sv4
As filed with the Securities and Exchange Commission on
June 23, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TRUSTMARK CORPORATION
(Exact name of Registrant as specified in its charter)
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MISSISSIPPI |
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6712 |
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64-0471500 |
(State or other jurisdiction of
incorporation or organization) |
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(Primary Standard Industrial
Classification Code Number) |
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(I.R.S. Employer
Identification No.) |
248 East Capitol Street
Jackson, Mississippi 39201
(601) 208-5111
(Address, including zip code,
and telephone, including area code, of
Registrants principal executive offices)
ZACH L. WASSON
TREASURER AND CFO
TRUSTMARK CORPORATION
248 East Capitol Street
Jackson, Mississippi 39201
(601) 208-6816
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies of communications to:
ROBERT D. DRINKWATER
GRANVILLE TATE, JR.
BRUNINI, GRANTHAM, GROWER & HEWES, PLLC
P. O. Drawer 119
Jackson, Mississippi 39205-0119
(601) 948-3101
Also
WILLIAM T. LUEDKE IV
CHARLOTTE M. RASCHE
BRACEWELL & GIULIANI LLP
711 Louisiana Street, Suite 2300
Houston, Texas 77002-2770
(713) 223-2300
Approximate date of commencement of proposed sale of the
securities 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. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
CALCULATION OF REGISTRATION FEE
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Proposed |
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Proposed | |
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Title Of Each |
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Maximum |
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Maximum | |
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Amount Of | |
Class of Securities |
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Amount To Be | |
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Offering Price Per |
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Aggregate | |
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Registration | |
To Be Registered |
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Registered(1) | |
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Share(2) |
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Offering Price(3) | |
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Fee(3) | |
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Common Stock
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3,400,000 |
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$ |
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$ |
43,415,000 |
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4,646 |
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(1) |
Maximum number of shares of Trustmark common stock issuable in
connection with the Merger. |
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(2) |
Not applicable. |
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(3) |
Pursuant to Rule 457(f), based upon the book value of the
Republic Bancshares of Texas, Inc. common stock and preferred
stock as of March 31, 2006 to be acquired by Trustmark as a
consequence of the merger. |
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission
acting pursuant to said Section 8(a), may determine.
The information
in this proxy statement/ prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This proxy statement/ prospectus is not an offer to
sell these securities, and it is not soliciting to buy these
securities, in any state where the offer or sale is not
permitted.
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Subject to completion, dated
June 23, 2006
MERGER PROPOSEDYOUR VOTE IS VERY IMPORTANT
Dear Shareholders:
You are cordially invited to attend the special meeting of
shareholders of Republic Bancshares of Texas, Inc.
(Republic) to be held
on ,
2006
at .m.
at 14604 Northwest Freeway, Houston, Texas 77040. At this
important meeting, you will be asked to consider and vote on the
approval of a merger agreement which provides for the merger of
Republic into Trustmark Corporation. If the merger is completed,
each outstanding share of Republic common stock and
Series A preferred stock will, at the election of the
holder be converted into (i) 1.3908 shares of
Trustmark common stock, (ii) $43.8089 in cash, or
(iii) a combination of cash and shares of Trustmark common
stock, subject to adjustment as set forth in the merger
agreement. After completion of the merger, we expect that
current Trustmark shareholders will own approximately 94.25% of
the combined company and shareholders of Republic will own
approximately 5.75% of the combined company. Trustmarks
common stock is listed on The Nasdaq Stock Market, Inc. National
Market System (Nasdaq NMS) under the symbol
TRMK.
Due to the aggregate limitations on the number of shares of
Trustmark common stock and the amount of cash that will be
issued in connection with the merger, as a Republic shareholder,
you will not know the exact number of shares of Trustmark common
stock or the exact amount of cash you will receive in connection
with the merger when you vote on the merger agreement.
We cannot complete the merger unless Trustmark obtains the
necessary regulatory approvals and unless the shareholders of
Republic approve the merger agreement. We are asking our
shareholders to consider and vote on this merger proposal at a
special meeting of shareholders. Whether or not you plan to
attend the special meeting, please take the time to vote by
completing and mailing the enclosed proxy card to Republic. If
you sign, date and mail your proxy card without indicating how
you want to vote, your proxy will be counted as a vote FOR
the merger agreement. If you do not return your proxy card, or
if you do not instruct your broker how to vote any shares held
for you in street name, the effect will be a vote
against the merger agreement.
This document contains a more complete description of the
special meeting and the terms of the merger. We urge you to
carefully review this entire document and the documents
incorporated by reference. You may also obtain information about
Trustmark from documents that Trustmark has filed with the
Securities and Exchange Commission. Your board of directors
enthusiastically supports the merger and recommends that you
vote in favor of the merger agreement.
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C. P. Bryan |
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Chairman, President and Chief Executive Officer |
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Republic Bancshares of Texas, Inc. |
An investment in Trustmark common stock in connection with
the merger involves risks. See Risk Factors
beginning on page 15.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
securities to be issued under this proxy statement/ prospectus
or determined if this proxy statement/ prospectus is accurate or
adequate. Any representation to the contrary is a criminal
offense. The securities we are offering through this document
are not savings or deposit accounts or other obligations of any
bank or non-bank subsidiary of either of our companies, and they
are not insured by the Federal Deposit Insurance Corporation,
the Savings Association Insurance Fund, the Bank Insurance Fund
or any other governmental agency.
Proxy statement/ prospectus dated
[ ],
2006
and first mailed to shareholders of Republic on or about
[ ],
2006
HOW TO OBTAIN ADDITIONAL INFORMATION
This proxy statement/ prospectus incorporates important business
and financial information about Trustmark from other documents
that are not included in or delivered with this proxy statement/
prospectus. This information is available to you without charge
upon your written or oral request. You may obtain copies of
those documents by accessing the Securities and Exchange
Commissions Internet website maintained at
http://www.sec.gov or by requesting copies in
writing or by telephone from Trustmark Corporation,
248 E. Capitol Street, Suite 310, Jackson,
Mississippi 39201, Attention: Joseph Rein, (601) 208-6898.
If you would like to request documents, please do so by
[ ,
2006] in order to receive them before the special meeting.
If you request any documents incorporated by reference, we will
mail them to you promptly by first class mail or similar means.
See Where You Can Find More Information on
page [ ].
PLEASE NOTE
We have not authorized anyone to provide you with any
information other than the information included in this document
and the documents to which we refer you. If someone provides you
with other information, please do not rely on it as being
authorized by us.
This proxy statement/ prospectus has been prepared as of
[ ],
2006. There may be changes in the affairs of Republic or
Trustmark since that date which are not reflected in this
document.
REPUBLIC BANCSHARES OF TEXAS, INC.
4200 Westheimer, Suite 101
Houston, Texas 77027
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
ON ,
2006
TO THE SHAREHOLDERS:
Notice is hereby given that a special meeting of the
shareholders of Republic Bancshares of Texas, Inc.
(Republic) will be held at 14604 Northwest Freeway,
Houston, Texas 77040, on
[ ],
2006, at
[ ][ ].m.,
local time, for the purpose of considering and voting on the
following matters, all as more fully described in the
accompanying proxy statement/ prospectus:
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(1) approval of the Agreement and Plan of Reorganization
dated as of April 13, 2006, as amended on May 16,
2006, between Republic and Trustmark Corporation
(Trustmark), which provides for the merger of
Republic into Trustmark all on and subject to the terms and
conditions contained therein; and |
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(2) transaction of such other business as may properly come
before the special meeting or any adjournments of the special
meeting. |
Only shareholders of record at the close of business on
[ ],
2006, shall be entitled to notice of and to vote at the special
meeting or any adjournments of the special meeting.
Shareholders of Republic have the right to dissent from the
merger and obtain payment in cash of the fair value of their
shares of Republic common stock or Series A preferred stock
under applicable provisions of Texas law. In order for a
shareholder of Republic to perfect his or her right to dissent,
such shareholder must file a written objection to the merger
with Republic prior to the special meeting, must not vote in
favor of the merger agreement and must file with Trustmark a
written demand for payment of the fair value of the
shareholders shares of Republic common stock or
Series A preferred stock within ten days after the delivery
of notice from Trustmark that the merger has been effected. A
copy of the applicable Texas statutory provisions is included as
Appendix C to the accompanying proxy statement/
prospectus and a summary of these provisions can be found under
the caption Dissenters Rights of Appraisal.
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By Order of the Board of Directors, |
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C. P. Bryan |
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Chairman, President and Chief Executive Officer |
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Republic Bancshares of Texas, Inc. |
Houston, Texas
[ ],
2006
Republics board of directors unanimously recommends
that you vote FOR the approval of the merger agreement.
Whether or not you plan to attend the meeting, please complete,
sign, date and return the enclosed proxy in the accompanying
pre-addressed postage-paid envelope.
Your Vote is Very Important
A proxy card and a form of election are enclosed. Whether or not
you plan to attend the special meeting, please complete, sign
and date the proxy card and promptly mail it in the enclosed
envelope. You may revoke your proxy card in the manner described
in the proxy statement/ prospectus at any time before it is
exercised. If you attend the special meeting, you may vote in
person if you wish, even if you have previously returned your
proxy card. You should also complete and return the form of
election on or before the special meeting.
TABLE OF CONTENTS
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A-1 |
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AGREEMENT AND PLAN OF REORGANIZATION AND FIRST AMENDMENT
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A-1 |
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B-1 |
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FAIRNESS OPINION OF KEEFE, BRUYETTE & WOODS, INC.
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B-1 |
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C-1 |
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PROVISIONS OF TEXAS LAW RELATING TO DISSENTERS RIGHTS OF
APPRAISAL
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C-1 |
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Opinion of Brunini, Grantham, Grower, & Hewes, PLLC |
Tax Opinion of Brunini, Grantham, Grower, & Hewes, PLLC |
Tax Opinion of Bracewell & Giuliani LLP |
Consent of KPMG LLP |
Consent of Brunini, Grantham, Grower, & Hewes, PLLC |
Form of Proxy for Special Meeting of Shareholders of Republic |
Forms of Election |
Consent of Keefe, Bruyette and Woods, Inc. |
ii
SUMMARY
This summary highlights selected information from this proxy
statement/ prospectus and may not contain all of the information
that is important to you. To understand the merger fully and for
a more complete description of the legal terms of the merger,
you should read carefully this entire document and the documents
to which we refer you. For more information about Trustmark, see
Where You Can Find More Information on
page [ ] . We have included
page references in this summary to direct you to other places in
this proxy statement/ prospectus where you can find a more
complete description of the topics we have summarized.
The Parties (page [ ])
Trustmark Corporation, 248 E. Capitol Street,
Jackson, Mississippi 39201, (601) 208-5111, is a
Mississippi corporation and a multi-bank holding company
headquartered in Jackson, Mississippi. Through its subsidiaries,
Trustmark operates as a financial services organization
providing banking and financial solutions to corporate,
institutional and individual customers predominantly within the
states of Florida, Mississippi, Tennessee and Texas.
Trustmark National Bank, (Trustmark Bank),
Trustmarks wholly-owned subsidiary accounts for
substantially all of the assets and revenues of Trustmark. In
addition to banking activities, Trustmark Bank provides
investment and insurance products and services to its customers
through its wholly-owned subsidiaries, Trustmark Investment
Advisors, Inc., The Bottrell Insurance Agency, Inc.,
Fisher-Brown, Incorporated and TRMK Risk Management, Inc.
Trustmark also engages in banking activities through its
wholly-owned subsidiary, Somerville Bank & Trust
Company, headquartered in Somerville, Tennessee.
As of March 31, 2006, Trustmark, on a consolidated basis,
had total assets of $8.238 billion, total loans of
$6.099 billion, total deposits of $6.321 billion and
shareholders equity of $755.7 million.
Republic Bancshares of Texas, Inc., 4200 Westheimer,
Suite 101, Houston, Texas 77027,
(281) 453-4100, is
a Texas corporation and a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. Through its
wholly-owned subsidiary, Republic National Bank, Republic offers
a diversified range of commercial and personal banking products
and services to small and medium-sized businesses and consumers
through six banking locations in the greater Houston
metropolitan area.
At March 31, 2006, Republic, on a consolidated basis, had
total assets of $654.0 million, total loans of
$475.3 million, total deposits of $589.2 million and
shareholders equity of $43.4 million.
Proposed Merger
(page [ ])
If Republics shareholders approve the merger agreement at
the special meeting, subject to the receipt of necessary
regulatory approvals and the satisfaction or waiver of all other
conditions to the merger, Republic will merge into Trustmark
with Trustmark being the surviving corporation. Immediately
following the merger, Republics banking subsidiary,
Republic National Bank, will be merged into Trustmark Bank. We
currently expect to complete the merger in the third quarter of
2006, although delays could occur.
We have included the merger agreement, as amended, as
Appendix A to this proxy statement/ prospectus. We
encourage you to read the merger agreement in full, as it is the
legal document that governs the merger.
Holders of Republic Stock Will Receive Shares of Trustmark
Common Stock and/or Cash in the Merger (see
page [ ] )
Subject to the aggregate limitations described below, holders of
Republic common and preferred stock will have the right to
convert their Republic stock into (i) cash at the rate of
$43.8089 per Republic share, (ii) shares of Trustmark
common stock at the rate of 1.3908 Trustmark shares for each
Republic share, or (iii) some combination of cash and
Trustmark common stock.
1
You may specify different elections with respect to different
shares you own. For example, if you own 100 Republic
shares, you could make a cash election with respect to
30 shares and a stock election as to the other
70 shares or vice versa. However, an election must be made
with respect to a whole share and not any portion of a share.
The amount of cash and the number of shares of Trustmark common
stock that Trustmark will issue in connection with the merger is
subject to an aggregate limitation that 49% of Republics
shares will be converted into cash and 51% of Republics
shares will be converted into Trustmark common stock.
Accordingly, your election and the elections of Republics
other shareholders may be adjusted on a pro rata basis to the
extent necessary to achieve these aggregate limits.
In addition, because Republic shares that are, in whole or in
part, converted into Trustmark common stock will be converted at
a fixed conversion ratio of 1.3908 Trustmark shares for each
Republic share, the value of the merger consideration to
Republic shareholders who receive Trustmark shares will
fluctuate with the market price of Trustmark common stock. As of
[ ],
2006, the closing price of Trustmark common stock was
$[ ]
per share. For these reasons, you will not know the exact
number or value of shares of Trustmark common stock and the
exact amount of cash you will receive in connection with the
merger when you vote on the merger agreement.
The table below shows the pre-tax values of the merger
consideration to you assuming you own 100 Republic shares and
(i) you receive cash for 100% of your shares, (ii) you
receive cash for 49 of your shares and Trustmark common stock
for the remainder, and (iii) you receive Trustmark common
stock for all of your shares. The chart computes the value of
the merger consideration (including cash paid for fractional
shares) based upon various assumed Trustmark share prices at the
time of the merger.
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Value of 100% | |
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Value of 49/51 Cash/ | |
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Value of 100% | |
Assumed Trustmark Share Price |
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Stock Election | |
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Stock Election | |
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$26.50
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$ |
4,380.89 |
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$ |
4,030.96 |
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$ |
3,686.02 |
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27.50
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4,380.89 |
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4,100.96 |
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3,825.02 |
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28.50
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4,380.89 |
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4,170.96 |
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3,964.02 |
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29.50
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4,380.89 |
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4,240.96 |
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4,103.02 |
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30.50
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4,380.89 |
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4,310.96 |
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4,242.02 |
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31.50
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4,380.89 |
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4,380.96 |
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4,381.02 |
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32.50
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4,380.89 |
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4,450.96 |
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4,520.02 |
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33.50
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4,380.89 |
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4,520.96 |
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4,659.02 |
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34.50
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4,380.89 |
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4,590.96 |
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4,798.02 |
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35.50
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4,380.89 |
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4,660.96 |
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4,937.02 |
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36.50
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4,380.89 |
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4,730.96 |
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5,076.02 |
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No fractional shares of Trustmark common stock will be issued in
connection with the merger. Instead, cash will be paid for any
fractional share of Trustmark to which you would otherwise be
entitled at the rate of $31.50 multiplied by the fractional
share.
Trustmark common stock is traded on the Nasdaq NMS under the
symbol TRMK. We urge you to obtain information on
the market value of Trustmark common stock that is more recent
than that provided in this proxy statement/ prospectus. You
should obtain current stock price quotations from a newspaper,
the Internet or your broker. There is no active trading market
for the Republic common stock or Series A preferred stock.
Effect of the Merger on Republic Stock Options
(page [ ])
As of May 31, 2006 certain of Republics officers and
a director held options to purchase an aggregate of
749,100 shares of Republic common stock with a weighted
average exercise price of $8.65 per share. Prior to the
merger, Republic will take all actions necessary to accelerate
the vesting of those options.
2
Holders of vested options are required to exercise all such
options at least three days prior to the date the merger is
consummated. Options which are not exercised prior to that date
will not be entitled to receive any consideration in connection
with the merger.
Federal Income Tax Consequences of the Merger
(page [ ])
The merger is structured as a reorganization for
United States federal income tax purposes. Accordingly, holders
of Republic stock receiving solely Trustmark common stock in the
merger will generally not recognize any gain or loss on the
exchange of their Republic shares for shares of Trustmark common
stock. Holders of Republic shares receiving solely cash in the
merger will recognize gain or loss in the amount by which the
cash exceeds the adjusted basis in the Republic stock
surrendered in the merger. Holders of Republic stock receiving a
combination of Trustmark common stock and cash in exchange for
Republic shares, in general, will recognize gain, but not loss,
equal to the lesser of cash received or gain realized in the
exchange. The amount of gain realized will equal the amount by
which the cash, if any, plus the fair market value at the
effective time of the merger of the Trustmark common stock
exceeds the adjusted tax basis in the Republic stock to be
surrendered in the merger. Neither Trustmark or Republic will
recognize gain or loss as a result of the merger. It is a
condition to the obligations of Republic and Trustmark to
complete the merger that each receive a legal opinion from its
outside counsel that the merger will be a reorganization for
United States federal income tax purposes.
The United States federal income tax consequences described
above may not apply to all holders of Republic shares. If you
are a holder of Republic stock, determining the actual tax
consequences of the merger to you may be complicated and will
depend on your specific situation and on variables not within
our control. You should consult your own tax advisor for a
full understanding of the mergers tax consequences to
you.
Republics Board of Directors Unanimously Recommends
Shareholder Approval
(page [ ])
Republics Board of Directors believes that the merger is
in the best interests of Republics shareholders and
unanimously recommends that you vote FOR approval of
the merger agreement.
Republics Board of Directors Received a Fairness
Opinion from Keefe, Bruyette & Woods, Inc.
(page [ ])
Republics financial advisor, Keefe, Bruyette &
Woods, Inc. (KBW), has delivered a written opinion
to Republics Board of Directors that, as of the date of
this proxy statement/ prospectus, based on and subject to the
considerations described in its opinion, the merger
consideration is fair from a financial point of view to
Republics shareholders. The full text of this opinion is
attached as Appendix B to this proxy statement/
prospectus. We encourage you to read the opinion carefully to
understand the assumptions made, matters considered and
limitations of the review undertaken by KBW in rendering its
fairness opinion.
Dissenters Rights of Appraisal
(page [ ])
As a shareholder of Republic, under Texas law you have the right
to dissent from the merger and have the appraised fair value of
your shares of Republic common stock or preferred stock paid to
you in cash. The appraised fair value may be more or less than
the value of the shares of Trustmark common stock and cash being
paid in the merger.
Persons having beneficial interests in Republic stock held of
record in the name of another person, such as a broker or bank,
must act promptly to cause the record holder to take the actions
required under Texas law to exercise dissenters rights.
In order to dissent, you must carefully follow the requirements
of the Texas Business Corporation Act, including giving the
required written notice prior to the special meeting at which
the vote on the
3
merger agreement is taken. These steps are summarized under the
caption Dissenters Rights of Appraisal on
page [ ].
If you intend to exercise dissenters rights, you should
read the statutes carefully and consult with your own legal
counsel. You should also remember that, if you return a signed
proxy card but fail to provide instructions as to how your
shares of Republic common stock or preferred stock are to be
voted, you will be considered to have voted in favor for the
merger agreement and you will not be able to assert
dissenters rights. Also, if you exercise dissenters
rights, you may have taxable income as a result, so you should
consult with your own tax advisor if you intend to dissent. See
The Merger Material Federal Income Tax
Consequences of the Merger on
page [ ]. If the merger
agreement is approved by the shareholders of Republic, holders
of Republic common stock or preferred stock who make a written
objection to the merger prior to the Republic special meeting,
do not vote in favor of approval of the merger agreement, and
properly make a written demand for payment following
consummation of the merger will be entitled to receive the
appraised fair value of their shares in cash under the Texas
Business Corporation Act.
The text of the provisions of the Texas Business Corporation Act
pertaining to dissenters rights is attached to this proxy
statement/ prospectus as Appendix C.
Republic Shareholders Will Vote on the Merger Agreement at
the Special Shareholders Meeting to be Held on
[ ],
2006 (page [ ])
Republic will hold a special shareholders meeting at
[ ]
[ ].m.,
local time, on
[ ],
2006, at 14604 Northwest Freeway, Houston, Texas 77040. At the
meeting, shareholders of Republic will vote on a proposal to
approve the merger agreement and any other matters that properly
arise.
The Record Date Has Been Set at
[ ],
2006 (page [ ])
If you owned shares of Republic at the close of business on
[ ],
2006, which is the record date, you are entitled to vote on the
merger agreement at the special meeting.
On the record date, there were [3,690,717] shares of
Republics common stock and [353,734] shares of
Republic preferred stock outstanding. At the meeting, you will
have one vote for each share of Republic common stock and one
vote for each share of Republic preferred stock that you owned
on the record date.
Your Proxy
A proxy for the special meeting is included as part of this
proxy statement/ prospectus. Please complete, date, sign and
return your proxy. A record holder of shares can revoke a proxy
at any time before the vote is taken at the special meeting by
sending a written notice revoking the proxy, submitting a
later-dated proxy to the secretary of Republic or by voting in
person at the special meeting.
Please do not send in your Republic stock certificates at this
time. You will receive instructions from Trustmark shortly after
the merger is completed with instructions on how to exchange
your Republic stock certificates for Trustmark shares and/or
cash.
Vote Required to Approve the Merger Agreement
(page [ ])
Approval of the merger agreement requires the affirmative vote
of the holders of at least two-thirds of Republics
outstanding common stock and two-thirds of Republics
outstanding Series A preferred stock, voting as separate
classes. If you fail to vote or if you abstain, it will have the
effect of a vote against the merger agreement. On the
record date, the directors and executive officers of Republic
and their affiliates, in the aggregate, were entitled to vote
approximately 12.52% of the Republic common stock and none of
the shares of Republic Series A preferred stock. All of
Republics directors and executive officers executed an
Agreement to vote their shares in favor of the merger agreement.
4
Under Mississippi law, Trustmarks shareholders are not
required to approve the merger agreement.
Some of the Directors and Officers of Republic Have Financial
Interests in the Merger That Differ From Your Interests
(page [ ])
Some of the directors and officers of Republic have interests in
the merger that differ from, or are in addition to, their
interests as shareholders of Republic.
The merger will constitute a change in control of
Republic that will trigger certain obligations that Republic
owes to C. P. Bryan and R. John McWhorter under their respective
employment agreements. Immediately before the completion of the
merger, C. P. Bryan will receive a payment of $1.5 million
plus an amount calculated to provide an after tax benefit equal
to applicable excise taxes imposed with respect to the payment,
and R. John McWhorter will receive a payment of $705,000 plus an
amount calculated to provide an after tax benefit equal to
applicable excise taxes imposed with respect to the payment.
As required by the merger agreement, C. P. Bryan and R. John
McWhorter have entered into amendments to their employment
agreements with Republic to eliminate certain severance benefits
to which they otherwise would be entitled on a change in control.
It is a condition to Trustmarks obligation to consummate
the merger that C. P. Bryan shall enter into an employment
agreement with Trustmark and Trustmark Bank, pursuant to which
Mr. Bryan will serve as the Chairman and Chief Executive
Officer of Trustmarks banking operations in Texas. The
agreement provides Mr. Bryan with a base salary of
$350,000, tax planning benefits in the aggregate amount of
$25,000, an automobile allowance of $1,000 per month, a
monthly payment of $600 for his continued membership in a golf
club and the right to certain artwork in his office.
Mr. Bryan will also receive an award of 16,130 shares
of Trustmarks common stock which will vest over three
years. If the agreement is terminated by virtue of the death or
disability of Mr. Bryan, he or his estate is entitled to a
payment of 50% of his base salary for the remainder of the term
of the agreement. If the agreement is terminated by Trustmark
without cause or by Mr. Bryan for good
reason following a change in control of Trustmark, then
Mr. Bryan is entitled to payment of his base salary for two
years. If Mr. Bryan resigns for any reason except for
good reason following a change in control of
Trustmark, he is entitled to payment of 50% of his base salary
for two years. The agreement has a term of three years and will
be renewable automatically for a three year period on each
anniversary of the effective date of the Agreement unless either
Trustmark or Mr. Bryan chooses not to renew.
Mr. Bryans employment agreement contains a noncompete
covenant that extends for a period of two years following
termination of his employment.
As required by the merger agreement, Mr. Bryan will also be
elected to the board of directors of Trustmark Bank.
Under the merger agreement, Trustmark is obligated to indemnify
Republics directors, officers and employees for a period
of four years following the merger to the same extent these
persons were entitled to indemnification by Republic and to use
commercially reasonable efforts to cover Republics
directors and officers for a period of four years for acts and
omissions occurring prior to the merger under Trustmarks
directors and officers liability insurance or
comparable coverage.
The merger agreement provides that all outstanding options vest
and become exercisable prior to consummation of the merger.
Regulatory Approvals We Must Obtain for the Merger to Occur
(page [ ])
The merger is subject to the approval of the Board of Governors
of the Federal Reserve System and the merger of Republic
National Bank into Trustmark Bank is subject to the approval of
the Office of the Comptroller of the Currency. Applications to
obtain approval of the mergers have been filed with those
regulatory authorities. Neither Trustmark nor Republic can be
certain if or when all such approvals will be obtained.
5
Other Conditions to the Merger
(page [ ])
A number of other conditions must be met for the parties to
complete the merger. Any of these conditions may be waived by
the party for whose benefit the condition exists. Currently,
neither party intends to waive any condition to the merger.
Other conditions include:
|
|
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|
|
the continuing accuracy of the parties representations and
warranties to each other as of the closing date of the merger; |
|
|
|
the absence of any material adverse change in the assets,
properties, business or financial condition of either party; |
|
|
|
the performance or compliance by each party with its respective
covenants and conditions required by the merger agreement; |
|
|
|
the registration with the Securities and Exchange Commission of
the shares of Trustmark common stock to be issued to
shareholders of Republic; |
|
|
|
the authorization for listing on the Nasdaq NMS of the shares of
Trustmark common stock to be issued to shareholders of Republic; |
|
|
|
Republic shall have received a satisfactory opinion of Brunini,
Grantham, Grower & Hewes, PLLC and Trustmark shall have
received a satisfactory opinion of Bracewell & Giuliani
LLP; and |
|
|
|
Republic shall have received the written opinion of its
financial advisor as to the fairness of the merger consideration
to Republics shareholders from a financial point of view. |
Modifications or Waiver
(page )
The parties may amend the merger agreement and each party may
waive its right to require the other party to adhere to any term
or condition of the merger agreement. However, the merger
consideration to be received by the shareholders of Republic
pursuant to the merger agreement may not be decreased after the
approval of the merger agreement without the further approval by
Republics shareholders.
Termination of the Merger Agreement
(page [ ])
The parties can mutually agree at any time to terminate the
merger agreement.
Either party can unilaterally terminate the merger agreement if:
|
|
|
|
|
the merger has not become effective within 150 days after
April 13, 2006, unless the failure to complete the merger
by that time is due to a material breach of the merger agreement
by the party that seeks to terminate the merger agreement; |
|
|
|
any court or other governmental body issues an order, decree or
ruling or takes any other action restraining, enjoining or
otherwise prohibiting the merger and such order, decree, ruling
or other action is final and non-appealable; |
|
|
|
any of the transactions contemplated by the merger agreement are
disapproved by any regulatory authority or other person whose
approval is required to consummate any of such transactions; |
|
|
|
the approval of the merger agreement by the shareholders of
Republic is not obtained; |
|
|
|
any of the conditions to the obligations of Trustmark or the
obligations of Republic, respectively, have not been met or
waived by the party entitled to such benefit; or |
|
|
|
the other party materially breaches its representations and
warranties or any covenant or agreement contained in the merger
agreement and such breach has not been cured within 15 days
after the terminating party gives written notice of such breach
to the breaching party. |
6
Republic may terminate the merger agreement, without the consent
of Trustmark, if:
|
|
|
|
|
Republic accepts a superior acquisition proposal (as defined in
the merger agreement); or |
|
|
|
the average closing price for the Trustmark common stock for the
five consecutive trading days ending on and including the third
trading day prior to the date that is ten days prior to the
effective date of the merger is less than $25.988 per share
and the number obtained by dividing the average closing price of
Trustmark common stock by $31.50 shall be less than the number
obtained by dividing the average closing price of a Trustmark
peer group by the April 12, 2006 closing price of that peer
group and subtracting 0.15 from the quotient; provided, however,
that Trustmark has the right, but not the obligation, to nullify
any exercise by Republic of this termination right by paying, as
additional merger consideration to each holder of Republic stock
making a share election, additional shares of Trustmark common
stock and/or cash in an amount per share of Republic stock equal
to the difference between the average closing price of Trustmark
common stock and $25.988 per share. |
Trustmark may terminate the merger agreement, without the
consent of Republic, if Republics board of directors:
|
|
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|
|
accepts an alternative acquisition proposal; or |
|
|
|
withdraws or modifies its recommendation or approval of the
merger agreement or recommends to the shareholders of Republic
the acceptance or approval of any alternative acquisition
proposal. |
In the event of the termination of the merger agreement without
breach by any party, the merger agreement will be void and have
no effect, without liability on the part of any party or the
directors, officers or shareholders of any party, except as
specifically contemplated in the merger agreement or as set
forth below.
Provided that Trustmark is not in material breach of any
covenant or obligation contained in the merger agreement,
Republic must pay Trustmark a termination fee of
$7.0 million if the merger agreement is terminated:
|
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|
by Republic because it has accepted a superior acquisition
proposal; |
|
|
|
by either Trustmark or Republic if the shareholders of Republic
do not approve the merger agreement and there exists another
acquisition proposal at that time and within 12 months of
termination Republic enters into a definitive agreement with
respect to any such acquisition proposal; or |
|
|
|
by Trustmark if the Republic board of directors resolves to
accept an acquisition proposal or withdraws or modifies its
recommendation or approval of the merger agreement or recommends
to the shareholders of Republic the acceptance or approval of
any alternate acquisition proposal. |
Trustmark to Use Purchase Accounting Treatment
(page [ ])
Trustmark will account for the merger using the purchase method
of accounting. Under the purchase method, Trustmark will record,
at fair value, the acquired assets and assumed liabilities of
Republic. To the extent the total purchase price exceeds the
fair value of tangible and identifiable intangible assets
acquired over the liabilities assumed, Trustmark will record
goodwill.
Utilizing information as of March 31, 2006, estimated
goodwill and other intangibles resulting from the merger are
currently expected to total approximately $169.4 million.
Trustmark will include in its consolidated financial statements
the results of operations and financial condition of Republic
after the merger is completed. Due to the fact that the proposed
transaction is not deemed to be significant from an
accounting perspective to Trustmark, no pro forma financial
information is included in this proxy statement/ prospectus,
except to the extent included under the heading
Comparative Per Share Data on page
[ ].
7
There are Differences Between the Rights of Trustmarks
and Republics Shareholders
(page [ ])
The rights of Republics shareholders are currently
governed by Republics articles of incorporation, as
amended, and bylaws and the Texas Business Corporation Act.
Following the merger, Republics shareholders who receive
shares of Trustmark common stock will become Trustmark
shareholders, and their rights will be governed by
Trustmarks articles of incorporation and bylaws and the
Mississippi Business Corporation Act. There are differences
between the rights of Trustmarks shareholders and the
rights of Republics shareholders. A discussion of the
rights of Trustmarks and Republics shareholders is
set forth under the heading Comparison of the Rights of
Trustmarks and Republics Shareholders on page
[ ].
What You Need to Do Now
Proxy
After you have carefully read this document, please vote your
Republic shares by completing, signing, dating and mailing the
enclosed proxy in the return envelope provided as soon as
possible so that your shares will be represented at the special
meeting. If you return a proxy that does not indicate how you
want to vote, your proxy will be counted as a vote in favor of
the merger agreement. If you do not vote or if you abstain, it
will have the effect of a vote against the merger agreement.
A proxy may be revoked at any time before it is voted at the
special meeting. See the heading Republic Special
Shareholders Meeting at
page [ ].
Election Form
The form for making your election to receive shares of Trustmark
common stock, cash or a combination of both is included as part
of this proxy statement/ prospectus. You must properly complete
and return the election to Republic on or before the date of the
special meeting. Persons holding options also need to submit
elections for shares which will be acquired on exercise of those
options. Any shareholder who does not return a properly
executed form of election in a timely manner shall be deemed to
have submitted an election to receive Trustmark common shares
for 100% of his or her Republic shares. As discussed
elsewhere in this proxy statement/ prospectus, shareholder
elections are subject to proration and adjustment.
Comparative Market Prices and Dividends
Trustmark common stock is traded on the Nasdaq NMS under the
symbol TRMK. On April 12, 2006, the last full
trading day before public announcement of the merger, Trustmark
common stock closed at $31.5625. On
[ ], 2006, Trustmark common
stock closed at
[$ ].
The market price of Trustmark will fluctuate. You should obtain
current stock price quotations from a newspaper, the Internet or
your broker.
The table below shows the high and low sales prices of Trustmark
common stock and cash dividends paid per share on the Trustmark
common stock for the last two fiscal years plus the first
quarter of 2006.
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Quarter Ended |
|
High | |
|
Low | |
|
Cash Dividend | |
|
|
| |
|
| |
|
| |
March 31, 2006
|
|
$ |
32.00 |
|
|
$ |
27.01 |
|
|
$ |
0.21 |
|
December 31, 2005
|
|
|
29.83 |
|
|
|
24.00 |
|
|
|
0.21 |
|
September 30, 2005
|
|
|
30.80 |
|
|
|
26.63 |
|
|
|
0.20 |
|
June 30, 2005
|
|
|
29.67 |
|
|
|
26.71 |
|
|
|
0.20 |
|
March 31, 2005
|
|
|
31.15 |
|
|
|
26.69 |
|
|
|
0.20 |
|
December 31, 2004
|
|
|
32.78 |
|
|
|
29.12 |
|
|
|
0.20 |
|
September 30, 2004
|
|
|
32.36 |
|
|
|
27.92 |
|
|
|
0.19 |
|
June 30, 2004
|
|
|
29.99 |
|
|
|
25.89 |
|
|
|
0.19 |
|
March 31, 2004
|
|
|
30.73 |
|
|
|
28.27 |
|
|
|
0.19 |
|
8
Neither Republics common or preferred stock is actively
traded, and any trading activity, as it occurs, takes place in
privately negotiated transactions between the buyer and seller.
Republic is aware of certain transactions in shares of its
common stock that have occurred since January 1, 2004,
although the trading prices of all stock transactions are not
known. On February 1, 2006, Republic completed a
reclassification transaction in which its shareholders
authorized a class of Series A preferred stock, and shares
of common stock held by shareholders owning 2,100 or fewer
shares were reclassified into shares of Series A preferred
stock on a one for one basis. The shares of Series A
preferred stock automatically convert into shares of Republic
common stock upon a change in control of Republic, with each
share of Series A preferred stock convertible into one
share of common stock. There have been no transactions in the
Series A preferred stock of which management is aware.
The following reflects the high and low sales prices for
arms length transactions in Republic common stock known to
Republic that occurred during the first three months of 2006 and
during 2005 and 2004. There may be other transactions of which
Republic is not aware.
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Period |
|
High | |
|
Low | |
|
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| |
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| |
Three months ended March 31, 2006
|
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$ |
13.71 |
|
|
$ |
13.26 |
|
Year ended December 31, 2005
|
|
|
13.26 |
|
|
|
11.66 |
|
Year ended December 31, 2004
|
|
|
11.66 |
|
|
|
9.90 |
|
Republic has never paid a dividend on its common or preferred
stock.
The following table summarizes the closing price per share of
Trustmark common stock and the equivalent per share price for
Republic common stock and Series A preferred stock giving
effect to the merger on (i) April 12, 2006, the
business day prior to the announcement of the merger, and
(ii) [ ],
2006, the most recent date practicable preceding the date of
this proxy statement/ prospectus. Historical market value
information regarding Republic common stock and Series A
preferred stock is not provided because there is no active
market for Republic stock. Because the market value of Trustmark
common stock is subject to fluctuation, the market value of the
shares of Trustmark common stock that holders of Republic stock
will receive upon consummation of the merger may increase or
decrease prior to the receipt of such shares following
completion of the merger.
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Equivalent Pro Forma Value Per | |
|
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Share of Republic Common | |
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Stock and Series A Preferred | |
|
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Trustmark Common Stock(1) | |
|
Stock(2) | |
|
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| |
|
| |
April 12, 2006
|
|
$ |
31.56 |
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|
$ |
43.89 |
|
[ ],
2006
|
|
$ |
|
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(1) |
Represents the closing price of Trustmark common stock on the
Nasdaq NMS. |
|
(2) |
Equivalent pro forma market value per share of Republic common
stock and Series A preferred stock represents the market
value per share of Trustmark common stock on the applicable date
multiplied by the exchange ratio of 1.3908. |
9
Selected Historical Financial Data
Trustmark
Trustmark is providing the following information to help you
analyze the financial aspects of the merger. Trustmark derived
this information from its audited financial statements for the
years 2001 through 2005, and from its unaudited financial
statements for the three months ended March 31, 2005 and
2006. This information is only a summary, and you should read it
in conjunction with the historical financial statements and the
related notes contained in the annual and quarterly reports and
other documents that Trustmark has filed with the Securities and
Exchange Commission or otherwise has provided to its
shareholders. See Where You Can Find More
Information on page [ ].
You should not rely on the historical information as being
indicative of results expected for the future. All information
is in thousands, except per share data.
TRUSTMARK SELECTED FINANCIAL DATA
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|
|
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|
|
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|
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Quarters Ended | |
|
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|
March 31, | |
|
Years Ended December 31, | |
|
|
| |
|
| |
|
|
2006 | |
|
2005 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
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| |
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| |
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| |
|
| |
|
| |
|
| |
|
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Consolidated Statements
of Income
|
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$ |
110,633 |
|
|
$ |
95,922 |
|
|
$ |
415,697 |
|
|
$ |
364,355 |
|
|
$ |
359,388 |
|
|
$ |
405,952 |
|
|
$ |
476,146 |
|
|
Total interest expense
|
|
|
42,392 |
|
|
|
27,513 |
|
|
|
139,256 |
|
|
|
88,738 |
|
|
|
89,558 |
|
|
|
113,766 |
|
|
|
209,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
68,241 |
|
|
|
68,409 |
|
|
|
276,441 |
|
|
|
275,617 |
|
|
|
269,830 |
|
|
|
292,186 |
|
|
|
266,904 |
|
|
Provision for loan losses
|
|
|
(2,984 |
) |
|
|
2,796 |
|
|
|
19,541 |
|
|
|
(3,055 |
) |
|
|
9,771 |
|
|
|
14,107 |
|
|
|
13,200 |
|
|
Noninterest income
|
|
|
36,690 |
|
|
|
36,548 |
|
|
|
143,107 |
|
|
|
124,028 |
|
|
|
136,310 |
|
|
|
116,997 |
|
|
|
117,662 |
|
|
Noninterest expense
|
|
|
63,512 |
|
|
|
61,142 |
|
|
|
243,276 |
|
|
|
225,309 |
|
|
|
214,887 |
|
|
|
208,968 |
|
|
|
199,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
44,403 |
|
|
|
41,019 |
|
|
|
156,731 |
|
|
|
177,391 |
|
|
|
181,482 |
|
|
|
186,108 |
|
|
|
171,427 |
|
|
Income taxes
|
|
|
15,084 |
|
|
|
14,238 |
|
|
|
53,780 |
|
|
|
60,682 |
|
|
|
62,952 |
|
|
|
64,968 |
|
|
|
60,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$ |
29,319 |
|
|
$ |
26,781 |
|
|
$ |
102,951 |
|
|
$ |
116,709 |
|
|
$ |
118,530 |
|
|
$ |
121,140 |
|
|
$ |
111,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$ |
0.53 |
|
|
$ |
0.47 |
|
|
$ |
1.82 |
|
|
$ |
2.01 |
|
|
$ |
2.01 |
|
|
$ |
1.95 |
|
|
$ |
1.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$ |
0.52 |
|
|
$ |
0.47 |
|
|
$ |
1.81 |
|
|
$ |
2.00 |
|
|
$ |
2.00 |
|
|
$ |
1.94 |
|
|
$ |
1.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per share
|
|
$ |
0.21 |
|
|
$ |
0.20 |
|
|
$ |
0.81 |
|
|
$ |
0.77 |
|
|
$ |
0.69 |
|
|
$ |
0.62 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, | |
|
December 31, | |
|
|
| |
|
| |
|
|
2006 | |
|
2005 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
8,237,688 |
|
|
$ |
8,179,993 |
|
|
$ |
8,389,750 |
|
|
$ |
8,052,957 |
|
|
$ |
7,914,321 |
|
|
$ |
7,138,706 |
|
|
$ |
7,180,339 |
|
|
Securities
|
|
|
1,273,433 |
|
|
|
1,827,481 |
|
|
|
1,336,656 |
|
|
|
1,717,067 |
|
|
|
2,112,443 |
|
|
|
1,811,767 |
|
|
|
1,853,547 |
|
|
Loans (including loans held for sale)
|
|
|
6,099,054 |
|
|
|
5,572,808 |
|
|
|
6,040,375 |
|
|
|
5,431,277 |
|
|
|
5,032,612 |
|
|
|
4,617,366 |
|
|
|
4,524,366 |
|
|
Deposits
|
|
|
6,321,032 |
|
|
|
5,534,728 |
|
|
|
6,282,814 |
|
|
|
5,450,093 |
|
|
|
5,089,459 |
|
|
|
4,686,296 |
|
|
|
4,613,365 |
|
10
Republic
The following table summarizes the selected historical
consolidated financial data of Republic for the periods and at
the dates indicated. The historical financial data as of and for
each of the years in the five year period ended
December 31, 2005 was derived from Republics audited
consolidated financial statements. The historical financial data
as of and for the three months ended March 31, 2006 and
2005 are unaudited, but management of Republic believes that
such amounts include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of its
financial position and results of operations as of the dates and
for the periods indicated. Information for any interim period is
not necessarily indicative of results that may be anticipated
for the full year or any future period. All information is in
thousands, except per share data.
