
FISCAL YEAR

Section 1. The fiscal year of the Company shall be the calendar year.

ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY

Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.

8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.

ARTICLE X
INDEMNIFICATION

Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.

(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses

9
<PAGE> 27
under applicable law.

(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.

(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.

ARTICLE XI
AMENDMENTS TO THE BY-LAWS

Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or ByLaws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.

10
<PAGE> 28
EXHIBIT C

SECTION 321(B) CONSENT

WILMINGTON TRUST COMPANY

Dated: February 20, 1997 By: /s/ Emmett R. Harmon
------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29
EXHIBIT D

NOTICE

This form is intended to assist state nonmember banks and savings banks
with state publication requirements. It has not been approved by any
state banking authorities. Refer to your appropriate state banking
authorities for your state publication requirements.

REPORT OF CONDITION

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
Name of Bank City

in the State of DELAWARE , at the close of business on December 31, 1996.

ASSETS
<TABLE>
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............................. 213,895
Interest-bearing balances....................................................... 0
Held-to-maturity securities.............................................................. 465,818
Available-for-sale securities............................................................ 752,297
Federal funds sold....................................................................... 95,000
Securities purchased under agreements to resell.......................................... 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income........................................ 3,634,003
LESS: Allowance for loan and lease losses....................................... 51,847
LESS: Allocated transfer risk reserve........................................... 0
Loans and leases, net of unearned income, allowance, and reserve................ 3,582,156
Assets held in trading accounts.......................................................... 0
Premises and fixed assets (including capitalized leases)................................. 89,129
Other real estate owned.................................................................. 3,520
Investments in unconsolidated subsidiaries and associated companies...................... 52
Customers' liability to this bank on acceptances outstanding............................. 0
Intangible assets........................................................................ 4,593
Other assets............................................................................. 114,300
Total assets............................................................................. 5,359,950
</TABLE>

CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES

Deposits:
In domestic offices...................................................................... 3,749,697
Noninterest-bearing............................................................. 852,790
Interest-bearing................................................................ 2,896,907
Federal funds purchased.................................................................. 77,825
Securities sold under agreements to repurchase........................................... 192,295
Demand notes issued to the U.S. Treasury................................................. 53,526
Trading liabilities...................................................................... 0
Other borrowed money:.................................................................... ///////
With original maturity of one year or less...................................... 714,000
With original maturity of more than one year.................................... 43,000
Mortgage indebtedness and obligations under capitalized leases........................... 0
Bank's liability on acceptances executed and outstanding................................. 0
Subordinated notes and debentures........................................................ 0
Other liabilities........................................................................ 98,756
Total liabilities........................................................................ 4,929,099
Limited-life preferred stock and related surplus......................................... 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus............................................ 0
Common Stock............................................................................. 500
Surplus.................................................................................. 62,118
Undivided profits and capital reserves................................................... 367,371
Net unrealized holding gains (losses) on available-for-sale securities................... 862
Total equity capital..................................................................... 430,851
Total liabilities, limited-life preferred stock, and equity capital...................... 5,359,950
</TABLE>

<PAGE> 1
EXHIBIT 25(C)

Registration No. 333-22135 and
333-22135-01

================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) ___

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

<TABLE>
<S> <C>
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
</TABLE>

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

THE COLONIAL BANCGROUP, INC.
COLONIAL CAPITAL II

(Exact name of obligor as specified in its charter)

Delaware 63-0661573
(State of incorporation) (I.R.S. employer identification no.)

One Commerce Street, Suite 800
Montgomery, Alabama 36104
(Address of principal executive offices) (Zip Code)

8.92% Capital Securities, Series A of Colonial Capital II
(Title of the indenture securities)
================================================================================
<PAGE> 2

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

WILMINGTON TRUST COMPANY
[SEAL]

Attest:/s/ Patricia A. Evans By:/s/ Emmett R. Harmon
----------------------------- ----------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

2
<PAGE> 3

EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987
<PAGE> 4

AMENDED CHARTER

ACT OF INCORPORATION

WILMINGTON TRUST COMPANY

FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.

Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt,
to receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.

2
<PAGE> 6

3
<PAGE> 7

(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.

(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.

4
<PAGE> 8

FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").

5
<PAGE> 9

stock and whether such dividends shall be cumulative or
non-cumulative;

(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and

6
<PAGE> 10

7
<PAGE> 11

8
<PAGE> 12

Corporation may be removed at any time without cause, but only by
the affirmative vote of the holders of two- thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.

SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.

EIGHTH: - This Act shall be deemed and taken to be a private Act.

9
<PAGE> 13

NINTH: - This Corporation is to have perpetual existence.

ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.

TWELFTH: - The Corporation may transact business in any part of the
world.

FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:

10
<PAGE> 14

(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or

(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).

(1) A "person" shall mean any individual firm, corporation or other
entity.

11
<PAGE> 15

such business combination, or immediately prior to the consummation
of any such transaction:

(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or

(3) A person shall be the "beneficial owner" of any Voting Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or

12
<PAGE> 16

(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.

13
<PAGE> 17

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON JANUARY 16, 1997
<PAGE> 18

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.

ARTICLE II
DIRECTORS

Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.

Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.

Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its
<PAGE> 19

members, or at the call of the Chairman of the Board of Directors or the
President.

Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.

Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.

ARTICLE III
COMMITTEES

Section I. Executive Committee

(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who

2
<PAGE> 20

shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.

(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.

3
<PAGE> 21

Section 2. Trust Committee

(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.

(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.

Section 3. Audit Committee

Section 4. Compensation Committee

4
<PAGE> 22

(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.

Section 6. Absence or Disqualification of Any Member of a Committee

ARTICLE IV
OFFICERS

5
<PAGE> 23

6
<PAGE> 24

operations of the Company.

There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.

ARTICLE V
STOCK AND STOCK CERTIFICATES

Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.

Section 3. The Board of Directors of the Company is authorized to
fix in advance

7
<PAGE> 25

ARTICLE VI
SEAL

Section 1. The corporate seal of the Company shall be in the
following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

ARTICLE VII
FISCAL YEAR

Section 1. The fiscal year of the Company shall be the calendar
year.

ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY

8
<PAGE> 26

ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

ARTICLE X
INDEMNIFICATION

9
<PAGE> 27

under applicable law.

ARTICLE XI
AMENDMENTS TO THE BY-LAWS

Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By- Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.

10
<PAGE> 28

EXHIBIT C

SECTION 321(B) CONSENT

WILMINGTON TRUST COMPANY

Dated: February 20, 1997 By: /s/ Emmett R. Harmon
----------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE> 29

EXHIBIT D

NOTICE

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

<TABLE>
<S> <C> <C> <C>
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------------- ------------------
Name of Bank City
</TABLE>

in the State of DELAWARE , at the close of business on December 31, 1996.

<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . . . . . . . . 213,895
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,818
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,297
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,634,003
LESS: Allowance for loan and lease losses. . . . . . 51,847
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . . . . . . . 3,582,156
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,129
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . . . . . . . . . 52
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,593
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,300
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,359,950
</TABLE>

CONTINUED ON NEXT PAGE
<PAGE> 30

<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>

Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,749,697
Noninterest-bearing . . . . . . . . 852,790
Interest-bearing. . . . . . . . . . 2,896,907
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,825
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192,295
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,526
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,756
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 4,929,099
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0

EQUITY CAPITAL

<PAGE> 1

EXHIBIT 99(A)

LETTER OF TRANSMITTAL
COLONIAL CAPITAL II
OFFER TO EXCHANGE ITS
8.92% CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF THE OUTSTANDING
8.92% CAPITAL SECURITIES OF COLONIAL CAPITAL I
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
PURSUANT TO THE PROSPECTUS
DATED MARCH 12, 1997

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON APRIL 14, 1997,
UNLESS THE OFFER IS EXTENDED.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY

BY MAIL/OVERNIGHT DELIVERY/HAND

Wilmington Trust Company
Corporate Trust Operation
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001

Attn: Jill Rylee

TO CONFIRM BY TELEPHONE OR FOR INFORMATION

(302) 651-8869

FACSIMILE TRANSMISSIONS:

(302) 651-1079

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.

THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER
OF TRANSMITTAL IS COMPLETED.

Capitalized terms used but not defined herein shall have the same meaning given
them in
<PAGE> 2

the Prospectus (as defined below).

This Letter of Transmittal is to be completed by holders of Old Capital
Securities (as defined below) either if (i) Old Capital Securities are to be
forwarded herewith or (ii) tenders of Old Capital Securities are to be made by
book-entry transfer to an account maintained by Wilmington Trust Company (the
"Exchange Agent") at The Depositary Trust Company ("DTC") pursuant to the
procedures set forth under "The Exchange Offer -- Procedures for Tendering Old
Capital Securities" in the Prospectus and an Agent's Message (as defined
herein) is not delivered.

Holders of Old Capital Securities whose certificates (the "Certificates") for
such Old Capital Securities are not immediately available or who cannot deliver
their Certificates and all other required documents to the Exchange Agent on or
prior to the Expiration Date (as defined in the Prospectus) or who cannot
complete the procedures for book-entry transfer on or prior to the Expiration
Date, must tender their Old Capital Securities according to the guaranteed
delivery procedures set forth in "The Exchange Offer -- Procedures for
Tendering Old Capital Securities" in the Prospectus.

DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.

NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

2
<PAGE> 3

DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED

<TABLE>
<S> <C> <C> <C> <C>
Old Capital Number of
Securities Liquidation Beneficial Holders
Name and Address of Tendered (Attach Amount of Old for Whom Old
Registered Holder Certificate Additional List Securities Tendered Capital Securities
(Please Fill in if Blank) Numbers* if Necessary) (If Less Than All)** Are Held

Total Amount Tendered: $
</TABLE>

* Need not be completed by book-entry holders.

** Old Capital Securities may be tendered in whole or in part in denominations
of $100,000 and integral multiples of $1,000 in excess thereof, provided that
if any Old Capital Securities are tendered for exchange in part, the untendered
Liquidation Amount thereof must be $100,000 or any integral multiple of $1,000
in excess thereof. All Old Capital Securities held shall be deemed tendered
unless a lesser number is specified in this column.

(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS (defined in
Instructions 1) ONLY)

[ ] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH
DTC AND COMPLETE THE FOLLOWING:

Name of Tendering Institution

DTC Account Number

Transaction Code Number

[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY
IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:

Name of Registered Holder

Window Ticket Number (if any)

Date of Execution of Notice of Guaranteed Delivery

If Guaranteed Delivery is to be made by Book-Entry Transfer:

Name of Tendering Institution

3
<PAGE> 4

DTC Account Number

Transaction Code Number

[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD
CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET
FORTH ABOVE.

[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.

Name:

Address:

Area Code and Telephone Number: Contact Person:

4
<PAGE> 5

LADIES AND GENTLEMEN:

The undersigned hereby tenders to Colonial Capital II, a Delaware
business trust (the "Issuer"), and The Colonial BancGroup, Inc., a Delaware
Corporation, as Depositor (the "Corporation"), the above-described aggregate
Liquidation Amount of the 8.92% Capital Securities (the "Old Capital
Securities") of Colonial Capital I, a Delaware business trust (the "Old
Issuer") in exchange for a like aggregate Liquidation Amount of the Issuer's
8.92% Capital Securities (the "New Capital Securities") which have been
registered under the Securities Act of 1933 (the "Securities Act"), upon the
terms and subject to the conditions set forth in the Prospectus dated
March 12, 1997 (as the same may be amended or supplemented from time to
time, the "Prospectus"), receipt of which is acknowledged, and in this Letter
of Transmittal (which, together with the Prospectus, constitutes the "Exchange
Offer").

Subject to and effective upon the acceptance of all or any portion of
the Old Capital Securities tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Issuer all right, title and interest in and to such Old Capital Securities as
are being tendered herewith. The undersigned hereby irrevocably constitutes
and appoints the Exchange Agent as its agent and attorney-in-fact (with full
knowledge that the Exchange Agent is also acting as agent of the Corporation
and the Issuer in connection with the Exchange Offer) with respect to the
tendered Old Capital Securities, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates for Old Capital Securities to the Issuer together with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Issuer, upon receipt by the Exchange Agent, as the undersigned's agent, of
the New Capital Securities to be issued in exchange for such Old Capital
Securities, (ii) present Certificates for such Old Capital Securities for
transfer, and to transfer the Old Capital Securities on the books of the Old
Issuer, and (iii) receive for the account of the Issuer all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.

THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED
HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
OLD CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE ISSUER WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE CORPORATION, THE ISSUER OR THE
EXCHANGE AGENT TO BE

5
<PAGE> 6

NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE
OLD CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS
OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ
AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.

The name and address of the registered holder of the Old Capital
Securities tendered hereby should be printed above, if they are not already set
forth above, as they appear on the Certificates representing such Old Capital
Securities. The Certificate numbers and the Old Capital Securities that the
undersigned wishes to tender should be indicated in the appropriate boxes
above.