REPUBLIC SELECTED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended | |
|
|
|
|
March 31, | |
|
Years Ended December 31, | |
|
|
| |
|
| |
|
|
2006 | |
|
2005 | |
|
2005 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
9,761 |
|
|
$ |
7,715 |
|
|
$ |
34,456 |
|
|
$ |
25,355 |
|
|
$ |
22,800 |
|
|
$ |
21,258 |
|
|
$ |
19,832 |
|
|
Interest expense
|
|
|
3,005 |
|
|
|
1,848 |
|
|
|
9,485 |
|
|
|
5,454 |
|
|
|
4,944 |
|
|
|
5,272 |
|
|
|
7,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
6,756 |
|
|
|
5,867 |
|
|
|
24,971 |
|
|
|
19,901 |
|
|
|
17,856 |
|
|
|
15,986 |
|
|
|
12,243 |
|
|
Provision for loan losses
|
|
|
200 |
|
|
|
495 |
|
|
|
1,500 |
|
|
|
1,450 |
|
|
|
1,730 |
|
|
|
2,095 |
|
|
|
1,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
6,556 |
|
|
|
5,372 |
|
|
|
23,471 |
|
|
|
18,451 |
|
|
|
16,126 |
|
|
|
13,891 |
|
|
|
11,167 |
|
|
Noninterest income
|
|
|
740 |
|
|
|
736 |
|
|
|
2,795 |
|
|
|
3,006 |
|
|
|
2,644 |
|
|
|
1,705 |
|
|
|
1,239 |
|
|
Noninterest expenses
|
|
|
4,484 |
|
|
|
4,117 |
|
|
|
16,441 |
|
|
|
14,312 |
|
|
|
12,666 |
|
|
|
11,014 |
|
|
|
8,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
2,812 |
|
|
|
1,991 |
|
|
|
9,825 |
|
|
|
7,145 |
|
|
|
6,104 |
|
|
|
4,582 |
|
|
|
3,420 |
|
|
|
Provision for income taxes
|
|
|
904 |
|
|
|
648 |
|
|
|
3,215 |
|
|
|
2,332 |
|
|
|
2,057 |
|
|
|
1,581 |
|
|
|
1,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
1,908 |
|
|
$ |
1,343 |
|
|
$ |
6,610 |
|
|
$ |
4,813 |
|
|
$ |
4,047 |
|
|
$ |
3,001 |
|
|
$ |
2,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share(2)
|
|
$ |
0.48 |
|
|
$ |
0.34 |
|
|
$ |
1.67 |
|
|
$ |
1.23 |
|
|
$ |
1.04 |
|
|
$ |
0.78 |
|
|
$ |
0.59 |
|
|
Diluted earnings per share(2)
|
|
$ |
0.45 |
|
|
$ |
0.32 |
|
|
$ |
1.57 |
|
|
$ |
1.18 |
|
|
$ |
1.00 |
|
|
$ |
0.75 |
|
|
$ |
0.58 |
|
|
Book value per share
|
|
$ |
10.40 |
|
|
$ |
9.15 |
|
|
$ |
10.40 |
|
|
$ |
8.93 |
|
|
$ |
7.71 |
|
|
$ |
6.72 |
|
|
$ |
5.94 |
|
|
Weighted average shares outstanding (basic)
|
|
|
4,002 |
|
|
|
3,943 |
|
|
|
3,966 |
|
|
|
3,912 |
|
|
|
3,877 |
|
|
|
3,855 |
|
|
|
3,845 |
|
|
Weighted average shares outstanding (diluted)
|
|
|
4,274 |
|
|
|
4,186 |
|
|
|
4,215 |
|
|
|
4,086 |
|
|
|
4,046 |
|
|
|
4,015 |
|
|
|
3,912 |
|
Performance Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
1.25 |
% |
|
|
0.93 |
% |
|
|
1.10 |
% |
|
|
0.99 |
% |
|
|
0.94 |
% |
|
|
0.86 |
% |
|
|
0.86 |
% |
|
Return on average common equity
|
|
|
18.09 |
% |
|
|
15.10 |
% |
|
|
17.30 |
% |
|
|
14.92 |
% |
|
|
14.21 |
% |
|
|
12.18 |
% |
|
|
10.27 |
% |
|
Net interest margin
|
|
|
4.75 |
% |
|
|
4.40 |
% |
|
|
4.46 |
% |
|
|
4.44 |
% |
|
|
4.46 |
% |
|
|
4.98 |
% |
|
|
5.04 |
% |
|
Efficiency ratio(4)
|
|
|
59.82 |
% |
|
|
62.35 |
% |
|
|
59.21 |
% |
|
|
62.48 |
% |
|
|
63.38 |
% |
|
|
62.26 |
% |
|
|
66.65 |
% |
Balance Sheet Data(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ |
653,977 |
|
|
$ |
589,486 |
|
|
$ |
634,514 |
|
|
$ |
573,662 |
|
|
$ |
435,218 |
|
|
$ |
384,419 |
|
|
$ |
312,197 |
|
|
Investment securities
|
|
|
84,390 |
|
|
|
97,790 |
|
|
|
90,851 |
|
|
|
89,445 |
|
|
|
83,922 |
|
|
|
41,704 |
|
|
|
1,125 |
|
|
Loans
|
|
|
475,317 |
|
|
|
425,238 |
|
|
|
470,770 |
|
|
|
402,495 |
|
|
|
315,486 |
|
|
|
293,555 |
|
|
|
258,487 |
|
|
Allowance for loan losses
|
|
|
(5,469 |
) |
|
|
(5,137 |
) |
|
|
(5,424 |
) |
|
|
(4,813 |
) |
|
|
(3,783 |
) |
|
|
(3,236 |
) |
|
|
(2,885 |
) |
|
Total deposits
|
|
|
589,214 |
|
|
|
522,578 |
|
|
|
572,182 |
|
|
|
497,760 |
|
|
|
355,181 |
|
|
|
349,083 |
|
|
|
288,141 |
|
|
Total shareholders equity
|
|
|
43,415 |
|
|
|
36,116 |
|
|
|
41,601 |
|
|
|
35,152 |
|
|
|
30,003 |
|
|
|
26,005 |
|
|
|
22,855 |
|
Capital Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets
|
|
|
6.17 |
% |
|
|
6.91 |
% |
|
|
6.35 |
% |
|
|
6.64 |
% |
|
|
6.59 |
% |
|
|
7.07 |
% |
|
|
8.27 |
% |
Asset Quality Ratios(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets(5) to loans and other real estate
|
|
|
0.10 |
% |
|
|
0.08 |
% |
|
|
0.17 |
% |
|
|
0.16 |
% |
|
|
0.15 |
% |
|
|
0.26 |
% |
|
|
0.07 |
% |
|
Net charge-offs to average loans
|
|
|
0.13 |
% |
|
|
0.17 |
% |
|
|
0.20 |
% |
|
|
0.12 |
% |
|
|
0.40 |
% |
|
|
0.63 |
% |
|
|
0.01 |
% |
|
Allowance for loan losses to total loans
|
|
|
1.15 |
% |
|
|
1.21 |
% |
|
|
1.15 |
% |
|
|
1.20 |
% |
|
|
1.20 |
% |
|
|
1.10 |
% |
|
|
1.12 |
% |
|
Allowance for loan losses to nonperforming assets(5)
|
|
|
1123.00 |
% |
|
|
1426.94 |
% |
|
|
663.08 |
% |
|
|
761.55 |
% |
|
|
793.08 |
% |
|
|
419.17 |
% |
|
|
1,559.46 |
% |
11
|
|
(1) |
Adjusted for a two-for-one stock split effective May 24,
2004. |
|
(2) |
Basic earnings per share is computed by dividing net income
available to common and preferred shareholders by the weighted
average number of common and preferred shares outstanding for
the period. Diluted earnings per share is computed by dividing
net income available to common and preferred shareholders,
adjusted for any changes in income that would result from the
assumed conversion of all potential dilutive common shares, by
the sum of the weighted average number of common and preferred
shares outstanding and the effect of all potential dilutive
common shares outstanding for the period. |
|
(3) |
At period end, except net charge-offs to average loans. |
|
(4) |
Calculated by dividing total noninterest expenses by net
interest income plus noninterest income, excluding net security
gains (losses). |
|
(5) |
Nonperforming assets consist of nonaccrual loans, troubled debt
restructurings and loans contractually past due 90 days or
more, ORE and foreclosed property. |
12
Comparative Per Share Data
The following table sets forth per share information for
Trustmark and Republic on a historical, pro forma combined and
equivalent pro forma basis. The pro forma data in the table
assumes that the merger is accounted for by the purchase method
of accounting. The pro forma calculations reflect that 51% of
the outstanding Republic shares will be converted into
1.3908 shares of Trustmark common stock per share of
Republic and that 49% of the outstanding Republic shares will be
converted into $43.8089 per Republic share. The pro forma
and pro forma equivalent per share information give effect to
the merger as if the merger had been effective (i) on the
dates presented, in the case of the book value presented, and
(ii) as of the beginning of the fiscal years presented, in
the case of earnings and dividends per share. The Republic
equivalent pro forma per share information shows the effect of
the merger from the perspective of an owner of Republic stock.
The information was computed by multiplying the pro forma
information by the exchange ratio of 1.3908. You should read
this information in conjunction with the historical financial
statements (and related notes) contained in the annual and
quarterly reports and other documents Trustmark has filed with
the Securities and Exchange Commission or that Trustmark and
Republic otherwise have provided to their shareholders. See
Where You Can Find More Information on
page [ ].
The pro forma information, while helpful in illustrating the
financial characteristics of the combined company under one set
of assumptions, does not reflect the benefits of expected cost
savings, opportunities to earn additional revenue, the impact of
restructuring and merger-related costs or the amortization of
certain intangibles and, accordingly, does not attempt to
predict or suggest future results. It also does not necessarily
reflect what the historical results of the combined company
would have been had the companies been combined during these
periods or future results that the combined company will
experience after the merger. Upon completion of the merger, the
operating results of Republic will be reflected in the
consolidated financial statements of Trustmark on a prospective
basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and | |
|
|
|
|
for the | |
|
As of and | |
|
|
Three Months | |
|
for the | |
|
|
Ended | |
|
Year Ended | |
|
|
March 31, 2006 | |
|
December 31, 2005 | |
|
|
| |
|
| |
TRUSTMARK CORPORATION:
|
|
|
|
|
|
|
|
|
|
Earnings Per Share (Basic):
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.53 |
|
|
$ |
1.82 |
|
|
|
Pro Forma
|
|
$ |
0.53 |
|
|
$ |
1.83 |
|
|
Earnings Per Share (Diluted):
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.52 |
|
|
$ |
1.81 |
|
|
|
Pro Forma
|
|
$ |
0.53 |
|
|
$ |
1.82 |
|
|
Cash Dividends Per Share:
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.21 |
|
|
$ |
0.81 |
|
|
|
Pro Forma
|
|
$ |
0.21 |
|
|
$ |
0.81 |
|
|
Book Value Per Share:
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
13.57 |
|
|
$ |
13.29 |
|
|
|
Pro Forma
|
|
$ |
14.60 |
|
|
$ |
14.34 |
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and | |
|
|
|
|
for the | |
|
As of and | |
|
|
Three Months | |
|
for the | |
|
|
Ended | |
|
Year Ended | |
|
|
March 31, 2006 | |
|
December 31, 2005 | |
|
|
| |
|
| |
REPUBLIC BANCSHARES OF TEXAS, INC.:
|
|
|
|
|
|
|
|
|
|
Earnings Per Share (Basic):
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.48 |
|
|
$ |
1.67 |
|
|
|
Equivalent Pro Forma
|
|
$ |
0.74 |
|
|
$ |
2.55 |
|
|
Earnings Per Share (Diluted):
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
0.45 |
|
|
$ |
1.57 |
|
|
|
Equivalent Pro Forma
|
|
$ |
0.74 |
|
|
$ |
2.53 |
|
|
Cash Dividends Per Share:
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
|
Equivalent Pro Forma
|
|
$ |
0.29 |
|
|
$ |
1.13 |
|
|
Book Value Per Share:
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$ |
10.84 |
|
|
$ |
10.40 |
|
|
|
Equivalent Pro Forma
|
|
$ |
20.31 |
|
|
$ |
19.94 |
|
A WARNING ABOUT FORWARD-LOOKING INFORMATION
Certain statements contained in this proxy statement/ prospectus
or incorporated herein by reference are not statements of
historical fact and constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements include, but are not
limited to, statements relating to anticipated future operating
and financial performance measures, including net interest
margin, credit quality, business initiatives, growth
opportunities and growth rates, among other things and encompass
any estimate, prediction, expectation, projection, opinion,
anticipation, outlook or statement of belief included therein as
well as the management assumptions underlying these
forward-looking statements. Should one or more of these risks
materialize, or should any such underlying assumptions prove to
be significantly different, actual results may vary
significantly from those anticipated, estimated, projected or
expected.
These risks could cause actual results to differ materially from
current expectations and include, but are not limited to,
changes in the level of nonperforming assets and charge offs,
local, state and national economic and market conditions,
material changes in market interest rates, the costs and effects
of litigation and of unexpected or adverse outcomes in such
litigation, competition in loan and deposit pricing, as well as
the entry of new competitors into our markets through de novo
expansion and acquisitions, changes in existing regulations or
the adoption of new regulations, natural disasters, acts of war
or terrorism, changes in consumer spending, borrowings and
savings habits, technological changes, changes in the financial
performance or condition of Trustmarks borrowers, the
ability to control expenses, changes in Trustmarks
compensation and benefit plans, greater than expected costs or
difficulties related to the integration of, or a material delay
in closing of the merger, greater than expected costs or
difficulties related to the integration of new products and
lines of business and other risks described in Trustmarks
filings with the Securities and Exchange Commission.
Although Trustmark believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
Trustmark undertakes no obligation to update or revise any of
this information, whether as the result of new information,
future events or developments or otherwise.
14
RISK FACTORS
In addition to the other information, including risk factors,
included or incorporated by reference in this proxy statement/
prospectus, you should carefully read and consider the following
factors in evaluating the proposal to be voted on at the special
meeting of Republic shareholders and in deciding whether to
elect to receive cash, shares of Trustmark common stock or some
combination thereof in the merger.
Because the market price of Trustmark common stock will
fluctuate, Republic shareholders electing to receive stock
cannot be sure of the value of the merger consideration they
will receive
Upon completion of the merger, each share of Republic common and
preferred stock will be converted into the merger consideration
consisting of shares of Trustmark common stock, cash or a
combination of the two. The value of the merger consideration to
be received by Republic shareholders who receive part of the
merger consideration in the form of Trustmark shares will vary
with the price of Trustmark common stock. Stock prices change as
a result of a variety of factors, including general market and
economic conditions, changes in business, operations and
prospects, and regulatory considerations. Many of these factors
are beyond Trustmarks control.
In addition, if the price of Trustmark common stock falls and
the price of the common stock of certain of Trustmarks
peers falls and the decreases exceed certain pre-agreed levels,
to avoid Republics right to terminate the merger
agreement, Trustmark may elect to increase the number of shares
of Trustmark common stock and/or the amount of the per share
cash consideration to be received by Republic shareholders who
made an election to receive shares of Trustmark common stock as
a component of the merger consideration.
Accordingly, at the time of the special meeting, Republic
shareholders will not know or be able to calculate the total
value of the merger consideration they will receive if the
merger is approved.
Republic shareholders may receive a form of consideration
different from what they elect
Although each Republic shareholder may elect to receive all
cash, all Trustmark common stock or a combination of the two in
the merger, the cash available to be paid to all Republic
shareholders will be fixed in amount and the shares of Trustmark
common stock available to be issued to all Republics
shareholders will be fixed in number. As a result, if either the
aggregate cash or stock elections exceed the maximum available,
and you make an election that exceeds the maximum available, you
may receive consideration in proportions of cash and Trustmark
common stock which are different from those you elected.
Trustmark may fail to realize the anticipated benefits of the
merger
The success of the merger will depend, in part, on the ability
to realize the anticipated cost savings from combining certain
aspects of the businesses of Trustmark and Republic. However, to
realize the anticipated benefits from the merger, Trustmark must
successfully combine the businesses of Trustmark and Republic in
a manner that permits those cost savings to be realized. The
anticipated benefits of the merger also depend on the continued
operating performance of Trustmarks and Republics
businesses following the merger. If Trustmark is not able to
combine the businesses of Trustmark and Republic in a manner
that permits the anticipated cost savings to be realized, or if
Trustmark and Republics businesses do not perform as
anticipated following the merger, the anticipated benefits of
the merger may not be realized fully or at all or may take
longer to realize than expected.
Trustmark and Republic have operated and, until the completion
of the merger, will continue to operate, independently. It is
possible that the integration process could result in the loss
of key employees, the disruption of each companys ongoing
business or inconsistencies in standards, controls, procedures,
and policies that adversely affect the combined companys
ability to maintain relationships with clients, customers,
depositors, and employees or to achieve the anticipated benefits
of the merger.
15
The market price of the shares of Trustmark common stock
after the merger may be affected by factors different from those
affecting the shares of Trustmark or Republic currently
Trustmarks current businesses and geographic markets
differ from those of Republic and, accordingly, the results of
operations of the combined company and the market price of the
combined companys shares of common stock may be affected
by factors different from those currently affecting the
independent results of operations and market price of each of
Trustmark and Republic.
Republic will be subject to business uncertainties and
contractual restrictions while the merger is pending
Uncertainty about the effect of the merger on employees and
customers may have an adverse effect on Republic and
consequently on Trustmark. These uncertainties may impair
Republics ability to attract, retain, and motivate key
personnel until the merger is consummated, and could cause
customers and others that deal with Republic to seek to change
existing business relationships with Republic. Retention of
certain employees may be challenging during the pendency of the
merger, as certain employees may experience uncertainty about
their future roles with Trustmark. If key employees depart
because of issues relating to the uncertainty and difficulty of
integration or a desire not to remain with Trustmark,
Trustmarks business following the merger could be harmed.
In addition, the merger agreement restricts Republics
activities until the merger occurs. These restrictions may
prevent Republic from pursuing attractive business opportunities
that may arise prior to the completion of the merger. Please see
the section entitled The Merger Conduct of
Business Pending Effective Time for a description of the
restrictive covenants to which Republic is subject.
Some of the executive officers of Republic may have financial
interests that are different from, or in addition to, their
interests as shareholders
The interests of some of the directors and executive officers of
Republic may be different from those of Republics
shareholders, and certain of Republics officers are
participants in financial arrangements that are different from,
or in addition to, those of Republics shareholders. These
interests are described in more detail in the section of this
proxy statement/ prospectus entitled The
Merger Some of the Directors and Officers of
Republic Have Financial Interests in the Merger that Differ from
Your Interests.
The merger agreement limits Republics ability to pursue
alternatives to the merger
The merger agreement contains provisions that make it more
difficult for Republic to sell its business to a party other
than Trustmark. These provisions include (1) the general
prohibition on Republic soliciting any acquisition proposal or
offer for a competing transaction, (2) the requirement that
Republic pay a termination fee of $7 million if the merger
agreement is terminated in specified circumstances and
thereafter an alternative transaction is entered into or
completed, and (3) the requirement that Republics
directors and executive officers vote their shares in favor of
the merger agreement even if they decide to accept another
acquisition proposal. See The Merger Conduct
of Business Pending Effective Time and The
Merger Termination.
Trustmark required Republic to agree to these provisions as a
condition to Trustmark entering into the merger agreement. These
provisions, however, might discourage a third party that might
have an interest in acquiring all or a significant part of
Republic from considering or proposing that acquisition, even if
that party were prepared to pay greater consideration than the
proposed merger consideration. Furthermore, the termination fee
may result in a potential competing acquirer proposing to pay a
lower per share price to acquire Republic than it might
otherwise have proposed to pay.
16
The shares of Trustmark common stock to be received by
Republic shareholders as a result of the merger will have
different rights from shares of Republic stock
Some of the rights associated with Republic common and preferred
stock are different from the rights associated with Trustmark
common stock. See Comparison of the Rights of
Trustmarks and Republics Shareholders for a
discussion of the different rights associated with Trustmark
common stock.
If the merger is approved, Republics former shareholders
will have less influence over the management and policies of
Trustmark than they have over the management and policies of
Republic.
REPUBLIC SPECIAL SHAREHOLDERS MEETING
General
This proxy statement/ prospectus is being furnished to you in
connection with the solicitation of proxies by Republics
board of directors from holders of Republics common and
preferred shares, for use at the special meeting of shareholders
to be held at 14604 Northwest Freeway, Houston, Texas 77040 on
[ ],
2006 at
[ ].m.,
local time, and at any adjournments or postponements of the
special meeting. At the special meeting, holders of Republic
common and preferred shares will be asked to vote upon the
following proposals:
|
|
|
|
|
approval of the Agreement and Plan of Reorganization dated
April 13, 2006, as amended on May 16, 2006, between
Trustmark and Republic pursuant to which Republic will merge
into Trustmark, all on and subject to the terms and conditions
contained therein; and |
|
|
|
such other matters as may properly come before the special
meeting or any adjournments thereof. |
Proxies may be voted on other matters that properly come before
the special meeting at the discretion of the proxy holders.
Republics board of directors is not aware of any other
matters that are likely to be considered at the special meeting.
Who Can Vote at the Special Meeting
Republics board of directors has fixed the close of
business on
[ ],
2006 as the record date for determining the holders of
Republics common and preferred shares entitled to notice
of, and to vote at, the special meeting. Only holders of record
of Republics shares at the close of business on the record
date will be entitled to notice of, and to vote at, the special
meeting.
On the record date, there were [3,690,717] shares of
Republic common stock outstanding held by
approximately holders
of record and [353,734] shares of Republic preferred
stock outstanding held by approximately
[ ]
holders of record.
Quorum; Vote Required
The presence, in person or by properly executed proxy, of a
majority of Republics common shares and a majority of
Republics preferred shares entitled to vote is necessary
to constitute a quorum at the special meeting. In the event that
a quorum is not present at the special meeting, it is expected
that the special meeting will be adjourned or postponed in order
to solicit additional proxies. All votes for or
against, as well as all abstentions, will be counted
for the purpose of determining whether a quorum is present.
Brokers who hold Republic shares as nominees will not have
discretionary authority to vote such shares in the absence of
instructions from the beneficial owners of those shares. Any
shares which are not voted because the nominee-broker lacks such
discretionary authority (broker non-votes) will
nevertheless be counted for the purpose of determining whether a
quorum is present.
Approval of the merger agreement will require the affirmative
vote of the holders of at least two-thirds of Republics
common stock and the holders of at least two-thirds of
Republics preferred stock, voting as separate classes.
17
Failures to vote, abstentions and broker non-votes will have the
same effect as votes against the merger agreement. Accordingly,
Republics board of directors urges you to complete, date
and sign the accompanying proxy and return it promptly in the
enclosed postage prepaid envelope whether or not you plan to
attend the special meeting.
As of the record date, Republics directors and executive
officers were entitled to vote 12.52% of Republics
common shares and none of Republics preferred shares.
Pursuant to the merger agreement, each director and executive
officer of Republic entered into an agreement to vote such
persons shares (i) in favor of the merger agreement,
(ii) against any action that would result in a breach of
the merger agreement, and (iii) against any acquisition
proposal (as defined in the merger agreement) or any other
action that might be expected to delay or prevent the merger
from closing. The effect of this agreement is to waive each such
persons right to exercise dissenters rights of
appraisal.
Action on any other matter that is properly presented at the
special meeting for consideration of the shareholders requires
the affirmative vote of a majority of the common shares and of
the preferred shares cast at the special meeting. Because the
required vote is based on the affirmative votes of a majority of
the votes cast, failures to vote will not be treated as votes
cast and will have no effect on any other matter that is
properly presented.
You should not return your stock certificates with
your proxy cards. The procedure for surrendering your stock
certificates is described under The Merger
Exchange of Republic Stock Certificates
on page [ ].
How to Vote in Person
If your shares are registered in your name, you are considered
the shareholder of record, and you may vote in person at the
special meeting. If you want to vote your Republic shares held
in street name in person at the special meeting, you will have
to get a written proxy in your name from the broker, bank or
other nominee that holds your shares. The grant of a proxy on
the enclosed proxy card does not preclude a shareholder from
voting in person.
How to Vote by Proxy
Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct how your shares are
voted without attending the special meeting. If you are a
shareholder of record, you may vote by completing, signing and
dating the enclosed proxy card and mailing it in the
accompanying
pre-addressed
envelopes. If you hold shares beneficially in street name, you
may vote by submitting voting instructions to your broker,
trustee or nominee.
How Proxies Work
Shares represented by properly submitted proxies received in
time for the special meeting will be voted at the special
meeting in the manner specified by such proxies. If your proxy
is properly executed but does not contain voting instructions,
your proxy will be voted FOR approval of the
merger agreement. The proxy also grants authority to the persons
designated in the proxy to vote in accordance with their own
judgment if an unscheduled matter is properly brought before the
special meeting.
How to Revoke a Proxy
You may revoke a proxy at any time prior to your proxy being
voted at the special meeting by:
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prior to the special meeting, delivering a written notice of
revocation bearing a later date or time than the proxy to
Republic at 4200 Westheimer, Suite 101, Houston, Texas
77027, Attention: Corporate Secretary; |
18
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|
prior to the special meeting, submitting another proxy by mail
or by hand delivery that is later dated and that is properly
signed, dated and completed; or |
|
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oral revocation at the special meeting in person to any of the
persons named on the enclosed proxy card. |
Attendance at the special meeting will not by itself constitute
revocation of a proxy. You must specifically revoke your proxy.
Solicitation of Proxies; Expenses
Directors, officers and other employees of Republic or its
subsidiaries may solicit proxies personally, by telephone, by
facsimile or otherwise. None of these people will receive any
special compensation for soliciting proxies. Republic will
arrange with brokerage firms and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the
beneficial owners of shares held of record by such brokerage
firms and other custodians, nominees and fiduciaries, and
Republic will reimburse these record holders for their
reasonable
out-of-pocket expenses.
Recommendation of the Republic Board of Directors
Republics board of directors has unanimously approved the
merger agreement and believes that the merger is in the best
interests of Republic and its shareholders. Republics
board of directors unanimously recommends that Republics
shareholders vote FOR approval of the merger
agreement.
See The Merger Background of and
Republics Reasons for the Merger on
page [ ].
THE MERGER
The following information describes the material aspects of
the merger. This description does not purport to be complete,
and is qualified in its entirety by reference to the merger
agreement which is attached to this proxy statement/ prospectus
as Appendix A. All shareholders are urged to read the
merger agreement in its entirety.
General
The merger consists of several components including the merger
of Republics wholly owned subsidiary, RBT Holdings, Inc.
into Republic followed by the merger of Republic into Trustmark,
and the subsequent merger of Republics subsidiary,
Republic National Bank, into Trustmark Bank.
Merger Consideration
The merger agreement provides for the merger of Republic into
Trustmark. If the shareholders of Republic approve the merger
agreement at the special meeting, and if the required regulatory
approvals are obtained and the other conditions to the
parties obligations to effect the merger are met or waived
by the party entitled to do so, we anticipate that the merger
will be completed in the third quarter of 2006, although delays
could occur.
Under the merger agreement, Republics common and preferred
shareholders will have the right to elect to receive
(i) cash in the amount of $43.8089 per Republic share,
(ii)Trustmark common stock at the rate of 1.3908 shares of
Trustmark common stock for each Republic share, or
(iii) part cash and part Trustmark common stock on the same
basis. The ability to make this election is, however, subject to
the aggregate limitations described below.
The amount of cash and/or Trustmark common stock Republic
shareholders will receive as a result of the merger is subject
to an overall limitation that an aggregate of 49% of the
Republic shares will be converted into cash, including cash
payable in lieu of fractional shares and cash payable to
dissenting shareholders. The remaining 51% of Republics
shares will be converted into Trustmark common stock.
19
Accordingly, each Republic shareholders election will be
subject to proration and adjustment so that these aggregate
percentages can be achieved.
For example, even if you elect to receive cash for all of your
Republic shares, depending on what other shareholders elect, as
many as 51% of your shares may be converted into Trustmark
common stock, and even if you elect to receive Trustmark common
stock for all of your shares, up to 49% of your shares may be
converted into cash. Accordingly, at the time they vote with
respect to the merger agreement, Republics shareholders
will not know exactly how much cash or the exact number of
Trustmark shares they will receive as a result of the merger.
The exchange ratio and/or the per share cash consideration may
be adjusted if (1) the average closing price of the Trustmark
common stock for the five trading days ending on the third
trading day prior to the date that is ten days prior to
completion of the merger is less than $25.988 and (2) the number
obtained by dividing the average closing price of the Trustmark
common stock by $31.50 shall be less than the number obtained by
dividing the average closing price of the Trustmark peer group
by the April 12, 2006 closing price of the peer group set
forth in the merger agreement and subtracting 0.15 from the
quotient. In the event the foregoing conditions are met and
Republic exercises is termination right under the merger
agreement, Trustmark has the discretion, but not the obligation,
to increase either the number of shares of common stock that it
will issue to Republic shareholders, the per share cash
consideration that it will pay to Republic shareholders or a
combination of both, in an amount equal to the difference
between the average closing price of the Trustmark common stock
and $25.988 per share. If Trustmark elects not to adjust the
exchange ratio and/or the per share cash consideration, Republic
may terminate the merger agreement.
No fractional shares of Trustmark common stock will be issued in
connection with the merger. Instead, cash will be paid for any
fractional Trustmark share to which you would otherwise be
entitled at the rate of $31.50 multiplied by the fractional
share.
As a result of the merger, certificates for Republic common
stock and preferred stock will only represent the right to
receive the merger consideration pursuant to the merger
agreement, and otherwise will be null and void after completion
of the merger.
You should be aware that the market value of Trustmarks
shares will fluctuate, and neither Trustmark nor Republic can
give you any assurance as to what the price of Trustmark common
stock will be when the merger becomes effective or when
certificates for those shares are delivered to you. We urge you
to obtain current information on the market value of Trustmark
shares. [See Summary Comparative Market
Prices and Dividends on
page [ ].]
Effect of the Merger on Republic Stock Options
On May 31, 2006, Republic had outstanding options to
purchase [749,100] shares of Republics common
stock held by approximately [44] Republic officers and
one director. Of these options, [428,100] are currently
vested. Pursuant to the merger agreement, Republic has agreed to
take all actions necessary to accelerate the vesting of all
outstanding Republic options. Owners of vested options must
exercise them at least three days prior to consummation of the
merger to be entitled to receive any part of the merger
consideration. Options which are unexercised subsequent to that
deadline will not receive any part of the merger consideration.
Although holders of unexercised options have no right to vote in
connection with the proposed merger, holders of options will be
provided forms of election as if they were currently holders of
Republic common stock.
20
Background of and Republics Reasons for the Merger
Background
From time to time, as part of its fiduciary duties and
responsibilities to evaluate strategic alternatives for
Republic, the board of directors of Republic has reviewed
Republics future prospects for profitability and earnings
and asset growth and the viability of Republics continued
operation as an independent banking organization. In the last
three years, one major factor routinely discussed by the board
in assessing Republics future earnings potential was the
passage of the Sarbanes-Oxley Act of 2002, which added several
additional reporting and procedural requirements. In addition,
during the normal course of its business, Republic has also
received inquiries regarding its willingness to consider an
affiliation with other financial institutions and visited from
time to time with various investment banking firms regarding the
potential marketability of Republic.
In September of 2004, Republic received a non-binding offer from
Trustmark to acquire all of the shares of Republic common stock,
subject to Trustmarks completion of a satisfactory due
diligence examination of Republic and other conditions. That
same month, Republics Chairman, President and CEO, C. P.
Bryan met with Richard Hickson, Trustmarks Chairman and
CEO, to discuss a potential business combination. Republic
subsequently elected not to pursue further discussions with
Trustmark.
As the Sarbanes-Oxley Act continued to subject Republic to
heightened compliance and documentation requirements in a
variety of areas, including disclosure and internal controls,
internal and external audit relationships and the duties and
qualifications of board committees, Republics costs of
compliance increased, particularly relative to Republics
limited personnel resources. In response to these increased
costs, in January 2005, Republics board began to evaluate
generally the advantages and disadvantages of repurchasing
shares from shareholders in order to go private and
terminate its reporting obligations under the Securities
Exchange Act of 1934. At that time, management informally
considered various possible methods of repurchasing shares,
including an open market repurchase plan and a fixed price
tender offer, although no action was taken.
On February 22, 2005, Republics board met with Keefe,
Bruyette & Woods, Inc. (KBW), an investment
banking firm, to discuss strategic alternatives to better manage
Republics large shareholder base and evaluate
Republics status as a Securities and Exchange Commission
(SEC) reporting company. The alternatives considered
included a possible going private transaction, various
structures of which were discussed, including a reverse stock
split whereby shareholders owning less than a certain number of
shares would be cashed-out of the company or the
issuance of preferred stock to holders of a smaller number of
shares of common stock, as well as alternatives such as a tender
offer, stock repurchases on the open market, other methods of
reducing the number of outstanding shares of Republics
common stock (although not necessarily the number of
Republics record shareholders), or continuing operations
as a SEC reporting company. Subsequent to this meeting, the
board of directors considered these discussions and evaluated
the costs associated with a potential going private transaction
and the ongoing costs of remaining a SEC reporting company.
Republics board continued to pursue the idea of going
private, and at a special meeting of the board of directors held
on September 13, 2005, management discussed its analysis of
the costs and benefits associated with a potential going private
transaction and the ongoing costs of remaining an SEC reporting
company. The board then renewed its discussions as to whether it
was in Republics best interests and the best interests of
Republics shareholders to engage in the going private
transaction. After lengthy discussion, the board unanimously
determined that Republic would go forward with the going private
proposal in the form of a reclassification transaction that
would automatically convert the shares held by persons holding a
certain number of shares or less into Series A preferred
shares. The Series A shares would automatically convert to
common stock upon a change in control at Republic. In approving
the going private transaction, the board took into consideration
the fact that holders of 2,100 or fewer shares of common stock
would not be cashed-out but, rather, would retain an
equity interest in Republic and therefore, realize the same
value per share as holders of common stock in the event of any
future sale of
21
Republic. In November 2005, the board reviewed the terms of the
Series A preferred stock and approved a modification to the
liquidation preference on the Series A preferred stock.
On September 26, 2005, Republic filed a Schedule 14A
with the Securities and Exchange Commission, which was amended
in response to SEC comments on November 15, 2005 and
December 9, 2005. Pursuant to a proxy statement dated
January 9, 2006, Republic called a special meeting of
shareholders for January 31, 2006 to vote on the amendments
to Republics articles of incorporation that would effect
the going private transaction. The transaction was approved by
the shareholders at the special meeting and consummated on
February 1, 2006.
On January 24, 2006, as part of its ongoing review of
strategic alternatives, the board met with representatives of
KBW and one other investment banking firm to discuss a potential
sale of Republic and the prices that the investment bankers
believed that Republic was likely to attract. The board met
again on January 31, 2006, to discuss the pros and cons of
offering Republic for sale at this time.
The board requested additional information from each of the
investment banking firms and met again on February 3, 2006,
with representatives of KBW. On February 14, 2006 Republic
engaged KBW to assist with exploring the sale of Republic.
In February, Republic worked with KBW to compile a booklet
containing various financial and other information concerning
Republic. KBW contacted nine financial organizations that it
believed might be interested in acquiring and had the financial
wherewithal to acquire Republic, and on February 22, 2006
the booklets were distributed to potential acquirers.
On February 27, 2006, Mr. Bryan met with management of
one of the potential acquirers other than Trustmark. On
March 7, 2006, Richard Hickson of Trustmark met with C. P.
Bryan in Houston and visually inspected Republics banking
offices. By March 7, 2006, seven financial organizations,
including Trustmark, had signed confidentiality agreements.
Based on preliminary indications of interest, Republic decided
to allow three organizations, including Trustmark, to conduct
due diligence investigations of Republic and meet with Republic
representatives.
From March 16, 2006 through April 3, 2006 three
banking organizations, including Trustmark, conducted due
diligence examinations of Republic. On March 27, 2006,
Trustmark conducted a presentation and a series of management
meetings for all senior officers of Republic at a Houston hotel.
On April 5 and 6, 2006, Republic received revised
nonbinding indications of interest from the three organizations.
Two of the organizations, including Trustmark, furnished
Republic with comments to a draft definitive acquisition
agreement which had been prepared by Republic. On April 8,
2006, representatives of Republic met with representatives of
KBW and with legal counsel to review the bids and any comments
to the draft definitive agreement. KBW was instructed to contact
all of the potential acquirers to continue to engage in
negotiations regarding price and other terms and conditions.
On April 11, 2006, the Republic board of directors held a
special meeting to review the terms of the merger agreement and
related agreements that had been negotiated with Trustmark. KBW
made a presentation to the Republic board of directors on the
proposed transaction and the results of various financial
analyses KBW had prepared in connection with the proposed
transaction. KBW then orally delivered its opinion that the
total merger consideration was fair to Republics
shareholders from a financial point of view. Representatives of
Bracewell & Giuliani LLP, Republics outside legal
counsel, then reviewed the merger agreement and related
agreements that had been negotiated with Trustmark.
Republics board considered the financial performance,
stock performance, market position, growth prospects and other
matters regarding Trustmark. The board evaluated
Trustmarks offer in relation to the then current market
value of Republic common stock and Series A preferred stock
and managements estimate of the future value of the
Republic stock as an independent entity. Following a thorough
discussion, including the matters listed below, the Republic
board of directors determined that the merger pursuant to the
merger agreement would be in the best interests of Republic and
its shareholders. As a result, Republics board unanimously
approved the proposed merger and the merger agreement and
22
instructed management, subject to the satisfactory finalization
of the merger documents, to execute and deliver the merger
documents on behalf of Republic.
Counsel for Trustmark and counsel for Republic further
negotiated a definitive agreement, and on April 13, 2006,
Republic and Trustmark entered into the merger agreement and
issued a joint press release announcing the proposed merger.
Republics Reasons for the Merger and Recommendation of
the Board of Republic
The Republic board of directors believes that the merger is in
the best interests of Republic and its shareholders.
Accordingly, the Republic board has unanimously approved the
merger agreement and unanimously recommends that Republic
shareholders vote FOR the proposal to approve the merger
agreement.
In approving the merger agreement, the Republic board consulted
with its financial advisor with respect to the financial aspects
and fairness of the proposed acquisition from a financial point
of view and with its legal counsel as to its legal duties and
the terms of the merger agreement and related agreements.
Republic believes that combining with Trustmark will create a
stronger and more diversified company that will provide
significant benefits to Republics shareholders and
customers alike. The terms of the merger agreement, including
the consideration to be paid to Republic shareholders, were the
result of arms length negotiations between representatives
of Trustmark and Republic. In evaluating whether to merge with
Trustmark, Republics board of directors considered a
number of factors, including, without limitation, the following:
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|
|
the current financial services industry environment, including
increased competition, consolidation trends and the effects of
the continued rising rate environment; |
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|
the additional capital, liquidity and resources needed for
Republics operations to continue to grow; |
|
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|
the business, financial condition and results of operations for
Trustmark and future prospects for Trustmark and its capital
stock based on managements examination of Trustmarks
past performance and current financial condition; |
|
|
|
the per share merger consideration, using Republics
financial information as of December 31, 2005, represents a
5.05 multiple of tangible book value and a 31.8 multiple of
twelve months trailing earnings; |
|
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|
deal protection in the form of a walk away if
Trustmarks stock price falls below certain levels; |
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KBWs review and analysis of comparable transactions and
valuations of recent transactions; |
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|
the opinion to be provided by KBW that the consideration to be
paid by Trustmark is fair to Republics shareholders from a
financial point of view; |
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the compatibility of Trustmarks management team with that
of Republic and the general strategic fit of the entities; |
|
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|
the tax free nature of the Trustmark common stock portion of the
merger consideration to Republic shareholders for federal income
tax purposes; |
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|
the non-economic terms of the transaction, including the impact
on existing customers and employees; |
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|
the enhanced liquidity provided by shares of Trustmark common
stock and the historical dividends paid by Trustmark on its
common stock; |
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the ability of Trustmark, as a successful acquirer of financial
institutions, to integrate the operations of Republic; |
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|
the likelihood that the transaction will be approved by
regulatory authorities; and |
23
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the ability of Trustmark to finance the cash portion of the
merger consideration. |
Republics board of directors determined that
Republics competitive position and the value of its stock
could best be enhanced through merging with Trustmark. The
aggregate price to be paid to holders of Republic stock resulted
from negotiations which considered the historical earnings and
dividends of Trustmark and Republic; the potential growth in
Republics market and earnings, both as an independent
entity and as a part of a larger organization such as Trustmark;
Republics asset quality; and the effect of the merger on
the shareholders and customers of Republic and the communities
that Republic serves.
The above discussion of the information and factors considered
by Republics board is not intended to be exhaustive, but
includes the material factors that Republics board
considered. In reaching its determination to approve and
recommend the merger, Republics board did not assign any
relative or specific weights to any of the foregoing factors and
individual directors may have given differing weights to
different factors. Based on the reasons stated, Republics
board of directors believes that the merger is in the best
interests of Republic and its shareholders. The board of
directors of Republic therefore unanimously approved the merger
agreement and unanimously recommends that the Republic
shareholders vote FOR approval of the merger agreement.
Trustmarks Reasons for the Merger
The proposed transaction provides an excellent opportunity for
Trustmark to expand and enhance its franchise within the
attractive and high-growth Houston, Texas marketplace. This
transaction complements Trustmarks existing Houston
presence and improves the demographic and growth prospects of
our organization. Trustmark and Republic share a similar
operating philosophy and complementary business mix. Republic
provides a strong middle-market commercial lending base and
branch network around which Trustmark will build enhanced
retail, mortgage banking and wealth management platforms in
Houston.
Opinion of Republics Financial Advisor
The fairness opinion of Republics financial advisor, KBW
is described below. The description contains projections,
estimates and/or other forward-looking statements about the
future earnings or other measures of the future performance of
Republic. You should not rely on any of these statements as
having been made or adopted by Republic or Trustmark.
Republic engaged KBW to render financial advisory and investment
banking services. KBW assisted Republic in analyzing,
structuring and negotiating the merger of Republic into
Trustmark. KBW is a nationally-recognized investment banking
firm with substantial experience in transactions similar to the
merger and is familiar with Republic and its business. As part
of its investment banking business, KBW is continually engaged
in the valuation of financial businesses and its securities in
connection with mergers and acquisitions.
On April 11, 2006, the Republic board held a meeting to
evaluate the proposed merger with Trustmark. At this meeting,
KBW reviewed the financial aspects of the proposed merger and
rendered an oral opinion that the consideration to be received
by Republic shareholders in the merger was fair to those
shareholders from a financial point of view. The Republic board
approved the merger agreement at this meeting.
KBW has confirmed its oral opinion by delivering to the Republic
board a written opinion dated the date of this proxy statement/
prospectus, which opinion reflected certain changes to the per
share consideration described in the paragraph Summary of
Proposal below. In rendering its updated opinion, KBW
confirmed the appropriateness of its reliance on the analyses
used to render the earlier opinion by reviewing the assumptions
upon which its analyses were based, performing procedures to
update certain of its analyses and reviewing certain other
factors considered in rendering its opinion.
The full text of KBWs opinion, dated June 23, 2006, is
attached as Appendix B to this proxy
statement/ prospectus. Republic shareholders are encouraged to
read KBWs opinion carefully in its
24
entirety for a discussion of the assumptions made, procedures
followed, factors considered and limitations upon the review
undertaken by KBW in connection with the rendering of its
opinion.
KBWs opinion speaks only as of the date of the opinion.
The opinion is directed solely to the Republic board and
addresses only the fairness, from a financial point of view, of
the merger consideration to Republic shareholders. It does not
address the underlying business decision to proceed with the
merger and does not constitute a recommendation to any Republic
shareholder as to how the shareholder should vote at the
Republic special meeting on the merger agreement or any related
matter.
In rendering its opinion, KBW:
Reviewed, among other things:
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|
|
the merger agreement, as amended, |
|
|
|
annual reports to shareholders and annual reports on
Form 10-K of
Trustmark, |
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|
quarterly reports on
Form 10-Q of
Trustmark, |
|
|
|
annual reports to shareholders and annual reports on
Form 10-KSB of
Republic, |
|
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|
quarterly reports on
Form 10-Q and
Form 10-QSB of
Republic, and |
|
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|
consolidated financial statements (FR Y-9C) of Republic, as
filed with the Federal Reserve. |
Held discussions with members of senior management of Republic
regarding:
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|
past and current business operations, |
|
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|
regulatory matters, |
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financial condition, and |
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future prospects. |
Reviewed the publicly reported financial condition and results
of operations for Republic and compared them with those of
certain companies that KBW deemed to be relevant;
Evaluated the potential pro forma impact of the merger on
Trustmark;
Reviewed the market prices, valuation multiples, publicly
reported financial condition and results of operations for
Trustmark and compared them with those of certain
publicly-traded companies that KBW deemed to be relevant;
Compared the proposed financial terms of the merger with the
financial terms of certain other transactions that KBW deemed to
be relevant; and
Performed such other studies and analyses and reviewed such
other information as KBW deemed appropriate.
In conducting its review and arriving at its opinion, KBW relied
upon and assumed the accuracy and completeness of all of the
financial and other information provided to or otherwise made
available to KBW or that was discussed with, or reviewed by KBW,
or that was publicly available. KBW did not attempt or assume
any responsibility to verify such information independently. KBW
relied upon the management of Republic as to the reasonableness
and achievability of the financial and operating forecasts and
projections (and assumptions and bases therefor) provided to
KBW. KBW assumed, without independent verification, that the
aggregate allowances for loan and lease losses for Trustmark and
Republic are adequate to cover those losses. KBW did not make or
obtain any evaluations or appraisals of any assets or
liabilities of Trustmark or Republic, or examine or review any
individual credit files.
In the course of its analysis, KBW reviewed certain financial
projections furnished by Republics senior management team.
Republic does not publicly disclose internal management
projections of the type provided to KBW in connection with its
review of the merger. As a result, such projections were not
25
prepared with a view towards public disclosure. The projections
were based on numerous variables and assumptions, which are
inherently uncertain, including factors related to general
economic and competitive conditions. Accordingly, actual results
could vary significantly from those set forth in the
projections. For purposes of rendering its opinion, KBW assumed
that, in all respects material to its analyses:
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the merger will be completed substantially in accordance with
the terms set forth in the merger agreement; |
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the representations and warranties of each party in the merger
agreement and in all related documents and instruments referred
to in the merger agreement are true and correct; |
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|
each party to the merger agreement and all related documents
will perform all of the covenants and agreements required to be
performed by such party under such documents; |
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all conditions to the completion of the merger will be satisfied
without any waivers; and |
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|
in the course of obtaining the necessary regulatory, contractual
or other consents or approvals for the merger, no restrictions,
including any divestiture requirements, termination or other
payments or amendments or modifications, will be imposed that
will have a material adverse effect on the future results of
operations or financial condition of the combined entity or the
contemplated benefits of the merger, including the cost savings
and related expenses expected to result from the merger. |
KBW further assumed that the merger will be accounted for as a
purchase under generally accepted accounting principles, and
that the merger will qualify as a tax-free reorganization for
U.S. federal income tax purposes. KBWs opinion is not
an expression of an opinion as to the prices at which shares of
Trustmark common stock will trade following the announcement of
the merger or the value of the shares of common stock of the
combined company when issued pursuant to the merger, or the
prices at which the shares of common stock of the combined
company will trade following the completion of the merger.
In performing its analyses, KBW made numerous assumptions with
respect to industry performance, general business, economic,
market and financial conditions and other matters, which are
beyond the control of KBW, Republic and Trustmark. Any estimates
contained in the analyses performed by KBW are not necessarily
indicative of values or future results, which may be
significantly more or less favorable than suggested by these
analyses. Additionally, estimates of the value of businesses or
securities do not purport to be appraisals or to reflect the
prices at which such businesses or securities might actually be
sold. Accordingly, these analyses and estimates are inherently
subject to substantial uncertainty. In addition, the KBW opinion
was among several factors taken into consideration by the
Republic board in making its determination to approve the merger
agreement and the merger. Consequently, the analyses described
below should not be viewed as determinative of the decision of
the Republic board with respect to the fairness of the merger
consideration.
The following is a summary of the material analyses presented by
KBW to the Republic board on April 11, 2006, in connection
with its oral fairness opinion, which was subsequently confirmed
in an updated written opinion letter dated June 23, 2006, that
reflected the May 16, 2006 First Amendment to Agreement and
Plan of Reorganization. The amendment provided, among other
things, that Republics shareholders would have the right
to receive either 1.3908 shares of Trustmark, $43.8089 in
cash or a combination of the two. The summary is not a complete
description of the analyses underlying the KBW opinion or the
presentation made by KBW to the Republic board, but summarizes
the analyses performed and presented in connection with such
opinion. The preparation of a fairness opinion is a complex
analytic process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances.
Therefore, a fairness opinion is not readily susceptible to
partial analysis or summary description. In arriving at its
opinion, KBW did not attribute any particular weight to any
analysis or factor that it considered, but rather made
qualitative judgments as to the significance and relevance of
each analysis and factor. KBW did not address whether any
individual analysis did or did not support the overall fairness
conclusion. The financial analyses summarized below include
information presented in tabular format. Accordingly, KBW
believes that its analyses and the summary of its analyses must
be considered as a whole and that selecting portions of its
26
analyses and factors or focusing on the information presented
below in tabular format, without considering all analyses and
factors or the full narrative description of the financial
analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of
the process underlying its analyses and opinion. The tables
alone do not constitute a complete description of the financial
analyses.
Summary of Proposal. Pursuant to the merger
agreement, as amended, Republic shareholders would have the
right to receive 1.3908 shares of Trustmark, $43.8089 in
cash, or a combination thereof for each share of Republic common
stock and preferred stock, subject to the limitation that 51% of
the Republic shares will be converted into shares of Trustmark
common stock and 49% of Republics shares will be converted
into cash. All options to purchase shares of Republic common
stock outstanding at the date of the merger agreement will be
accelerated and exercisable beginning ten (10) days prior
to the effective date of the merger. Holders of Republic options
will be required to exercise their options in order to receive
the consideration in the merger. Based on Trustmarks
closing price on April 7, 2006 of $31.50, and based on the
exercise of all outstanding Republic options with cash, the
merger consideration would represent a value of approximately
$43.8089 per share to Republic shareholders and an
aggregate value of $210.0 million for Republic.
Selected Peer Group Analysis. Using publicly
available information, KBW compared the financial performance,
financial condition and market valuations of Trustmark to those
of a group of comparable banks. The companies in the peer group
were:
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AmSouth Bancorporation
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United Community Banks, Inc. |
First Horizon National Corporation
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Prosperity Bancshares, Inc. |
Compass Bancshares, Inc.
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Sterling Bancshares, Inc. |
Synovus Financial Corp.
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BancFirst Corporation |
Colonial BancGroup, Inc.
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Texas Capital Bancshares, Inc. |
BOK Financial Corporation
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IBERIABANK Corporation |
South Financial Group, Inc.
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First Financial Bankshares, Inc. |
Cullen/Frost Bankers, Inc.
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Capital City Bank Group, Inc. |
BancorpSouth, Inc.
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Simmons First National Corporation |
International Bancshares Corporation
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Seacoast Banking Corporation of Florida |
Texas Regional Bancshares, Inc.
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Renasant Corporation |
Alabama National BanCorporation
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Bank of the Ozarks, Inc. |
Hancock Holding Company
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Southwest Bancorp, Inc. |
To perform this analysis, KBW used financial data as of and for
the quarter ended December 31, 2005. Market data was as of
April 7, 2006 and the source for 2006 and 2007 earnings per
share estimates was First Call, a nationally-recognized earnings
per share estimate consolidator.
KBWs analysis showed the following concerning
Trustmarks financial performance:
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Peer Group | |
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Peer Group | |
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Trustmark | |
|
Average | |
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Median | |
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| |
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| |
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| |
Core Return on Average Assets
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1.33 |
% |
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1.27 |
% |
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1.22 |
% |
Core Return on Average Equity
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14.65 |
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14.61 |
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14.20 |
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Net Interest Margin
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3.94 |
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4.02 |
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4.11 |
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Fee Income/ Revenue
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32.4 |
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29.6 |
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28.4 |
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Efficiency Ratio
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55.9 |
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58.0 |
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57.7 |
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27
KBWs analysis showed the following concerning
Trustmarks financial condition:
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Peer Group | |
|
Peer Group | |
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Trustmark | |
|
Average | |
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Median | |
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| |
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| |
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| |
Equity/ Assets
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8.84 |
% |
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8.98 |
% |
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9.00 |
% |
Tangible Equity/ Tangible Assets
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7.00 |
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6.59 |
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6.68 |
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Loans/ Deposits
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93.8 |
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83.7 |
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84.5 |
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Securities/ Assets
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15.9 |
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22.6 |
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21.5 |
|
Loan Loss Reserve/ Loans
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1.27 |
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1.25 |
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1.20 |
|
Nonperforming Assets/ Loans plus Other Real Estate Owned
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0.55 |
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0.44 |
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0.34 |
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Net Charge-Offs/ Average Loans
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0.15 |
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0.26 |
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0.20 |
|
KBWs analysis showed the following concerning
Trustmarks market valuations:
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|
Peer Group | |
|
Peer Group | |
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Trustmark | |
|
Average | |
|
Median | |
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| |
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| |
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| |
Stock Price/ Book Value per Share
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|
2.37 |
x |
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2.31 |
x |
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2.30 |
x |
Stock Price/ Tangible Book Value per Share
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|
3.05 |
x |
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|
3.24 |
x |
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3.14 |
x |
Stock Price/ 2006 Estimated GAAP EPS
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|
|
15.3 |
x |
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15.7 |
x |
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15.7 |
x |
Stock Price/ 2007 Estimated GAAP EPS
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|
14.1 |
x |
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14.1 |
x |
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|
13.7 |
x |
Dividend Yield
|
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|
2.7 |
% |
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2.2 |
% |
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2.1 |
% |
2006 Dividend Payout Ratio
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40.8 |
% |
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32.7 |
% |
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35.6 |
% |
For purposes of this analysis, core earnings excluded revenue
and expense items deemed non-recurring or extraordinary and
excluded gains or losses on the sale of investment securities.
Financial Impact Analysis. KBW performed pro forma
merger analyses that combined the projected income statements
and balance sheets of Trustmark and Republic. Assumptions
regarding the accounting treatment and acquisition adjustments
were made by KBW to calculate the financial impact that the
merger would have on certain projected financial results of
Trustmark. The analysis assumed the 2006 and 2007 First Call
consensus earnings per share estimates of $2.06 and $2.24,
respectively, for Trustmark. For Republic, the analysis assumed
2006 management budgeted earnings. The analysis also assumed
Republic would achieve 15% earnings growth in 2007. This
analysis indicated that the merger is expected to be neutral to
slightly accretive to Trustmarks estimated earnings per
share in 2006 and in 2007 and that the merger is expected to be
dilutive to tangible book value per share for Trustmark. The
analysis also indicated that Trustmark would remain at least
adequately capitalized as per regulatory guidelines and thus
have the financial ability to execute the merger. This analysis
was based on certain assumptions with regard to cost savings,
merger related charges and amortization of intangibles that were
based on KBWs experience with comparable transactions and
on information supplied to KBW by Republics management.
For all of the above analyses, the actual results achieved by
Trustmark following the merger will vary from the projected
results, and the variations may be material.
28
Comparable Transaction Analysis. KBW reviewed
certain financial data related to comparable transactions. KBW
reviewed selected acquisitions of Texas metropolitan banks and
bank holding companies announced after January 1, 2003,
with aggregate transaction values greater than $25 million.
The transactions included in the group were:
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Survivor |
|
Acquired Entity |
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|
Texas United Bancshares Inc.
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Northwest Bancshares, Inc. |
Cullen/Frost Bankers, Inc.
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|
Alamo Corporation of Texas |
Prosperity Bancshares, Inc.
|
|
SNB Bancshares, Inc. |
Compass Bancshares, Inc.
|
|
TexasBanc Holding Company |
Cullen/Frost Bankers, Inc.
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Texas Community Bancshares, Inc. |
Sterling Bancshares, Inc.
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|
Prestonwood Bancshares, Inc. |
Zions Bancorporation
|
|
Amegy Bancorporation, Inc. |
State National Bancshares, Inc.
|
|
Heritage Financial Corporation |
Texas United Bancshares, Inc.
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|
Gateway Holding Company, Inc. |
Cullen/Frost Bankers, Inc.
|
|
Horizon Capital Bank |
Wells Fargo & Company
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|
First Community Capital Corp. |
Southwest Bancorp. of Texas
|
|
Klein Bancshares, Incorporated |
State National Bancshares, Inc.
|
|
Mercantile Bank Texas |
Southwest Bancorp. of Texas
|
|
Reunion Bancshares, Inc. |
Adam Corporation Group
|
|
Beltline Bancshares Inc. |
Prosperity Bancshares, Inc.
|
|
MainBancorp, Incorporated |
Inwood Bancshares, Inc.
|
|
WB&T Bancshares, Inc. |
29
KBW also reviewed selected acquisitions of Texas banks and bank
holding companies announced after January 1, 2003, with
aggregate transaction values greater than $25 million. The
transactions included in the group were:
|
|
|
Survivor |
|
Acquired Entity |
|
|
|
Texas United Bancshares Inc.
|
|
Northwest Bancshares, Inc. |
Cullen/Frost Bankers, Inc.
|
|
Alamo Corporation of Texas |
Prosperity Bancshares, Inc.
|
|
SNB Bancshares, Inc. |
Compass Bancshares, Inc.
|
|
TexasBanc Holding Company |
Cullen/Frost Bankers, Inc.
|
|
Texas Community Bancshares, Inc. |
Sterling Bancshares, Inc.
|
|
Prestonwood Bancshares, Inc. |
Zions Bancorporation
|
|
Amegy Bancorporation, Inc. |
State National Bancshares, Inc.
|
|
Heritage Financial Corporation |
Texas United Bancshares, Inc.
|
|
Gateway Holding Company, Inc. |
Cullen/Frost Bankers, Inc.
|
|
Horizon Capital Bank |
Wells Fargo & Company
|
|
First Community Capital Corp. |
Southwest Bancorp. of Texas
|
|
Klein Bancshares, Incorporated |
State National Bancshares, Inc.
|
|
Mercantile Bank Texas |
Southwest Bancorp. of Texas
|
|
Reunion Bancshares, Inc. |
Adam Corporation Group
|
|
Beltline Bancshares Inc. |
Prosperity Bancshares, Inc.
|
|
MainBancorp, Incorporated |
Inwood Bancshares, Inc.
|
|
WB&T Bancshares, Inc. |
North American Bancshares, Inc.
|
|
State Bank & Trust of Seguin, Texas |
Franklin Bank Corp.
|
|
First National Bank of Athens |
First Financial Bankshares, Inc.
|
|
Clyde Financial Corporation |
Banco Bilbao Vizcaya Argentaria, S.A.
|
|
Laredo National Bancshares, Inc. |
Texas United Bancshares, Inc.
|
|
GNB Bancshares, Inc. |
Southwest Bancorp. of Texas
|
|
Maxim Financial Holdings, Inc. |
30
KBW also reviewed selected acquisitions of banks and bank
holding companies nationwide, announced after January 1,
2005, with aggregate transaction values between
$100 million and $300 million. The transactions
included in the group were:
|
|
|
Survivor |
|
Acquired Entity |
|
|
|
Mercantile Bankshares Corporation
|
|
James Monroe Bancorp, Inc. |
Cathay General Bancorp, Inc.
|
|
Great Eastern Bank |
Placer Sierra Bancshares
|
|
Southwest Community Bancorp |
Midwest Banc Holdings, Inc.
|
|
Royal American Corporation |
BB&T Corporation
|
|
First Citizens Bancorporation |
Western Alliance Bancorporation
|
|
Intermountain First Bancorp |
Cascade Bancorp
|
|
F & M Holding Company |
Marshall & Ilsley Corporation
|
|
Trustcorp Financial Incorporated |
First Community Bancorp
|
|
Foothill Independent Bancorp |
Wintrust Financial Corporation
|
|
Hinsbrook Bancshares, Incorporated |
Prosperity Bancshares, Inc.
|
|
SNB Bancshares, Inc. |
Susquehanna Bancshares, Inc.
|
|
Minotola National Bank |
Pinnacle Financial Partners, Inc.
|
|
Cavalry Bancorp, Inc. |
FNB Corp.
|
|
Integrity Financial Corporation |
First Community Bancorp
|
|
Cedars Bank |
Synovus Financial Corp.
|
|
Riverside Bancshares, Inc. |
Whitney Holding Corporation
|
|
First National Bancshares, Inc. |
Commerce Bancorp, Inc.
|
|
Palm Beach County Bank |
East West Bancorp, Inc.
|
|
United National Bank |
Capital Bank Corporation
|
|
1st State Bancorp, Inc. |
FLAG Financial Corporation
|
|
First Capital Bancorp, Inc. |
Cullen/Frost Bankers, Inc.
|
|
Horizon Capital Bank |
Associated Banc-Corp
|
|
State Financial Services Corporation |
First Citizens Bancorporation, Inc.
|
|
Summit Financial Corporation |
Mercantile Bankshares Corporation
|
|
Community Bank of Northern Virginia |
Willow Grove Bancorp, Inc.
|
|
Chester Valley Bancorp Inc. |
For each transaction, KBW derived and compared, among other
things, the implied ratio of price per common share paid for the
acquired company to:
|
|
|
|
|
the earnings per share of the acquired company for the latest
twelve months of results publicly available prior to the time
the transaction was announced; |
|
|
|
estimated earnings per share of the acquired company for the
year in which the transaction was announced; |
|
|
|
book value per share of the acquired company based on the latest
publicly available financial statements of the company available
prior to the announcement of the acquisition; and |
|
|
|
tangible book value per share of the acquired company based on
the latest publicly available financial statements of the
company available prior to the announcement of the acquisition. |
Additionally, KBW compared the core deposit premium paid in each
transaction. The core deposit premium is calculated as the
premium paid in the transaction over the acquired companys
tangible equity as a percentage of the acquired companys
core deposits. For purposes of this analysis, core deposits are
defined as total deposits less certificates of deposit with
balances over $100,000.
31
Transaction multiples for the merger were based on the maximum
aggregate transaction value of $210 million, which assumes
all stock options are exercised with cash. The source for
forward earnings estimates of Republic was managements
budget. KBW compared these results with announced multiples. The
results of the analysis are set forth in the following tables.
Texas metropolitan bank transactions with announced deal
values over $25 million since January 1, 2003:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark/ | |
|
Comparable | |
|
Comparable | |
|
|
Republic | |
|
Transaction | |
|
Transaction | |
|
|
Transaction* | |
|
Average | |
|
Median | |
|
|
| |
|
| |
|
| |
Deal Price/ Trailing 12 Months Earnings per Share
|
|
|
31.8 |
x |
|
|
25.7 |
x |
|
|
24.7 |
x |
Deal Price/ Estimated Earnings per Share
|
|
|
23.2 |
x |
|
|
21.1 |
x |
|
|
21.7 |
x |
Deal Price/ Book Value per Share
|
|
|
5.05 |
x |
|
|
3.01 |
x |
|
|
3.15 |
x |
Deal Price/ Tangible Book Value per Share
|
|
|
5.05 |
x |
|
|
3.25 |
x |
|
|
3.17 |
x |
Core Deposit Premium
|
|
|
39.9 |
% |
|
|
23.2 |
% |
|
|
22.3 |
% |
* Multiples are based on aggregate values. Republics
financial information is as of and for the year ended
December 31, 2005.
Texas bank transactions with announced deal values over
$25 million since January 1, 2003:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark/ | |
|
Comparable | |
|
Comparable | |
|
|
Republic | |
|
Transaction | |
|
Transaction | |
|
|
Transaction* | |
|
Average | |
|
Median | |
|
|
| |
|
| |
|
| |
Deal Price/ Trailing 12 Months Earnings per Share
|
|
|
31.8 |
x |
|
|
27.0 |
x |
|
|
25.2x |
|
Deal Price/ Estimated Earnings per Share
|
|
|
23.2 |
x |
|
|
21.1 |
x |
|
|
21.7x |
|
Deal Price/ Book Value per Share
|
|
|
5.05 |
x |
|
|
2.80 |
x |
|
|
2.84x |
|
Deal Price/ Tangible Book Value per Share
|
|
|
5.05 |
x |
|
|
2.99 |
x |
|
|
2.95x |
|
Core Deposit Premium
|
|
|
39.9 |
% |
|
|
22.1 |
% |
|
|
21.1 |
% |
* Multiples are based on aggregate values. Republics
financial information is as of and for the year ended
December 31, 2005.
Nationwide bank transactions with announced deal values
between $100 million and $300 million since
January 1, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustmark/ | |
|
Comparable | |
|
Comparable | |
|
|
Republic | |
|
Transaction | |
|
Transaction | |
|
|
Transaction* | |
|
Average | |
|
Median | |
|
|
| |
|
| |
|
| |
Deal Price/ Trailing 12 Months Earnings per Share
|
|
|
31.8 |
x |
|
|
25.8 |
x |
|
|
24.5x |
|
Deal Price/ Estimated Earnings per Share
|
|
|
23.2 |
x |
|
|
22.2 |
x |
|
|
23.4x |
|
Deal Price/ Book Value per Share
|
|
|
5.05 |
x |
|
|
3.01 |
x |
|
|
3.04x |
|
Deal Price/ Tangible Book Value per Share
|
|
|
5.05 |
x |
|
|
3.13 |
x |
|
|
3.14x |
|
Core Deposit Premium
|
|
|
39.9 |
% |
|
|
31.3 |
% |
|
|
28.3 |
% |
* Multiples are based on aggregate values. Republics
financial information is as of and for the year ended
December 31, 2005.
No company or transaction used as a comparison in the above
analysis is identical to Republic, Trustmark or the merger.
Accordingly, an analysis of these results is not mathematical.
Rather, it involves complex considerations and judgments
concerning differences in financial and operating
characteristics of the various companies surveyed.
Discounted Cash Flow Analysis. KBW performed a
discounted cash flow analysis to estimate a range of the present
values of after-tax cash flows that Republic could provide to
equity holders through 2010 on a stand-alone basis, excluding
the effects related to the merger. In performing this analysis,
KBW used
32
budgeted 2006 net income and applied a range of long-term
growth rates from 10.0% to 15.0% thereafter. The range of values
was determined by adding (1) the amount of projected excess
capital Republic will hold at September 30, 2006 assuming a
tangible common equity to tangible assets ratio for Republic of
7.00%, (2) the present value of Republics
dividendable earnings, net of earnings necessary to maintain a
constant tangible common equity to tangible assets ratio for
Republic of 7.00% from September 30, 2006 through
December 31, 2010, and (3) the present value of the
terminal value of Republics common stock. In
calculating the terminal value of Republic, KBW applied
multiples ranging from 14.0x to 16.0x to 2011 forecasted
earnings. The dividend stream and the terminal value were then
discounted back using discount rates ranging from 10.0% to
14.0%, which range KBW viewed as appropriate for a company with
Republics risk characteristics.
This analysis resulted in a reference range for the implied
present value of Republic of $130.0 million to
$203.7 million.
KBW stated that the discounted cash flow present value analysis
is a widely used valuation methodology but noted that it relies
on numerous assumptions, including asset and earnings growth
rates, terminal values and discount rates. The analysis did not
purport to be indicative of the actual values or expected values
of Republic.
Other Analysis. KBW compared the financial and
market performance (where applicable) of Republic and Trustmark
to a variety of relevant industry peer groups and indices. KBW
reviewed earnings estimates, balance sheet composition,
historical stock performance (where applicable) and other
financial data for Trustmark and Republic.
The Republic board retained KBW as an independent contractor to
act as financial adviser to Republic regarding the merger. As
part of its investment banking business, KBW is continually
engaged in the valuation of banking businesses and its
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other
purposes. As specialists in the securities of banking companies,
KBW has experience in, and knowledge of, the valuation of
banking enterprises. In the ordinary course of its business as a
broker-dealer, KBW may, from time to time, purchase securities
from, and sell securities to, Republic and Trustmark. As an
active trader in securities, KBW may from time to time have a
long or short position in, and buy or sell, debt or equity
securities of Republic and Trustmark for KBWs own account
and for the accounts of its customers.
Republic and KBW have entered into an agreement relating to the
services to be provided by KBW in connection with the merger.
Republic paid KBW a cash fee of $25,000 promptly after the
execution of the merger agreement. Republic has also agreed to
pay KBW at the time of closing a cash fee contingent on the
aggregate deal value of the final offer. Based on the terms of
Trustmarks proposal, KBW will receive a cash fee equal to
approximately 0.67% of the aggregate market value of the
consideration paid in the merger less any fees paid prior to the
closing. Pursuant to the KBW engagement agreement, Republic has
also agreed to reimburse KBW for reasonable
out-of-pocket expenses
and disbursements incurred in connection with its retention and
to indemnify KBW and certain related parties against certain
liabilities.
Election Forms
A form of election is included with this proxy statement/
prospectus. A form of election must be properly completed and
returned to Republic on or before the special meeting. Any
Republic shareholder or option holder who does not return a
properly executed form of election before the special meeting
shall be deemed to have elected to convert 100% of his or her
Republic shares, including shares to be acquired on exercise of
options, into shares of Trustmark common stock, subject to
proration and adjustments as described above.
33
Exchange of Republic Stock Certificates
When the merger is completed, shares of Republic common and
preferred stock will be converted into the right to receive,
upon surrender of the certificate representing such shares as
described below, the merger consideration consisting of cash
and/or Trustmark common shares. Promptly after the merger
becomes effective, Trustmark will deliver or mail to you a form
of letter of transmittal and instructions for the surrender of
your Republic stock certificates. When you properly surrender
your certificates, or provide other satisfactory evidence of
ownership, and return the letter of transmittal duly executed
and completed in accordance with its instructions and any other
documents as may be reasonably requested, Trustmark will
promptly deliver to you the merger consideration to which you
are entitled.
You should not send in your stock certificates until you
receive the letter of transmittal and instructions.
With respect to any Republic stock certificate that has been
lost or destroyed, Trustmark will pay the merger consideration
attributable to the shares represented by such certificate upon
receipt of a surety bond or other adequate indemnity, as
required in accordance with Trustmarks standard policies,
and evidence reasonably satisfactory to Trustmark of ownership
of the lost or destroyed shares. After the merger is completed,
there can be no transfers of Republic shares.
To the extent permitted by law, after the merger becomes
effective, you will be entitled to vote at any meeting of
Trustmark shareholders the number of whole shares of Trustmark
common stock into which your shares of Republic stock are
converted, regardless of whether you have exchanged your
Republic stock certificates. You will also be entitled to any
dividends or other distributions on the Trustmark common stock
to which you are entitled which have a record date after the
merger becomes effective. However, any cash portion of the
merger consideration and any dividends or other distributions
payable to you will not be paid to you until you surrender your
Republic stock certificates for exchange. Upon surrender of your
Republic stock certificate, the certificate representing any
Trustmark common stock into which your shares of Republic stock
have been converted, together with any cash and dividends to
which you are entitled, will be delivered and paid to you,
without interest.
Some of the Directors and Officers of Republic Have Financial
Interests in the Merger that Differ from Your Interests
The merger will constitute a change in control of
Republic that will trigger certain obligations owed by Republic
to C. P. Bryan and R. John McWhorter under their employment
agreements.
Immediately before the completion of the merger, C. P. Bryan
will receive a payment of $1.5 million plus an amount
calculated to provide an after tax benefit equal to applicable
excise taxes imposed with respect to the payment, and R. John
McWhorter will receive a payment of $705,000 plus an amount
calculated to provide an after tax benefit equal to applicable
excise taxes imposed with respect to the payment.
As required by the merger agreement, C. P. Bryan and R. John
McWhorter have entered into amendments to their employment
agreements with Republic to eliminate certain severance benefits
were otherwise payable on a change in control.
A condition to Trustmarks obligation to consummate the
merger is C. P. Bryan entering into an employment agreement with
Trustmark and Trustmark Bank. That agreement will provide
Mr. Bryan with, among other things, a base salary of
$350,000, tax planning benefits in the aggregate amount of
$25,000, an automobile allowance of $1,000 per month, a
monthly payment of $600 for his continued membership in a golf
club and the right to certain artwork in his office. If the
agreement is terminated by virtue of the death or disability of
Mr. Bryan, he or his estate is entitled to a payment of 50%
of his base salary for the remainder of the term. If the
agreement is terminated by Trustmark without cause
or by Mr. Bryan for good reason following a
change in control of Trustmark, then Mr. Bryan is entitled
to payment of his base salary for two years. If he resigns for
any reason except for good reason following a change
in control of Trustmark, Mr. Bryan is entitled to payment
of 50% of his base salary for two years. The
34
agreement has a term of three years and will automatically renew
for a three year period on each anniversary of the effective
date of the agreement unless either Trustmark or Mr. Bryan
chooses not to renew. Mr. Bryans employment agreement
contains a noncompete covenant that extends for a period of two
years following termination of his employment.
In addition to the compensation and benefits discussed above,
Mr. Bryan will receive an award of 16,130 shares of
Trustmarks common stock. These shares will vest over a
period of three years.
Pursuant to Mr. Bryans employment agreement with
Trustmark and Trustmark Bank, Mr. Bryan will serve as the
Chairman and Chief Executive Officer of Trustmarks banking
operations in Texas. As required by the merger agreement, Mr.
Bryan will also be elected to the board of directors of
Trustmark Bank.
The merger agreement provides that all of Republics
outstanding options will vest and become exercisable as of ten
days prior to the merger and holders of vested options are
required to exercise all of their options prior to the date the
merger is completed. As of May 31, 2006, Republics
officers and a director held an aggregate of
321,000 unvested options to purchase shares of Republic
common stock.
Under the merger agreement, Trustmark is obligated to indemnify
Republics directors, officers and employees for a period
of four years following the merger to the same extent these
persons were entitled to indemnification by Republic. Trustmark
also agreed to use commercially reasonable efforts to maintain
for a period of not less than four years after completion of the
merger its current directors and officers insurance policy
coverage (or comparable coverage), which policy shall be amended
to include each director and officer of Republic currently
covered under the comparable policy maintained by Republic, and
which shall provide coverage for (among other things) acts or
omissions occurring prior to the effective time of the merger.
Effective Date and Time of the Merger
The merger agreement provides that the merger will be completed
on a date selected by Trustmark that is no later than the
30th business day following the later of the special
shareholders meeting and receipt of all required
regulatory authority approvals. The merger will become effective
at the time and date specified in the certificates approving the
merger to be issued by the Mississippi Secretary of State and
the Texas Secretary of State. It is currently anticipated that
the merger will become effective in the third quarter of 2006,
assuming all conditions to the respective obligations of
Trustmark and Republic to complete the merger have been
satisfied, although delays could occur.
We cannot assure you that we can obtain the necessary
shareholder and regulatory approvals or that the other
conditions to completion of the merger can or will be satisfied.
Conduct of Business Pending Effective Time
From the date of the merger agreement to and including the
closing date, Republic shall:
|
|
|
|
|
conduct its affairs (including, without limitation, the making
of or agreeing to make any loans or other extensions of credit)
only in the ordinary course of business consistent with past
practices and prudent banking principles; |
|
|
|
use its best efforts to preserve intact its present business
organizations, keep available the services of its present
officers, directors, key employees and agents, and preserve its
relationships and goodwill with customers and advantageous
business relationships; and |
|
|
|
except as required by law or regulation, take no action which
would adversely affect or delay the ability of Republic or
Trustmark to obtain any required regulatory or other approvals. |
From the date of the merger agreement to and including the
closing date, unless otherwise required by law or regulation,
permitted by the merger agreement or reflected in a disclosure
schedule, or unless
35
Trustmark otherwise consents in writing (which consent shall not
be unreasonably withheld), Republic shall not:
|
|
|
|
|
make or agree to make or renew any loans or other extensions of
credit to any borrower in excess of $1,000,000 (except pursuant
to commitments made prior to the date of the merger agreement,
loans fully secured by a certificate of deposit at Republic, or
renewals, extensions and consolidations of any loans other than
those previously disclosed); |
|
|
|
issue or sell or obligate itself to issue or sell any shares of
its capital stock (other than issuances for shares accrued or
withheld as of the date of the merger agreement of the Republic
Employee Stock Purchase Plan) or any warrants, rights, options
or warrants to acquire, or any securities convertible into, any
shares of its capital stock, or declare or pay any dividend in
respect of its capital stock; |
|
|
|
open or close any branch office, or acquire or sell or agree to
acquire or sell any branch office or any deposit liabilities,
and shall otherwise consult with and seek the advice of
Trustmark with respect to basic policies relating to branching,
site location and relocation; |
|
|
|
enter into, amend or terminate certain agreements specified in
the merger agreement or any other material agreement, or acquire
or dispose of any material amount of assets or liabilities,
except in the ordinary course of business consistent with
prudent banking practices; |
|
|
|
grant any severance or termination pay (other than pursuant to
Republics policies in effect as of the date of the merger
agreement) to, or enter into any employment, consulting,
noncompetition, retirement, parachute, severance or
indemnification agreement with, any officer, director, employee
or agent of Republic, either individually or as part of a class
of similarly situated persons (other than as required or
contemplated by the merger agreement); |
|
|
|
declare, pay or set aside for payment any dividend or other
distribution (whether in cash, stock or property) in respect of
or, directly or indirectly, purchase, redeem or otherwise
acquire any shares of Republic common stock or preferred stock; |
|
|
|
make or acquiesce to any change in accounting methods,
principles and practices, except as may be required by GAAP or
any governmental authority; |
|
|
|
sell, transfer, convey or otherwise dispose of any real property
(including other real estate owned) or interest
therein; |
|
|
|
foreclose upon or otherwise acquire any commercial real property
prior to receipt and approval by Trustmark of a Phase I
environmental review thereof; |
|
|
|
increase or decrease the rate of interest paid on deposit
accounts, except in a manner and pursuant to policies consistent
with Republics past practices; |
|
|
|
establish any new subsidiary; |
|
|
|
voluntarily make any material change in the interest rate risk
profile of Republic from that as of December 31, 2005; |
|
|
|
materially deviate from policies and procedures existing as of
the date of the merger agreement with respect to (1)
classification of assets, (2) the allowance for loan losses
and (3) accrual of interest on assets, except as otherwise
required by the provisions of the merger agreement; |
|
|
|
amend or change any provision of Republics articles of
incorporation or bylaws; |
|
|
|
make any capital expenditure which would exceed an aggregate of
$50,000; |
|
|
|
excluding deposits, certificates of deposit, FHLB advances and
borrowings consistent with past practices, undertake any
additional borrowings in excess of ninety days; or |
|
|
|
modify any outstanding loan or acquire any loan participation,
unless such modification is made in the ordinary course of
business, consistent with past practice. |
36
We refer you to the merger agreement, which is attached as
Appendix A to this proxy statement/ prospectus, for
additional restrictions on the conduct of the business of
Republic pending the merger.
No Solicitation
In addition to the restrictions on Republic outlined above, so
long as the merger agreement is in effect, Republic and its
subsidiaries have agreed not to take any of the following
actions:
|
|
|
|
|
solicit, initiate or encourage the making of any acquisition
proposal; or |
|
|
|
enter into any negotiations concerning, furnish any nonpublic
information relating to Republic in connection with, or agree to
any acquisition proposal. |
However, Republic may furnish information or participate in
negotiations or discussions where the board of directors of
Republic determines, based on the advice of counsel, that the
failure to furnish such information or participate in such
negotiations or discussions would or could reasonably be deemed
to constitute a breach of the fiduciary or legal obligations of
Republics board of directors to its shareholders. Republic
has agreed to notify Trustmark of any acquisition proposal
received and provide reasonable detail as to the identity of the
proposed acquirer and the nature of the proposed transaction.
Republic may terminate the merger agreement if it has received a
bona fide acquisition proposal from a third party which it
determines, in good faith and in the exercise of its fiduciary
duties after consultation with its legal and financial advisors,
to be superior to the terms of the merger agreement and the
failure to terminate the merger agreement and accept such
superior proposal would be inconsistent with the proper exercise
of its fiduciary duties under applicable law. See the heading
The Merger Termination on
page [ ].
Conditions to Completion of the Merger
Trustmarks obligation to consummate the merger is
conditioned upon:
|
|
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|
|
the representations and warranties made by Republic in the
merger agreement must have been true in all material respects
when made and shall be true in all material respects as of the
closing date; |
|
|
|
Republic shall have performed or complied with all covenants and
conditions required by the merger agreement to be conformed and
complied with by it; |
|
|
|
there shall have been no change from the date of the merger
agreement in the assets, properties, business or financial
condition of Republic which had or may have a material
adverse effect; |
|
|
|
Trustmark shall have received an acceptable legal opinion of
Bracewell & Giuliani LLP, counsel to Republic; |
|
|
|
C.P. Bryan, Trustmark and Trustmark Bank shall have entered into
an employment agreement in the form specified in and attached to
the merger agreement; and |
|
|
|
Trustmark shall have received the legal opinion of its counsel,
Brunini, Grantham, Grower & Hewes, PLLC to the effect
that the merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code. |
Republics obligation to consummate the merger is
conditioned upon:
|
|
|
|
|
the representations and warranties made by Trustmark in the
merger agreement must have been true in all material respects
when made and shall be true in all material respects as of the
closing date; |
|
|
|
Trustmark shall have performed and complied with all covenants
and conditions required by the merger agreement to be conformed
or complied with by it; |
|
|
|
there shall have been no change from the date of the merger
agreement in the assets, properties, business or financial
condition of Trustmark which had or may have a material
adverse effect; |
37
|
|
|
|
|
Republic shall have received an acceptable legal opinion of
Brunini, Grantham, Grower & Hewes, PLLC, counsel to
Trustmark; |
|
|
|
Republics financial advisor shall not have withdrawn or
materially modified its opinion that the merger consideration is
fair to the Republic shareholders from a financial point of
view; and |
|
|
|
Republic shall have received the legal opinion of
Bracewell & Giuliani LLP to the effect that the merger
will qualify as a reorganization under Section 368(a) of
the Internal Revenue Code. |
Both parties obligations to consummate the merger are
conditioned upon:
|
|
|
|
|
Trustmark shall have received the final approval of the merger
from all necessary governmental agencies and authorities, which
approval shall not impose any restrictions on its operations
which are unacceptable to it; |
|
|
|
approval of the merger agreement by holders of at least
two-thirds of the outstanding shares of Republic common stock
and by holders of at least two-thirds of the Republic preferred
stock, voting as separate classes; |
|
|
|
the registration statement of which this proxy statement/
prospectus forms a part covering the Trustmark shares to be
issued in the merger shall have become effective and no stop
order suspending such effectiveness shall be in effect and no
claim, action, suit proceeding or investigation by the
Securities and Exchange Commission to suspend the effectiveness
of the registration statement shall have been initiated or
continuing or have been threatened and be unresolved; and |
|
|
|
the shares of Trustmark common stock to be delivered to the
shareholders of Republic shall have been authorized for listing
on the Nasdaq NMS. |
Any condition to the consummation of the merger, except the
required shareholder and regulatory approvals, and the absence
of an order or ruling prohibiting the merger, may be waived in
writing by the party to the merger agreement entitled to the
benefit of such condition.