If any tendered Old Capital Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if the Certificates are submitted for
more Old Capital Securities than are tendered or accepted for exchange,
Certificates for such nonexchanged or nontendered Old Capital Securities will
be returned (or, in the case of Old Capital Securities tendered by book-entry
transfer, such Old Capital Securities will be credited to an account maintained
at DTC), without expense to the tendering holder, promptly following the
expiration or termination of the Exchange Offer.

The undersigned understands that tenders of Old Capital Securities
pursuant to any one of the procedures described under "The Exchange Offer --
Procedures for Tendering Old Capital Securities" in the Prospectus and in the
instructions herein will, upon the Corporation's and the Issuer's acceptance
for exchange of such tendered Old Capital Securities, constitute a binding
agreement between the undersigned, the Corporation and the Issuer upon the
terms and subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the Prospectus, the
Corporation and the Issuer may not be required to accept for exchange any of
the Old Capital Securities tendered hereby.

Unless otherwise indicated herein in the box entitled "Special
Issuance Instructions" below, the undersigned hereby directs that the New
Capital Securities be issued in the name of the undersigned or, in the case of
a book-entry transfer of Old Capital Securities, that such New Capital
Securities be credited to the account indicated above maintained at DTC. If
applicable, substitute Certificates representing Old Capital Securities not
exchanged or not accepted for exchange will be issued to the undersigned or, in
the case of a book-entry transfer of Old Capital Securities, will be credited
to the account indicated above maintained at DTC. Similarly, unless otherwise
indicated under "Special Delivery Instructions" below, please deliver New
Capital Securities to the undersigned at the address shown below the
undersigned's signature.

SUBJECT TO THE FOLLOWING SENTENCE, BY TENDERING OLD CAPITAL SECURITIES
AND EXECUTING THIS LETTER OF TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND
AGREES THAT (I) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF THE

6
<PAGE> 7

CORPORATION, THE OLD ISSUER OR THE ISSUER WITHIN THE MEANING OF RULE 405 UNDER
THE SECURITIES ACT, (II) ANY NEW CAPITAL SECURITIES TO BE RECEIVED BY THE
UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III)
THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO
PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW
CAPITAL SECURITIES TO BE RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE
UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES
NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES
ACT) OF SUCH NEW CAPITAL SECURITIES. BY TENDERING OLD CAPITAL SECURITIES
PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A
HOLDER OF OLD CAPITAL SECURITIES WHICH IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, EITHER THAT (A) SUCH OLD CAPITAL SECURITIES HELD BY THE
BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH OLD CAPITAL SECURITIES
WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER A
PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE
REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW
CAPITAL SECURITIES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT), OR THAT IT UNDERSTANDS
THE RESTRICTIONS ON TRANSFER THAT MAY OTHERWISE APPLY.

THE CORPORATION AND THE ISSUER HAVE AGREED THAT, SUBJECT TO THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING
BROKER-DEALER IN CONNECTION WITH RESALES OF NEW CAPITAL SECURITIES RECEIVED IN
EXCHANGE FOR OLD CAPITAL SECURITIES, WHERE SUCH OLD CAPITAL SECURITIES WERE
ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 90
DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED
CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW
CAPITAL SECURITIES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER.
IN THAT REGARD, EACH PARTICIPATING BROKER-DEALER WHO ACQUIRED OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES, BY TENDERING SUCH OLD CAPITAL SECURITIES AND

7
<PAGE> 8

EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM
THE CORPORATION OR THE ISSUER OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY
OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN
THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO
OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS
CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL
RESPECT OR WHICH CAUSED THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY
REFERENCE THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN
THE REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL
SUSPEND THE SALE OF NEW CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL THE
CORPORATION OR THE ISSUER HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO
CORRECT SUCH MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES OF THE AMENDED
OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE
CORPORATION OR THE ISSUER HAS GIVEN NOTICE THAT THE SALE OF THE NEW CAPITAL
SECURITIES MAY BE RESUMED, AS THE CASE MAY BE. IF THE CORPORATION OR THE
ISSUER GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE NEW CAPITAL SECURITIES, IT
SHALL EXTEND THE 90-DAY PERIOD REFERRED TO ABOVE DURING WHICH PARTICIPATING
BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION WITH THE RESALE
OF NEW CAPITAL SECURITIES BY THE NUMBER OF DAYS DURING THE PERIOD FROM AND
INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE DATE WHEN
PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR
AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW CAPITAL SECURITIES OR
TO AND INCLUDING THE DATE ON WHICH THE CORPORATION OR THE ISSUER HAS GIVEN
NOTICE THAT THE SALE OF NEW CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY
BE.

Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from and after the last Distribution date to
which Distributions have been paid or duly provided for on such Old Capital
Securities prior to the original issue date of the New Capital Securities or,
if no such Distributions have been paid or duly provided for, will not receive
any accrued Distributions on such Old Capital Securities, and the undersigned
waives the right to receive any interest on such Old Capital Securities accrued
from and after such Distribution date or, if no such Distributions have been
paid or duly provided for, from and after January 29, 1997.

8
<PAGE> 9

All authority herein conferred or agreed to be conferred in this
Letter of Transmittal shall survive the death or incapacity of the undersigned
and any obligation of the undersigned hereunder shall be binding upon the
heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, this tender is irrevocable.

9
<PAGE> 10

HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5, AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREWITH)
(NOTE: SIGNATURES MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)

Must be signed by registered holder exactly as name appears on Certificates for
the Old Capital Securities hereby tendered or on a security position listing,
or by any person authorized to become the registered holder by endorsements and
documents transmitted herewith (including such opinions of counsel,
certifications and other information as may be required by the Issuer or the
Exchange Agent for the Old Capital Securities to comply with the restrictions
on transfer applicable to the Old Capital Securities). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See instruction 5.

______________________________________________________________________________
(Signature of Holder)

Date:_________________________, 1997

Name:_________________________________________________________________________
(Please Print)

Capacity (full title)_________________________________________________________

Address:______________________________________________________________________

______________________________________________________________________________
(Include Zip Code)

Area Code and Telephone Number________________________________________________

Tax Identification or Social Security Number__________________________________

GUARANTEE OF SIGNATURE
(SEE INSTRUCTIONS 2 AND 5)

______________________________________________________________________________
(Authorized Signature)

10
<PAGE> 11

Date:___________________________, 1997

Name of Firm__________________________________________________________________

Capacity (full title)_________________________________________________________
(Please Print)

Address_______________________________________________________________________

______________________________________________________________________________
(Include Zip Code)

Area Code and Telephone Number________________________________________________

SPECIAL ISSUANCE INSTRUCTION
(SEE INSTRUCTIONS 1, 5 AND 6)

To be completed ONLY if the New Capital Securities or any Old Capital
Securities that are not tendered are to be issued in the same of someone other
than the registered holder of the Old Capital Securities whose name appears
above.

Issue
[] New Capital Securities
[] Old Capital Securities not tendered

to:

Name

Address

(INCLUDE ZIP CODE)

AREA CODE AND TELEPHONE NUMBER

TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER

11
<PAGE> 12

SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)

TO BE COMPLETED ONLY IF THE NEW CAPITAL SECURITIES OR ANY OLD CAPITAL
SECURITIES THAT ARE NOT TENDERED ARE TO BE SENT TO SOMEONE OTHER THAN THE
REGISTERED HOLDER OF THE OLD CAPITAL SECURITIES WHOSE NAME APPEARS ABOVE, OR TO
SUCH REGISTERED HOLDER AT AN ADDRESS OTHER THAN THAT SHOWN ABOVE.

MAIL
[] NEW CAPITAL SECURITIES
[] OLD CAPITAL SECURITIES NOT TENDERED

TO:

NAME

ADDRESS

(INCLUDE ZIP CODE)

AREA CODE AND TELEPHONE NUMBER

TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER

12
<PAGE> 13

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES: This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made
pursuant to the procedures for tender by book-entry transfer set forth under
"The Exchange Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus and an Agent's Message is not delivered. Certificates, or
book-entry confirmation of a book-entry transfer of such Old Capital Securities
into the Exchange Agent's account at DTC, as well as this Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer may
also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a confirmation of book-
entry transfer of Old Capital Securities into the Exchange Agent's account at
DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgement states that such participant has received
and agrees to be bound by the Letter of Transmittal (including the
representations contained herein) and that the Issuer and the Corporation may
enforce the Letter of Transmittal against such participant. Old Capital
Securities may be tendered in whole or in part in the Liquidation Amount of
$100,000 (100 Capital Securities) and integral multiples of $1,000 in excess
thereof, provided that, if any Old Capital Securities are tendered for exchange
in part, the untendered Liquidation Amount thereof must be $100,000 (100
Capital Securities) or any integral multiple of $1,000 in excess thereof.