Covenants
In the merger agreement, Republic undertook various covenants
set out in Article IV. In addition to the covenants
relating to Republics conduct of business pending
completion of the merger set forth above, those covenants
include:
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Republic agreed, to the extent permitted by law, to provide
Trustmark all information concerning Republic required for
inclusion in this proxy statement/ prospectus, or any other
application, filing, statement or document to be made or filed
in connection with the merger and the other transactions
contemplated by the merger agreement; |
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Republic agreed to give Trustmark access to all of its
properties, books and records and to provide additional
financial and operating data and other information about its
business and properties; |
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Republic agreed to execute and deliver such instruments and take
such actions as Trustmark may reasonably require to cause the
amendment or termination of any of Republics employee
benefit plans; |
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Republic agreed to undertake all approvals, filings, and other
steps necessary to cause the merger of Republics
subsidiary, RBT Holdings, Inc., into Republic; |
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Republic agreed to cause Republic National Bank to cooperate
with Trustmark and Trustmark Bank in conjunction with all
approvals, filings, and other steps necessary to cause the
consummation of the merger of Republic National Bank into
Trustmark Bank; |
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Republic agreed take all actions necessary to approve and
execute the amendments to the employment agreements of C. P.
Bryan and R. John McWhorter in the manner prescribed by the
merger agreement and to deliver executed copies of such
amendments to Trustmark; |
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Republic agreed to pay C. P. Bryan and R. John McWhorter the
change in control payments as specified in the merger agreement; |
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Republic agreed to notify the trustee of the subsidiary trust
formed to issue trust preferred securities of the execution of
the merger agreement; and |
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Republic agreed to deliver to Trustmark a list of persons who
are then affiliates of Republic with respect to the
merger within the meaning of Rule 144 under the Securities
Act and cause each affiliate to deliver to Trustmark
an affiliate agreement in the prescribed form. |
In the merger agreement, Trustmark also undertook various
covenants. Those covenants include:
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Trustmark agreed to promptly prepare and file with the
Securities and Exchange Commission a registration statement
relating to the shares of Trustmark common stock to be delivered
to the shareholders of Republic pursuant to the merger, and to
use its best efforts to cause the registration statement to
become effective; |
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Trustmark agreed to offer employees of Republic who continue
their employment after the merger the opportunity to participate
as newly hired employees in the employee benefit plans and
programs maintained for employees of Trustmark and that Republic
employees will be entitled to credit for prior service with
Republic for all purposes under the employee benefit plans and
programs (other than stock option plans) sponsored by Trustmark
to the extent Republic sponsored a similar type of plan
immediately prior to the merger, and any eligibility waiting
period and pre-existing condition exclusion with respect to such
plans shall be waived; |
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Trustmark agreed to allow Republic to accrue employee bonuses
for the year during which the merger occurs in an amount
consistent with Republics past practices and in the normal
course of business. These accrued bonuses shall be payable in
accordance with Trustmarks incentive compensation plan to
eligible employees on March 15, 2007, provided such
employee is employed by Trustmark on March 1, 2007; |
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Trustmark agreed to promptly file all necessary regulatory
documents, notices and applications; |
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Trustmark agreed to file all documents required to be filed and
use its best efforts to have the shares of Trustmark common
stock to be issued in connection with the merger included for
quotation on Nasdaq NMS; |
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Trustmark agreed to file in a timely manner for a period of not
less than two years from the date of the merger agreement, all
reports with the Securities and Exchange Commission required to
be filed by it pursuant to Section 13 and
Section 15(d) of the Securities Exchange Act of 1934; |
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Trustmark agreed, for a period of four years following the
completion of the merger, to indemnify and hold harmless each
present and former director, officer and employee of Republic
against any costs or expenses incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil
or criminal, administrative or investigative, arising out of
matters existing or occurring at or prior to the merger to the
fullest extent to which such parties were entitled under
Republics articles of incorporation, bylaws and applicable
laws; |
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Trustmark agreed that it will use its commercially reasonable
efforts to maintain its existing policy of directors and
officers liability insurance (or comparable coverage) for a
period of at least four years after completion of the merger,
which policy shall be amended to include each director and
officer of Republic currently covered under comparable policies
held by Republic; |
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Trustmark agreed to increase by one the number of positions on
the Trustmark Bank board of directors and cause C. P. Bryan to
be elected or appointed as a director of Trustmark Bank at the
effective time of the merger; |
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Trustmark agreed to prepare and file a registration statement
with the Securities and Exchange Commission and use its best
efforts to cause the registration statement to become
effective; and |
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Trustmark agreed to enter into a supplemental indenture to the
Indenture dated December 19, 2002, pursuant to which
Republic issued $8,248,000 in junior subordinated debentures to
its subsidiary trust, assuming the obligations and performance
of the covenants of Republic under the Indenture. |
Representations and Warranties of Republic and Trustmark
In the merger agreement, Republic has made representations and
warranties to Trustmark, and Trustmark has made representations
and warranties to Republic. The more significant of these made
by both parties relate to (among other things):
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corporate organization and existence; |
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authority and power to execute the merger agreement and to
complete the transactions contemplated by the merger agreement; |
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the absence of conflicts between the execution of the merger
agreement and completion of the transactions contemplated by the
merger agreement and certain other agreements; |
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capitalization; |
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the accuracy of their respective financial statements and
reports; |
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pending or threatened litigation and other proceedings; |
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compliance with applicable laws and regulatory filings; |
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employee benefit plans; |
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the payment of taxes and filing of tax returns; |
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compliance with the Community Reinvestment Act; |
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the absence of certain changes and events; |
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insurance coverage; and |
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brokers or finders fees. |
Republic also has made additional representations and warranties
to Trustmark with respect to (among other things):
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its investments; |
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its real property and leases; |
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its personal property; |
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its compliance with environmental laws; |
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its loan portfolio and allowance for loan losses; |
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the existence of certain loan agreements and related matters; |
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the existence of certain contracts and commitments; |
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its deferred compensation arrangements; |
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its accounting controls; |
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the absence of derivative contracts; |
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its deposit accounts; |
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its intellectual property rights; |
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its compliance with the Bank Secrecy Act and the USA PATRIOT
Act; and |
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employment relations; |
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its receipt of a fairness opinion; |
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the accuracy of information to be supplied for inclusion in
state and federal reports and filings; |
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the vote required to approve the merger agreement and related
transactions; |
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the accuracy of information provided to Trustmark; |
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its filing of a Form 15 deregistration statement with the
Securities and Exchange Commission; |
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its outstanding trust preferred securities; and |
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its shareholders list. |
Trustmark has also made additional representations and
warranties to Republic with respect to (among other things):
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its compliance with its Securities and Exchange Commission
reporting obligations and the accuracy of such reports; and |
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its compliance with the provisions of the Sarbanes-Oxley Act. |
Modifications or Waiver
No termination, cancellation, modification, amendment, deletion,
addition or other change in the merger agreement, or any
provision thereof, or waiver of any right or remedy therein
provided, shall be effective for any purpose unless specifically
set forth in a writing signed by the party or parties to be
bound thereby. The waiver of any right or remedy in respect to
any occurrence or event on one occasion shall not be deemed a
waiver of such right or remedy in respect to such occurrence or
event on any other occasion.
Termination
The merger agreement may be terminated in the following manner:
The merger agreement may be terminated and the merger abandoned
at any time upon the mutual consents of Trustmark and Republic.
The merger agreement may be terminated and the merger abandoned
at any time prior to the effective date by either Trustmark or
Republic if:
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the merger has not been completed within 150 days of
April 13, 2006 and the party exercising its termination
right did not fail to perform a material obligation under the
merger agreement which has been the cause of or resulted in the
failure to complete the merger by that deadline; |
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any court of competent jurisdiction in the United States or
other United States governmental body issues an order, decree or
ruling or takes any other action restraining, enjoining or
otherwise prohibiting the merger and such order, decree, ruling
or other action is final and non-appealable; |
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any of the transactions contemplated by the merger agreement are
disapproved by any regulatory authority or other person whose
approval is required to consummate any of such transactions; |
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the approval of the merger agreement by the shareholders of
Republic is not obtained; |
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any of the conditions to the obligations of Trustmark or the
obligations of Republic, respectively, have not been met or
waived by the party entitled to such benefit; or |
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the other party materially breaches its representations and
warranties or any covenant or agreement contained in the merger
agreement and such breach has not been cured within the required
time limit. |
Republic may terminate the merger agreement if:
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it has received a bona fide acquisition proposal from a third
party and the Republic board of directors determines, in good
faith and in the exercise of its fiduciary duties after
consultation with its legal and financial advisors, that such
acquisition proposal is superior to the terms of the merger
agreement and the failure to terminate the merger agreement and
accept such superior proposal would be inconsistent with the
proper exercise of its fiduciary duties; or |
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the average per share sales price for Trustmark common stock for
the five consecutive trading days ending three trading days
prior to the tenth day before completion of the merger is less
than $25.988 per share and the number obtained by dividing
the average closing price of Trustmark common stock by $31.50
shall be less than the number obtained by dividing the average
closing price of the Trustmark peer group by the April 12,
2006 closing price of the peer group set forth in the merger
agreement and subtracting 0.15 from the quotient; provided,
however, that Trustmark has the right, but not the obligation,
to nullify any exercise by Republic of this termination right by
paying, as additional merger consideration to each holder of
Republic stock making a share election, additional shares of
Trustmark common stock and/or cash in an amount per share of
Republic stock equal to the difference between the average
closing price of Trustmark common stock and $25.988 per
share. In the event Republic desires to terminate the merger
agreement, it must notify Trustmark in writing, of its intent to
terminate during a specified period. |
Trustmark may terminate the merger agreement if Republics
board of directors resolves to:
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accept an alternative acquisition proposal (as defined in the
merger agreement); or |
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withdraw or modify, in any manner that is adverse to Trustmark,
its recommendation or approval of the merger agreement or
recommends to Republic shareholders acceptance or approval of
any alternate acquisition proposal. |
In the event of the termination of the merger agreement without
breach by any party, the merger agreement will be void and have
no effect, without liability on the part of any party or the
directors, officers or shareholders of any party, except as
specifically contemplated in the merger agreement or as set
forth below.
Provided that Trustmark is not in material breach of any
covenant or obligation contained in the merger agreement,
Republic must pay Trustmark a termination fee of
$7.0 million if the merger agreement is terminated:
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by Republic because it has received a bona fide alternative
acquisition proposal (as defined in the merger agreement) and
the Republic board of directors determines, in good faith and in
the exercise of its fiduciary duties after consultation with its
legal and financial advisors, that such acquisition proposal is
superior to the terms of the merger agreement and the failure to
terminate the merger agreement and accept such superior proposal
would be inconsistent with the proper exercise of its fiduciary
duties; |
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by either Trustmark or Republic if the shareholders of Republic
do not approve the merger agreement, if at the time of any
failure by the shareholders of Republic to approve the merger
agreement there exists an alternate acquisition proposal with
respect to Republic and, within twelve months of the termination
of the merger agreement, Republic enters into a definitive
agreement with any third party with respect to any alternate
acquisition proposal; or |
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by Trustmark if Republics board of directors resolves to
accept an alternative acquisition proposal or withdraws or
modifies its recommendation or approval of the merger or
recommends to Republic shareholders acceptance or approval of
any alternate acquisition proposal. |
Material U.S. Federal Income Tax Consequences of the
Merger
General
The following discusses the material U.S. federal income
tax consequences of the merger. This discussion is based on the
Internal Revenue Code of 1986 (the Code), as
amended, applicable Treasury regulations, administrative
interpretations and court decisions as in effect as of the date
of this proxy statement/ prospectus, all of which may change,
possibly with retroactive effect.
This discussion assumes that Republic shareholders hold their
Republic shares and will hold their Trustmark common stock as
capital assets within the meaning of Section 1221 of the
Code. This discussion does not address all aspects of federal
income taxation that may be important to a Republic shareholder
in light of that shareholders particular circumstances or
to a Republic shareholder subject to special rules, such as:
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a person who is not a citizen or resident of the U.S.; |
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a financial institution or insurance company; |
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a tax-exempt organization; |
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a dealer or broker in securities; |
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a person who holds Republic shares as part of a hedge,
appreciated financial position, straddle, conversion or other
integrated transaction; |
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partnership or other entity classified as a partnership for
U.S. federal income tax purposes; or |
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a person liable for the alternative minimum tax. |
This discussion is not a complete analysis or description of all
potential federal income tax consequences to the merger. It does
not address tax consequences that may vary with, or are
contingent on, individual circumstances. In addition, it does
not address any non-income tax or any foreign, state or local
tax consequences of the merger. Accordingly, shareholders are
strongly encouraged to consult their own tax advisors to
determine their particular tax consequences.
Tax Opinions
As a condition to the parties obligations to consummate the
merger, Trustmark must receive an opinion of Brunini, Grantham,
Grower & Hewes, PLLC, and Republic must receive an
opinion of Bracewell & Giuliani LLP to the effect that
the merger will be a reorganization within the meaning of
Section 368(a) of the Code and that Trustmark and Republic
will each be a party to that reorganization within the meaning
of Section 368(b) of the Code.
Copies of the tax opinions are attached as Exhibits 8.1 and
8.2 to the registration statement on
Form S-4, of which
this proxy statement/ prospectus forms a part. It is a condition
to completion of the merger that each of Trustmark and Republic
receive an updated opinion of Bruinini, Gratham,
Grower & Hewes, PLLC and Bracewell & Giuliani
LLP, respectively. The conditions relating to receipt of the tax
opinions may be waived. Neither Trustmark nor Republic currently
intends to waive the conditions related to the receipt of an
updated tax opinion. However, if these conditions were waived,
Republic would re-solicit the approval of its shareholders prior
to completing the merger.
The opinions of tax counsel regarding the merger will each rely
on (1) representations and covenants made by Trustmark and
Republic, including those contained in certificates of officers
of Trustmark and Republic, and (2) certain assumptions,
including an assumption regarding the completion of the merger
in the manner contemplated by the merger agreement. If any of
those representations, covenants or
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assumptions is inaccurate, tax counsel may not be able to
provide the required opinions. An opinion of tax counsel neither
binds the Internal Revenue Service (IRS) nor
precludes the IRS or the courts from adopting a contrary
position. Neither Trustmark nor Republic intends to obtain a
ruling from the IRS on the tax consequences of the merger, and
as a result there can be no assurances that the IRS will not
disagree with or challenge any of the conclusions herein.
Federal Income Tax Consequences to Republic and Trustmark
The merger will be a reorganization within the meaning of
Section 368(a) of the Code, and Trustmark and Republic will
each be a party to that reorganization within the meaning of
Section 368(b) of the Code. Neither Trustmark nor Republic
will recognize any gain or loss for federal income tax purposes
as a result of the merger.
Federal Income Tax Consequence to Republic Shareholders
For federal income tax purposes:
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A shareholder of Republic who receives only shares of Trustmark
common stock in the merger generally will not recognize any gain
or loss, except for any gain or loss attributable to cash
received in lieu of a fractional share of Trustmark common stock. |
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A shareholder of Republic who receives only cash in the merger
will recognize gain or loss equal to the difference between the
amount of cash received and the shareholders adjusted tax
basis in the shares of Republic stock surrendered in the
exchange. |
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A shareholder of Republic who receives both Trustmark common
stock and cash in the merger will not recognize any loss on the
exchange, and will recognize gain (if any) equal to the lesser
of: (1) the amount of cash received (other than cash
received in lieu of a fractional share of Trustmark common
stock); or (2) the amount of gain realized (that is, the
excess of the sum of the amount of cash received and the fair
market value, on the date of the merger, of the shares of
Trustmark common stock received over the shareholders
adjusted tax basis in the shares of Republic stock surrendered
in the exchange). |
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A shareholder of Republic who receives Trustmark common stock
will have an adjusted tax basis in the Trustmark common stock
received in the merger equal to the adjusted tax basis of the
shares of Republic stock surrendered (other than any adjusted
tax basis allocable to cash received in lieu of a fractional
share of Trustmark common stock), increased by the amount of
gain, if any, recognized (other than any gain recognized with
respect to cash received in lieu of a fractional share of
Trustmark common stock), and decreased by the amount of cash, if
any, received (other than cash received in lieu of a fractional
share of Trustmark common stock). |
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The holding period for shares of Trustmark common stock received
in exchange for shares of Republic stock in the merger will
include the holding period for the shares of Republic stock
surrendered in the exchange. |
Federal Income Tax Consequence to Republic Option Holders Who
Exercise Their Options
General. Depending on whether the Republic stock
option is an incentive stock option described in
Section 422 of the Code (an ISO) or is a
non-qualified stock option taxed under Section 83 of the
Code (a NQSO) and further depending on the merger
consideration received by the Republic stock option, a Republic
option holder who exercises his or her option to acquire shares
of Republic stock may recognize income for federal income tax
purposes and such income may be treated as wages for federal
employment tax (FICA and Medicare).
Once a Republic option holder exercises his or her Republic
stock option and thereby becomes a holder of Republic stock,
except as noted below in connection with disqualifying
dispositions, the federal
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income tax consequences described in The
Merger Material Federal Income Tax Consequences of
the Merger Federal Income Tax Consequence to
Republic Shareholders apply.
Limitation on ISO Status $100,000 First
Exercisable Rule. In considering possible tax consequences,
each Republic option holder should be aware that the Code places
limits on ISO qualification and tax treatment. One important
limit is that the aggregate fair market value of shares of
Republic stock with respect to which any option holder may first
exercise his or her ISOs during any calendar year may not exceed
$100,000. In the event this limit is exceeded (whether at the
time of initial grant or at any time thereafter, including by
amendment of the option or by a vesting acceleration caused by
the operation of any term or provision of the option), the
portion of the option which permits exercises in excess of the
$100,000 limit will be treated as a NQSO for federal income and
employment taxation and withholding purposes.
In determining whether the $100,000 limit is exceeded, the
following rules apply: (1) the fair market value of stock
is determined as of the date of grant; (2) except as
provided in (3) below, options are taken into account in
the order in which they are granted, and (3) an option is
considered to be exercisable for the first time during a
calendar year if the option will become exercisable at any time
during the calendar year assuming the employee performs service
until the vesting date. If exercisability is subject to an
acceleration provision (e.g., change of control) or is otherwise
accelerated by Republic, the option is then considered first
exercisable in the calendar year in which the acceleration
occurs. After an acceleration occurs, the options for which an
acceleration has occurred are then taken into account in
accordance with (2) above. However, an ISO that becomes
exercisable as a result of an acceleration does not affect the
application of the $100,000 limit with respect to any option
exercised prior to the acceleration.
Exercise of ISOs. A Republic option holder who
exercises an ISO will not be subject to federal income or
employment taxation or withholding at the time of exercise so
long as the exercise occurs while continuously employed from the
date of grant to the date of exercise or not more than three
months, or one year if the Republic option holder is disabled,
after ceasing to be an employee of Republic (the
employment service requirement). If the option
holder acquired the option by reason of the death of the
employee to whom the option was granted, then the option is
considered to retain its status as an ISO on exercise by the
successor option holder if the employee satisfied the employment
service requirement on the date of his or her death (assuming an
exercise then).
Notwithstanding the above described non-recognition from regular
taxation, the excess of the fair market value of Republic stock
over the exercise price on the date of exercise is a tax
preference item for purposes of determining the Republic option
holders alternative minimum tax. However, if the Republic
stock acquired by exercise of the ISO is disposed of in a
taxable transaction in the same year in which the exercise
occurs, then that excess amount will cease to be a tax
preference item.
If an option which is designed to be an ISO is exercised more
than three months, or more than one year if the Republic option
holder is disabled, after ceasing to be an employee of Republic
(i.e., the employment service requirement is not met), the
option will be treated as a NQSO for federal income and
employment taxation and withholding purposes.
A Republic shareholders adjusted tax basis in the Republic
stock acquired by exercise of an ISO is equal to the exercise
price paid for the Republic stock. The holding period for the
Republic shares acquired by exercise of an ISO commences on the
date of such exercise.
Disqualifying Disposition of Stock Acquired by Exercise of an
ISO. A disposition of the shares acquired by exercise
of an ISO after the expiration of the required ISO holding
period (defined below) at a gain will generate a long-term
capital gain in the year of disposition (assuming the stock is a
capital asset within the meaning of Section 1221 of the
Code).
A disposition of the shares acquired by exercise of an ISO prior
to the expiration of the required ISO holding period (a
disqualifying disposition) will cause the
shareholder to recognize as ordinary compensation income in the
year of the disqualifying disposition. The amount of the
ordinary compensation income will equal the excess of the fair
market value of stock on the date of exercise over
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the exercise price for the stock (or, if less, the excess of the
amount realized on the disposition over the exercise price). The
balance of any gain in a disqualifying disposition will be a
long-term or short-term capital gain depending on the stock
holders holding period of the disposed stock.
The required ISO holding period is the longer of two
years from the date of grant of the ISO or one year from the
date of exercise of the ISO.
Compensation income recognized in a disqualifying disposition of
stock acquired by exercise of an ISO will not be subject to
federal income tax withholding or federal employment taxation or
withholding on account of the disqualifying disposition.
Exchange of Republic Shares Acquired by Exercise of an ISO
Generally Is Not a Disqualifying Disposition. Except as
noted below, the exchange of Republic stock acquired by exercise
of an ISO prior to the merger for Trustmark common stock or a
combination of Trustmark common stock and cash will not be
treated as a disqualifying disposition where the required ISO
holding period is not met. However, if all of a holders
Republic stock is exchanged only for cash in the merger
(i.e., no Trustmark common stock is received), then the
disposition of Republic stock acquired by exercise of an ISO
which has not been held for the required ISO holding period will
be treated as a disqualifying disposition. In addition, the
exchange of Republic stock acquired by exercise of an ISO which
has not been held for the required ISO holding period for cash
in lieu of a fractional share of Trustmark common stock will be
treated as a disqualifying disposition.
Trustmark Common Stock Received in Exchange for Republic
Stock Acquired by Exercise of an ISO Continues to Be Subject to
the ISO Rules. The Trustmark common stock received in
exchange for Republic stock acquired by exercise of an ISO will
continue to be considered stock acquired on exercise of an ISO
and a later disposition prior to the expiration of the required
ISO holding period will be treated as a disqualifying
disposition.
NQSOs. A Republic option holder who exercises a NQSO will
be subject to federal income and employment taxation and
withholding at the time of exercise. The income recognized will
be ordinary compensation income in an amount equal to the excess
of the fair market value of the Republic stock on the date of
exercise over the exercise price. The income recognized will be
subject to federal income tax withholding and federal employment
taxation and withholding at the time of exercise.
A Republic shareholders adjusted tax basis in the Republic
stock acquired by exercise of a NQSO is equal to the exercise
price paid for the Republic stock plus the amount includible in
income as ordinary compensation income as a result of the
exercise. The holding period for the Republic stock acquired by
exercise of a NQSO commences on the date of such exercise.
Capital Gain Treatment
Except in connection with disqualifying dispositions (as
described above), it is anticipated that any gain recognized
with respect to shares of Republic stock as a consequence of
participating in the merger generally will be long-term capital
gain if the shares of Republic stock have been held for more
than one year. Long-term capital gain generally is taxable to
individual shareholders at the rate of 15%.
Possible Treatment of Cash as a Dividend
It is anticipated that any gain recognized by Republic
shareholders will be treated as capital gain, as described
above. However, it is possible that a Republic shareholder would
instead be required to treat all or part of such gain as
dividend income, if that shareholders percentage ownership
in Trustmark (including shares that the shareholder is deemed to
own) after the transaction is not meaningfully reduced from what
the shareholders percentage ownership would have been had
the holder received solely shares of Trustmark common stock,
rather than a combination of cash and Trustmark common stock in
the merger. Republic shareholders described in the preceding
sentence should consult their own tax advisors about whether the
receipt of cash in the merger will be treated as capital gain or
dividend income under the Code.
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Cash Received in Lieu of a Fractional Share
Shareholders generally will recognize gain or loss on any cash
received in lieu of a fractional share of Trustmark common
stock. The amount of such gain or loss will be equal to the
difference between the amount of cash received in lieu of the
fractional share of Trustmark common stock and the portion of
the shareholders aggregate adjusted tax basis in the
Republic shares surrendered that is allocable to the fractional
share of Trustmark common stock. Such gain or loss generally
will be long-term capital gain or loss if the Republic stock
exchanged for the fractional share of Trustmark common stock was
held for more than one year as of the date of the merger unless
such payment, under each such shareholders particular
facts and circumstances, is deemed to have the effect of a
dividend distribution and not a redemption treated as an
exchange under the principles of Section 302 of the Code,
described above.
Appraisal Rights
If a Republic shareholder properly exercises appraisal rights,
such shareholder will recognize a capital gain or loss equal to
the difference between the amount of cash received through the
exercise of such rights and such shareholders adjusted tax
basis in its share of Republic stock, unless such payment, under
each such shareholders particular facts and circumstances,
is deemed to have the effect of a dividend distribution and not
a redemption treated as an exchange under the principles of
Section 302 of the Code, described above.
Backup Withholding and Information Reporting
Information returns will be filed with the IRS in connection
with cash payments for Republic shares pursuant to the merger.
Backup withholding at a rate of 28% may apply to cash paid to a
Republic shareholder, unless such shareholder furnishes a
correct taxpayer identification number and certifies that he or
she is not subject to backup withholding on the substitute
Form W-9 included
in the letter of transmittal to be delivered to the shareholder
following the completion of the merger.
Any amount withheld under the backup withholding rules will be
allowable as a refund or credit against a shareholders
U.S. federal income tax liability, provided required
information is furnished to the IRS. The IRS may impose a
penalty upon any taxpayer that fails to provide the correct
taxpayer identification number.
Reporting Requirements
Holders of Republic stock receiving Trustmark common stock as a
result of the merger will be required to retain records
pertaining to the merger and will be required to file with their
U.S. federal income tax return for the year in which the
merger takes place a statement setting forth facts relating to
the merger. The facts to be disclosed by such shareholder
include the shareholders adjusted tax basis in the shares
of Republic stock exchanged in the merger, the fair market value
of the Trustmark common stock and the amount of cash received in
the merger.
The foregoing is a summary discussion of the material U.S.
federal income tax consequences of the merger. The discussion is
included for general information purposes only and may not apply
to a particular Republic shareholder in light of such
shareholders particular circumstances. You should consult
your own tax advisor as to the particular tax consequences to
you of the merger, including the application of state, local and
foreign tax laws and possible future changes in federal income
tax laws and the interpretation thereof, which can have
retroactive effects.
Regulatory Considerations
The merger is subject to approval by the Board of Governors of
the Federal Reserve System (Federal Reserve) under
the Bank Holding Company Act of 1956, as amended (the BHC
Act). In considering the approval of the merger, the BHC
Act requires the Federal Reserve to review the financial
conditions and future prospects of Trustmark and Republic and
their respective subsidiary banks, the
47
managerial resources, the convenience and needs of the
communities to be served, and the parties effectiveness in
combating money laundering activities.
The Federal Reserve is also required to evaluate whether the
merger would result in a monopoly or would be in furtherance of
any combination or conspiracy or attempt to monopolize the
business of banking in any part of the United States or
otherwise would substantially lessen competition or tend to
create a monopoly which in any manner would be in restraint of
trade. If the Federal Reserve determines that an acquisition
would substantially lessen competition, it will not approve the
transaction unless it finds that the anticompetitive effects of
the proposed transaction are clearly outweighed in the public
interest by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served.
In addition to filing the required application with the Federal
Reserve, Trustmark must also file an application with and obtain
the approval of the Office of the Comptroller of the Currency
(OCC) for the merger of Republic National Bank into
Trustmark Bank. When evaluating the bank merger, the OCC will
look at factors such as the effect of the transaction on
competition, the convenience and needs of the community to be
served, the financial history of the merging financial
institutions, the condition of the merging financial
institutions, including capital, management, and earnings
prospects and the adequacy of disclosure of the terms of the
merger.
Trustmark has filed the required applications with the Federal
Reserve and the OCC. Although Trustmark does not know of any
reason why it will not obtain approval from these regulators in
a timely manner, Trustmark cannot be certain when it will obtain
them or that it will obtain them at all.
A period of 15 to 30 days must expire following approval by
the Federal Reserve during which time the U.S. Department
of Justice may file objections to the merger under the federal
antitrust laws. While Republic and Trustmark do not know of any
reason that the Department of Justice would challenge regulatory
approval by the Federal Reserve and believe that the likelihood
of such action is remote, there can be no assurance that the
Department of Justice will not initiate such a proceeding, or if
such a proceeding is initiated, as to the result of any such
challenge.
The approval of any notice or application merely implies
satisfaction of regulatory criteria for approval, and does not
include review of the merger from the standpoint of the adequacy
of the consideration to be received by, or fairness to,
shareholders. Regulatory approval does not constitute an
endorsement or recommendation of the proposed merger.
Accounting Treatment
Trustmark will account for the merger using the purchase method
of accounting. Under this method, Trustmark will record the
acquired identifiable assets and liabilities assumed at their
fair values at the time the merger is completed. Any excess of
the purchase price over the sum of the fair values of tangible
and identifiable intangible assets less liabilities assumed will
be recorded as goodwill. Based on information as of
March 31, 2006, management of Trustmark estimates
that goodwill and other intangibles resulting from the merger
will total approximately $169.4 million.
Effect on Employee Benefit Plans
The merger agreement provides that Republic employees who
continue to be employed by Trustmark after the merger will be
entitled to participate, as newly hired employees, in the
employee benefit plans and programs maintained for employees of
Trustmark; however, except for Trustmarks stock option
plan, a Republic employee will be entitled to credit for prior
service, and any eligibility, waiting period and pre-existing
condition exclusion applicable to such plan will be waived if
Republic provided a similar type of plan immediately prior to
the merger. Similar benefit plans offered by Republic included a
medical plan, a dental plan, a 401(k) plan, a voluntary life
insurance plan, a voluntary accidental death &
dismemberment plan, a long term disability plan, an employee
stock purchase plan, a vacation and sick leave plan and a
tuition reimbursement plan.
48
Any vacation taken by a Republic employee for the calendar year
in which the merger occurs will be deducted from the vacation
benefits available to that employee for the remainder of the
calendar year. Trustmark further agrees to credit the Republic
employees and their eligible dependents for the year during
which closing occurs with any deductibles already incurred
during such year under Republics group health plan.
Republic shall be entitled to accrue for normal employee bonuses
for the 2006 year. Accrued bonuses shall be payable in
accordance with Trustmarks incentive compensation plan to
eligible employees on March 15, 2007, provided the eligible
employee is employed by Trustmark on March 1, 2007.
Restrictions on Resales by Affiliates
The shares of Trustmark common stock to be issued in the merger
will be registered under the Securities Act of 1933 and will be
freely transferable except for any shares received by any
shareholder who may be deemed to be an affiliate of
Republic at the effective time of the merger. Affiliates of
Republic may sell their shares of Trustmark common stock
acquired in the merger only in transactions registered under the
Securities Act or permitted by the resale provisions of
Rules 144 and 145 under the Securities Act or as otherwise
permitted by the Securities Act. Persons who may be deemed
affiliates of Republic generally include individuals or entities
that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with
Republic and include directors and executive officers of
Republic. In addition, any executive officer or director of
Republic who becomes an affiliate of Trustmark will be required
to comply with the resale requirements under Rule 144 of
the Securities Act. The restrictions on resales by an affiliate
extend also to related parties of the affiliate, including
parties related by marriage who live in the same home as the
affiliate.
DISSENTERS RIGHTS OF APPRAISAL
The following section of this proxy statement/ prospectus
describes material aspects of the law pertaining to
dissenters rights under Texas law. If you wish to dissent
from the merger and receive the fair value in cash of your
shares of Republic common stock or preferred stock instead of
receiving the merger consideration, you should carefully read
the following discussion, review the full text of the applicable
law relating to dissenters rights which is attached to
this proxy statement/ prospectus as Appendix C, and
consult with your legal counsel before electing or attempting to
exercise these rights.
If you hold one or more shares of Republic stock, you are
entitled to dissenters rights under Texas law. This means
that if you properly dissent from the merger of Republic into
Trustmark pursuant to the merger agreement, you will receive an
amount in cash representing the fair value of the shares of
Republic stock that you hold. This value may be more or less
than the value of the merger consideration that you would
otherwise receive pursuant to the merger agreement. The
availability of your right to dissent from the merger and obtain
the fair value of your shares of Republic stock is conditioned
upon compliance with a complicated procedure that is set forth
in Articles 5.11, 5.12 and 5.13 of the Texas Business
Corporation Act, which are referred to in the following
discussion as the dissent provisions. The following discussion
is only a summary of the dissent provisions. A copy of the full
text of Articles 5.11, 5.12 and 5.13 is attached at
Appendix C to this proxy statement/ prospectus. You
will lose your dissenters rights in the merger if you do
not properly comply with the procedures set forth in the dissent
provisions.
How to Exercise and Perfect Your Right to Dissent
To be eligible to exercise your right to dissent to the merger:
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you must, prior to the Republic special meeting, provide
Republic with a written objection to the merger that states that
you intend to exercise your right to dissent if the merger
agreement is approved and the merger is completed and that
provides an address to which Trustmark may send a notice if the
merger is completed; and |
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you must not vote your shares of Republic stock in favor of the
merger agreement. |
49
If you intend to dissent from the merger, you should send the
notice to:
Republic Bancshares of Texas, Inc.
4200 Westheimer, Suite 101
Houston, Texas 77027
Attention: C. P. Bryan
If you vote your shares of Republic stock at the special meeting
to approve the merger agreement, you will lose your right to
dissent from the merger. You will instead receive shares of
Trustmark common stock and cash as described in the merger
agreement. If you comply with the two items above and the merger
is completed, Trustmark will send you a written notice advising
you that the merger has been completed. Trustmark must deliver
this notice to you within ten days after the merger is completed.
If you wish to receive the fair value of your shares of Republic
stock in cash, you must, within ten days of the date the notice
was delivered or mailed to you by Trustmark, send a written
demand to Trustmark for payment of the fair value of your shares
of Republic stock. The fair value of your shares of Republic
stock will be the value of the shares on the day immediately
preceding the Republic special meeting, excluding any
appreciation or depreciation in anticipation of the merger. Your
written demand and any notice addressed to Trustmark must be
sent to:
Trustmark Corporation
248 E. Capitol Street, Suite 310
Jackson, Mississippi 39201
Attention: Zach L. Wasson
Your Demand for Payment
Your written demand must state how many shares of Republic stock
you own and your estimate of the fair value of your shares of
Republic stock. If you fail to send this written demand to
Trustmark within ten days of Trustmarks delivery of your
notice, you will be bound by the merger and you will not be
entitled to receive a cash payment representing the fair value
of your shares of Republic stock. Instead, you will receive
shares of Trustmark common stock and cash as described in the
merger agreement. You must also, within 20 days of making a
demand for payment, submit the stock certificates representing
your shares of Republic stock to Trustmark. Trustmark will make
a notation on your stock certificates indicating that a demand
for payment has been made and may return the share certificates
to you. If you fail to submit your stock certificates to
Trustmark for notation, Trustmark may, at its option, terminate
your right to receive a cash payment for your shares, unless a
court otherwise directs Trustmark.
Trustmarks Actions Upon Receipt of Your Demand for
Payment
Within 20 days after Trustmark receives your demand for
payment and your estimate of the fair value of your shares of
Republic stock, Trustmark must send you written notice stating
whether or not it accepts your estimate of the fair value of
your shares.
If Trustmark accepts your estimate, Trustmark will notify you
that it will pay the amount of your estimated fair value within
90 days of the merger being completed. Trustmark will make
this payment to you only if you have surrendered the share
certificates representing your shares of Republic stock, duly
endorsed for transfer, to Trustmark.
If Trustmark does not accept your estimate, Trustmark will
notify you of this fact and will make an offer of an alternative
estimate of the fair value of your shares that it is willing to
pay you within 90 days of the merger being completed, which
you may accept within 60 days or decline.
Payment of the Fair Value of Your Shares of Republic Stock
Upon Agreement
If you and Trustmark have reached an agreement on the fair value
of your shares of Republic stock within 60 days after the
merger is completed, Trustmark must pay you the agreed amount.
The payment
50
must be made by Trustmark within 90 days after the merger
is completed, provided that you have surrendered the share
certificates representing your shares of Republic stock, duly
endorsed for transfer, to Trustmark.
Commencement of Legal Proceedings if a Demand for Payment
Remains Unsettled
If you and Trustmark have not reached an agreement as to the
fair market value of your shares of Republic stock within
60 days after the merger is completed, you or Trustmark
may, with 60 days after the expiration of the
60-day period, commence
proceedings in Harris County, Texas, asking the court to
determine the fair value of your shares of Republic stock. The
court will determine if you have complied with the dissent
provisions and if you have become entitled to a valuation of and
payment for your shares of Republic stock. The court will
appoint one or more qualified persons to act as appraisers to
determine the fair value of your shares. The appraisers will
determine the fair value of your shares and will report this
value to the court. The court will consider the report, and both
you and Trustmark may address the court about the report. The
court will determine the fair value of your shares and direct
Trustmark to pay that amount, plus interest, which will begin to
accrue 91 days after the merger is completed.
Rights as a Shareholder
If you have made a written demand on Trustmark for payment of
the fair value of your shares of Republic stock, you will not
thereafter be entitled to vote or exercise any other rights as a
shareholder except the right to receive payment for your shares
as described herein and the right to maintain an appropriate
action to obtain relief on the ground that the merger would be
or was fraudulent. In the absence of fraud in the transaction,
your right under the dissent provisions described herein is the
exclusive remedy for the recovery of the value of your shares or
money damages with respect to the merger.
Withdrawal of Demand
If you have made a written demand on Trustmark for payment of
the fair value of your Republic stock, you may withdraw such
demand at any time before payment for your shares has been made
or before a petition has been filed with a court for
determination of the fair value of your shares. If you withdraw
your demand or are otherwise unsuccessful in asserting your
dissenters rights, you will be bound by the merger and
your status as a shareholder will be restored without prejudice
to any corporate proceedings, dividends or distributions which
may have occurred during the interim.
U.S. Federal Income Tax Consequences
With respect to the tax consequences of exercising appraisal
rights, please refer to the section of the proxy statement/
prospectus entitled The MergerMaterial Federal
Income Tax Consequences of the MergerAppraisal
Rights on page
[ ].
INFORMATION ABOUT REPUBLIC
General
Republic was incorporated as a business corporation under the
laws of the State of Texas on May 17, 2001 for the purpose
of serving as a bank holding company for Republic National Bank.
Republic National Bank was chartered as a national banking
association which began operations on November 13, 1998.
Republic offers a diversified range of commercial and personal
banking products and services to small- and medium-sized
businesses and consumers located primarily in the greater
Houston metropolitan area. Republic presently has six
(6) full-service banking offices located in Houston.
Republic offers checking accounts, savings accounts,
certificates of deposit, bank-by-mail and
24-hour depository
facilities, drive-up
banking, cashiers checks, travelers checks, savings bonds,
consumer loans, commercial loans,
51
commercial payroll accounts, merchant bank card services,
lock-box and other cash management services, safe deposit boxes
and online banking services. Republics business emphasis
is to provide personal, responsive and dependable banking
services to individuals, professionals and owner-operated
businesses. Republic does not presently offer trust services.
Through Star-NET, Republics online banking product,
customers can view their account information, transfer funds and
download information to a personal finance software program.
Online bill payment services are also available for an
additional fee.
Employees and Employee Relations
As of March 31, 2006, Republic had 138 full-time
equivalent employees, 60 of whom were officers. Republic
provides medical insurance and other benefits to full-time
employees and considers relations with employees to be
excellent. Republics employees are not represented by any
collective bargaining group.
Competition
Republic has substantial competition in lending funds and
attracting and retaining deposits. The primary factors in
competing for loans are the range and quality of lending
services offered, interest rates and loan origination fees. In
competing for commercial loans (a targeted growth segment),
management believes that the personal relationships between
lending officers and commercial borrowers is a primary factor.
Competition for the origination of real estate loans normally
comes from other commercial banks, thrift institutions, mortgage
bankers, finance and insurance companies. The primary factors in
competing for deposits are the range and quality of financial
services offered, the ability to offer attractive rates and the
availability of convenient locations. There is direct
competition for deposits from commercial banks, credit unions
and thrift institutions. Additional significant competition for
savings deposits comes from other investment alternatives, such
as money market funds, credit unions, and corporate and
government securities.
Republic expects increased competition. Management believes that
the consolidation within the financial services industry will
likely continue which means that the number of locally-owned
financial institutions will decrease and that Republic will
increasingly compete against larger regional and
out-of-state banks.
Although Republic has been able to compete effectively in its
market areas to date, there is no assurance that Republic will
continue to do so in the future.
Properties
Republic currently operates six banking office locations in
Houston, Texas. The following table sets forth specific
information on Republics offices, each of which offers
full banking operations provided by a full complement of lobby
staff (including tellers, new account representatives, and
lending professionals on site), safe-deposit boxes, an automated
teller machine, and drive-through banking services:
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Real | |
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Size in Square | |
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Deposits at | |
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Estate | |
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Building | |
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Feet | |
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March 31, 2006 | |
Banking Office |
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Owned | |
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Owned | |
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(Approximate) | |
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Location | |
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(in thousands) | |
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Champions
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No |
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Yes |
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8,200 |
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6809 FM 1960 West |
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$ |
172,265 |
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Cypress Station
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No |
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Yes |
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5,000 |
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1055 FM 1960 West |
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84,338 |
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River Oaks
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No |
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No |
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11,775 |
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4200 Westheimer Road |
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179,311 |
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Memorial
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No |
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No |
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8,800 |
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10301-A Katy Freeway |
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76,438 |
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Northwest Freeway
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Yes |
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Yes |
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11,400 |
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14604 Northwest Freeway |
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54,963 |
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Southeast
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Yes |
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Yes |
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2,100 |
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4130 Fairmont Parkway |
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21,899 |
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$ |
589,214 |
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52
Legal Proceedings
Republic and Republic National Bank are involved in routine
legal proceedings from time to time in the normal course of
business. Management does not believe that there is any pending
or threatened proceeding against Republic or Republic National
Bank which, if determined adversely, would have a material
adverse effect on the business, financial position or results of
operations of Republic or Republic National Bank.
Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information regarding the
beneficial ownership of Republic common stock as of May 31,
2006, by all (1) directors, (2) executive officers,
(3) each person who is known by Republic to own
beneficially 5% or more of our common stock and (4) all
directors and executive officers as a group. Unless otherwise
indicated, based on information furnished by such shareholders,
management of Republic believes that each person has sole voting
and dispositive power over the shares indicated as owned by such
person.
Information relating to beneficial ownership of the common stock
set forth below is based upon beneficial ownership
concepts set forth in rules of the Securities and Exchange
Commission under Section 13(d) of the Exchange Act. Under
these rules, a person is deemed to be a beneficial
owner of a security if that person has or shares
voting power, which includes the power to vote or
direct the voting of such security, or investment
power, which includes the power to dispose or to direct
the disposition of such security. A person is also deemed to be
a beneficial owner of any security of which that person has the
right to acquire beneficial ownership within 60 days. Under
the rules, more than one person may be deemed to be a beneficial
owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he has no economic
interest. For instance, beneficial ownership includes spouses,
minor children and other relatives residing in the same
household, and trusts, partnerships or corporations which are
affiliated with the shareholder.
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Percentage of | |
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Number of | |
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Common | |
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Number of | |
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Percentage of | |
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Shares of | |
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Stock | |
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Shares of | |
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Preferred Stock | |
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Common | |
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Beneficially | |
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Preferred | |
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Beneficially | |
Name |
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Stock | |
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Owned(1) | |
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Stock | |
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Owned(2) | |
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C. P. Bryan
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340,715 |
(3) |
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8.90 |
% |
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* |
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R. John McWhorter
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35,993 |
(4) |
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* |
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* |
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Gerald W. Bodzy
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41,600 |
(5) |
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1.13 |
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* |
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Donn C. Fullenweider
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28,432 |
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* |
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* |
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James C. Hassell
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81,000 |
(6) |
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2.19 |
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* |
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Wayne C. Owen
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96,700 |
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2.62 |
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* |
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Executives officers and directors as a group (6 persons)
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624,440 |
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16.21 |
% |
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* |
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* |
Indicates beneficial ownership which does not exceed 1.0%. |
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(1) |
The percentage beneficially owned was calculated based on
3,690,717 shares of common stock issued and outstanding as
of May 31, 2006. The percentage assumes the exercise by the
shareholder or group named in each row of all options for the
purchase of common stock held by such shareholder or group and
exercisable within 60 days. |
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(2) |
The percentage beneficially owned was calculated based on
353,734 shares of preferred stock issued and outstanding as
of May 31, 2006. |
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(3) |
Includes 99,000 shares held of record by the C. P. Bryan
IRA and 136,000 shares which may be acquired within
60 days pursuant to fully vested stock options. |
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(4) |
Includes 12,300 shares which may be acquired within
60 days pursuant to fully vested stock options. |
53
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(5) |
Consists of 41,600 shares held of record by Bodzy
Investment Partnership, Ltd., of which Mr. Bodzy is the
general partner. |
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(6) |
Includes 16,000 shares held of record by Hassell
Construction Company, Inc. and 1,000 shares held of record
by James C. Hassell Inter-vivos Trust, both of which are
controlled by Mr. Hassell, and 14,000 shares which may
be acquired within 60 days pursuant to outstanding stock
options. |
DESCRIPTION OF TRUSTMARK COMMON STOCK
The authorized capital stock of Trustmark consists of
250,000,000 shares of Trustmark common stock, no par value,
and 20,000,000 shares of preferred stock, no par value. As
of March 31, 2006, there were 55,680,234 shares of
common stock issued and outstanding. No shares of preferred are
issued and outstanding.
Except in the election of directors (in which shareholders have
cumulative voting rights) each share of Trustmark common stock
is entitled to one vote on all matters submitted to a vote at
any meeting of shareholders. Holders of Trustmark common stock
are entitled to receive dividends when, as and if declared by
Trustmarks board of directors out of funds legally
available for the payment of dividends and, upon liquidation, to
receive pro rata all assets, if any, of Trustmark available for
distribution to shareholders. Holders of Trustmark common stock
have no preemptive rights to subscribe for any additional
securities of any class that Trustmark may issue, nor any
conversion, redemption or sinking fund rights.
The rights and privileges of holders of Trustmark common stock
are subject to any preferences that the Trustmark Board of
Directors may set for any series of Trustmark preferred stock
that Trustmark may issue in the future.
COMPARISON OF THE RIGHTS OF TRUSTMARKS AND
REPUBLICS SHAREHOLDERS
If the merger becomes effective, holders of Republics
common and preferred shares who receive part of the merger
consideration in the form of Trustmark common stock will become
shareholders of Trustmark. The following is a summary of the
material differences between the rights of holders of Trustmark
common stock and the holders of Republic common stock and
Series A preferred stock. Because Trustmark is incorporated
under the laws of Mississippi and Republic is incorporated under
the laws of Texas, the differences in the rights of holders of
Trustmark stock and those of holders of Republic stock arise
from differing provisions of the Mississippi Business
Corporations Act (MBCA) and the Texas Business Corporation
Act (TBCA), in addition to differing provisions of their
respective articles of incorporation and bylaws.
The rights of the holders of Republics common stock and
the holders of Republics Series A preferred stock are
identical except with respect to voting rights, dividend rights
and liquidation preferences. Whereas holders of Republics
common stock may vote on any matter that is subject to
shareholder approval, the holders of Republics
Series A preferred stock are entitled to vote only upon
proposals for a change in control of Republic or any amendment
to Republics articles of incorporation if the amendment
would affect the Series A preferred stock. With respect to
dividend rights, when and if declared and paid by Republic,
holders of Republics common stock are not entitled to
receive dividends unless such dividends are paid in full on the
Series A preferred stock prior to the receipt of dividends
by the holders of common stock. While holders of Republics
common stock have no liquidation preference in the distribution
of Republics assets in the event of any voluntary or
involuntary liquidation, dissolution or winding up of Republic,
the holders of Series A preferred stock are entitled to a
preference in such event equal to the greater of the book value
per share of the preferred stock as of the date of liquidation,
the amount per share to be paid to holders of common stock or
$10.00 per share (which was the book value per share of
Republic common stock as of September 30, 2005).
54
The following summary does not purport to be a complete
statement of the provisions affecting, and differences between,
the rights of holders of Trustmark and Republic shares. The
identification of specific provisions or differences is not
meant to indicate that other equally or more significant
differences do not exist. This summary is qualified in its
entirety by reference to the MBCA and the TBCA and the
respective governing corporate documents of Trustmark and
Republic, to which the shareholders of Republic are referred.
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Trustmark |
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Republic |
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Special Meetings of
Shareholders |
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Mississippi law provides that a special meeting of the
shareholders may be called by (a) the board of directors or
the person or persons authorized to do so by the articles of
incorporation or bylaws, or (b) unless the articles of
incorporation provide otherwise, the holders of at least 10% of
all the votes entitled to be cast on any issue proposed to be
considered at a proposed special meeting. |
|
Under Texas law, special meetings of the shareholders of a
corporation may be called by the president, by the board of
directors or by other persons so authorized in the
corporations articles of incorporation or bylaws, or the
holders of not less than 10% of all shares entitled to vote at
the meeting, unless a different percentage, not to exceed 50%,
is provided for in the articles of incorporation. |
Board of Directors |
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Minimum size is 5 |
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Minimum size is 1 |
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Maximum size is 26 |
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No maximum size |
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Current size is 11 |
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Current size is 5 |
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The number of directors is fixed, from time to time,
by the Board. |
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The number of directors is fixed, from time to time,
by the Board. |
Election of Directors |
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Under Mississippi law, directors are elected by a plurality of
the votes cast by the shares entitled to vote in the election at
a meeting of shareholders at which a quorum is present, unless
otherwise provided in the articles of incorporation.
Shareholders of Trustmark have the right to cumulate their votes
for directors. Each shareholder is entitled to multiply the
number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote and cast the
product for a single candidate or distribute the product among
two or more candidates.
Each director of Trustmark is elected for a one-year term. This
means that the entire board is elected at each annual meeting of
the shareholders. |
|
Under Texas law, directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election of
directors at a meeting of shareholders at which a quorum is
present, unless otherwise provided in the articles of
incorporation or the bylaws of a corporation.
Shareholders of Republic are permitted to cumulate their votes
in the election of directors. Each share of Republic common
stock has one vote for each nominee for director, which may be
cast for as many persons as there are directors to be elected or
cumulated to give one candidate as many votes as the number of
such directors multiplied by the number of his shares or by
distributing such votes on the same principal among any number
of such candidates. A shareholder who intends to cumulate his
votes must give |
55
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Trustmark |
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Republic |
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prior written notice to Republic.
Each director of Republic is elected for a one-year term. This
means that the entire board is elected at each annual meeting of
the shareholders. |
Removal of Directors and
Board Vacancies |
|
Mississippi law provides that the shareholders may remove one or
more directors with or without cause unless the articles of
incorporation provide that a director may only be removed for
cause. A director may be removed by the majority vote of the
shareholders at the shareholders meeting expressly called for
the purpose of removing the director or directors, unless the
number of votes sufficient to elect the director is cast against
removal.
Any vacancies existing in the board of directors may be filled
by (a) the shareholders entitled to vote thereon,
(b) the board of directors, or (c) if the directors
remaining in office constitute less than a quorum, then the
remaining directors may fill the vacancy by the vote of the
majority of the directors remaining in office. A director
elected to fill a vacancy will hold office for the remainder of
the term of his or her predecessor in office. |
|
Texas law provides that at any meeting of shareholders called
expressly for that purpose, any director or the entire board of
directors may be removed, with or without cause, by a specified
portion of votes not less than a majority of shares entitled to
vote at an election of directors, unless otherwise provided in a
corporations articles of incorporation or bylaws.
Republics bylaws provide that any director or the entire
board of directors may be removed with or without cause by the
vote of the holders of a majority of the shares then entitled to
vote at an election of directors.
Any vacancies existing in the members of the board of directors
of Republic may be filled by the vote of (a) the holders of a
majority of the outstanding shares entitled to vote thereon or
(b) a majority of the remaining directors, though less than
a quorum. A director elected to fill a vacancy will hold office
for the remainder of the term of his or her predecessor in
office. |
Dividends and Other Distributions |
|
Dividends and other distributions are subject to statutory
restrictions under Mississippi law and certain regulatory
restrictions. |
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Dividends and other distributions are subject to statutory
restrictions under Texas law and certain regulatory restrictions. |
Shareholder Nominations and Shareholder Proposals |
|
Bylaws establish advance notice procedures for the nomination of
candidates for election as directors by persons other than
existing management. |
|
Republic has no notice procedures for the nomination of
candidates or the proposal of business. |
Indemnification; Limitation of Director Liability |
|
Section 79-4-8.51 of the Mississippi Code of 1972, as
amended, provides that a corporation may indemnify a |
|
Article 7.06 of the Texas Miscellaneous Corporation Laws Act
provides that the articles of incorporation may provide that a |
56
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Trustmark |
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Republic |
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director: (a) if the director acted in good faith and in the
best interests of the corporation; or (b) to the extent
permitted or required under the corporations bylaws.
However, a corporation generally may not indemnify a director
under Section 79-4-8.51 (a) in connection with a
proceeding by or in the right of the corporation; or (b) in
connection with any proceeding for which the director was
adjudged liable on the basis that the director received a
financial benefit to which he was not entitled.
Section 79-4-8.52 provides that a corporation shall
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a
party because he was a director of the corporation against
reasonable expenses incurred by him in connection with the
proceeding.
Trustmarks articles of incorporation provide that
Trustmark will indemnify its directors and officers against
liabilities arising out of his or her status as a director or
officer but not if found guilty or liable for negligent or
willful misconduct and not as to penalties imposed by any
applicable bank regulatory authority. |
|
director of the corporation shall not be liable, or shall be
liable only to the extent provided in the articles of
incorporation, to the corporation or its shareholders for
monetary damages for an act or omission in the directors
capacity as a director, except that the liability of a director
cannot be limited to the extent the director is found liable for
(a) a breach of the directors duty of loyalty to the
corporation or its shareholder, (b) an act or omission not
in good faith that constitutes a breach of duty of the director
to the corporation or that involves intentional misconduct or a
knowing violation of the law, (c) a transaction from which
the director received an improper benefit, whether or not the
benefit resulted from an action taken within the scope of the
directors office, or (d) an act or omission for which the
liability of a director is expressly provided by an applicable
statute.
Republics articles of incorporation provide for
indemnification, by action of the board of directors, for any
director, officer, employee or agent of Republic and nominees
and designees who are not or were not officers, employees, or
agents of Republic but who are or were serving at the request of
Republic as a director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another
enterprise or employee benefit plan as and to the fullest extent
permitted by law. |
Vote Required for Certain Shareholder Action |
|
Mississippi law provides that on matters other than the election
of directors, the affirmative vote of the holders of a majority
of the shares entitled to vote and represented at the
shareholders meeting shall be the act of the shareholders,
unless the vote of a greater number is required by law |
|
Texas law provides that on matters other than the election of
directors, the affirmative vote of the holders of a majority of
the shares entitled to vote and represented at the
shareholders meeting shall be the act of the shareholders,
unless the vote of a greater number is required by |
57
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Trustmark |
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Republic |
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or the articles of incorporation.
Trustmarks bylaws provide that the vote of the holders of
a majority of the shares of Trustmark stock entitled to vote on
a matter and represented at a meeting at which a quorum is
present, voting as a single class, shall be sufficient to
approve such matter. |
|
law, the articles of incorporation or the bylaws. Under Texas
law, a corporations articles of incorporation may provide
for a different level of approval, not less than a majority.
Republics articles of incorporation generally provide that
the vote of the holders of a majority of the shares of
Republics stock entitled to vote on a matter and
represented at a meeting in which a quorum is present, voting as
a single class, will be sufficient to approve such matter,
unless the vote of a greater number or separate voting of the
classes of stock is otherwise required by law, Republics
articles of incorporation or bylaws. Holders of preferred stock
are entitled to vote only upon a merger, acquisition or other
business combination in which Republic is not the surviving
entity, a sale of all or substantially all of the assets or any
amendment to the articles of incorporation that would affect the
preferred stock as required by Texas law. |
Anti-Takeover Statutes |
|
Mississippi Control Share Acquisition Act applies to Trustmark. |
|
Texas Business Combination Law applies to Republic. |
Amendments to Articles of Incorporation and Bylaws |
|
Mississippi law provides that a corporations articles of
incorporation may be amended by the board of directors without
shareholder approval to change each issued and unissued share of
an outstanding class into a greater number of whole shares if
the corporation has only shares of that class outstanding and to
accomplish certain ministerial tasks. All other amendments to
the articles of incorporation must be (a) approved by the board
of directors and recommended to the shareholders, and (b)
approved by the majority of the votes entitled to be cast on the
amendment. |
|
Under Texas law, a corporations articles of incorporation
may be amended by the affirmative vote of the holders of
two-thirds of the outstanding shares entitled to vote on the
amendment and the holders of two-thirds of the outstanding
shares of each class or series entitled to vote on the
amendment, unless a different number, not less than a majority,
is specified in the corporations articles of
incorporation.
Republics articles of incorporation do not provide for a
different number of outstanding shares required to amend the
articles of incorporation. |
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Under Mississippi law and |
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Under Texas law, unless a |
58
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Trustmark |
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Republic |
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Trustmarks bylaws, Trustmarks board of directors may
amend or repeal the bylaws unless: (a) the articles of
incorporation reserve the right exclusively to the shareholders;
or (b) the shareholders, in amending or repealing a
particular bylaw, expressly provide that the board of directors
may not amend or repeal that bylaw. Trustmarks
shareholders may also amend or repeal the bylaws. |
|
corporations articles of incorporation or a bylaw adopted
by the shareholders provides otherwise, a corporations
shareholders may amend the bylaws.
Republics bylaws provide that the bylaws may be adopted,
amended or repealed by the board of directors and
Republics shareholders do not have power to adopt, amend
or repeal the bylaws. |
Shareholders Rights of
Dissent and Appraisal |
|
Section 79-4-13.02 of the Mississippi Code of 1972, as
amended, provides that no dissenters rights are available
for corporations whose shares are publicly traded. |
|
The TBCA provides for dissenters rights in Articles 5.11,
5.12 and 5.13. |
OTHER BUSINESS
As of the date of this proxy statement/ prospectus,
Republics board of directors is not aware of any business
to come before the special meeting other than those matters
described in this proxy statement/ prospectus. However, if any
other matters should properly come before the special meeting or
an adjournment or postponement thereof, shares represented by
proxies will be voted in accordance with the judgment of the
persons voting the proxies.
LEGAL MATTERS
The validity of the shares of Trustmark common stock offered by
this proxy statement/ prospectus will be passed upon by Brunini,
Grantham, Grower & Hewes, PLLC. Certain legal matters
with respect to the merger will be passed upon for Republic by
Bracewell & Giuliani LLP, Houston, Texas.
EXPERTS
The consolidated financial statements of Trustmark Corporation
as of December 31, 2005 and 2004, and for each of the years
in the three-year period ended December 31, 2005, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2005
have been incorporated by reference herein in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Trustmark files annual, quarterly and current reports, proxy
statements and other information with the Securities and
Exchange Commission (SEC). You may read and copy any
reports, statements or certain other information that Trustmark
files with the SEC at the SECs Public Reference Room, 100
F Street. N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for
further information on the public reference room. The SEC
filings are also available to the public from commercial
document retrieval services and at the Internet world wide web
site maintained by the SEC at http://www.sec.gov.
59
Trustmark has filed the registration statement to register with
the SEC the Trustmark common stock to be issued to Republic
shareholders in the merger. This proxy statement/ prospectus is
a part of that registration statement and constitutes a
prospectus of Trustmark. As allowed by the SEC rules, this
proxy statement/ prospectus does not contain all the
information you can find in Trustmarks registration
statement or the exhibits to the registration statement.
The SEC allows Trustmark to incorporate by reference
information into this proxy statement/ prospectus, which means
that Trustmark can disclose important information to you by
referring you to another document filed separately with the SEC.
The information incorporated by reference is considered part of
this proxy statement/ prospectus, except for any information
superseded by information contained directly in this proxy
statement/ prospectus or in later filed documents incorporated
by reference in this proxy statement/ prospectus.
This proxy statement/ prospectus incorporates by reference the
documents set forth below that Trustmark has previously filed
with the SEC and that contain important information about
Trustmark and its businesses.
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Annual Report on Form 10-K
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For the fiscal year ended December 31, 2005 |
Quarterly Report on Form 10-Q
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For the quarter ended March 31, 2006 |
Proxy Statement on Schedule 14A
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Filed on April 7, 2006 |
Current Reports on Form 8-K
|
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Filed on May 18, 2006; May 17, 2006; April 17,
2006; April 14, 2006; April 13, 2006; and
January 31, 2006 |
Trustmark also incorporates by reference additional documents
that may be filed with the SEC between the date of this proxy
statement/ prospectus and the completion of the merger or the
termination of the merger agreement (other than information in
such future filings deemed, under SEC rules, not to have been
filed). These include periodic reports, such as annual reports
on Form 10-K,
quarterly reports on
Form 10-Q and
current reports on
Form 8-K, as well
as proxy statements.
Trustmark has supplied all information contained or incorporated
by reference in this proxy statement/ prospectus relating to
Trustmark, and Republic has supplied all such information
relating to Republic.
Any of the documents incorporated by reference can be obtained
from Trustmark, the SEC or the SECs Internet web site as
described above. Documents incorporated by reference are
available from Trustmark without charge, excluding all exhibits
except those that Trustmark has specifically incorporated by
reference in this proxy statement/ prospectus. Shareholders may
obtain documents incorporated by reference in this proxy
statement/ prospectus by requesting them in writing or by
telephone from Trustmark, 248 E. Capitol Street,
Jackson, MS 39201, Attention: Joseph Rein (601) 208-6898.
If you would like to request documents, please do so by
[ ], 2006 to receive them before
the meeting.
You should rely only on the information contained or
incorporated by reference into this proxy statement/
prospectus. Trustmark and Republic have not authorized anyone to
provide you with information that is different from that
contained in this proxy statement/ prospectus or in any of the
materials that have been incorporated by reference into this
document. If you are in a jurisdiction where offers to exchange
or sell, or solicitations of offers to exchange or purchase, the
securities offered by this document or the solicitation of
proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer
presented in this document does not extend to you.
This proxy statement/ prospectus is dated
[ ].
You should not assume that the information contained in this
proxy statement/ prospectus is accurate as of any date other
than the date of this proxy statement/ prospectus. Neither the
mailing of this proxy statement/ prospectus to shareholders nor
the issuance of Trustmark common stock in the merger creates any
implication to the contrary.
60
Appendix A
AGREEMENT AND PLAN OF REORGANIZATION AND FIRST AMENDMENT
A-1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
TRUSTMARK CORPORATION
and
REPUBLIC BANCSHARES OF TEXAS, INC.
Dated as of April 13, 2006
(STOCK/ CASH TRANSACTION)
A-2
TABLE OF CONTENTS
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I.
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THE MERGERS |
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A-7 |
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Section 1.1. |
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Mergers |
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A-7 |
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Section 1.2. |
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Articles of Incorporation, Bylaws and Facilities of Continuing
Corporation |
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A-8 |
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Section 1.3. |
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Effect of Merger |
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A-8 |
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Section 1.4. |
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Liabilities of Continuing Corporation |
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A-8 |
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Section 1.5. |
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Merger Consideration |
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A-8 |
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Section 1.6. |
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Republic Stock Options |
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A-9 |
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Section 1.7. |
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Dissenting Shares |
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A-9 |
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Section 1.8. |
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Election Procedures and Exchange of Shares |
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A-9 |
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Section 1.9. |
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Limitation on Elections |
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A-9 |
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Section 1.10. |
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Form of Election |
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A-10 |
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Section 1.11. |
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Change in Election; Revocation |
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A-10 |
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Section 1.12. |
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Distribution of Trustmark Common Stock and Cash |
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A-10 |
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Section 1.13. |
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Fractional Shares |
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A-11 |
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Section 1.14. |
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Calculations and Adjustments |
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A-11 |
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Section 1.15. |
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Lost or Destroyed Certificates |
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A-11 |
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Section 1.16. |
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Ratification by Shareholders |
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A-11 |
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Section 1.17. |
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Tax Consequences |
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A-11 |
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II.
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REPRESENTATIONS AND WARRANTIES OF REPUBLIC |
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A-11 |
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Section 2.1. |
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Organization |
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A-12 |
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Section 2.2. |
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Capitalization |
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A-12 |
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Section 2.3. |
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Approvals; Authority |
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A-13 |
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Section 2.4. |
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Investments |
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A-13 |
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Section 2.5. |
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Financial Statements |
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A-13 |
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Section 2.6. |
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Loan Portfolio |
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A-14 |
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Section 2.7. |
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Certain Loans and Related Matters |
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A-14 |
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Section 2.8. |
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Real Property Owned or Leased |
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A-14 |
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Section 2.9. |
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Personal Property |
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A-15 |
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Section 2.10. |
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Environmental Laws |
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A-15 |
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Section 2.11. |
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Litigation and Other Proceedings |
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A-16 |
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Section 2.12. |
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Taxes |
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A-16 |
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Section 2.13. |
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Contracts and Commitments |
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A-17 |
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Section 2.14. |
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Insurance |
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A-17 |
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Section 2.15. |
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No Conflict With Other Instruments |
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A-18 |
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Section 2.16. |
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Compliance with Laws and Regulatory Filings |
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A-18 |
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Section 2.17. |
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Absence of Certain Changes |
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A-18 |
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Section 2.18. |
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Employment Relations |
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A-19 |
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Section 2.19. |
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Employee Benefit Plans |
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A-19 |
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Section 2.20. |
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Deferred Compensation Arrangements |
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A-20 |
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Section 2.21. |
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Brokers, Finders and Financial Advisors |
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A-20 |
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Section 2.22. |
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Trust Preferred Securities |
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A-20 |
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Section 2.23. |
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Derivative Contracts |
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A-20 |
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A-3
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Section 2.24. |
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Deposits |
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A-20 |
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Section 2.25. |
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Accounting Controls |
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A-20 |
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Section 2.26. |
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Community Reinvestment Act |
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A-20 |
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Section 2.27. |
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Intellectual Property Rights |
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A-21 |
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Section 2.28. |
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Bank Secrecy Act; USA PATRIOT Act |
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A-21 |
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Section 2.29. |
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Fairness Opinion |
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A-21 |
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Section 2.30. |
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Shareholders List |
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A-21 |
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Section 2.31. |
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Vote Required |
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A-21 |
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Section 2.32. |
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Full Disclosure |
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A-21 |
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Section 2.33. |
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Disclosure Documents |
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A-21 |
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Section 2.34. |
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SEC Deregistration |
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A-22 |
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III.
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REPRESENTATIONS AND WARRANTIES OF TRUSTMARK |
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A-22 |
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Section 3.1. |
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Organization |
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A-22 |
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Section 3.2. |
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Capitalization |
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A-22 |
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Section 3.3. |
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Approvals; Authority |
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A-22 |
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Section 3.4. |
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No Conflict With Other Instruments |
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A-23 |
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Section 3.5. |
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Financial Statements |
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A-23 |
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Section 3.6. |
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Securities and Exchange Commission Reporting Obligations |
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A-23 |
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Section 3.7. |
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Trustmark Employee Benefit Plans |
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A-23 |
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Section 3.8. |
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Regulatory Approvals |
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A-24 |
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Section 3.9. |
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Taxes |
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A-24 |
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Section 3.10. |
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Insurance |
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A-24 |
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Section 3.11. |
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Laws and Regulatory Filings |
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A-24 |
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Section 3.12. |
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Community Reinvestment Act |
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A-24 |
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Section 3.13. |
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Litigation and Other Proceedings |
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A-25 |
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Section 3.14. |
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Brokers and Finders |
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A-25 |
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Section 3.15. |
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Sarbanes-Oxley Act Compliance |
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A-25 |
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Section 3.16. |
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Absence of Certain Changes |
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A-25 |
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IV.
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COVENANTS OF REPUBLIC |
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A-25 |
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Section 4.1. |
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Shareholder Approval and Best Efforts |
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A-25 |
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Section 4.2. |
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Activities of Republic Pending Closing |
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A-25 |
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Section 4.3. |
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Access to Properties and Records |
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A-27 |
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Section 4.4. |
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Information for Regulatory Applications and SEC Filings |
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A-27 |
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Section 4.5. |
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Standstill Provision |
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A-27 |
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Section 4.6. |
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Affiliate Agreement |
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A-28 |
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Section 4.7. |
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Trust Preferred Issue |
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A-28 |
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Section 4.8. |
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Merger of Republic-Delaware into Republic |
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A-28 |
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Section 4.9. |
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Bank Merger |
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A-28 |
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Section 4.10. |
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Amendments to Employment Agreements |
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A-28 |
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Section 4.11. |
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Employee Benefit Plans |
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A-28 |
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Section 4.12. |
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Change in Control Payments |
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A-28 |
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V.
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COVENANTS OF TRUSTMARK |
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A-28 |
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Section 5.1. |
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Regulatory Filings and Best Efforts |
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A-28 |
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Section 5.2. |
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Registration Statement |
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A-29 |
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A-4
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Section 5.3. |
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Employee Benefit Plans |
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A-29 |
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Section 5.4. |
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Regulatory Approvals |
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A-29 |
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Section 5.5. |
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NASDAQ Listing |
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A-30 |
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Section 5.6. |
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Rule 144 Compliance |
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A-30 |
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Section 5.7. |
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Indemnification; Insurance |
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A-30 |
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Section 5.8. |
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Supplemental Indenture |
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A-30 |
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Section 5.9 |
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Trustmark National Bank Director |
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A-30 |
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VI.
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MUTUAL COVENANTS OF TRUSTMARK AND REPUBLIC |
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A-31 |
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Section 6.1. |
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Notification; Updated Disclosure Schedules |
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A-31 |
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Section 6.2. |
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Confidentiality |
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A-31 |
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Section 6.3. |
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Publicity |
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A-31 |
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VII.
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CLOSING |
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A-31 |
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Section 7.1. |
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Closing |
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A-31 |
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Section 7.2. |
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Effective Time |
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A-32 |
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VIII
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. TERMINATION |
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A-32 |
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Section 8.1. |
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Termination |
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A-32 |
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Section 8.2. |
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Effect of Termination |
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A-34 |
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Section 8.3. |
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Termination Fee |
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A-34 |
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IX.
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CONDITIONS TO OBLIGATIONS OF TRUSTMARK |
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A-35 |
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Section 9.1. |
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Compliance with Representations and Covenants |
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A-35 |
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Section 9.2. |
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Absence of Material Adverse Effect |
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A-35 |
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Section 9.3. |
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Legal Opinion |
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A-35 |
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Section 9.4. |
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C. P. Bryan Employment Agreement |
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A-35 |
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Section 9.5. |
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Tax Opinion |
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A-35 |
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X.
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CONDITIONS TO OBLIGATIONS OF REPUBLIC |
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A-36 |
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Section 10.1. |
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Compliance with Representations and Covenants |
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A-36 |
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Section 10.2. |
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Absence of Material Adverse Effect |
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A-36 |
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Section 10.3. |
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Legal Opinion |
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A-36 |
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Section 10.4. |
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Opinion of Financial Advisor |
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A-36 |
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Section 10.5. |
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Tax Opinion |
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A-36 |
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XI.
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CONDITIONS TO RESPECTIVE OBLIGATIONS OF TRUSTMARK, AND REPUBLIC |
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A-36 |
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Section 11.1. |
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Government Approvals |
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A-36 |
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Section 11.2. |
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Shareholder Approval |
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A-37 |
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Section 11.3. |
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Registration of Trustmark Common Stock |
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A-37 |
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Section 11.4. |
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Listing of Trustmark Common Stock |
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XII.
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MISCELLANEOUS |
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A-37 |
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Section 12.1. |
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Definitions |
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A-37 |
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Section 12.2. |
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Non-Survival of Representations and Warranties |
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A-37 |
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Section 12.3. |
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Amendments |
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A-37 |
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Section 12.4. |
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Expenses |
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A-37 |
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Section 12.5. |
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Notices |
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A-38 |
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Section 12.6. |
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Controlling Law |
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A-38 |
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Section 12.7. |
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Headings |
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A-38 |
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Section 12.8. |
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Modifications or Waiver |
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A-38 |
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Section 12.9. |
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Severability |
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A-39 |
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Section 12.10. |
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Assignment |
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A-39 |
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Section 12.11. |
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Consolidation of Agreements |
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A-39 |
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Section 12.12. |
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Counterparts |
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A-39 |
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Section 12.13. |
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Binding on Successors |
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A-39 |
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Section 12.14. |
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Gender |
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A-39 |
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Section 12.15. |
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Disclosures |
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A-39 |
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Exhibit A
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Company Merger Agreement |
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Exhibit B
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Bank Merger Agreement |
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Exhibit C
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Affiliate Agreement |
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Exhibit D
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Bryan Amendment to Employment Agreement |
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Exhibit E
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McWhorter Amendment to Employment Agreement |
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Exhibit F
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Bryan Employment Agreement |
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Exhibit G
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Trustmark Peer Group |
A-6
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization
(Agreement) dated as of April 13, 2006 is by
and among Trustmark Corporation, a Mississippi corporation
(Trustmark) and Republic Bancshares of Texas, Inc.,
Houston, Texas, a Texas corporation (Republic).
WHEREAS, Republic desires to affiliate with Trustmark and
Trustmark desires to affiliate with Republic in the manner
provided in this Agreement; and
WHEREAS, the Boards of Directors of Trustmark and Republic
believe that the acquisition of Republic by Trustmark in the
manner provided by, and subject to the terms and conditions set
forth in, this Agreement and all exhibits, schedules and
supplements hereto is desirable and in the best interests of
their respective shareholders; and
WHEREAS, the respective Boards of Directors of Trustmark and
Republic have approved this Agreement and the transactions
proposed herein substantially on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of such premises and the mutual
representations, warranties, covenants and agreements contained
herein, the parties agree as set forth below.
INTRODUCTION
A. This Agreement provides for the
merger of Republic with and into Trustmark with Trustmark as the
survivor (the Merger), all pursuant to the terms and
conditions set forth in this Agreement. In connection with the
Merger, Trustmark will acquire all of the issued and outstanding
shares of (i) common stock, $1.00 par value, of
Republic (Republic Common Stock) and
(ii) Series A Preferred Stock, $1.00 par value,
of Republic (Republic Series A Stock)
(collectively, the Republic Common Stock and the Republic
Series A Stock are sometimes referred to herein as the
Republic Stock) for an aggregate consideration as
set forth in this Agreement.
B. This Agreement also provides for
the merger of Republics wholly-owned Delaware Subsidiary,
RBT Holdings, Inc. (Republic-Delaware), with and
into Republic prior to consummation of the Merger.
C. It is contemplated that
immediately following consummation of the Merger, Republic
National Bank (Republic Bank), a national banking
association and wholly owned Subsidiary of Republic, will be
merged (the Bank Merger) with and into Trustmark
National Bank, a wholly-owned Subsidiary of Trustmark, with
Trustmark National Bank as the surviving entity.
I. THE MERGERS
Section 1.1. Mergers.
Upon the terms and subject to the conditions set forth in this
Agreement and the Company Merger Agreement in the form attached
hereto as Exhibit A, at the Effective Time (as defined in
Section 7.2 of this Agreement), Republic shall be merged
with and into Trustmark (which, as the surviving corporation, is
hereinafter referred to as Continuing Corporation
whenever reference is made to it at or after the Effective Time)
under the Articles of Incorporation of Trustmark and pursuant to
the provisions of, and with the effect provided in
Sections 79-4-11.01 et seq. of the Mississippi Code of
1972, as amended.
Immediately following the Merger and pursuant to this Agreement
and the Bank Merger Agreement in the form attached hereto as
Exhibit B, Republic Bank shall be merged with and into
Trustmark National Bank under the Articles of Association of
Trustmark National Bank. As a result of and as part of the Bank
Merger, on the Effective Date (as defined in Exhibit B) of
the Bank Merger each of the issued and outstanding shares of
Republic Bank common stock shall be cancelled and retired and
shall cease to exist. As a consequence of the Bank Merger, all
assets of Republic Bank, as they exist on the Effective Date,
shall pass to and vest in Trustmark National Bank without any
conveyance or transfer,
A-7
and Trustmark National Bank shall be responsible for all
liabilities of every kind and description of Republic Bank as of
the Effective Date.
Section 1.2. Articles of Incorporation,
Bylaws and Facilities of Continuing Corporation. At the
Effective Time and until thereafter amended in accordance with
applicable law, the Articles of Incorporation of Continuing
Corporation shall be the Articles of Incorporation of Trustmark
as in effect at the Effective Time. Until altered, amended or
repealed as therein provided and in the Articles of
Incorporation of Continuing Corporation, the Bylaws of
Continuing Corporation shall be the Bylaws of Trustmark as in
effect at the Effective Time. Unless and until changed by the
Board of Directors of Continuing Corporation, the main office of
Continuing Corporation shall be the main office of Trustmark as
of the Effective Time. The established offices and facilities of
Republic immediately prior to the Merger shall become
established offices and facilities of Continuing Corporation.
The Board of Directors of the Continuing Corporation shall be
the Board of Directors of Trustmark at the Effective Time, each
of whom shall serve until duly elected and qualified. The
executive officers of the Continuing Corporation shall be the
executive officers of Trustmark at the Effective Time. Until
thereafter changed in accordance with law or the Articles of
Incorporation or Bylaws of Continuing Corporation, all corporate
acts, plans, policies, contracts, approvals and authorizations
of Republic and Trustmark and their respective shareholders,
Boards of Directors, committees elected or appointed thereby,
officers and agents, which were valid and effective immediately
prior to the Effective Time, shall be taken for all purposes as
the acts, plans, policies, contracts, approvals and
authorizations of Continuing Corporation and shall be as
effective and binding thereon as the same were with respect to
Republic and Trustmark, respectively, as of the Effective Time.
Section 1.3. Effect of Merger. At the
Effective Time, the corporate existence of Republic and
Trustmark shall, as provided in the provisions of law heretofore
mentioned, be consolidated and continued in Continuing
Corporation, and Continuing Corporation shall be deemed to be a
continuation in entity and identity of Republic and Trustmark.
All rights, franchises and interests of Republic and Trustmark,
respectively, in and to any type of property and chooses in
action shall be transferred to and vested in Continuing
Corporation by virtue of the Merger without any deed or other
transfer. Continuing Corporation, without any order or other
action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interest, including
appointments, designations and nominations, and all other rights
and interests as trustee, executor, administrator, transfer
agent or registrar of stocks and bonds, guardian of estates,
assignee, receiver and committee of estates and lunatics, and in
every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises, and interests were held
or enjoyed by Republic and Trustmark, respectively, as of the
Effective Time. At the Effective Time, the directors and
officers of Trustmark shall become the directors and officers of
Continuing Corporation.
Section 1.4. Liabilities of Continuing
Corporation. At the Effective Time of the Merger, Continuing
Corporation shall be liable for all liabilities of Republic and
Trustmark. All deposits, debts, liabilities, obligations and
contracts of Republic and of Trustmark, respectively, matured or
unmatured, whether accrued, absolute, contingent or otherwise,
and whether or not reflected or reserved against on balance
sheets, books of account, or records of Republic or Trustmark,
as the case may be, shall be those of Continuing Corporation and
shall not be released or impaired by the Merger. All rights of
creditors and other obligees and all liens on property of either
Republic or Trustmark shall be preserved unimpaired subsequent
to the Merger.
Section 1.5. Merger Consideration. As a
result of and as part of the Merger and subject to the
adjustments and limitations provided for in Sections 1.8
through 1.15 of this Agreement, shares of Republic Stock issued
and outstanding immediately prior to the Effective Time, other
than Dissenting Shares (as defined in Section 1.7 of this
Agreement), shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and
represent the right to receive cash or shares of common stock,
no par value, of Trustmark (Trustmark Common Stock)
or combination of both (the Merger Consideration),
on the basis described herein.
A-8
Section 1.6. Republic Stock Options.
Republic shall take all actions necessary to accelerate vesting
of all the outstanding Republic Stock options outstanding on the
date of this Agreement (which options are listed in
Schedule 2.2); provided, however, no Republic Stock
options that were not vested as of February 28, 2006, may
become vested until ten (10) days prior to the Effective
Time. Holders of vested stock options who exercise them at least
three (3) days prior to the Effective Time shall be
entitled to payment of the Merger Consideration in accordance
with this Article I. Trustmark shall not assume, or provide
any Merger Consideration for, a stock option that remains
unexercised within three (3) days of the Effective Time, or
for any Republic Stock acquired by exercising a stock option
after three (3) days prior to the Effective Time.
Section 1.7. Dissenting Shares. Each
share of Republic Stock issued and outstanding immediately prior
to the Effective Time, the holder of which has not voted in
favor of the Merger and who has delivered a written demand for
payment of the fair value of such shares within the time and in
the manner provided in Article 5.12 of the Texas Business
Corporation Act (TBCA), is referred to herein as a
Dissenting Share. Dissenting Shares shall not be
converted into or represent the right to receive the Merger
Consideration pursuant to Section 1.5 of this Agreement and
shall be entitled only to such rights as are available to such
holder pursuant to the applicable provisions of the TBCA unless
and until such holder shall have failed to perfect or shall have
effectively withdrawn or lost his right to appraisal and payment
under Article 5.12 of the TBCA. If any such holder shall
have so failed to perfect or shall have effectively withdrawn or
lost such right, such holders Dissenting Shares shall
thereupon be deemed to have been converted into and to have
become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration without any interest thereon.
Section 1.8. Election Procedures and Exchange
of Shares. At least thirty (30) days prior to the date
of the Republic shareholders meeting to approve the Merger (the
Meeting Date), Republic shall deliver to Trustmark a
list of Republics shareholders which shall include each
shareholders name, address and the number of shares of
Republic Stock owned. Subject to the provisions of
Sections 1.5, 1.6, and 1.9 through 1.15 hereof, each holder
of shares of Republic Stock as of the date thirty (30) days
prior to the Meeting Date (the Record Date) and the
option holders listed in Schedule 2.2 shall be given
the opportunity to elect, in accordance with the procedures set
forth in Section 1.10 hereof (the Election), to
convert their shares of Republic Stock into either:
(a) cash in an amount equal to
$44.00 per share for all of the shares of Republic Stock
owned by such holder of record as of the Record Date (the
Available Cash Election); or
(b) shares of Trustmark Common
Stock in an amount equal to the Exchange Ratio times the number
of shares of Republic Stock owned by such holder of record as of
the Record Date (the Share Election). The Exchange
Ratio shall be equal to 1.3968; or
(c) a combination of cash and
Trustmark Common Stock for all of the shares of Republic Stock
owned by such holder of record as of the Record Date (the
Combination Election) in the proportions and with
respect to the shares of Republic Stock specified by such
holder. In the event a Republic shareholder makes a Combination
Election, the amount of cash to be received for each share of
Republic Stock converted into cash shall be computed in
accordance with Section 1.8(a) and the amount of Trustmark
Common Stock to be received for shares of Republic Stock
converted in Trustmark Common Stock shall be computed in
accordance with Section 1.8(b).