Holders who wish to tender their Old Capital Securities and (i) whose Old
capital Securities are not immediately available or (ii) who cannot deliver
their Old Capital Securities, this Letter of transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (iii) who
cannot complete the procedures for delivery by book-entry transfer on or prior
to the Expiration Date, may tender their Old Capital Securities by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedures set forth under "The Exchange Offer--Procedures
for Tendering Old Capital Securities" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the
Corporation and the Issuer, must be received by the Exchange Agent on or prior
to the Expiration Date; and (iii) the Certificates (or book-entry confirmation
(as defined in the Prospectus)) representing all tendered Old Capital
Securities, in proper form for the transfer, together with a Letter of
Transmittal, must be received by the Exchange Agent within three New York Stock
Exchange Inc trading days after the date of execution

13
<PAGE> 14

of such Notice of Guaranteed Delivery, all as provided in "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the Prospectus.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Capital
Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on
or prior to the Expiration Date. As used herein and in the Prospectus,
"Eligible Institution" means a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as "an eligible guarantor institution," including (as
such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.

THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY ON OR PRIOR TO THE EXPIRATION DATE.

Neither the Corporation nor the Issuer will accept any alternative, conditional
or contingent tenders. Each tendering holder, by execution of a Letter of
Transmittal (or facsimile thereof), waives any right to receive any notice of
the acceptance of such tender.

2. GUARANTEE OF SIGNATURES. No signature guarantee of this Letter of
Transmittal is required if:

(i) this Letter of Transmittal is signed by the registered
holder (which term, for purposes of this document, shall include any
participant in DTC whose name appears on a security position listing as
the owner of the Old Capital Securities) of Old Capital Securities
tendered herewith, unless such holder has completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" above, or

(ii) such Old Capital Securities are tendered for the account of
a firm that is an Eligible Institution.

In all other cases, an Eligible Institution must guarantee the signature on
this Letter of Transmittal. See Instruction 5.

14
<PAGE> 15

3. INADEQUATE SPACE. If the space provided in the box captioned "Description of
Old Capital Securities Tendered" is inadequate, the Certificate numbers and/or
the Liquidation Amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.

4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Capital Securities
will be accepted only in the Liquidation Amount of $100,000 (100 Capital
Securities) and integral multiples of $1,000 in excess thereof, provided that
if any Old Capital Securities are tendered for exchange in part, the untendered
Liquidation Amount thereof must be $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof. If less than all Old Capital
Securities evidenced by any Certificate submitted are to be tendered, fill in
the Liquidation Amount of Old Capital Securities which are to be tendered in
the box entitled "Liquidation Amount of Old Capital Securities Tendered (If
Less than All)." In such case, a new Certificate for the remainder of the Old
Capital Securities that were evidenced by your Old Certificate will be sent to
the holder of the Old Capital Securities, promptly after the Expiration Date
unless the appropriate boxes on this Letter of Transmittal are completed. All
Old Capital Securities represented by Certificates delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.

Except as otherwise provided herein, tender of Old Capital Securities may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission of such notice of withdrawal must be received by the Exchange
Agent at one of its addresses set forth above or in the Prospectus on or prior
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Old Capital Securities to be withdrawn, the
aggregate Liquidation Amount of Old Capital Securities to be withdrawn, and (if
certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the
Certificates for the Old Capital Securities, if different from that of the
person who tendered such Old Capital Securities. If Certificates for the Old
Capital Securities have been delivered or otherwise identified to the Exchange
Agent, then prior to the physical release of such Certificates for the Old
Capital Securities, the tendering holder must submit the serial numbers shown
on the particular Certificates for the Old Capital Securities to be withdrawn
and the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth under
"The Exchange Offer--Procedures for Tendering Old Capital Securities," the
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawal of Old Capital Securities, in which case a
notice of withdrawal will be effective if delivered to the Exchange Agent by
written, telegraphic, telex or facsimile on or prior to the Expiration Date.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The

15
<PAGE> 16

Exchange Offer--Procedures for Tendering Old Capital Securities."

All Questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Issuer, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Issuer, any affiliates or
assigns of the Corporation and the Issuer, the Exchange Agent or any other
person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Old Capital Securities which may have been
tendered but which are withdrawn on or prior to the Expiration Date will be
returned to the holder thereof without cost to such holder promptly after
withdrawal.

5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If this
Letter of Transmittal is signed by the registered holder of the Old Capital
Securities tendered hereby, the signature must correspond exactly with the name
as written on the face of the Certificates without alteration, enlargement or
any change whatsoever.

If any of the Old Capital Securities tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.

If any tendered Old Capital Securities are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.