The elections made by the option holders shall only be binding
on those option holders (i) if the Merger is approved by
the Republic shareholders and (ii) the option holder
exercises the option for the shares of Republic Stock at least
three (3) days prior to the Effective Time as provided in
Section 1.6.
Section 1.9. Limitation on
Elections. If, based on the Elections, the total cash
payable to holders of Republic Stock (including cash payable in
lieu of fractional shares and cash payable to dissenters to the
Merger) would be greater than forty-nine percent (49%) of the
total value of the Merger Consideration, or the total Trustmark
Common Stock issued to holders of Republic Stock would be
greater than fifty-one percent (51%) of the total value of the
Merger Consideration, Trustmark shall have
A-9
the right to proportionally adjust the cash and Trustmark Common
Stock to be issued to holders of Republic Stock so that the
total cash payable to holders of Republic Stock (including cash
payable in lieu of fractional shares and cash payable to
dissenters to the Merger) shall be equal to forty-nine percent
(49%) of the Merger Consideration and the total Trustmark Common
Stock to be issued shall be equal to fifty-one percent (51%) of
the Merger Consideration or 3,400,000 shares. For purposes
of the calculation contained herein, all dissenting shareholders
shall be deemed to have received cash in an amount equal to the
amount of the Available Cash Election for such shares.
Section 1.10. Form of
Election. Forms for making the Election (the
Forms of Election), shall be mailed to the option
holders and holders of Republic Stock as of the Record Date as
part of the proxy statement (the Proxy Statement)
for the special shareholders meeting of Republic called to
consider the Merger. The Forms of Election must be properly
completed and returned to Republic on or before the Meeting Date
in accordance with the instructions applicable thereto. Any
option holder or holder of shares of Republic Stock who does not
return a properly executed Form of Election on or before the
Meeting Date shall be deemed to have made a Share Election. If
the Merger is approved, Republic shall furnish Trustmark with
the original Forms of Election as soon as is practicable
following the shareholders meeting of Republic.
Section 1.11. Change in
Election; Revocation. Any option holder or holder of
Republic Stock may, at any time, change an Election by
submitting a revised, subsequently dated Form of Election on or
before the Meeting Date.
Section 1.12. Distribution
of Trustmark Common Stock and Cash.
(a) Promptly following the
Effective Time of the Merger, Trustmark shall send to holders of
Republic Stock of record as of the Closing Date transmittal
materials for use in exchanging their shares of Republic Stock
for the Merger Consideration. Trustmark shall thereafter
promptly pay the Merger Consideration to holders of Republic
Stock who have properly submitted transmittal materials and
surrendered their share certificates to Trustmark. Unless and
until the share certificates are properly surrendered, a former
holder of Republic Stock shall not be entitled to receive the
cash and/or share certificates to which such holder is entitled
or any dividends payable with respect to such shares. Upon the
proper surrender of such Republic Stock, the former Republic
shareholder shall be issued the Trustmark shares and/or shall be
paid the cash and dividends (without interest) to which such
shareholder is entitled.
(b) Former shareholders of Republic
who have made a Share Election or Combination Election shall be
entitled to vote after the Effective Time at any meeting of
Trustmarks shareholders the number of shares of Trustmark
Common Stock into which their shares are converted, after such
shareholders of Republic have surrendered their certificates in
exchange therefor.
(c) After the Effective Time, the
stock transfer ledger of Republic shall be closed and there
shall be no transfers on the stock transfer books of Republic of
the shares of Republic Stock which were outstanding immediately
prior to such time. If, after the Effective Time, certificates
are presented to Trustmark, they shall be promptly exchanged as
provided in this Section 1.12.
(d) If any certificate representing
shares of Trustmark Common Stock is to be issued in a name other
than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be
appropriately endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form (reasonably
satisfactory to Trustmark) for transfer, and that the person
requesting such exchange shall pay to Trustmark in advance any
transfer or other Taxes required by reason of the issuance of a
certificate representing shares of Trustmark Common Stock in any
name other than that of the registered holder of the certificate
surrendered, or required for any other reason, or shall
establish to the satisfaction of Trustmark that such tax has
been paid or not payable.
(e) Neither Trustmark, Republic, or
any other person shall be liable to any former holder of shares
of Republic Stock for any Trustmark Common Stock (or dividends
or distributions with respect
A-10
thereto) or cash properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar
laws.
Section 1.13. Fractional
Shares. No fractional shares of Trustmark Common Stock shall
be issued upon the surrender for exchange of certificates
representing shares of Republic Stock. In lieu of any such
fractional share, each holder of shares of Republic Stock who
would otherwise be entitled to a fractional share of Trustmark
Common Stock will be paid cash upon the proper surrender of all
the stock certificates representing shares of Republic Stock
held by such holder in the amount equal to the product of such
fraction multiplied by $31.50.
Section 1.14. Calculations
and Adjustments.
(a) If, between the date of this
Agreement and the Effective Time, shares of Trustmark Common
Stock shall be changed into a different number of shares or
shares of a different class by reason of any reclassification,
recapitalization, stock split, or stock dividend with a record
date within said period, the number of shares of Trustmark
Common Stock to be issued and delivered upon the consummation of
the Merger as provided in this Agreement shall be appropriately
and proportionately adjusted so that the number of such shares
that will be issued and delivered as a result of the Merger will
equal the number of shares of Trustmark Common Stock that
holders of shares of Republic Stock would have received had the
record date for such reclassification, recapitalization, stock
split, or stock dividend been immediately following the
Effective Time.
(b) If, between the date of this
Agreement and the Effective Time, the number of shares of
Republic Stock issued shall be increased due to the purchase of
shares by Republics employee stock purchase plan, the
Exchange Ratio, the Available Cash Election share price, the
Merger Consideration to be delivered pursuant to this Agreement,
and any other relevant provision of this Agreement shall be
adjusted to reflect all of the issued and outstanding shares of
Republic Stock at the Effective Time.
Section 1.15. Lost or
Destroyed Certificates. Any person whose certificates
representing shares of Republic Stock shall have been lost or
destroyed may nevertheless obtain the shares of Trustmark Common
Stock and/or cash to which such holder of Republic Stock is
entitled as a result of the Merger if such holder provides
Trustmark with a statement certifying such loss or destruction
and an indemnity satisfactory to Trustmark sufficient to
indemnify Trustmark against any loss or expense that may occur
as a result of such lost or destroyed certificate being
thereafter presented to Trustmark for exchange.
Section 1.16. Ratification
by Shareholders. This Agreement shall be submitted to the
shareholders of Republic in accordance with applicable
provisions of law and the respective Articles of Incorporation
and Bylaws of Republic. Republic and Trustmark shall proceed
expeditiously and cooperate fully in the procurement of any
other consents and approvals and the taking of any other actions
in satisfaction of all other requirements prescribed by law or
otherwise necessary for consummation of the Merger on the terms
herein provided, including, without limitation, the preparation
and submission of all necessary filings, requests for waivers
and certificates with the Board of Governors of the Federal
Reserve System (Federal Reserve Board) and the
Office of the Comptroller of the Currency (OCC).
Section 1.17. Tax
Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of
Section 368(a) of the Code, and the parties hereby adopt
this Agreement as a plan of reorganization within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
Treasury Regulations promulgated thereunder.
II. REPRESENTATIONS AND
WARRANTIES OF REPUBLIC
Republic, for itself and on behalf of its Subsidiaries,
Republic-Delaware and Republic Bank, makes the following
representations and warranties, each of which is being relied on
by Trustmark, which representations and warranties shall,
individually and in the aggregate, be true and correct in all
respects on the date of this Agreement and on the Closing Date
(except that all representations and warranties made as of a
specific date shall be true and correct as of such date). For
the purposes of this Agreement,
A-11
except in Section 2.1 and where the context otherwise
requires, any reference to Republic in this Article II
shall be deemed to include Republic and its Subsidiaries, and
any reference to material, materiality, or Material Adverse
Effect, or a similar standard shall refer to the financial
condition, operations, or other aspects of Republic taken as a
whole and its Subsidiaries individually.
Prior to the date of this Agreement, Republic has delivered to
Trustmark a number of Schedules setting forth, among other
things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure
requirement contained in a provision hereof, or as an exception
to one or more representations or warranties or covenants
contained herein; provided, that the mere inclusion of an item
in a Schedule as an exception to a representation or warranty or
covenant shall not be deemed an admission by either party that
such item was required to be disclosed therein. Republic agrees
that, two (2) days prior to Closing, it shall provide
Trustmark with supplemental Schedules reflecting any changes in
the information which has occurred in the period from the date
of delivery of such Schedules to the date two (2) days
prior to Closing.
2.1 Organization.
(a) Republic is a Texas corporation
duly organized, validly existing and in good standing under the
laws of the State of Texas. Republic-Delaware is a Delaware
corporation duly organized, validly existing and in good
standing under the laws of Delaware. Republic Bank is a national
banking association duly organized, validly existing and in good
standing under the laws of the United States of America. Each of
Republic, Republic-Delaware and Republic Bank has full power and
authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to own,
lease and operate its properties, to engage in the business and
activities now conducted by it, except where the failure to be
so licensed or qualified would not have a Material Adverse
Effect (as defined in Section 12.1(b) of this Agreement) on
the business, assets, operations, financial condition or results
of operations (such business, assets, operations, financial
condition or results of operations hereinafter collectively
referred to as the Condition) of Republic.
(b) Republic and Republic-Delaware
are registered bank holding companies under the Bank Holding
Company Act of 1956, as amended (BHC Act). Republic
Bank is duly authorized to conduct a general banking business,
embracing all usual deposit functions of commercial banks as
well as commercial, industrial and real estate loans,
installment credits, collections and safe deposit facilities
subject to the supervision of the OCC and the Federal Deposit
Insurance Corporation (FDIC). True and complete
copies of the Articles of Incorporation and Bylaws of Republic
and Republic-Delaware and the Articles of Association and Bylaws
of Republic Bank, each as amended to date, have been delivered
or made available to Trustmark.
(c) Other than as set forth in
Schedule 2.1(c), Republic (i) does not have any
Subsidiaries or Affiliates, (ii) is not a general partner
or material owner in any joint venture, general partnership,
limited partnership, trust or other non-corporate entity, and
(iii) does not know of any arrangement pursuant to which
the stock of any corporation is or has been held in trust
(whether express, constructive, resulting or otherwise) for the
benefit of all shareholders of Republic.
(d) The deposit accounts of
Republic Bank are insured by the FDIC through the Bank Insurance
Fund to the fullest extent permitted by law, and all premiums
and assessments due and owning as of the date hereof required in
connection therewith have been paid by Republic Bank.
Section 2.2. Capitalization.
The authorized capital stock of Republic consists of
20,000,000 shares of Republic Common Stock, of which
3,657,381 are issued and outstanding, and 500,000 shares of
Republic Series A Stock, $1.00 par value, of which
346,133 are issued and outstanding. The authorized capital stock
of Republic-Delaware consists of 3,000 shares of
Republic-Delaware common stock, $.01 par value,
1,000 shares of which are issued and outstanding and owned
by Republic. The authorized capital stock of Republic Bank
consists of 5,000,000 shares of Republic Bank common stock,
$1.00 par value, 1,922,000 of which are issued and
outstanding and owned by Republic-Delaware. All of the issued
and outstanding shares of Republic Stock are validly issued,
fully paid and nonassessable, and
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have not been issued in violation of the preemptive rights of
any person or in violation of any applicable federal or state
laws. Schedule 2.2 sets forth for each Republic
Stock option, the name of the grantee, the date of the grant,
the type of grant, the status of the option grant as qualified
or non-qualified under Section 422 of the Code, the number
of shares of Republic Common Stock subject to each option, and
the number of shares of Republic Common Stock that are currently
exercisable and the exercise price per share. Upon exercise the
outstanding Republic Stock options as of the date of this
Agreement shall represent 769,100 shares of Republic Common
Stock. Other than as set forth in Schedule 2.2,
there are no existing options, warrants, calls, convertible
securities or commitments of any kind obligating Republic to
issue any authorized and unissued Republic Stock nor does
Republic have any outstanding commitment or obligation to
repurchase, reacquire or redeem any of its outstanding capital
stock. There are no voting trusts, voting agreements, buy-sell
agreements or other similar arrangements affecting the Republic
Stock.
Section 2.3. Approvals;
Authority.
(a) Republic has full corporate
power and authority to execute and deliver this Agreement (and
any related documents), and Republic has full legal capacity,
power and authority to perform its obligations hereunder and
thereunder and to consummate the contemplated transactions.
(b) The Board of Directors of
Republic has approved this Agreement and the transactions
contemplated herein subject to the approval thereof by the
shareholders of Republic as required by law, and, other than
shareholder approval, no further corporate proceedings of
Republic are needed to execute and deliver this Agreement and
consummate the Merger. This Agreement has been duly executed and
delivered by Republic and is a duly authorized, valid, legally
binding agreement of Republic enforceable against Republic in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to creditors rights generally and general
equitable principles.
Section 2.4. Investments.
Republic has furnished to Trustmark a complete list, as of
December 31, 2005, of all securities, including municipal
bonds, owned by Republic (the Securities Portfolio).
Except as set forth in Schedule 2.4, all such
securities are owned by Republic (i) of record, except
those held in bearer form, and (ii) beneficially, free and
clear of all mortgages, liens, pledges and encumbrances.
Schedule 2.4 also discloses any entities in which
the ownership interest of Republic equals 5% or more of the
issued and outstanding voting securities of the issuer thereof.
There are no voting trusts or other agreements or understandings
with respect to the voting of any of the securities in the
Securities Portfolio.
Section 2.5. Financial
Statements.
(a) Republic has furnished or made
available to Trustmark true and complete copies of its audited
financial statements as of December 31, 2005, 2004 and
2003, its call reports as of and for the year ended
December 31, 2005, and its unaudited financial statements
for the quarter ended March 31, 2006. The audited financial
statements, call reports, and unaudited financial statements
referred to in this Section 2.5 are collectively referred
to in this Agreement as the Republic Financial
Statements.
(b) Each of the Republic Financial
Statements fairly present the financial position of Republic and
the results of its operations at the dates and for the periods
indicated in conformity with generally accepted accounting
principles (GAAP) applied on a consistent basis.
(c) As of the dates of the Republic
Financial Statements referred to above, Republic did not have
any liabilities, fixed or contingent, which are material and are
not fully shown or provided for in such Republic Financial
Statements or otherwise disclosed in this Agreement, or in any
of the documents delivered to Trustmark. Since December 31,
2005, there have been no material changes in the financial
condition, assets, liabilities or business of Republic, other
than changes made in the ordinary course of business, which
individually or in the aggregate have not had a Material Adverse
Effect on the Condition of Republic.
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Section 2.6. Loan
Portfolio. (a) All evidences of indebtedness reflected
as assets in the Republic Financial Statements as of and for the
period ended December 31, 2005, were as of such dates in
all material respects the binding obligations of the respective
obligors named therein in accordance with their respective
terms, (b) the allowance for loan losses shown on the
Republic Financial Statements as of and for the period ended
December 31, 2005, was, and the allowance for loan losses
to be shown on the Republic Financial Statements as of any date
subsequent to the execution of this Agreement will be, as of
such dates, in the reasonable judgment of management of
Republic, adequate to provide for possible losses, net of
recoveries relating to loans previously charged off, in respect
of loans outstanding (including accrued interest receivable) of
Republic and other extensions of credit (including letters of
credit or commitments to make loans or extend credit), and
(c) the allowance for loan losses described in
clause (b) above has been established in accordance with
GAAP as applied to banking institutions and all applicable rules
and regulations; provided, however, that Republic makes no
representation or warranty as to the sufficiency of collateral
securing or the collectibility of such loans.
Section 2.7. Certain Loans
and Related Matters.
(a) Except as set forth in
Schedule 2.7(a), Republic is not a party to any
written or oral: (i) loan agreement, note or borrowing
arrangement under the terms of which the obligor is sixty
(60) days delinquent in payment of principal or interest or
in default of any other material provisions as of the date
hereof; (ii) loan agreement, note or borrowing arrangement
which has been classified or, in the exercise of reasonable
diligence by Republic, should have been classified as
substandard, doubtful, loss,
other loans especially mentioned, other assets
especially mentioned or any comparable classifications by
such persons; (iii) loan agreement, note or borrowing
arrangement, including any loan guaranty, with any director or
executive officer of Republic, or any 10% or more shareholder of
Republic, or any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing;
or (iv) loan agreement, note or borrowing arrangement in
violation of any law, regulation or rule applicable to Republic
including, but not limited to, those promulgated, interpreted or
enforced by any regulatory agency with supervisory jurisdiction
over Republic and which violation could have a Material Adverse
Effect on the Condition of Republic.
(b) Schedule 2.7(b)
contains the watch list of loans of Republic (the
Watch List) as of December 31, 2005. Except as
set forth in Schedule 2.7(b), to the knowledge of
Republic, there is no loan agreement, note or borrowing
arrangement which should be included on the Watch List in
accordance with Republics current practices and prudent
banking principles.
Section 2.8. Real Property
Owned or Leased.
(a) Other than real property
acquired through foreclosure or deed in lieu of foreclosure,
Schedule 2.8(a) contains a true, correct and
complete list of all real property owned or leased by Republic
(the Republic Real Property). True and complete
copies of all deeds, leases and title insurance policies for, or
other documentation evidencing ownership of, the properties
referred to in Schedule 2.8(a) and all mortgages,
deeds of trust and security agreements to which such property is
subject have been furnished or made available to Trustmark.
(b) No lease with respect to any
Republic Real Property and no deed with respect to any Republic
Real Property contains any restrictive covenant that materially
restricts the use, transferability or value of such Republic
Real Property. Each of such leases is a legal, valid and binding
obligation enforceable in accordance with its terms (except as
may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors
generally and the availability of equitable remedies), and is in
full force and effect; there are no existing defaults by
Republic or the other party thereunder and there are no
allegations or assertions of such by any party under such
agreement or any events that with notice, lapse of time, or the
happening or occurrence of any other event would constitute a
default thereunder.
(c) To the knowledge of Republic,
none of the buildings and structures located on any Republic
Real Property, nor any appurtenances thereto or equipment
therein, nor the operation or
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maintenance thereof, violates in any material manner any
restrictive covenants or encroaches on any property owned by
others, nor does any building or structure of third parties
encroach upon any Republic Real Property, except for those
violations and encroachments which in the aggregate could not
reasonably be expected to cause a Material Adverse Effect on the
Condition of Republic. No condemnation proceeding is pending or,
to Republics knowledge, threatened, which would preclude
or materially impair the use of any Republic Real Property in
the manner in which it is currently being used.
(d) Republic has good and
indefeasible title to, or a valid and enforceable leasehold
interest in, or a contract vendees interest in, all
Republic Real Property, and such interest is free and clear of
all liens, charges or other encumbrances, except
(i) statutory liens for amounts not yet delinquent or which
are being contested in good faith through proper proceedings,
and (ii) those liens related to real property Taxes, local
improvement district assessments, easements, covenants,
restrictions and other matters of record which do not
individually or in the aggregate materially adversely affect the
use and enjoyment of the relevant real property.
(e) Except as set forth in
Schedule 2.8(e), all buildings and other facilities
used in the business of Republic are adequately maintained and,
to Republics knowledge, are free from defects which could
materially interfere with the current or future use of such
facilities.
Section 2.9. Personal
Property. Republic has good title to, or a valid leasehold
interest in, all personal property, whether tangible or
intangible, used in the conduct of its business (the
Republic Personalty), free and clear of all liens,
charges or other encumbrances, except (a) statutory liens
for amounts not yet delinquent or which are being contested in
good faith through proper proceedings, and (b) such other
liens, charges, encumbrances and imperfections of title as do
not individually or in the aggregate materially adversely affect
the use and enjoyment of the relevant Republic Personalty.
Subject to ordinary wear and tear, the Republic Personalty is in
good operating condition and repair and is adequate for the uses
to which it is being put.
Section 2.10. Environmental
Laws. To the knowledge of Republic, Republic and any
properties or business owned or operated by Republic, whether or
not held in a fiduciary or representative capacity, are in
material compliance with all terms and conditions of all
applicable federal and state Environmental Laws (as defined
below) and permits thereunder. Republic has not received notice
of any violation of any Environmental Laws or generated, stored,
or disposed of any materials designated as Hazardous Materials
(as defined below) under the Environmental Laws, and they are
not subject to any claim or lien under any Environmental Laws.
During the term of ownership by Republic no real estate
currently owned, operated, or leased (including any property
acquired by foreclosure or deeded in lieu thereof) by Republic,
or owned, operated or leased by Republic within the ten years
preceding the date of this Agreement, has been designated by
applicable governmental authorities as requiring any
environmental cleanup or response action to comply with
Environmental Laws, or has been the site of release of any
Hazardous Materials. To the knowledge of Republic, (a) no
asbestos was used in the construction of any portion of
Republics facilities, and (b) no real property
currently owned by it is, or has been, an industrial site or
landfill. Trustmark and its consultants, agents and
representatives shall have the right to inspect Republics
assets for the purpose of conducting asbestos and other
environmental surveys, provided that such inspection shall be at
the expense of Trustmark and at such time as may be mutually
agreed upon between Republic and Trustmark.
Environmental Laws, as used in this Agreement, means
any applicable federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now in
effect and in each case as amended to date, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree, or judgment, relating to
the environment, human health or safety, or Hazardous Materials,
including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
42 U.S.C. § 9601, et seq.; The Hazardous
Materials Transportation Authorization Act, as amended,
49 U.S.C. § 5101, et seq.; the Resource
Conservation and Recovery Act of 1976, as amended,
42 U.S.C. § 6901, et seq.; the Federal
Water Pollution Control Act, as
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amended, 33 U.S.C. § 1201, et seq.; the
Toxic Substances Control Act, 15 U.S.C. § 2601,
et seq.; the Clean Air Act, 42 U.S.C.
§ 7401, et seq.; and the Safe Drinking Water
Act, 42 U.S.C. § 300f, et seq.
Hazardous Materials, as used in this Agreement,
includes, but is not limited to, (a) any petroleum or
petroleum products, natural gas, or natural gas products,
radioactive materials, asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contains
dielectric fluid containing levels of polychlorinated biphenyls
(PCBs), mold, and radon gas; (b) any chemicals, materials,
waste or substances defined as or included in the definition of
hazardous substances, hazardous wastes,
hazardous materials, extremely hazardous
wastes, restricted hazardous wastes,
toxic substances, toxic pollutants,
contaminants, or pollutants, or words of
similar import, under any Environmental Laws; and (c) any
other chemical, material, waste or substance which is in any way
regulated as hazardous or toxic by any federal, state or local
government authority, agency or instrumentality, including
mixtures thereof with other materials, and including any
regulated building materials such as asbestos and lead.
Section 2.11. Litigation
and Other Proceedings. Except as set forth in
Schedule 2.11, there are no legal, quasi-judicial,
regulatory or administrative proceedings of any kind or nature
now pending or, to the knowledge of Republic, threatened before
any court or administrative body in any manner against Republic,
or any of its properties or capital stock, which might have a
Material Adverse Effect on the Condition of Republic or the
transactions proposed by this Agreement. Republic does not know
of any basis on which any litigation or proceeding could be
brought which could have a Material Adverse Effect on the
Condition of Republic or which could question the validity of
any action taken or to be taken in connection with this
Agreement and the transactions contemplated hereby. Republic is
not in default with respect to any judgment, order, writ,
injunction, decree, award, rule or regulation of any court,
arbitrator or governmental agency or instrumentality.
Section 2.12. Taxes.
Republic has filed with the appropriate federal, state and local
governmental agencies all Tax Returns and reports required to be
filed, and has paid all Taxes and assessments shown or claimed
to be due. The Tax Returns as filed were correct in all
respects. Republic has not executed or filed with the Internal
Revenue Service any agreement extending the period for
assessment and collection of any federal income Tax. Republic is
not a party to any action or proceeding by any governmental
authority for assessment or collection of Taxes, nor has any
claim for assessment or collection of Taxes been asserted
against Republic. Republic has not waived any statute of
limitations with respect to any Tax or other assessment or levy,
and all such Taxes and other assessments and levies which
Republic is required by law to withhold or to collect have been
duly withheld and collected and have been paid over to the
proper governmental authorities to the extent due and payable,
or segregated and set aside for such payment and, if so
segregated and set aside will be so paid by Republic, as
required by law.
True and complete copies of the federal income tax returns of
Republic as filed with the Internal Revenue Service
(IRS) for the years ended December 31, 2004,
2003 and 2002 have been delivered or made available to Trustmark.
For purposes of this Agreement, Tax or
Taxes shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, excise, stamp, real or
personal property, ad valorem, withholding, social security (or
similar), unemployment, occupation, use, production, service,
service use, license, net worth, payroll, franchise, severance,
transfer, recording, employment, premium, windfall profits,
environmental (including taxes under Section 59A of the
Internal Revenue Code (the Code)), customs duties,
capital stock, profits, disability, sales, registration, value
added, alternative or add-on minimum, estimated or other taxes,
assessments or charges imposed by any federal, state, local or
foreign governmental entity and any interest, penalties, or
additions to tax attributable thereto. For purposes of this
Agreement, Tax Return shall mean any return,
declaration, report, form or similar statement required to be
filed with respect to any Tax (including any attached
schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of
estimated Tax.
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Section 2.13. Contracts and
Commitments.
(a) Except as set forth in
Schedule 2.13, Republic is not a party to or bound
by any of the following (whether written or oral, express or
implied):
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(i) employment contract or
severance arrangement (including without limitation any
collective bargaining contract or union agreement or agreement
with an independent consultant) which is not terminable by
Republic on less than sixty (60) days notice without
payment of any amount on account of such termination; |
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(ii) bonus, stock option or other
employee benefit arrangement, other than any deferred
compensation arrangement disclosed in Schedule 2.20
or any profit-sharing, pension or retirement plan or welfare
plan disclosed in Schedule 2.19(a); |
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(iii) material lease or license
with respect to any property, real or personal, whether as
landlord, tenant, licensor or licensee; |
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(iv) contract or commitment for
capital expenditures; |
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(v) material contract or commitment
made in the ordinary course of business for the purchase of
materials or supplies or for the performance of services over a
period of more than one hundred twenty (120) days
from the date of this Agreement; |
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(vi) contract or option to purchase
or sell any real or personal property made in the ordinary
course of business; |
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(vii) contract, agreement or letter
with respect to the management or operations of Republic imposed
by any bank regulatory authority having supervisory jurisdiction
over Republic; |
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(viii) agreement, contract or
indenture related to the borrowing by Republic of money other
than those entered into in the ordinary course of business; |
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(ix) guaranty of any obligation for
the borrowing of money, excluding endorsements made for
collection, repurchase or resale agreements, letters of credit
and guaranties made in the ordinary course of business; |
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(x) agreement with or extension of
credit to any executive officer or director of Republic or
holder of more than ten percent (10%) of the issued and
outstanding Republic Common Stock or Republic Series A
Stock, or any affiliate of such person, which is not on
substantially the same terms (including, without limitation, in
the case of lending transactions, interest rates and collateral)
as, and following credit underwriting practices that are not
less stringent than, those prevailing at the time for comparable
transactions with unrelated parties or which involve more than
the normal risk of collectibility or other unfavorable features; |
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(xi) contract or commitment to sell
all or substantially all of the assets of Republic or its
Subsidiaries; or |
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(xii) contracts, other than the
foregoing, with annual payments aggregating $25,000 or more not
made in the ordinary course of business and not otherwise
disclosed in this Agreement, in any schedule attached hereto or
in any document delivered or referred to or described in writing
by Republic to Trustmark. |
(b) Republic has in all material
respects performed all material obligations required to be
performed by it to date and is not in default under, and no
event has occurred which, with the lapse of time or action by a
third party could result in default under, any material
indenture, mortgage, contract, lease or other agreement to which
Republic is a party or by which Republic is bound or under any
provision of its Articles of Incorporation or Bylaws.
Section 2.14. Insurance.
A true and complete list of all insurance policies owned or held
by or on behalf of Republic (other than credit-life policies),
including policy numbers, retention levels, insurance
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carriers, and effective and termination dates, is set forth in
Schedule 2.14. Such policies are in full force and
effect and contain only standard cancellation or termination
clauses. In the judgment of the Board of Directors of Republic,
such insurance policies in respect of amounts, types and risks
insured are adequate to insure against risks to which Republic
and its assets are normally exposed in the operation of its
business, subject to customary deductibles and policy limits.
Section 2.15. No Conflict
With Other Instruments. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby will not (a) conflict with
or violate any provision of Republics Articles of
Incorporation or Bylaws, or (b) assuming all required
shareholder and regulatory approvals and consents are duly
obtained, will not (i) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Republic or any of its properties or
assets, or (ii) violate, conflict with, result in a breach
of any provision of or constitute a default (or an event which,
with or without notice or lapse of time, would constitute a
default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance
required by, cause Trustmark or Republic to become subject to or
liable for the payment of any Tax, or result in the creation of
any lien, charge or encumbrance upon any of the properties or
assets of Republic under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease agreement, instrument or obligation to
which Republic is a party, or by which any of its properties or
assets may be bound or affected, except for such violations,
conflicts, breaches or defaults which either individually or in
the aggregate will not have a Material Adverse Effect on the
Condition of Republic.
Section 2.16. Compliance
with Laws and Regulatory Filings. Republic is in material
compliance with all applicable federal, state and local laws,
rules, regulations and orders applicable to it. Except for
approvals by regulatory authorities having jurisdiction over
Republic, no prior consent, approval or authorization of, or
declaration, filing or registration with, any person or
regulatory authority is required of Republic in connection with
the execution, delivery and performance by Republic of this
Agreement and the transactions contemplated hereby, or the
resulting change of control of Republic except for certain
instruments necessary to consummate the Merger contemplated
hereby. Republic has filed all reports, registrations and
statements, together with any amendments required to be made
thereto, that are required to be filed with the Federal Reserve
Board or any other regulatory authority having jurisdiction over
Republic and its Subsidiaries, and such reports, registrations
and statements are, to the knowledge of Republic, true and
correct in all material respects.
Section 2.17. Absence of
Certain Changes. Except as set forth in
Schedule 2.17, since December 31, 2005,
Republic has not (a) issued or sold any of its capital
stock or corporate debt obligations; (b) declared or set
aside or paid any dividend or made any other distribution
(whether in cash, stock or property) in respect of or, directly
or indirectly, purchased, redeemed or otherwise acquired any
shares of Republic Stock; (c) incurred any obligations or
liabilities (fixed or contingent), except obligations or
liabilities incurred in the ordinary course of business, or
mortgaged, pledged or subjected any of its assets to a lien or
encumbrance (other than in the ordinary course of business and
other than statutory liens not yet delinquent);
(d) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (fixed or contingent), other than
accruals, accounts and notes payable included in the Republic
Financial Statements, accruals, accounts and notes payable
incurred since December 31, 2005 in the ordinary course of
business, and accruals, accounts and notes payable incurred in
connection with the transactions contemplated by this Agreement;
(e) sold, exchanged or otherwise disposed of any of its
capital assets other than in the ordinary course of business;
(f) other than in accordance with past practices, made any
general or individual wage or salary increase (including
increases in directors or consultants fees), paid
any bonus, granted or paid any perquisites such as automobile
allowances, club memberships or dues or other similar benefits,
made any accrual or arrangement for or payment of bonuses or
special compensation of any kind or severance or termination pay
to any present or former officer or salaried employee, or
instituted any employee welfare, retirement or similar plan or
arrangement; (g) suffered any physical damage, destruction
or casualty loss, whether or not covered by insurance;
(h) made any or acquiesced with any change in accounting
methods, principles and practices except as
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may be required by GAAP; (i) excluding loan commitments
made and certificates of deposit issued, entered into any
contract, agreement or commitment which obligates Republic for
an amount in excess of $25,000 over the term of any such
contract, agreement or commitment; (j) except in the
ordinary course of business, entered or agreed to enter into any
agreement or arrangement granting any preferential rights to
purchase any of its assets, properties or rights or requiring
the consent of any party to the transfer and assignment of any
such assets, properties or rights; or (k) incurred any
change or any event involving a prospective change in the
Condition of Republic which has had, or is reasonably likely to
have, a Material Adverse Effect on the Condition of Republic,
including, without limitation any change in the administrative
or supervisory standing or rating of Republic with any
regulatory agency having jurisdiction over Republic, and no fact
or condition exists as of the date hereof which might reasonably
be expected to cause any such event or change in the future.
Section 2.18. Employment
Relations. The relations of Republic with its employees are
satisfactory, and Republic has not received any notice of any
controversies with, or organizational efforts or other pending
actions by, representatives of its employees. Republic has
materially complied with all laws relating to the employment of
labor with respect to its employees, including any provisions
thereof relating to wages, hours, collective bargaining and the
payment of workers compensation insurance and social
security and similar taxes, and no person has asserted that
Republic is liable for any arrearages of wages, workers
compensation insurance premiums or any taxes or penalties for
failure to comply with any of the foregoing.
Section 2.19. Employee
Benefit Plans.
(a) Schedule 2.19(a)
lists all employee benefit plans or agreements providing
benefits to any employees or former employees of Republic that
are sponsored or maintained by Republic to which Republic
contributes or is obligated to contribute on behalf of employees
or former employees of Republic, including without limitation
any employee benefit plan within the meaning of
Section 3(3) of the Employment Retirement Income Security
Act of 1974, as amended (ERISA), any employee
pension benefit plan within the meaning of Section 3(2) of
ERISA, or any collective bargaining, bonus, incentive, deferred
compensation, stock purchase, stock option, severance, change of
control or fringe benefit plan. Except as set forth in
Schedule 2.19(a), all employee benefit plans
maintained by Republic and its Subsidiaries are in material
compliance with the provisions of ERISA and the applicable
provisions of the Code.
(b) No employee benefit plans of
Republic or its ERISA Affiliates (as defined below) (the
Republic Plans) are subject to Title IV of
ERISA or are multiemployer plans within the meaning
of Section 4001(a)(3) of ERISA (Multiemployer
Plans). None of Republic or any of its respective ERISA
Affiliates has, at any time during the last six years,
contributed to or been obligated to contribute to any
Multiemployer Plan, and none of Republic, or any of its
respective ERISA Affiliates has incurred any withdrawal
liability under Part I of Subtitle E of Title IV of
ERISA that has not been satisfied in full.
(c) To the knowledge of Republic
and its Subsidiaries, no prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the
Code, has occurred that could result in liability to Republic
and its Subsidiaries. Republics 401(k) Plan has been
determined to be qualified within the meaning of
Section 401(a) of the Code and neither Republic or its
Subsidiaries knows of any fact which would adversely affect the
qualified status of such plan. Republic has provided Trustmark
with copies of the most recent determination letters issued by
the IRS with respect to such plans.
(d) There does not now exist, nor,
to the best knowledge Republic, do any circumstances exist that
could result in, any Controlled Group Liability that would be a
material liability of Republic now or following the Closing.
Controlled Group Liability means (i) any and
all liabilities (A) under Title IV of ERISA,
(B) under Section 302 of ERISA, (C) under
Sections 412 and 4971 of the Code, or (D) as a result
of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, and (E) under corresponding
or similar provisions of foreign laws or regulations;
(ii) with respect to any Republic Plan any other material
liability under Title I of
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ERISA or Chapter 43 or 68 of the Code, and
(iii) material unfunded liabilities under any non-qualified
deferred compensation plan for the benefit of any employee or
former employee of Republic.
(e) ERISA Affiliates
means, with respect to any entity, trade or business, any other
entity, trade or business that is a member of a group described
in Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first entity,
trade or business, or that is a member of the same
controlled group as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
Section 2.20. Deferred
Compensation Arrangements. Schedule 2.20
contains a list of all deferred compensation arrangements of
Republic, if any, including the terms under which the cash value
of any life insurance purchased in connection with any such
arrangement can be realized.
Section 2.21. Brokers,
Finders and Financial Advisors. Except for the persons and
fees set forth in Schedule 2.21, neither Republic
nor any of its officers, directors or employees have employed
any broker, finder or financial advisor or incurred any
liability for any brokerage fees, commissions or finders
fees in connection with this Agreement and the transactions
contemplated herein.
Section 2.22. Trust Preferred
Securities.
(a) Republic has issued and
presently outstanding $8,248,000 of Floating Junior Subordinated
Debentures due 2033 issued by Republic Bancshares Capital
Trust I (Trust I) pursuant to an Indenture
dated as of December 19, 2002 between Republic and
Wilmington Trust Company, as Trustee (the Trustee).
Trust I has issued and outstanding $8,000,000 in aggregate
principal amount of trust preferred securities pursuant to the
terms of the Amended and Restated Declaration of Trust dated as
of December 19, 2002 among Republic, the Trustee, and the
administrators named therein.
(b) All representations and
warranties made by Republic in the documents related to the
issuance of the trust preferred securities were true in all
material respects when made.
Section 2.23. Derivative Contracts. Republic is not
a party to nor has it agreed to enter into an exchange-traded or
over-the-counter swap,
forward, future, option, cap, floor or collar financial contract
or agreement, or any other contract or agreement not included in
the Republic Financial Statements which is a financial
derivative contract (including various combinations thereof)
(Derivative Contracts).
Section 2.24. Deposits.
To the knowledge of Republic, none of the deposits of Republic
is a brokered deposit (as such term is defined in
12 CFR 337.6(a)(2)) or is subject to any encumbrance, legal
restraint or other legal process (other than garnishments,
pledges, set off rights, escrow limitations and similar actions
taken in the ordinary course of business).
Section 2.25. Accounting
Controls. Republic has devised and maintained a system of
internal accounting controls sufficient to provide reasonable
assurances that: (a) all material transactions are executed
in accordance with general or specific authorization of the
Board of Directors and the duly authorized executive officers of
Republic; (b) all material transactions are recorded as
necessary to permit the preparation of financial statements in
conformity with GAAP consistently applied with respect to
institutions such as Republic or other criteria applicable to
such financial statements, and to maintain proper accountability
for items therein; (c) access to the material properties
and assets of Republic is permitted only in accordance with
general or specific authorization of the Board of Directors and
the duly authorized executive officers of Republic; and
(d) the recorded accountability for items is compared with
the actual levels at reasonable intervals and appropriate
actions taken with respect to any differences.
Section 2.26. Community
Reinvestment Act. Republic is in material compliance with
the Community Reinvestment Act (12 U.S.C. § 2901
et seq.) (CRA) and all regulations
promulgated thereunder, and Republic has supplied Trustmark with
copies of Republics current CRA Statement, all support
papers therefor, all letters and written comments received by
Republic since January 1, 2002 pertaining thereto and any
responses by Republic to such comments. Republic has a rating of
satisfactory as of its most recent CRA compliance
examination and knows of no reason why it would not receive a
rating of satisfactory or better pursuant to its
next CRA compliance examination or why
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the OCC or any other governmental entity may seek to restrain,
delay or prohibit the transactions contemplated hereby as a
result of any act or omission of Republic under the CRA.
Section 2.27. Intellectual
Property Rights. Schedule 2.27 contains a
correct and complete list of all registered trademarks,
registered service marks, trademark and service mark
applications, trade names and registered copyrights presently
owned or held by Republic or any Subsidiary or used under
license by them in the conduct of their business (the
Intellectual Property). Republic and its
Subsidiaries own or have the right to use and continue to use
the Intellectual Property in the operation of their business.
Other than as set forth in Schedule 2.27, neither
Republic nor any Subsidiary is, to their knowledge, infringing
or violating any patent, copyright, trademark, service mark,
label filing or trade name owned or otherwise held by any other
party, nor has Republic or any Subsidiary, to their knowledge,
used any confidential information or any trade secrets owned or
otherwise held by any other party, without holding a valid
license for such use. No Intellectual Property will be adversely
affected as a result of the Merger.
Section 2.28. Bank Secrecy
Act; USA PATRIOT Act. Other than as set forth in
Schedule 2.28, Republic has neither had nor
suspected any incidents of fraud or defalcation during the last
two years. Republic is in material compliance with the Bank
Secrecy Act and all regulations promulgated thereunder and has
timely and properly filed and maintained all requisite Currency
Transaction Reports and Suspicious Activity Reports and has
properly monitored transaction activity (including, but not
limited to, wire transfers). In addition, Republic is in
material compliance with the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT) Act, GLB Act Privacy
Provisions, Office of Foreign Assets Control Regulation (OFAC),
Bank Protection Act, and all applicable Financial Crimes
Enforcement Network (FinCEN) requirements and all other related
laws.
Section 2.29. Fairness
Opinion. Prior to the execution of this Agreement, Republic
has received an opinion from Keefe, Bruyette & Woods,
Inc., to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date hereof, the
Merger Consideration to be received by the shareholders of
Republic pursuant to this Agreement is fair to such shareholders
from a financial point of view, and such opinion will be updated
as of the date of the Proxy Statement (as defined in
Section 5.2 hereof). Such opinion has not been amended or
rescinded.
Section 2.30. Shareholders
List. Republic has provided or made available to Trustmark
as of a date within ten (10) days of the date of this
Agreement a list of the holders of shares of Republic Stock
containing the names, addresses and number of shares held of
record, which shareholders list is in all respects
accurate as of such date and will be updated prior to Closing.
Section 2.31. Vote
Required. The affirmative vote of the holders of two thirds
of the outstanding Republic Common Stock and the Republic
Series A Stock is the only vote required of the
shareholders of Republic necessary to approve the Merger and the
related transactions contemplated thereby. The affirmative vote
of Republic, as the sole shareholder of Republic-Delaware, is
the only vote of the shareholders of Republic-Delaware necessary
to approve the merger of Republic-Delaware into Republic and the
related transactions contemplated thereby.
Section 2.32. Full
Disclosure. This Agreement, the Schedules, and all
information provided to Trustmark in writing pursuant to this
Agreement does not contain any untrue statements of material
fact and Republic has not omitted to disclose to Trustmark any
material fact known to Republic concerning the financial
condition, properties, or prospects of Republic or its
Subsidiaries.
Section 2.33. Disclosure
Documents. With respect to information supplied or to be
supplied by Republic for inclusion in the Proxy Statement and
the registration statement to be filed with the Securities and
Exchange Commission (SEC) by Trustmark for the
registration of the shares of Trustmark Common Stock to be
issued in connection with the Merger (the Registration
Statement): (a) the Proxy Statement, at the time of
the mailing thereof to shareholders of Republic and at the time
of the special meeting of Republics shareholders, will not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein,
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in light of the circumstances under which they are made, not
misleading; and (b) the Registration Statement, at the time
it becomes effective under the Securities Act, will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading.
Section 2.34. SEC
Deregistration. On February 2, 2006 Republic filed a
Form 15 deregistration statement with the SEC for the
deregistration of the Republic Common Stock under
Section 12 of the Exchange Act. Pursuant to
Rule 12g-4(a),
however, Republics Exchange Act registration remains
effective until May 2, 2006. Republic represents and
warrants to Trustmark that it has not received any notice of,
nor does it have any knowledge of, the SECs rejection of
Republics Form 15. Furthermore, Republic agrees to
immediately notify Trustmark of the receipt of any such notice
from the SEC.
III. REPRESENTATIONS AND
WARRANTIES OF TRUSTMARK
Trustmark, for itself and its Subsidiary, Trustmark National
Bank, makes the following representations and warranties to
Republic, which representations and warranties shall,
individually and in the aggregate, be true and correct in all
respects upon the date of this Agreement and on the Closing Date
(except that all representations and warranties made as of a
specific date shall be true and correct as of such date).
Section 3.1. Organization.
Trustmark is a corporation duly organized, validly existing and
in good standing under the laws of the State of Mississippi and
a bank holding company duly registered under the BHC Act,
subject to all laws, rules and regulations applicable to bank
holding companies. Trustmark owns 100% of the issued and
outstanding capital stock of Trustmark National Bank. Trustmark
National Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the
United States. Trustmark National Bank is an insured bank as
defined in the Federal Deposit Insurance Act. Trustmark and
Trustmark National Bank have full power and authority (including
all licenses, franchises, permits and other governmental
authorizations which are legally required) to own their
properties, to engage in the business and activities now
conducted by them and to enter into this Agreement, except where
the failure to be so licensed or qualified would not have a
Material Adverse Effect on the Condition of Trustmark,
considered as a consolidated whole.
Section 3.2. Capitalization.
The authorized capital stock of Trustmark consists of
250,000,000 shares of Trustmark Common Stock, no par value,
of which 55,772,059 are issued and outstanding as of
March 13, 2006, and of which 5,677,526 are reserved for
issuance upon the exercise of stock options, and
20,000,000 shares of Trustmark preferred stock, no par
value, of which none are issued and outstanding as of
March 13, 2006. The authorized capital stock of Trustmark
National Bank consists of 2,677,955 shares of Trustmark
National Bank common stock, $5.00 par value, 2,677,955 of
which are issued and outstanding. All of the issued and
outstanding shares of Trustmark Common Stock are validly issued,
fully paid and nonassessable, and have not been issued in
violation of the preemptive rights of any person or in violation
of any applicable federal or state laws. The shares of Trustmark
Common Stock to be issued to Republic shareholders pursuant to
the provisions of this Agreement have been duly authorized, will
be validly issued, fully paid and nonassessable and will not be
issued in violation of the preemptive rights of any person.
There are no voting trusts, voting agreements or other similar
arrangements affecting the Trustmark Common Stock.
Section 3.3. Approvals;
Authority.
(a) Trustmark has full corporate
power and authority to execute and deliver this Agreement, to
perform their respective obligations hereunder and to consummate
the transactions contemplated hereby.
(b) The Board of Directors of
Trustmark has approved this Agreement and the transactions
contemplated herein subject to any approval thereof by the
shareholders of Trustmark as required by law, and no further
corporate proceedings of Trustmark is needed to execute and
deliver this Agreement and consummate the Merger. This Agreement
has been duly executed and delivered by
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Trustmark and is a duly authorized, valid, legally binding
agreement of Trustmark enforceable against Trustmark in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to creditors rights generally and general
equitable principles.
Section 3.4. No Conflict
With Other Instruments. The execution, delivery and
performance of this Agreement or the consummation of the
transactions contemplated hereby will not (a) violate any
provision of the respective Articles of Incorporation or Bylaws
of Trustmark, or (b) assuming all required shareholder and
regulatory consents and approvals are duly obtained,
(i) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to
Trustmark or any of its properties or assets, or
(ii) violate, conflict with, result in a breach of any
provision of or constitute a default (or an event which, with or
without notice or lapse of time, would constitute a default)
under, result in the termination of or a right of termination or
cancellation under, accelerate the performance required by,
cause Trustmark to become subject to or liable for the payment
of any Tax, or result in the creation of any lien, charge or
encumbrance upon any of the properties or assets of Trustmark
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease
agreement, instrument or obligation to which Trustmark is a
party, or by which any of its properties or assets may be bound
or affected, except for such violations, conflicts, breaches or
defaults which either individually or in the aggregate will not
have a Material Adverse Effect on the Condition of Trustmark.
Section 3.5. Financial
Statements.
(a) Trustmark has furnished or made
available to Republic true and complete copies of its Annual
Report on
Form 10-K for the
year ended December 31, 2005 (Annual Report),
as filed with the SEC, which contains Trustmarks audited
balance sheets as of December 31, 2005 and 2004, and the
related statements of income and statements of changes in
shareholders equity and cash flow for the years ended
December 31, 2005, 2004 and 2003. The financial statements
referred to above included in the Annual Report are referred to
herein as the Trustmark Financial Statements.
(b) The Trustmark Financial
Statements fairly present the financial position and results of
operation of Trustmark at the dates and for the periods
indicated in conformity with GAAP applied on a consistent basis.
(c) Since December 31, 2005,
Trustmark has not had any obligations or liabilities, fixed or
contingent, which are material and are not fully shown or
provided for in the Trustmark Financial Statements or otherwise
disclosed in this Agreement, or in any of the documents
delivered to Republic. Since December 31, 2005, there have
been no material changes in the financial condition, assets,
liabilities or business of Trustmark, other than changes in the
ordinary course of business, which individually or in the
aggregate have not had a Material Adverse Effect on the
Condition of Trustmark.
Section 3.6. Securities and
Exchange Commission Reporting Obligations. Trustmark has
filed all material reports and statements, together with any
amendments required to be made with respect thereto, that it was
required to file with the SEC pursuant to the Securities
Exchange Act of 1934, as amended (the Exchange Act).
As of their respective dates, each of such reports and
statements (or if amended, as of the date so amended), were true
and correct and complied in all material respects with the
relevant statutes, rules and regulations enforced or promulgated
by the SEC, and such reports did not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 3.7. Trustmark
Employee Benefit Plans. The employee benefits plans and
welfare benefit plans (referred to collectively herein as the
Trustmark Plans) in effect at Trustmark and its
Subsidiaries have all been operated in all material respects in
compliance with ERISA, since ERISA became applicable with
respect thereto. None of the Trustmark Plans nor any of their
respective related trusts have been terminated (except the
termination of any Trustmark Plan which is in compliance with
the requirements of ERISA and which will not result in any
additional liability to Trustmark), and there has been no
reportable event, as that term is defined in
Section 4043 of ERISA, required to be reported since the
effective date of ERISA which has not been reported, and none of
such Trustmark Plans nor
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their respective related trusts have incurred any
accumulated funding deficiency, as such term is
defined in Section 302 of ERISA (whether or not waived),
since the effective date of ERISA. The Trustmark Plans are the
only employee benefit plans covering employees of Trustmark and
its Subsidiaries. Trustmark and its Subsidiaries will not have
any material liabilities with respect to employee benefits,
whether vested or unvested as of the Closing Date, for any of
their employees other than under the Trustmark Plans, and as of
the date hereof the actuarial present value of Trustmark Plan
assets of each Trustmark Plan is not less (and as of the
Effective Time of the Merger such present value will not be
less) than the present value of all benefits payable or to be
payable thereunder.
Section 3.8. Regulatory
Approvals. Trustmark has no reason to believe that it will
not be able to obtain all requisite regulatory approvals
necessary to consummate the transactions set forth in this
Agreement without unnecessary delay.
Section 3.9. Taxes.
Trustmark and its Subsidiaries have filed with the appropriate
federal, state and local governmental authorities all material
Tax Returns and reports required to be filed, and have paid all
Taxes and assessments shown to be due and payable thereon. At
the time of filing, all such Tax Returns were correct in all
material respects. Neither Trustmark nor any of its Subsidiaries
have executed or filed with the Internal Revenue Service any
agreement extending the period for assessment and collection of
any federal income Tax. Neither Trustmark nor any Subsidiary is
a party to any pending action or proceeding by any governmental
authority for assessment or collection of Taxes, nor has any
written claim for assessment or collection of Taxes been
asserted against Trustmark or any Subsidiary. All Taxes which
Trustmark or any Subsidiary is or was required by law to
withhold or to collect have been duly withheld and collected and
have been paid over to the proper authorities to the extent due
and payable, or segregated and set aside for such payment and,
if so segregated and set aside will be so paid by Trustmark or
any Subsidiary, as required by applicable law.
Section 3.10. Insurance.
Trustmark currently maintains insurance in amounts reasonably
necessary for its operations. In the judgment of the Board of
Directors of Trustmark, such insurance policies in respect of
amounts, types and risks insured are adequate to insure against
risks to which Trustmark and its assets are normally exposed in
the operation of its business, subject to customary deductibles
and policy limits. Trustmark has no reason to believe that
existing insurance coverage cannot be renewed as and when the
same shall expire upon terms and conditions as favorable as
those presently in effect, other than possible increases in
premiums or unavailability of coverage that do not result from
any extraordinary loss experience on the part of Trustmark.
Section 3.11. Laws and
Regulatory Filings. Trustmark and its Subsidiaries are in
material compliance with all applicable federal, state and local
laws, rules, regulations and orders applicable to them, except
where such noncompliance would not result in a Material Adverse
Effect on Trustmark. Except for approvals by regulatory
authorities having supervisory jurisdiction over Trustmark and
its Subsidiaries, no prior consent, approval or authorization
of, or declaration, filing or registrations with, any person or
regulatory authority is required of Trustmark and its
Subsidiaries in connection with the execution, delivery and
performance by Trustmark of this Agreement and the transactions
contemplated hereby. Trustmark and its Subsidiaries have filed
all reports, registrations and statements, together with any
amendments required to be made thereto, that are required to be
filed with the Federal Reserve Board, the FDIC, the OCC, or any
other regulatory authority having supervisory jurisdiction over
Trustmark and its Subsidiaries, and such reports, registrations
and statements, as finally amended or corrected, are, to the
knowledge of Trustmark and its Subsidiaries, true and correct in
all material respects.
Section 3.12. Community
Reinvestment Act. Trustmark National Bank is in material
compliance with the CRA and all regulations promulgated
thereunder. Trustmark National Bank has a rating of
satisfactory as of its most recent CRA compliance
examination and, knows of no reason why it would not receive a
rating of satisfactory or better pursuant to its
next CRA compliance examination or why the OCC or any other
governmental entity may seek to restrain, delay or prohibit the
transactions contemplated hereby as a result of any act or
omission of the Trustmark National Bank under the CRA.
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Section 3.13. Litigation
and Other Proceedings. There are no legal, quasi-judicial or
administrative proceedings of any kind or nature now pending or,
to the knowledge of Trustmark, threatened before any court or
administrative body in any manner against Trustmark, or any of
its properties or capital stock, which might have a Material
Adverse Effect on the Condition of Trustmark or the transactions
proposed by this Agreement. Trustmark knows of no basis on which
any litigation or proceeding could be brought which could have a
Material Adverse Effect on the Condition of Trustmark or which
could question the validity of any action taken or to be taken
in connection with this Agreement and the transactions
contemplated hereby. Trustmark is not in default with respect to
any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or
instrumentality.
Section 3.14. Brokers and
Finders. Other than as set forth on
Schedule 3.14, neither Trustmark nor any of its
officers, directors or employees have employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finders fees in connection with this
Agreement.
Section 3.15. Sarbanes-Oxley
Act Compliance. Trustmark and its Subsidiaries and any of
the officers and directors of Trustmark, in their capacities as
such, are in compliance, in all material respects, with the
provisions of the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley Act) and the related rules and
regulations promulgated thereunder by the SEC and NASDAQ.
Section 3.16. Absence of
Certain Changes. Since December 31, 2005,
(a) Trustmark and its Subsidiaries have conducted their
respective businesses in the ordinary and usual course
consistent with prudent banking practices (excluding the
incurrence of expenses related to this Agreement and the
transactions contemplated hereby), and (b) no event has
occurred or circumstance arisen that, individually or in the
aggregate, has had or could reasonably be expected to have a
Material Adverse Effect on Trustmark.
IV. COVENANTS OF REPUBLIC
Republic covenants and agrees with Trustmark as follows:
Section 4.1. Shareholder
Approval and Best Efforts. Republic will, as soon as
practicable following acceptance of Trustmarks regulatory
applications for processing, but in no event prior to
May 3, 2006, take all steps under applicable law to call,
give notice of, convene and hold a meeting of its shareholders
at such time as may be mutually agreed to by the parties for the
purpose of approving this Agreement and the transactions
contemplated hereby and for such other purposes consistent with
the complete performance of this Agreement as may be necessary
and desirable. The Board of Directors of Republic will recommend
to its shareholders the approval of this Agreement and the
transactions contemplated hereby, unless otherwise required by
their fiduciary duties under applicable law, and Republic will
use its best efforts to obtain the necessary approvals by its
shareholders of this Agreement and the transactions contemplated
hereby. If the transaction is approved by such shareholders,
Republic will take all reasonable action to aid and assist in
the consummation of the Merger, and will use its best efforts to
take or cause to be taken all other actions necessary, proper or
advisable to consummate the transactions contemplated by this
Agreement, including such actions as Trustmark reasonably
considers necessary, proper or advisable in connection with
filing applications and registration statements with, or
obtaining approvals from, all governmental entities having
jurisdiction over the transactions contemplated by this
Agreement.
Section 4.2. Activities of
Republic Pending Closing.
(a) From the date hereof to and
including the Closing Date, as long as this Agreement remains in
effect Republic shall (i) conduct its affairs (including,
without limitation, the making of or agreeing to make any loans
or other extensions of credit) only in the ordinary course of
business consistent with past practices and prudent banking
principles; (ii) use its best efforts to preserve intact
its present business organizations, keep available the services
of its present officers, directors, key employees and agents and
preserve its relationships and goodwill with customers and
advantageous business relationships;
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and (iii) except as required by law or regulation, take no
action which would adversely affect or delay the ability of
Republic or Trustmark to obtain any approvals from any
regulatory agencies or other approvals required for consummation
of the transactions contemplated hereby or to perform its
obligations and agreements under this Agreement.
(b) From the date hereof to and
including the Closing Date, except as required by law or
regulation, as long as this Agreement remains in effect or
unless Trustmark otherwise consents in writing (which consent
shall not be unreasonably withheld), Republic shall not:
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(i) make or agree to make or renew
any loans or other extensions of credit to any borrower in
excess of $1,000,000 (except (A) pursuant to commitments
made prior to the date of this Agreement, (B) loans fully
secured by a certificate of deposit at Republic, and
(C) renewals, extensions and consolidations of any loans
other than those loans listed in Schedule 2.7);
provided, however, that in the event that Republic desires to
make or renew any such loan in excess of $1,000,000, Republic
shall so advise Trustmark in writing. Trustmark shall notify
Republic in writing within three (3) business days of
receipt of such notice whether Trustmark consents to such loan
or extension of credit, provided that if Trustmark fails to
notify Republic with such time frame, Trustmark shall be deemed
to have consented to such loan or extension of credit; |
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(ii) issue or sell or obligate
itself to issue or sell any shares of its capital stock (other
than issuances for the Republic Employee Stock Purchase Plan
purchases but only in such amounts accrued or withheld as of the
date of this Agreement) or any warrants, rights or options to
acquire, or any securities convertible into, any shares of its
capital stock, or declare or pay any dividend in respect of its
capital stock; |
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(iii) open or close any branch
office, or acquire or sell or agree to acquire or sell, any
branch office or any deposit liabilities, and shall otherwise
consult with and seek the advice of Trustmark with respect to
basic policies relating to branching, site location and
relocation; |
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(iv) enter into, amend or terminate
any agreement of the type that would be required to be disclosed
in Schedule 2.13, or any other material agreement,
or acquire or dispose of any material amount of assets or
liabilities, except in the ordinary course of business
consistent with prudent banking practices; |
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(v) grant any severance or
termination pay (other than pursuant to Republics policies
in effect on the date hereof) to, or enter into any employment,
consulting, noncompetition, retirement, parachute, severance or
indemnification agreement with, any officer, director, employee
or agent of Republic, either individually or as part of a class
of similarly situated persons (other than as required or
contemplated by this Agreement); |
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(vi) cause or allow any of the
things listed in Section 2.17 to occur (except with respect
to Section 2.17(g), Republic shall use its best efforts to
not cause or allow any of the things listed therein to occur); |
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(vii) sell, transfer, convey or
otherwise dispose of any real property (including other
real estate owned) or interest therein; |
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(viii) foreclose upon or otherwise
acquire any commercial real property prior to receipt and
approval by Trustmark of a Phase I environmental review
thereof; |
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(ix) increase or decrease the rate
of interest paid on deposit accounts, except in a manner and
pursuant to policies consistent with Republics past
practices; |
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(x) establish any new Subsidiary; |
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(xi) voluntarily make any material
change in the interest rate risk profile of Republic from that
as of December 31, 2005; |
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(xii) materially deviate from
policies and procedures existing as of the date of this
Agreement with respect to (A) classification of assets,
(B) the allowance for loan losses, and (C) accrual of
interest on assets, except as otherwise required by the
provisions of this Agreement; |
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(xiii) amend or change any
provision of Republics Articles of Incorporation or Bylaws; |
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(xiv) make any capital expenditure
which would exceed an aggregate of $50,000; |
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(xv) excluding deposits,
certificates of deposit, FHLB advances and borrowings consistent
with past practices, undertake any additional borrowings in
excess of ninety (90) days; or |
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(xvi) modify any outstanding loan
or acquire any loan participation, unless such modification is
made in the ordinary course of business, consistent with past
practice. |
Section 4.3. Access to
Properties and Records. To the extent permitted by
applicable law, Republic shall (a) afford the executive
officers and authorized representatives (including legal
counsel, accountants and consultants) of Trustmark full access
to the properties, books and records of Republic in order that
Trustmark may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of
Republic, and (b) furnish Trustmark with such additional
financial and operating data and other information as to the
business and properties of Republic as Trustmark shall, from
time to time, request. As soon as practicable after they become
available, Republic will deliver or make available to Trustmark
all call reports filed by Republic with the appropriate federal
regulatory authority after the date of this Agreement. All
financial statements shall be prepared in accordance with GAAP
applied on a consistent basis with previous accounting periods.
In the event of the termination of this Agreement, Trustmark
will return to Republic all documents and other information
obtained pursuant hereto and will keep confidential any
information obtained pursuant to this Agreement.
Section 4.4. Information
for Regulatory Applications and SEC Filings. To the extent
permitted by law, Republic will furnish Trustmark with all
information concerning Republic required for inclusion in any
application, filing, registration statement or document to be
made or filed by Trustmark or Republic with any federal or state
regulatory or supervisory authority in connection with the
transactions contemplated by this Agreement during the pendency
of this Agreement. Republic represents and warrants that all
information so furnished for such applications and filings
shall, to the best of its knowledge, be true and correct in all
material respects without omission of any material fact required
to be stated to make the information not misleading. Republic
agrees at any time, upon the request of Trustmark, to furnish to
Trustmark a written letter or statement confirming the accuracy
of the information with respect to Republic contained in any
report or other application or statement referred to in this
Agreement, and confirming that the information with respect to
Republic contained in such document or draft was furnished by
Republic expressly for use therein or, if such is not the case,
indicating the inaccuracies contained in such document or
indicating the information not furnished by Republic expressly
for use therein.
Section 4.5. Standstill
Provision. So long as this Agreement is in effect, neither
Republic nor any of its Subsidiaries shall, and Republic agrees
and will use its best efforts to cause its directors, officers,
employees, agents and representatives not to, directly or
indirectly, take any action to solicit, initiate, or encourage
the making of any Acquisition Proposal (as hereinafter defined);
nor will they enter into any negotiations concerning, furnish
any nonpublic information relating to Republic in connection
with, or agree to any Acquisition Proposal; except where the
Board of Directors of Republic determines, based on the written
advice of counsel, that the failure to furnish such information
or participate in such negotiations or discussions would or
could reasonably be deemed to constitute a breach of the legal
or fiduciary obligations of the Board of Directors to
Republics shareholders. Republic agrees to notify
Trustmark promptly of any Acquisition Proposal received and
provide reasonable detail as to the identity of the proposed
acquiror and the nature of the proposed transaction.
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Section 4.6. Affiliate
Agreement. No later than the fifteenth
(15th)
day following the date of execution of this Agreement, Republic
shall deliver to Trustmark, after consultation with legal
counsel, a list of names and addresses of those persons who are
then affiliates of Republic with respect to the
Merger within the meaning of Rule 144 under the Securities
Act. There shall be added to such list the names and addresses
of any other person (within the meaning of Rule 144) which
Trustmark identifies (by written notice to Republic within three
business days after receipt of such list) as possibly being a
person who may be deemed to be an affiliate of
Republic within the meaning of Rule 144. Notwithstanding
the foregoing, C. P. Bryan, Gerald W. Bodzy, Donn C.
Fullenweider, James C. Hassell, Wayne C. Owen, and R. John
McWhorter shall be deemed affiliates within the
meaning of Rule 144. Republic shall cause each
affiliate to deliver, to Trustmark, not later than
the thirtieth (30th) day following the date of execution of this
Agreement, an agreement dated as of the date of delivery thereof
in the form of Exhibit C attached hereto.
Section 4.7. Trust Preferred
Issue. As soon as practicable following the execution of
this Agreement, Republic shall notify the Trustee with respect
to its issue of trust preferred securities of the execution of
this Agreement and shall obtain from the Trustee confirmation
that (a) no Default or Event of Default (as those terms are
defined in the Indenture and related Guarantee Agreement) exists
or is continuing; (b) no Default or Event of Default will
occur as a result of the execution, delivery and performance by
Republic of its obligations under the terms of this Agreement;
and (c) Republic has not elected to commence an Extended
Interest Payment Period as that term is defined in the Indenture.
Section 4.8. Merger of
Republic-Delaware into Republic. Prior to the Closing Date,
Republic shall have undertaken all approvals, filings, and other
steps necessary to cause the merger of Republic-Delaware with
and into Republic.
Section 4.9. Bank
Merger. Prior to the Effective Time, Republic shall cause
Republic Bank to cooperate with Trustmark and Trustmark National
Bank as necessary in conjunction with all approvals, filings,
and other steps necessary to cause the consummation of the Bank
Merger immediately following the Effective Time.
Section 4.10. Amendments to
Employment Agreements. Within fifteen (15) days after
the date of this Agreement, Republic shall have taken all
actions necessary to approve and execute the Amendments to
Employment Agreements of C. P. Bryan and R. John McWhorter in
the Form attached hereto as Exhibits D and E respectively,
and to deliver executed copies of such Amendments to Trustmark.
Section 4.11. Employee
Benefit Plans. Republic shall execute and deliver such
instruments and take such other actions as Trustmark may
reasonably require in order to cause the amendment or
termination of any of its employee benefit plans on terms
satisfactory to Trustmark and in accordance with applicable law
and effective as of the Closing Date.
Section 4.12. Change in
Control Payments. On or before the Effective Time, Republic
shall (a) pay C. P. Bryan the Republic Change in Control
payments as defined in Section 7 of Exhibit F attached
hereto, and (b) make the payments required by R. John
McWhorters Employment Agreement with Republic, as amended.
V. COVENANTS OF TRUSTMARK
Trustmark covenants and agrees with Republic as follows:
Section 5.1. Regulatory
Filings and Best Efforts. Trustmark will take all reasonable
action to aid and assist in the consummation of the Merger and
the transactions contemplated hereby, and will use its best
efforts to take or cause to be taken all other actions
necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including such actions which are
necessary, proper or advisable in connection with filing
applications with, or obtaining approvals from, all regulatory
authorities having jurisdiction over the transactions
contemplated by this Agreement.
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Section 5.2. Registration
Statement. Within thirty (30) days after the execution
of this Agreement, Trustmark will prepare and file with the SEC
a Registration Statement on
Form S-4 under the
Securities Act and any other applicable documents, relating to
the shares of Trustmark Common Stock to be delivered to the
shareholders of Republic pursuant to this Agreement, and will
use its best efforts to cause the Registration Statement to
become effective. Republic and its counsel shall be given the
opportunity to participate in the preparation of the
Registration Statement and shall have the right to approve the
content of the Registration Statement with respect to Republic
and the Republic shareholders meeting. At the time the
Registration Statement becomes effective, the Registration
Statement will comply in all material respects with the
provisions of the Securities Act and the published rules and
regulations thereunder, and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not false or misleading, and at the time of
mailing thereof to Republics shareholders and at the time
of the Republic shareholders meeting held to approve the
Merger, the Proxy Statement included as part of the Registration
Statement (the Proxy Statement), as amended or
supplemented by any amendment or supplement filed by Trustmark
will not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein not false or misleading; provided, however, that none of
the provisions of this subparagraph shall apply to statements in
or omissions from the Registration Statement or the Proxy
Statement made in reliance upon and in conformity with
information furnished by Republic for use in the Registration
Statement or the Proxy Statement.
Section 5.3. Employee
Benefit Plans. Trustmark agrees that the employees of
Republic who continue their employment after the Closing Date
(the Republic Employees) will be entitled to
participate as newly hired employees in the employee benefit
plans and programs maintained for employees of Trustmark on the
Closing Date, in accordance with the respective terms of such
plans and programs, and Trustmark shall take all actions
necessary or appropriate to facilitate coverage of the Republic
Employees in such plans and programs from and after the Closing
Date, subject to the following:
(a) Each Republic Employee will be
entitled to credit for prior service with Republic for all
purposes under the employee benefit plans and other employee
benefit plans and programs (other than stock option plans),
sponsored by Trustmark to the extent Republic sponsored a
similar type of plan in which the Republic Employees
participated immediately prior to the Closing Date. Any
eligibility waiting period and pre-existing condition exclusion
applicable to such plans and programs shall be waived with
respect to each Republic Employee and their eligible dependents.
For purposes of determining Republic Employees benefit for the
calendar year in which the Merger occurs under Trustmarks
vacation program, any vacation taken by the Republic Employees
immediately preceding the Closing Date for the calendar year in
which the Merger occurs will be deducted from the total
Trustmark vacation benefit available to such Republic Employees
for such calendar year. Trustmark further agrees to credit the
Republic Employees and their eligible dependents for the year
during which coverage under Trustmarks group health plan
begins, with any deductibles already incurred during such year,
under Republics group health plan.
(b) The Republic Employees shall be
entitled to credit for past service with Republic for the
purpose of satisfying any eligibility or vesting periods
applicable to Trustmarks employee benefit plans which are
subject to Sections 401(a) and 501(a) of the Code
(including, without limitation, Trustmarks 401(k) Profit
Sharing Plan).
(c) Republic shall be entitled to
accrue on its balance sheet for employee bonuses for performance
in the 2006 calendar year in which the Merger occurs. The amount
accrued shall be consistent with Republics past practices
and in the normal course of business. The accrued bonuses shall
be payable in accordance with Trustmarks incentive
compensation plan to eligible employees on March 15, 2007,
provided the eligible employee is employed by Trustmark on
March 1, 2007.
Section 5.4. Regulatory
Approvals. Trustmark will file all necessary regulatory
documents, notices and applications not later than the
30th day after the execution of this Agreement and will
provide
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Republic with a copy of the non-confidential portions of
notices, applications, statements or correspondence submitted to
or received from regulatory authorities in connection with the
Merger.
Section 5.5. NASDAQ
Listing. Trustmark will file all documents required to have
the shares of Trustmark Common Stock to be issued pursuant to
the Agreement included for quotation on NASDAQ and use its best
efforts to effect said listing.
Section 5.6. Rule 144
Compliance. For a period of not less than two (2) years
after the date hereof (or such shorter period of time as may be
applicable for affiliates of Republic within the meaning of
Rule 144 to sell shares of Trustmark Common Stock in
accordance with Rule 145 of the Securities Act), Trustmark
shall use its best efforts to file in a timely manner all
reports with the SEC required to be filed by it pursuant to
Section 13 and Section 15(d) of the Exchange Act.
Section 5.7. Indemnification;
Insurance.
(a) For a period of four
(4) years from and after the Effective Time, Trustmark (the
Indemnifying Party) shall indemnify and hold
harmless each present and former director, officer and employee
of Republic determined as of the Effective Time (the
Indemnified Parties) against any costs or expenses
(including reasonable attorneys fees), judgments, fines,
losses, claims, damages or liabilities (collectively,
Costs) incurred in connection with any claim,
action, suit, proceeding or investigation whether civil or
criminal, administrative or investigative, arising out of
matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective
Time to the fullest extent to which such Indemnified Parties
were entitled under Republics Articles of Association,
Bylaws and applicable laws.
(b) Any Indemnified Party wishing
to claim indemnification under this section, upon learning of
any such claim, action, suit, proceeding or investigation, shall
promptly notify the Indemnifying Party, but the failure to so
notify shall not relieve the Indemnifying Party of any liability
it may have to such Indemnified Party if such failure does not
materially prejudice the Indemnifying Party. In the event of any
such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense
thereof and the Indemnifying Party shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if
the Indemnifying Party elects not to assume such defense or
counsel for the Indemnified Party and the Indemnified Parties,
the Indemnified Parties may retain counsel which is reasonably
satisfactory to the Indemnifying Party, and the Indemnifying
Party shall pay, promptly as statements therefor are received,
the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any
jurisdiction unless the use of one counsel for such Indemnified
Parties would present such counsel with a conflict of interest),
(ii) the Indemnified Parties will cooperate in the defense
of any such matter, and (iii) the Indemnifying Party shall
not be liable for any settlement effected without its prior
written consent.
(c) Trustmark shall use its commercially reasonable efforts
to maintain its existing policy of directors and officers
liability insurance (or comparable coverage) for a period of not
less than four (4) years after the Effective Time; which
policy shall be amended, however, to include the directors and
officers of Republic currently covered under the policy held by
Republic, and which shall be a claims made policy
providing coverage for (among other things) acts or omissions
occurring prior to the Effective Time.
Section 5.8. Supplemental
Indenture. Trustmark agrees that at or prior to the
Effective Time it will enter into a supplemental indenture to
the Indenture dated December 19, 2002, assuming the
obligations and performance of the covenants of Republic under
the Indenture.
Section 5.9. Trustmark
National Bank Director. Trustmark agrees that at or prior to
the Effective Time it will elect C. P. Bryan to the Board of
Directors of Trustmark National Bank, such election to be
effective as of the Effective Time.
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VI. MUTUAL COVENANTS OF
TRUSTMARK AND REPUBLIC
Section 6.1. Notification;
Updated Disclosure Schedules. Republic shall give prompt
notice to Trustmark, and Trustmark shall give prompt notice to
Republic, of (i) any representation or warranty made by it
in this Agreement becoming untrue or inaccurate in any respect,
including, without limitation, as a result of any change in a
Schedule, or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements
of the parties or the conditions to the obligations of the
parties under this Agreement.
Section 6.2. Confidentiality.
Neither Trustmark nor Republic will, directly or indirectly,
before or after the consummation or termination of this
Agreement, disclose any confidential information, whether
written or oral (Subject Information) acquired from
the other party to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, other than in
connection with the regulatory notice and application process
or, after termination of this Agreement pursuant to
Section 8.1 hereof, use such Subject Information for its
own purposes or for the benefit of any person, firm,
corporation, association, or other entity under any
circumstances. The term Subject Information does not
include any information that (a) at the time of disclosure
or thereafter is generally available to and known to the public,
other than by a breach of this Agreement by the disclosing
party, (b) was available to the disclosing party on a
nonconfidential basis from a source other than the nondisclosing
party, (c) was independently acquired or developed without
violating any obligations of this Agreement, or (d) is
required to be disclosed under applicable law or legal process,
provided, however, the nondisclosing party must give prompt
notice to the disclosing party of the requirement and cooperate
with the disclosing party in any effort to oppose such
disclosure requirement.
Section 6.3. Publicity.
Except as otherwise required by applicable law or in connection
with the regulatory application process, as long as this
Agreement is in effect, neither Trustmark nor Republic shall,
nor shall they permit any of their officers, directors or
representatives to, issue or cause the publication of any press
release or public announcement with respect to, or otherwise
make any public announcement concerning, the transactions
contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld or
delayed.
VII. CLOSING
Section 7.1. Closing.
Subject to the other provisions of this Article VII, on a
mutually acceptable date (Closing Date) as soon as
practicable within a thirty (30) day period commencing with
the latest of the following dates:
(a) the receipt of Republic
shareholder approval and the last approval from any requisite
regulatory or supervisory authority and the expiration of any
statutory or regulatory waiting period which is necessary to
effect the Merger; or
(b) if the transactions
contemplated by this Agreement are being contested in any legal
proceeding and Trustmark or Republic, pursuant to
Section 11.1 herein, have elected to contest the same, then
the date that such proceeding has been brought to a conclusion
favorable, in the judgment of each of Trustmark and Republic, to
the consummation of the transactions contemplated herein, or
such prior date as each of Trustmark and Republic shall elect
whether or not such proceeding has been brought to a conclusion.
A meeting (Closing) will take place at which the
parties to this Agreement will exchange certificates, opinions,
letters and other documents in order to determine whether any
condition exists which would permit the parties hereto to
terminate this Agreement. If no such condition then exists or if
no party elects to exercise any right it may have to terminate
this Agreement, then and thereupon the appropriate parties shall
execute such documents and instruments as may be necessary or
appropriate to effect the transactions contemplated by this
Agreement.
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The Closing shall take place at the offices of Trustmark in
Jackson, Mississippi, or at such other place to which the
parties hereto may mutually agree.
Section 7.2. Effective
Time. Subject to the terms and upon satisfaction of all
requirements of law and the conditions specified in this
Agreement including, among other conditions, the receipt of any
requisite approvals of the shareholders of Republic and the
regulatory approvals of the Federal Reserve Board, FDIC, OCC and
any other federal or state regulatory agency whose approval must
be received in order to consummate the Merger, the Merger shall
become effective, and the effective time of the Merger shall
occur, at the date and time specified in the certificates
approving the Merger to be issued by the Mississippi Secretary
of State and the Texas Secretary of State (Effective
Time).
VIII. TERMINATION
Section 8.1. Termination.
(a) This Agreement may be
terminated by action of the Board of Directors of Trustmark or
Republic at any time prior to the Effective Time if:
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(i) any court of competent
jurisdiction in the United States or other United States
(federal or state) governmental body shall have issued an order,
decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have been final and
non-appealable; |
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(ii) any of the transactions
contemplated by this Agreement are disapproved by any regulatory
authority or other person whose approval is required to
consummate any of such transactions; or |
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(iii) the Merger shall not have
become effective on or before the one hundred and fiftieth day
following the date of this Agreement, or such later date as
shall have been approved in writing by the Boards of Directors
of Trustmark and Republic; provided, however, that the right to
terminate under this Section 8.1(a)(iii) shall not be
available to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of, or has
resulted in, the failure of the Merger to become effective on or
before such date. |
(b) This Agreement may be
terminated at any time prior to the Closing by the Board of
Directors of Republic if (i) Trustmark shall fail to comply
in any material respect with any of its covenants or agreements
contained in this Agreement, or if any of the representations or
warranties of Trustmark contained herein shall be inaccurate in
any material respect, or (ii) if the conditions set forth
in Article X have not been met or waived by Republic. In
the event the Board of Directors of Republic desires to
terminate this Agreement because of an alleged breach or
inaccuracy or change as provided in (i) above, such Board
of Directors must notify Trustmark in writing of its intent to
terminate stating the reason therefor. Trustmark shall have
fifteen (15) days from the receipt of such notice to cure
the alleged breach or inaccuracy, subject to the approval of
Republic (which approval shall not be unreasonably withheld).
(c) This Agreement may be
terminated at any time prior to the Closing by action of the
Board of Directors of Trustmark if (i) Republic shall fail
to comply in any material respect with any of its covenants or
agreements contained in this Agreement, or if any of the
representations or warranties of Republic contained herein shall
be inaccurate in any material respect, (ii) if the
conditions set forth in Article IX have not been met or
waived by Trustmark, or (iii) the Board of Directors of
Trustmark reasonably concludes, after consulting with counsel,
that Trustmark will be unable to obtain any regulatory approval
required in order to consummate the Merger or any such approval
is accompanied by terms or conditions which materially and
adversely impact the financial consequences of the Merger to
Trustmark. In the event the Board of Directors of Trustmark
desires to terminate this Agreement because of an alleged breach
or inaccuracy or change as provided in (i) above, the Board
of Directors must notify Republic in writing of its intent to
terminate stating the cause therefor. Republic shall have fifteen
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(15) days from the receipt of such notice to cure the
alleged breach or inaccuracy, subject to the approval of
Trustmark (which approval shall not be unreasonably withheld).
(d) This Agreement may be
terminated at any time prior to the Closing with the mutual
written consent of Trustmark and Republic and the approval of
such action by their respective Boards of Directors.
(e) This Agreement may be
terminated at any time prior to the Closing by the Board of
Directors of Republic, if prior to the Effective Time, Republic
shall have received a bona fide Acquisition Proposal (as defined
in Section 8.3(c)) and Republics Board of Directors
determines in its good faith judgment and in the exercise of its
fiduciary duties, based as to legal matters on the advice of
independent legal counsel and as to financial matters on the
written advice of Keefe, Bruyette & Woods, Inc. or an
investment banking firm of national reputation, that such
alternative Acquisition Proposal (if consummated pursuant to its
terms) is a Superior Proposal (as defined in
Section 8.3(d)), and that the failure to terminate this
Agreement and accept such Superior Proposal would be
inconsistent with the proper exercise of such fiduciary duties;
provided, however, that termination under this clause (e)
shall not be deemed effective until payment of the Termination
Fee required by Section 8.3.
(f) This Agreement may be
terminated at any time prior to the Closing by the Board of
Directors of Trustmark if Republics Board of Directors
shall have (i) resolved to accept an Acquisition Proposal,
or (ii) withdrawn or modified, in any manner that is
adverse to Trustmark, its recommendation or approval of this
Agreement or the Merger or recommended to Republic shareholders
acceptance or approval of any alternative Acquisition Proposal,
or shall have resolved to do the foregoing.
(g) This Agreement may be
terminated by Republic during the three-day period following the
Determination Date if:
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(i) the Average Closing Price of
Trustmark Common Stock shall be less than $25.988 per
share; and |
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(ii) (A) the number obtained
by dividing the Average Closing Price of Trustmark Common Stock
by $31.50 shall be less than (B) the number obtained by
dividing the Average Closing Price of the Trustmark peer group
(the Peer Group) by the April 12, 2006 closing
price of the Peer Group set forth on Exhibit G hereto and
subtracting 0.15 from such quotient, subject to the following
provisions of this Section 8.1(g). If Republic elects to
exercise its termination right pursuant to the immediately
preceding sentence, it shall give prompt written notice of such
election to Trustmark. During the three (3) day period (the
Decision Period) commencing with its actual receipt
of such notice, Trustmark may elect to pay, as additional Merger
Consideration to each holder of Republic Stock making a Share
Election, additional shares of Trustmark Common Stock and/or
cash in an amount per share of Republic Stock equal to the
difference between the Average Closing Price of Trustmark Common
Stock and $25.988 per share (the Gross Up
Amount). The Gross Up Amount shall be paid (i) in
shares of Trustmark Common Stock valued for this purpose at the
Average Closing Price of Trustmark Common Stock on the
Determination Date, or (ii) cash, as determined in the sole
discretion of Trustmark (the Gross Up
Determination). Notwithstanding any other provisions of
this Agreement, Trustmark will have the option to change the
percentages of cash and Trustmark Common Stock payable in the
Gross Up Determination from those set forth in Section 1.9,
provided that in no event may less than forty-five percent (45%)
of the Merger Consideration be payable in shares of Trustmark
Common Stock (including any shares issued as Gross Up Amount).
All payments of Gross Up Amounts, if any, shall be made as
payments of additional Merger Consideration as provided in
accordance with Sections 1.5, and 1.12 through 1.15. |
If Trustmark makes the Gross Up Determination within the
Decision Period, it shall give prompt written notice to Republic
of such Gross Up Determination and the Gross Up Amount,
whereupon Republic shall have no right to terminate the
Agreement pursuant to this Section 8.1(g) and this
Agreement shall remain in full force and effect in accordance
with its terms.
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If, during the period between the date of this Agreement and the
Determination Date, shares of Trustmark Common Stock shall be
changed into a different number of shares or shares of a
different class by reason of any reclassification,
recapitalization, stock split, or stock dividend with a record
date within said period, the initial price of $31.50 per
share of Trustmark Common Stock shall be appropriately adjusted
to account for such change for the purposes of this
Section 8.1(g).