If this Letter of Transmittal or any Certificates or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Corporation and the Issuer, in their sole discretion, of
such person's authority to so act.

When this Letter of Transmittal is signed by the registered owner of the Old
Capital Securities listed and transmitted hereby, no endorsement of
Certificates or separate bond powers are required unless New Capital Securities
are to be issued in the name of a person other than the registered holder.
Signatures on such Certificates or bond powers must be guaranteed by an
Eligible Institution.

If this Letter of Transmittal is signed by a person other than the registered
owner of the Old Capital Securities listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name of the
registered owner appears on the Certificates, and also must be accompanied by
such opinions of counsel, certifications and other information as the
Corporation, the Issuer or the Exchange Agent may require in accordance with
the restrictions on transfer applicable to the Old Capital Securities.
Signatures on such Certificates or bond powers must be guaranteed by an
Eligible

16
<PAGE> 17

Institution.

6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital Securities are to
be issued in the name of a person other than the signer of this letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Capital Securities not exchanged will be returned by mail
or, if tendered by book-entry transfer, by crediting the account indicated
above maintained at DTC unless the appropriate boxes on this Letter of
Transmittal are completed. See Instruction 4.

7. IRREGULARITIES. The Corporation and the Issuer will determine, in their
sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and
binding on all parties. The Corporation and the Issuer reserve the absolute
right to reject any and all tenders determined by either of them not to be in
proper form or acceptance of which, or exchange for, may in the view of counsel
to the Corporation or the Issuer, be unlawful. The Corporation and the Issuer
also reserve the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer set forth in the Prospectus under "The
Exchange Offer--Certain Conditions to the Exchange Offer" or any conditions or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders. The Corporation's and the Issuer's interpretation of the terms
and conditions of the Exchange Offer (including this Letter of Transmittal and
the instructions hereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. The Corporation, the
Issuer, any affiliates or assigns of the Corporation, the Issuer, the Exchange
Agent, or any other person shall not be under any duty to give notification of
any irregularities in tenders or incur any liability for failure to give such
notification.

8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.

9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax
law, a holder whose tendered Old Capital Securities are accepted for exchange
is required to provide the Exchange Agent with such holder's correct taxpayer
identification number ("TIN") on the Substitute W-9 form below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the holder or other payee to a $50 penalty. In addition,
payments to such holders or other payees with

17
<PAGE> 18

respect to Old Capital Securities exchanged pursuant to the Exchange Offer may
be subject to a 31% backup withholding.

The box in Part 2 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 2 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the substitute form
W-9. If the holder furnishes the Exchange Agent with its TIN within 60 days
after the date of the Substitute Form W-9, the amounts retained during the 60
day period will be remitted to the holder and no further amounts shall be
retained or withheld from payments made to the holder thereafter. If, however,
the holder has not provided the Exchange Agent with its TIN within such 60 day
period, amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.

The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.

Certain holders (including, among others, corporations, financial institutions
and certain foreign persons) may not be subject to these backup withholding and
reporting requirements. Such holders should nevertheless complete the attached
Substitute Form W-9 below, and write "exempt" on the face thereof, to avoid
possible erroneous backup withholding. A foreign person may qualify as an
exempt recipient by submitting a properly completed IRS Form W-8, signed under
penalties of perjury, attesting to that holder's exempt status. Please consult
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which holders are exempt from
backup withholding.

Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person subject to a backup withholding
will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.

10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificates representing

18
<PAGE> 19

Old Capital Securities have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to
the steps that must be taken in order to replace the Certificates. The Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, destroyed or stolen Certificates have been followed.

11. SECURITY TRANSFER TAXES. Holders who tender their Old Capital Securities
for exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, New Capital Securities are to be delivered to, or are
to be issued in the name of, any person other than the registered holder of the
Old Capital Securities tendered, or if a transfer tax is imposed for any reason
other than the exchange of Old Capital Securities in connection with the
Exchange Offer, then the amount of any such transfer tax (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer will be billed directly to such tendering holder.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.

19
<PAGE> 20

<TABLE>
<CAPTION>
PAYER'S NAME: WILMINGTON TRUST COMPANY
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1-PLEASE PROVIDE YOUR TIN IN _________________________________
FORM W-9 THE BOX AT THE RIGHT AND CERTIFY Social Security Number(s)
BY SIGNING AND DATING BELOW. OR
Department of the _________________________________
Treasury Internal Employer Identification Number(s)
Revenue Service
----------------------------------------------------------------------------------

Payer's Request for PART 2-CERTIFICATION - Under Penalties PART 3 -
Taxpayer of Perjury, certify that:
Identification Awaiting TIN [ ]
Number (TIN) (1) The number shown on the form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and

(2) I am not subject to backup withholding because PART 4 - For Payee
(a) I am exempt from backup withholding, or (b) I Exempt from Backup
have not been notified by the Internal Revenue Service Withholding
("IRS") that I am subject to backup withholding as a
result of failure to report all interest or dividends Exempt [ ]
or (c) the IRS has notified me that I am no longer
subject to backup withholding.

----------------------------------------------------------------------------------

CERTIFICATION INSTRUCTIONS - You must cross out Item (2) in Part 2 above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding, you received another notification from the IRS stating that you are
no longer subject to backup withholding, do not cross out Item (2). If you are
exempt from backup withholding, check the box in Part 4 above.

SIGNATURE_________________________________ DATE_______________, 1997

Please fill your name and address below:

________________________________________
Name

________________________________________
Address (number and street)

________________________________________

________________________________________
(City, State and Zip Code)

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
</TABLE>

20
<PAGE> 21

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that until I provide a taxpayer identification number, 31% of all
reportable dividend payments made to me will be withheld, but will be
refunded if I provide a certified taxpayer identification number within 60
days. After the 60-day period has elapsed, 31% of all reportable payments
will be withheld.

________________________________ ______________________, 1997
Signature Date

<PAGE> 1

EXHIBIT 99(B)

NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8.92% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
COLONIAL CAPITAL II

This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Old Issuer's (as defined below) 8.92% Capital Securities
(the "Old Capital Securities") are not immediately available, (ii) Old Capital
Securities, the Letter of Transmittal and all other documents required cannot
be delivered to Wilmington Trust Company (the "Exchange Agent") on or prior to
the Expiration Date (as defined in the Prospectus referred to below) or (iii)
the procedures for delivery by book-entry transfer cannot be completed on or
prior to the Expiration Date. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile, to
the Exchange Agent on or prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the Prospectus.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY

BY MAIL/OVERNIGHT DELIVERY/HAND:

Wilmington Trust Company
Corporate Trust Operation
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001

Attn: [Jill Rylee]

TO CONFIRM BY TELEPHONE OR FOR MORE INFORMATION:

(302) 651-8869

FACSIMILE TRANSMISSIONS:

(302) 651-1079

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2

THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES.
IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN
"ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE
MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER
OF TRANSMITTAL.
<PAGE> 3

Ladies and Gentlemen:

The undersigned hereby tenders to Colonial Capital II, a Delaware business
trust, upon the terms and subject to the conditions set forth in the Prospectus
dated March 12, 1997 (as the same may be amended or supplemented from time to
time, the "Prospectus"), and the related Letter of Transmittal (which together
constitute the "Exchange Offer") receipt of which is hereby acknowledged, the
aggregate principal amount of Old Capital Securities set forth below pursuant
to the guaranteed delivery procedures set forth in the Prospectus under the
caption "The Exchange Offer--Procedures for Tendering Old Capital Securities".

Aggregate Liquidation Name of Registered Holder:
Amount Tendered:

Certificate Nos: Address:
(if available)
Area Code and Telephone Number:

If Old Capital Securities will be tendered by book-entry transfer, provide the
following information:

SIGNATURE:

DTC ACCOUNT NUMBER:

DATE:

THE GUARANTEE BELOW MUST BE COMPLETED

<PAGE> 4

GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution" including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association
recognized program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of
its addresses set forth above, either the Old Capital Securities tendered
hereby in proper form for transfer, or confirmation of the book-entry transfer
of such Old Capital Securities to the Exchange Agent's account at The
Depository Trust Company ("DTC"), pursuant to the procedures for book-entry
transfer set forth in the Prospectus, in either case together with one or more
properly completed and duly executed Letters of Transmittal (or facsimile
thereof) and any other required documents within three business days after the
date of execution of this Notice of Guaranteed Delivery.

The undersigned acknowledges that it must deliver the Letters of Transmittal
and the Old Capital Securities tendered hereby to the Exchange Agent within the
time period set forth above and that failure to do so could result in a
financial loss to the undersigned.

Name of Firm

(AUTHORIZED SIGNATURE (TITLE)

ADDRESS

INCLUDE ZIP CODE)

AREA CODE AND TELEPHONE NUMBER

DATE

NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF
GUARANTEED DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL SECURITIES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.