Average Closing Price shall mean the average closing
bid/asked market price (computed on the basis of the last trade
of the day) of Trustmark Common Stock and the common stock of
the Peer Group as reported on the New York Stock Exchange
(NYSE) or NASDAQ, as the case may be, for the five
(5) consecutive Trading Days preceding the three
(3) Trading Days prior to the Determination Date. For
purposes of this Agreement the term Trading Day
means any day on which the NYSE and NASDAQ are open for trading.
For the purposes of this Agreement the term Determination
Date shall mean ten (10) days prior to the Effective
Time.
(h) This Agreement may be
terminated at any time prior to Closing by either Trustmark or
Republic, if the shareholders of Republic fail to approve the
Merger at the special meeting of shareholders called for such
purpose (or any adjournment thereof).
Section 8.2. Effect of
Termination. In the event of termination of this Agreement
by either Trustmark or Republic as provided in Section 8.1
or the abandonment of the Merger without breach by any party
hereto, this Agreement (other than Sections 6.2 and 12.4)
shall become void and have no effect, without any liability on
the part of any party or its directors, officers or
shareholders. Nothing contained in this Section 8.2 shall
relieve any party hereto of any liability for a breach of this
Agreement.
Section 8.3. Termination
Fee. To compensate Trustmark for entering into this
Agreement, taking actions to consummate the transactions
contemplated hereunder and incurring the costs and expenses
related thereto and other losses and expenses, including
foregoing the pursuit of other opportunities by Trustmark,
Republic and Trustmark agree as follows:
(a) Provided that Trustmark shall
not be in material breach of any covenant or obligation under
this Agreement (which breach has not been cured promptly
following receipt of written notice thereof by Republic
specifying in reasonable detail the basis of such alleged
breach), Republic shall pay to Trustmark the sum of
$7 million (the Termination Fee) if this
Agreement is terminated (i) by Republic under the
provisions of Section 8.1(e), (ii) by either Trustmark
or Republic if at the time of any failure by the shareholders of
Republic to approve and adopt this Agreement and the Merger
there shall exist an Acquisition Proposal with respect to
Republic and, within twelve months of the termination of this
Agreement, Republic enters into a definitive agreement with any
third party with respect to any such Acquisition Proposal, or
(iii) by Trustmark under the provisions of
Section 8.1(f). The payment of the Termination Fee shall be
Trustmarks sole and exclusive remedy with respect to
termination of this Agreement as set forth in this
Section 8.3(a).
(b) Any payment required by
paragraph (a) of this Section 8.3 shall become
payable within two (2) business days after receipt by the
non-terminating party of written notice of termination of this
Agreement; provided, however, that if such Termination Fee
payment is required pursuant to clause (ii) of
Section 8.3(a), then such payment shall become payable
within two (2) business days after the execution and
delivery by Republic of such definitive agreement.
(c) For purposes of this Agreement,
Acquisition Proposal means a written offer or
proposal which contains a fixed price per share or a
mathematically ascertainable formula for calculating a price per
share for Republic Stock regarding any of the following (other
than the transactions contemplated by this Agreement):
(i) any merger, reorganization, consolidation, share
exchange, recapitalization, business combination, liquidation,
dissolution, or other similar transaction involving the sale,
lease, exchange, mortgage, pledge, transfer, or other
disposition of, all or substantially all of the assets or equity
securities or deposits of, Republic or any Subsidiary, in a
single transaction or series of related transactions which could
reasonably be expected to impede, interfere with, prevent or
materially delay the completion of the Merger; (ii) any
tender offer or exchange offer for all or substantially all of
the
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outstanding shares of the capital stock of Republic or the
filing of a registration statement under the Securities Act in
connection therewith; or (iii) any public announcement of a
proposal, plan, or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
(d) For purposes of this Agreement,
Superior Proposal means a bona fide Acquisition
Proposal made by a third person that the Board of Directors of
Republic determines in its good faith judgment to be more
favorable to Republics shareholders than the Merger
(taking into account, in good faith, the written opinion, with
only customary qualifications, of Republics independent
financial advisor that the value of the consideration to
Republics shareholders provided for in such proposal
exceeds the value of the consideration to Republics
shareholders provided for in the Merger) and for which
financing, to the extent required, is then committed or which,
in the good faith judgment of the Board of Directors of Republic
(taking into account, in good faith, the written advice of
Republics independent financial advisor), is reasonably
capable of being obtained by such third person.
IX. CONDITIONS TO OBLIGATIONS OF
TRUSTMARK
The obligations of Trustmark under this Agreement are subject to
the satisfaction, at or prior to the Closing Date of the
following conditions, which may be waived by Trustmark in its
sole discretion:
Section 9.1. Compliance
with Representations and Covenants. The representations and
warranties made by Republic in this Agreement must have been
true in all material respects when made and shall be true in all
material respects as of the Closing Date with the same force and
effect as if such representations and warranties were made at
and as of the Closing Date, and Republic shall have performed or
complied with all covenants and conditions required by this
Agreement to be performed and complied with prior to or at the
Closing. Trustmark shall have been furnished with a certificate,
executed by an appropriate representative of Republic and dated
as of the Closing Date, to the foregoing effect.
Section 9.2. Absence of
Material Adverse Effect. There shall have been no change
after the date hereof in the assets, properties, business or
financial condition of Republic which have, or which may be
foreseen to have a Material Adverse Effect on the Condition of
Republic or the transactions contemplated hereby; provided,
however, that a Material Adverse Effect shall not include a
change with respect to, or effect on, Republic resulting
(a) from a change in law, rule, regulation or GAAP,
(b) as a result of entering into this Agreement or
complying with this Agreement, or (c) from any other matter
affecting federally-insured depository institutions generally
(including without limitation, their holding companies),
including, without limitation, changes in general economic
conditions and changes in prevailing interest or deposit rates;
provided, any such change does not impact Republic more
adversely than other similarly situated financial institutions.
Section 9.3. Legal
Opinion. Trustmark shall have received an opinion of
Bracewell & Giuliani, LLP, counsel to Republic, dated
as of the Closing Date, addressed to Trustmark and in form and
substance satisfactory to counsel for Trustmark.
Section 9.4. C. P. Bryan
Employment Agreement. Prior to the Closing Date, C. P.
Bryan, Trustmark and Trustmark National Bank shall have entered
into the Employment Agreement in the form attached hereto as
Exhibit F.
Section 9.5. Tax
Opinion. Trustmark shall have received an opinion of
Brunini, Grantham, Grower & Hewes, PLLC to the effect
that on the basis of certain facts, representations and opinions
set forth in such opinion that the Merger will qualify as a
reorganization under Section 368(a) of the Internal Revenue
Code. In rendering such opinion, such counsel may require and
rely upon and may incorporate by reference representations and
covenants, including those contained in certificates of officers
and/or directors of Republic, Trustmark and others.
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X. CONDITIONS TO OBLIGATIONS OF
REPUBLIC
The obligations of Republic under this Agreement are subject to
the satisfaction, at or prior to the Closing Date, of the
following conditions, which may be waived by Republic in its
sole discretion:
Section 10.1. Compliance
with Representations and Covenants. The representations and
warranties made by Trustmark in this Agreement must have been
true in all materials respects when made and shall be true in
all material respects as of the Closing Date with the same force
and effect as if such representations and warranties were made
at and as of the Closing Date, and Trustmark shall have
performed and complied in all material respects with all
covenants and conditions required by this Agreement to be
performed or complied with by Trustmark prior to or at the
Closing. Republic shall be furnished with a certificate,
executed by appropriate representatives of Trustmark and dated
as of the Closing Date, to the foregoing effect.
Section 10.2. Absence of
Material Adverse Effect. There shall have been no change
after the date hereof in the assets, properties, business or
financial condition of Trustmark which has, or which may be
foreseen to have a Material Adverse Effect on the Condition of
Trustmark considered as a consolidated whole or the transactions
contemplated hereby; provided, however, that for purposes
of this Section 10.2, a Material Adverse Effect will not
include a change with respect to, or effect on, Trustmark
resulting (a) from a change in law, rule, regulation or
GAAP, (b) as a result of entering into this Agreement or
complying with this Agreement, or (c) from any other matter
affecting federally-insured depository institutions generally
(including without limitation, their holding companies),
including, without limitation, changes in general economic
conditions and changes in prevailing interest or deposit rates;
provided, any such change does not impact Trustmark more
adversely than other similarly situated financial institutions.
Section 10.3. Legal
Opinion. Republic shall have received an opinion of Brunini,
Grantham, Grower & Hewes, PLLC, counsel to Trustmark,
dated as of the Closing Date, addressed to Republic and in form
and substance satisfactory to counsel for Republic.
Section 10.4. Opinion of
Financial Advisor. Republic shall have received a written
opinion from a financial advisor dated as of the date of the
Proxy Statement furnished to shareholders of Republic in
connection with the vote on the Merger that the Merger
Consideration is fair to the Republic shareholders from a
financial point of view, and that opinion shall not have been
withdrawn or materially modified prior to Closing.
Section 10.5. Tax
Opinion. Republic shall have received an opinion of
Bracewell & Giuliani, LLP to the effect that on the
basis of certain facts, representations and opinions set forth
in such opinion that the Merger will qualify as a reorganization
under Section 368(a) of the Internal Revenue Code. In
rendering such opinion, such counsel may require and rely upon
and may incorporate by reference representations and covenants,
including those contained in certificates of officers and/or
directors of Republic, Trustmark and others.
XI. CONDITIONS TO RESPECTIVE
OBLIGATIONS OF TRUSTMARK,
AND REPUBLIC
The respective obligations of Trustmark and Republic under this
Agreement are subject to the satisfaction of the following
conditions which may be waived by Trustmark and Republic,
respectively, in their sole discretion:
Section 11.1. Government
Approvals. Trustmark shall have received the approval, or
waiver of approval, of the transactions contemplated by this
Agreement from all necessary governmental agencies and
authorities, including the Federal Reserve Board and any other
regulatory agency whose approval must be received in order to
consummate the Merger, which approvals shall not impose any
restrictions on the operations of Trustmark or the Continuing
Corporation which are unacceptable to Trustmark, and such
approvals and the transactions contemplated hereby shall not
have been contested by any federal or state governmental
authority or any third party (except shareholders asserting
dissenters rights) by formal
A-36
proceeding. It is understood that, if any such contest is
brought by formal proceeding, Trustmark or Republic may, but
shall not be obligated to, answer and defend such contest or
otherwise pursue the Merger over such objection.
Section 11.2. Shareholder
Approval. The holders of Republic Common Stock and the
holders of Republic Series A Stock, voting as separate
classes, shall each have approved this Agreement and the
transactions contemplated by this Agreement.
Section 11.3. Registration
of Trustmark Common Stock. The Registration Statement
covering the Trustmark Common Stock to be issued in the Merger
shall have become effective under the Securities Act and no stop
orders suspending such effectiveness shall be in effect, and no
claim, action, suit, proceeding or investigation by the SEC to
suspend the effectiveness of the Registration Statement shall
have been initiated or continuing, or have been threatened and
be unresolved, and all necessary approvals under state
securities laws relating to the issuance or trading of the
Trustmark Common Stock to be issued in the Merger shall have
been received.
Section 11.4. Listing of
Trustmark Common Stock. The shares of Trustmark Common Stock
to be delivered to the shareholders of Republic pursuant to this
Agreement shall have been authorized for listing on NASDAQ.
XII. MISCELLANEOUS
Section 12.1. Definitions.
Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
(a) Affiliate means any natural person,
corporation, general partnership, limited partnership
proprietorship, other business organization, trust, union,
association or governmental authority that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the person
specified.
(b) Material, materially, or
Material Adverse Effect, when used in reference to
Republic or its Subsidiaries shall be understood to mean a
breach of any representation, warranty, or covenant contained in
this Agreement which, separately or in the aggregate with any
other such breach, does or could result in a cost, loss,
detriment, or obligation in excess of $4,000,000 on a pre-tax
basis. Provided, however, with reference to the representations,
warranties, and covenants of Trustmark and its Subsidiaries
contained in this Agreement, material, materially, or Material
Adverse Effect shall have the meaning normally accorded to such
terms considering the relative importance of such
representation, warranty, or covenant in the context of an
organization of the type and size of Trustmark.
(c) Subsidiary or Subsidiaries
shall mean, when used with reference to an entity, any
corporation, association or other entity in which 50% of the
issued and outstanding voting securities are owned directly or
indirectly by any such entity, or any partnership, joint
venture, limited liability company or other enterprise in which
any entity has, directly or indirectly, any equity interest.
Section 12.2. Non-Survival
of Representations and Warranties. The representations,
warranties, covenants and agreements of Trustmark and Republic
contained in this Agreement shall terminate at the Closing.
Section 12.3. Amendments.
This Agreement may be amended only by a written instrument
signed by Trustmark and Republic at any time prior to the
Effective Time with respect to any of the terms contained
herein; provided, however, that the Merger Consideration to be
received by the shareholders of Republic pursuant to this
Agreement shall not be decreased subsequent to the approval of
the transactions contemplated by the Agreement without the
further approval by such shareholders.
Section 12.4. Expenses.
Whether or not the transactions provided for herein are
consummated, each party to this Agreement will pay its
respective expenses incurred in connection with the preparation
and performance of its obligations under this Agreement.
Similarly, each party agrees to indemnify the
A-37
other parties against any cost, expense or liability (including
reasonable attorneys fees) in respect of any claim made by
any party for a brokers or finders fee in connection
with this transaction other than one based on communications
between the party and the claimant seeking indemnification.
Except as disclosed herein, Trustmark and Republic represent and
warrant to each other that neither of them, nor any of their
agents, employees or representatives, has incurred any liability
for any commissions or brokerage fees in connection with this
transaction.
Section 12.5. Notices.
Except as explicitly provided herein, any notice given hereunder
shall be in writing and shall be delivered in person or mailed
by first class mail, postage prepaid or sent by facsimile,
courier or personal delivery to the parties at the following
addresses unless by such notice a different address shall have
been designated:
If to Trustmark:
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Trustmark Corporation
248 E. Capitol Street, Suite 310
Jackson, Mississippi 39201 |
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Attention: Richard G. Hickson |
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With a copy to: |
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Brunini, Grantham, Grower & Hewes, PLLC
248 E. Capitol Street, Suite 1400
Jackson, Mississippi 39201 |
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Attention: Granville Tate, Jr. |
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If to Republic: |
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Republic Bancshares of Texas, Inc.
4200 Westheimer, Suite 101
Houston, Texas 77027 |
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Attention: C. P. Bryan |
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With a copy to: |
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Bracewell & Giuliani LLP
711 Louisiana Street, Suite 2300
Houston, Texas 77002-2770 |
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Attention: William T. Luedke IV |
All notices sent by mail as provided above shall be deemed
delivered three (3) days after deposit in the mail. All
notices sent by courier as provided above shall be deemed
delivered on the date set forth on the couriers delivery
receipt and all notices sent by facsimile shall be deemed
delivered upon confirmation of receipt. All other notices shall
be deemed delivered when actually received. Any party to this
Agreement may change its address for the giving of notice
specified above by giving notice as herein provided.
Section 12.6. Controlling
Law. All questions concerning the validity, operation and
interpretation of this Agreement and the performance of the
obligations imposed upon the parties hereunder shall be governed
by the laws of the State of Texas and, to the extent applicable,
by the laws of the United States of America.
Section 12.7. Headings.
The headings and titles to the sections of this Agreement are
inserted for convenience only and shall not be deemed a part
hereof or affect the construction or interpretation of any
provision hereof.
Section 12.8. Modifications
or Waiver. No termination, cancellation, modification,
amendment, deletion, addition or other change in this Agreement,
or any provision hereof, or waiver of any right or
A-38
remedy herein provided, shall be effective for any purpose
unless specifically set forth in a writing signed by the party
or parties to be bound thereby. The waiver of any right or
remedy in respect to any occurrence or event on one occasion
shall not be deemed a waiver of such right or remedy in respect
to such occurrence or event on any other occasion.
Section 12.9. Severability.
Any provision hereof prohibited by or unlawful or unenforceable
under any applicable law or any jurisdiction shall as to such
jurisdiction be ineffective, without affecting any other
provision of this Agreement, or shall be deemed to be severed or
modified to conform with such law, and the remaining provisions
of this Agreement shall remain in force, provided that the
purpose of the Agreement can be effected. To the fullest extent,
however, that the provisions of such applicable law may be
waived, they are hereby waived, to the end that this Agreement
be deemed to be a valid and binding agreement enforceable in
accordance with its terms.
Section 12.10. Assignment.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
but shall not be assigned by any party without the prior written
consent of the other parties.
Section 12.11. Consolidation
of Agreements. All understandings and agreements heretofore
made between the parties hereto are merged in this Agreement
which (together with any agreements executed by the parties
hereto contemporaneously with or subsequent to the execution of
this Agreement) shall be the sole expression of the agreement of
the parties respecting the Merger.
Section 12.12. Counterparts.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall be
deemed to constitute one and the same instrument.
Section 12.13. Binding on
Successors. Except as otherwise provided herein, this
Agreement shall be binding upon, and shall inure to the benefit
of, the parties and their respective heirs, executors, trustees,
administrators, guardians, successors and assigns.
Section 12.14. Gender.
Any pronoun used herein shall refer to any gender, either
masculine, feminine or neuter, as the context requires.
Section 12.15. Disclosures.
Any disclosure made in any document delivered pursuant to this
Agreement or referred to or described in writing in any section
of this Agreement or any schedule attached hereto shall be
deemed to be disclosure for purposes of any section herein or
schedule hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
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TRUSTMARK CORPORATION |
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/S/ Richard G. Hickson |
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Richard G. Hickson, Chairman And Chief Executive |
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Officer |
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ATTEST: |
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/S/ T. Harris Collier, III |
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T. Harris Collier, III, Secretary |
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REPUBLIC BANCSHARES OF TEXAS, INC. |
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/S/ C. P. Bryan |
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C. P. Bryan, Chief Executive Officer |
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ATTEST: |
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/S/ R. John McWhorter |
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R. John McWhorter, Secretary |
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[Signature Page to Agreement and Plan of Reorganization]
A-40
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
This First Amendment to Agreement and Plan of Reorganization
(Amendment) dated as of May 16, 2006 is by and
among Trustmark Corporation, a Mississippi corporation
(Trustmark) and Republic Bancshares of Texas, Inc.,
a Texas corporation (Republic).
WHEREAS, Trustmark and Republic entered an Agreement and Plan of
Reorganization (the Agreement) effective as of
April 13, 2006;
WHEREAS, after the effective date of the Agreement Republic sold
and issued 20,937 shares of Republic Stock (as defined in
the Agreement) to Republics Employee Stock Purchase Plan;
WHEREAS, while the total Merger Consideration (as defined in the
Agreement) payable under the terms of the Agreement has not
changed, the change in the number of outstanding shares of
Republic Stock due to the purchase by the Employee Stock
Purchase Plan requires an amendment to the per share
consideration payable in cash and Trustmark common stock to
holders of Republic Stock under the terms of the
Agreement; and
WHEREAS, Trustmark and Republic desire to amend the Agreement
pursuant to the provisions of Section 12.3 of the Agreement
to accomplish the foregoing amendment and certain other matters
as delineated herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, Trustmark and Republic do hereby
agree to amend the Agreement as follows:
1. Section 1.8. Election
Procedures and Exchange of Shares. Section 1.8(a) of
the Agreement is amended to change the cash amount per share
from $44.00 to $43.8089, and Section 1.8(b) of the
Agreement is amended to change the Exchange Ratio from 1.3968 to
1.3908.
2. Section 3.7. Trustmark
Employee Benefit Plans. The last sentence in
Section 3.7 of the Agreement is deleted in its entirety and
the following new sentence shall be substituted in lieu thereof:
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Trustmark and its Subsidiaries will not have any material
liabilities with respect to employee benefits, whether vested or
unvested as of the Closing Date, for any of their employees
other than under the Trustmark Plans, and Trustmarks
defined benefit pension plan assets exceed the accumulated
benefit obligation (computed on an actuarial basis) as of
December 31, 2005. |
3. Section 5.2.
Registration Statement. The first sentence in
Section 5.2 of the Agreement is deleted in its entirety and
the following new sentence shall be substituted in lieu thereof:
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As soon as practicable after the execution of this Agreement,
Trustmark will prepare and file with the SEC a Registration
Statement on
Form S-4 under the
Securities Act and any other applicable documents, relating to
the shares of Trustmark Common Stock to be delivered to the
shareholders of Republic pursuant to this Agreement, and will
use its best efforts to cause the Registration Statement to
become effective. |
4. Section 5.3(b). Employee
Benefit Plans. The following phrase is added to the end of
the sentence in Section 5.3(b) of the Agreement:
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to the extent Republic sponsored a similar type of plan in which
Republic Employees participated immediately prior to the Closing
Date. |
5. Section 5.4. Regulatory
Approvals. Section 5.4 of the Agreement is deleted in
its entirety and the following new Section 5.4 shall be
substituted in lieu thereof:
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Trustmark will file all necessary regulatory documents, notices
and applications as soon as practicable after the execution of
this Agreement and will provide Republic with a copy of the
non-confidential portions of notices, applications, statements
or correspondence submitted to or received from regulatory
authorities in connection with the Merger. |
A-41
6. Exhibit A.
Section 4(a) of Exhibit A to the Agreement is amended
to change the cash amount per share from $44.00 to $43.8089, and
Section 4(b) of Exhibit A to the Agreement is amended
to change the Exchange Ratio from 1.3968 to 1.3908.
7. Exhibit D.
Exhibit D to the Agreement is deleted in its entirety and
the form of the instrument attached as Exhibit D hereto
shall be substituted in lieu thereof.
8. Exhibit E.
Exhibit E to the Agreement is deleted in its entirety and
the form of the instrument attached as Exhibit E hereto
shall be substituted in lieu thereof.
Except as amended and modified herein, all other terms and
provisions of the Agreement shall remain unchanged and in full
force and effect. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which shall be deemed to constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first above written.
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TRUSTMARK CORPORATION |
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/S/ Richard G. Hickson |
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Richard G. Hickson, Chairman and Chief Executive Officer |
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ATTEST: |
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/S/ T. Harris Collier, III |
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T. Harris Collier, III, Secretary |
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REPUBLIC BANCSHARES OF TEXAS, INC. |
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/S/ C. P. Bryan |
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C. P. Bryan, Chief Executive Officer |
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ATTEST: |
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/S/ R. John McWhorter |
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R. John McWhorter, Secretary |
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A-43
Appendix B
FAIRNESS OPINION OF KEEFE, BRUYETTE & WOODS, INC.
June [23], 2006
The Board of Directors
Republic Bancshares of Texas, Inc.
4200 Westheimer
Houston, TX 77027
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the stockholders of
Republic Bancshares of Texas, Inc. (Republic) of the
consideration offered in the proposed merger (the
Merger) with Trustmark Corporation
(Trustmark) pursuant to the Agreement and Plan of
Reorganization, dated as of April 13, 2006, between
Republic and Trustmark, as amended by the First Amendment to
Agreement and Plan of Reorganization, dated as of May 16,
2006 (the Agreement). Pursuant to the terms of the
Agreement, each of the issued and outstanding shares of common
stock, $1.00 par value per share, of Republic and each of
the issued and outstanding shares of the preferred stock,
$1.00 par value per share, of Republic (collectively,
Republic Stock) will be converted into $43.8089 in
cash or 1.3908 shares of the common stock, no par value, of
Trustmark or a combination of cash and Trustmark common stock
(Merger Consideration).
Keefe, Bruyette & Woods, Inc., as part of its
investment banking business, is continually engaged in the
valuation of bank holding companies and their securities in
connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted
securities, private placements, competitive bidding processes,
and valuations for various other purposes. As specialists in the
securities of banking companies, we have experience in, and
knowledge of, the valuation of banking enterprises. In the
ordinary course of our business as a broker-dealer, we may, from
time to time purchase securities from, and sell securities to,
Republic and Trustmark, and as a market maker in and active
trader of securities, we may from time to time have a long or
short position in, and buy or sell, debt or equity securities of
Trustmark for our own account and for the accounts of our
customers. To the extent we have any such position as of the
date of this opinion it has been disclosed to Republic. We have
acted exclusively for the Board of Directors of Republic in
rendering this fairness opinion and will receive a fee from
Republic for our services.
In arriving at our opinion, we have reviewed, analyzed and
relied upon material bearing upon the respective financial and
operating conditions of Republic and Trustmark before and after
the Merger.
B-1
In the course of our engagement as financial advisor we have,
among other things:
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i.
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Reviewed the Agreement, and any amendments thereto; |
ii.
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Reviewed Annual Reports to shareholders and Annual Reports on
Form 10-K of Trustmark; |
iii.
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Reviewed Annual Reports to shareholders and Annual Reports on
Form 10-KSB of Republic; |
iv.
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Reviewed Quarterly Reports on Form 10-Q of Trustmark; |
v.
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Reviewed Quarterly Reports on Form 10-Q and
Form 10-QSB of Republic; |
vi.
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Reviewed Consolidated Financial Statements (FR Y-9C) of Republic
as filed with the Federal Reserve; |
vii.
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Held discussions with senior management of Republic with respect
to past and current business operations, regulatory matters,
financial condition and future prospects; |
viii.
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Reviewed certain internal financial data, projections and other
information of Republic, including financial projections
prepared by management; |
ix.
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Reviewed the market prices, valuation multiples, publicly
reported financial conditions and results of operations for
Trustmark and compared them with those of certain publicly
traded companies that KBW deemed to be relevant; |
x.
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Reviewed the publicly reported financial conditions and results
of operations for Republic and compared them with those of
certain companies that KBW deemed to be relevant; |
xi.
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Evaluated the potential pro forma impact of the merger on
Trustmark; |
xii.
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Compared the proposed financial terms of the merger with the
financial terms of certain other transactions that KBW deemed to
be relevant; and |
xiii.
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Conducted such other financial studies, analyses and
investigations and reviewed such other information as we deemed
appropriate to enable us to render our opinion. |
In conducting our review and arriving at our opinion, we have
relied upon the accuracy and completeness of all of the
financial and other information provided to us or publicly
available and we have not assumed any responsibility for
independently verifying the accuracy or completeness of any such
information. We have relied upon the management of Republic as
to the reasonableness and achievability of the financial and
operating forecasts and projections (and the assumptions and
bases therefor) provided to us, and we have assumed that such
forecasts and projections reflect the best currently available
estimates and judgments of such management and that such
forecasts and projections will be realized in the amounts and in
the time periods currently estimated by such management. We are
not experts in the independent verification of the adequacy of
allowances for loan and lease losses and we have assumed, with
your consent, that the aggregate allowances for loan and lease
losses for Republic and Trustmark are adequate to cover such
losses. In rendering our opinion, we have not made or obtained
any evaluations or appraisals of the properties of Republic or
Trustmark, nor have we examined any individual credit files.
We have considered such financial and other factors as we have
deemed appropriate under the circumstances, including, among
others, the following: (i) the historical and current
financial position and results of operations of Republic and
Trustmark; (ii) the assets and liabilities of Republic and
Trustmark; and (iii) the nature and terms of certain other
merger transactions involving financial institutions. We have
also taken into account our assessment of general economic,
market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation
and knowledge of the banking industry generally. Our opinion is
necessarily based upon conditions as they exist and can be
evaluated on the date hereof and the information made available
to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Merger Consideration is fair, from a
financial point of view, to the holders of Republic Stock.
|
|
|
Very truly yours, |
|
|
/S/ Keefe, Bruyette & Woods, Inc. |
B-2
Appendix C
PROVISIONS OF TEXAS LAW RELATING TO DISSENTERS RIGHTS
OF APPRAISAL
Art. 5.11. Rights of Dissenting
Shareholders in the Event of Certain Corporate Actions
A. Any shareholder of a domestic
corporation shall have the right to dissent from any of the
following corporate actions:
(1) Any plan of merger to which the
corporation is a party if shareholder approval is required by
Article 5.03 or 5.16 of this Act and the shareholder holds
shares of a class or series that was entitled to vote thereon as
a class or otherwise;
(2) Any sale, lease, exchange or
other disposition (not including any pledge, mortgage, deed of
trust or trust indenture unless otherwise provided in the
articles of incorporation) of all, or substantially all, the
property and assets, with or without good will, of a corporation
if special authorization of the shareholders is required by this
Act and the shareholders hold shares of a class or series that
was entitled to vote thereon as a class or otherwise;
(3) Any plan of exchange pursuant
to Article 5.02 of this Act in which the shares of the
corporation of the class or series held by the shareholder are
to be acquired.
B. Notwithstanding the provisions
of Section A of this Article, a shareholder shall not have
the right to dissent from any plan of merger in which there is a
single surviving or new domestic or foreign corporation, or from
any plan of exchange, if:
(1) the shares, or depository
receipts in respect of the shares, held by the shareholder are
part of a class or series, shares, or depository receipts in
respect of the shares, of which are on the record date fixed to
determine the shareholders entitled to vote on the plan of
merger or plan of exchange:
(a) listed on a national securities
exchange;
(b) listed on the Nasdaq Stock
Market (or successor quotation system) or designated as a
national market security on an interdealer quotation system by
the National Association of Securities Dealers, Inc., or
successor entity; or
(c) held of record by not less than
2,000 holders;
(2) the shareholder is not required
by the terms of the plan of merger or plan of exchange to accept
for the shareholders shares any consideration that is
different than the consideration (other than cash in lieu of
fractional shares that the shareholder would otherwise be
entitled to receive) to be provided to any other holder of
shares of the same class or series of shares held by such
shareholder; and
(3) the shareholder is not required
by the terms of the plan of merger or the plan of exchange to
accept for the shareholders shares any consideration other
than:
(a) shares, or depository receipts
in respect of the shares, of a domestic or foreign corporation
that, immediately after the effective time of the merger or
exchange, will be part of a class or series, shares, or
depository receipts in respect of the shares, of which are:
(i) listed, or authorized for
listing upon official notice of issuance, on a national
securities exchange;
(ii) approved for quotation as a
national market security on an interdealer quotation system by
the National Association of Securities Dealers, Inc., or
successor entity; or
(iii) held of record by not less
than 2,000 holders;
(b) cash in lieu of fractional
shares otherwise entitled to be received; or
(c) any combination of the
securities and cash described in Subdivisions (a) and
(b) of this subsection.
C-1
Art. 5.12. Procedure for Dissent by Shareholders as to Said
Corporate Actions
A. Any shareholder of any domestic
corporation who has the right to dissent from any of the
corporate actions referred to in Article 5.11 of this Act
may exercise that right to dissent only by complying with the
following procedures:
(1) (a) With
respect to proposed corporate action that is submitted to a vote
of shareholders at a meeting, the shareholder shall file with
the corporation, prior to the meeting, a written objection to
the action, setting out that the shareholders right to
dissent will be exercised if the action is effective and giving
the shareholders address, to which notice thereof shall be
delivered or mailed in that event. If the action is effected and
the shareholder shall not have voted in favor of the action, the
corporation, in the case of action other than a merger, or the
surviving or new corporation (foreign or domestic) or other
entity that is liable to discharge the shareholders right
of dissent, in the case of a merger, shall, within ten
(10) days after the action is effected, deliver or mail to
the shareholder written notice that the action has been
effected, and the shareholder may, within ten (10) days
from the delivery or mailing of the notice, make written demand
on the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, for payment of
the fair value of the shareholders shares. The fair value
of the shares shall be the value thereof as of the day
immediately preceding the meeting, excluding any appreciation or
depreciation in anticipation of the proposed action. The demand
shall state the number and class of the shares owned by the
shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the
ten (10) day period shall be bound by the action.
(b) With respect to proposed
corporate action that is approved pursuant to Section A of
Article 9.10 of this Act, the corporation, in the case of
action other than a merger, and the surviving or new corporation
(foreign or domestic) or other entity that is liable to
discharge the shareholders right of dissent, in the case
of a merger, shall, within ten (10) days after the date the
action is effected, mail to each shareholder of record as of the
effective date of the action notice of the fact and date of the
action and that the shareholder may exercise the
shareholders right to dissent from the action. The notice
shall be accompanied by a copy of this Article and any articles
or documents filed by the corporation with the Secretary of
State to effect the action. If the shareholder shall not have
consented to the taking of the action, the shareholder may,
within twenty (20) days after the mailing of the notice,
make written demand on the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case
may be, for payment of the fair value of the shareholders
shares. The fair value of the shares shall be the value thereof
as of the date the written consent authorizing the action was
delivered to the corporation pursuant to Section A of
Article 9.10 of this Act, excluding any appreciation or
depreciation in anticipation of the action. The demand shall
state the number and class of shares owned by the dissenting
shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the
twenty (20) day period shall be bound by the action.
(2) Within twenty (20) days
after receipt by the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, of a
demand for payment made by a dissenting shareholder in
accordance with Subsection (1) of this Section, the
corporation (foreign or domestic) or other entity shall deliver
or mail to the shareholder a written notice that shall either
set out that the corporation (foreign or domestic) or other
entity accepts the amount claimed in the demand and agrees to
pay that amount within ninety (90) days after the date on
which the action was effected, and, in the case of shares
represented by certificates, upon the surrender of the
certificates duly endorsed, or shall contain an estimate by the
corporation (foreign or domestic) or other entity of the fair
value of the shares, together with an offer to pay the amount of
that estimate within ninety (90) days after the date on
which the action was effected, upon receipt of notice within
sixty (60) days after that date from the shareholder that
the shareholder agrees to accept that amount and, in the case of
shares represented by certificates, upon the surrender of the
certificates duly endorsed.
(3) If, within sixty (60) days
after the date on which the corporate action was effected, the
value of the shares is agreed upon between the shareholder and
the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the
shares shall be made within ninety
C-2
(90) days after the date on which the action was effected
and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the
agreed value, the shareholder shall cease to have any interest
in the shares or in the corporation.
B. If, within the period of sixty
(60) days after the date on which the corporate action was
effected, the shareholder and the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case
may be, do not so agree, then the shareholder or the corporation
(foreign or domestic) or other entity may, within sixty
(60) days after the expiration of the sixty (60) day
period, file a petition in any court of competent jurisdiction
in the county in which the principal office of the domestic
corporation is located, asking for a finding and determination
of the fair value of the shareholders shares. Upon the
filing of any such petition by the shareholder, service of a
copy thereof shall be made upon the corporation (foreign or
domestic) or other entity, which shall, within ten
(10) days after service, file in the office of the clerk of
the court in which the petition was filed a list containing the
names and addresses of all shareholders of the domestic
corporation who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been
reached by the corporation (foreign or domestic) or other
entity. If the petition shall be filed by the corporation
(foreign or domestic) or other entity, the petition shall be
accompanied by such a list. The clerk of the court shall give
notice of the time and place fixed for the hearing of the
petition by registered mail to the corporation (foreign or
domestic) or other entity and to the shareholders named on the
list at the addresses therein stated. The forms of the notices
by mail shall be approved by the court. All shareholders thus
notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the
court.
C. After the hearing of the
petition, the court shall determine the shareholders who have
complied with the provisions of this Article and have become
entitled to the valuation of and payment for their shares, and
shall appoint one or more qualified appraisers to determine that
value. The appraisers shall have power to examine any of the
books and records of the corporation the shares of which they
are charged with the duty of valuing, and they shall make a
determination of the fair value of the shares upon such
investigation as to them may seem proper. The appraisers shall
also afford a reasonable opportunity to the parties interested
to submit to them pertinent evidence as to the value of the
shares. The appraisers shall also have such power and authority
as may be conferred on Masters in Chancery by the Rules of Civil
Procedure or by the order of their appointment.
D. The appraisers shall determine
the fair value of the shares of the shareholders adjudged by the
court to be entitled to payment for their shares and shall file
their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the
clerk to the parties in interest. The report shall be subject to
exceptions to be heard before the court both upon the law and
the facts. The court shall by its judgment determine the fair
value of the shares of the shareholders entitled to payment for
their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or
other entity, together with interest thereon, beginning
91 days after the date on which the applicable corporate
action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders
entitled to payment. The judgment shall be payable to the
holders of uncertificated shares immediately but to the holders
of shares represented by certificates only upon, and
simultaneously with, the surrender to the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the
case may be, of duly endorsed certificates for those shares.
Upon payment of the judgment, the dissenting shareholders shall
cease to have any interest in those shares or in the
corporation. The court shall allow the appraisers a reasonable
fee as court costs, and all court costs shall be allotted
between the parties in the manner that the court determines to
be fair and equitable.
E. Shares acquired by the existing,
surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, pursuant to the payment of the
agreed value of the shares or pursuant to payment of the
judgment entered for the value of the shares, as in this Article
provided, shall, in the case of a merger, be treated as provided
in the plan of merger and, in all other cases, may be held and
disposed of by the corporation as in the case of other treasury
shares.
C-3
F. The provisions of this Article
shall not apply to a merger if, on the date of the filing of the
articles of merger, the surviving corporation is the owner of
all the outstanding shares of the other corporations, domestic
or foreign, that are parties to the merger.
G. In the absence of fraud in the
transaction, the remedy provided by this Article to a
shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the
recovery of the value of his shares or money damages to the
shareholder with respect to the action. If the existing,
surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of
this Article, any shareholder who fails to comply with the
requirements of this Article shall not be entitled to bring suit
for the recovery of the value of his shares or money damages to
the shareholder with respect to the action.
Art. 5.13. Provisions Affecting Remedies of Dissenting
Shareholders
A. Any shareholder who has demanded
payment for his shares in accordance with either
Article 5.12 or 5.16 of this Act shall not thereafter be
entitled to vote or exercise any other rights of a shareholder
except the right to receive payment for his shares pursuant to
the provisions of those articles and the right to maintain an
appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective
shares for which payment has been demanded shall not thereafter
be considered outstanding for the purposes of any subsequent
vote of shareholders.
B. Upon receiving a demand for
payment from any dissenting shareholder, the corporation shall
make an appropriate notation thereof in its shareholder records.
Within twenty (20) days after demanding payment for his
shares in accordance with either Article 5.12 or 5.16 of
this Act, each holder of certificates representing shares so
demanding payment shall submit such certificates to the
corporation for notation thereon that such demand has been made.
The failure of holders of certificated shares to do so shall, at
the option of the corporation, terminate such shareholders
rights under Articles 5.12 and 5.16 of this Act unless a
court of competent jurisdiction for good and sufficient cause
shown shall otherwise direct. If uncertificated shares for which
payment has been demanded or shares represented by a certificate
on which notation has been so made shall be transferred, any new
certificate issued therefor shall bear similar notation together
with the name of the original dissenting holder of such shares
and a transferee of such shares shall acquire by such transfer
no rights in the corporation other than those which the original
dissenting shareholder had after making demand for payment of
the fair value thereof.
C. Any shareholder who has demanded
payment for his shares in accordance with either
Article 5.12 or 5.16 of this Act may withdraw such demand
at any time before payment for his shares or before any petition
has been filed pursuant to Article 5.12 or 5.16 of this Act
asking for a finding and determination of the fair value of such
shares, but no such demand may be withdrawn after such payment
has been made or, unless the corporation shall consent thereto,
after any such petition has been filed. If, however, such demand
shall be withdrawn as hereinbefore provided, or if pursuant to
Section B of this Article the corporation shall terminate
the shareholders rights under Article 5.12 or 5.16 of
this Act, as the case may be, or if no petition asking for a
finding and determination of fair value of such shares by a
court shall have been filed within the time provided in
Article 5.12 or 5.16 of this Act, as the case may be, or if
after the hearing of a petition filed pursuant to
Article 5.12 or 5.16, the court shall determine that such
shareholder is not entitled to the relief provided by those
articles, then, in any such case, such shareholder and all
persons claiming under him shall be conclusively presumed to
have approved and ratified the corporate action from which he
dissented and shall be bound thereby, the right of such
shareholder to be paid the fair value of his shares shall cease,
and his status as a shareholder shall be restored without
prejudice to any corporate proceedings which may have been taken
during the interim, and such shareholder shall be entitled to
receive any dividends or other distributions made to
shareholders in the interim.
C-4
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF
DIRECTORS AND OFFICERS
Pursuant to Article VI, Section 2 of the bylaws of
Trustmark, the corporation may indemnify or reimburse the
expenses of any person against all reasonable expenses incurred
in connection with any litigation or proceeding in which such
person may have been involved because he is or was a director
(including honorary or advisory directors), officer or employee
of the corporation or of any other firm, corporation or
organization which he served in any such capacity at the request
of the corporation. Provided, such person shall have no right to
indemnification or reimbursement in relation to any matters in
which he is finally adjudged to have been guilty of or liable
for negligence or willful misconduct in the performance of his
duties; and, provided further, that no person shall be so
indemnified or reimbursed in relation to any administrative
proceeding or action instituted by any appropriate bank
regulatory agency which proceeding or action results in a final
order assessing civil monetary penalties or requiring
affirmative action by an individual or individuals in the form
of payments to the corporation.
In addition, pursuant to the Mississippi Business Corporation
Act (MBCA), directors and officers are entitled to
indemnification in certain events as summarized below:
The MBCA provides for indemnification of directors and officers
in certain events. Directors and officers are entitled to
indemnification if they are wholly successful, on the merits or
otherwise, in the defense of any proceeding to which such person
is a party because he was a director or officer of the
corporation against reasonable expenses incurred by him in
connection with the proceeding. A corporation may indemnify an
individual who is a party to a proceeding because he is or was a
director or officer against a liability incurred in the
proceeding if the person conducted himself in good faith and he
reasonably believed, in the case of conduct in his official
capacity, that his conduct was in the best interests of the
corporation, and, in all other cases, that his conduct was not
opposed to the best interests of the corporation, and, in the
case of any criminal proceeding, that he had no reasonable cause
to believe his conduct was unlawful or, he engaged in conduct
for which broader indemnification has been made permissible or
obligatory under a provision of the corporations articles
of incorporation. Unless ordered by a court, a corporation may
not indemnify a director or officer in connection with a
proceeding by or in the right of the corporation, except for
reasonable expenses incurred in connection with the proceeding
if it is determined that the director has met the relevant
standard of conduct specified above, or, in connection with any
proceeding with respect to conduct for which he was adjudged
liable on the basis that he received a financial benefit to
which he was not entitled, whether or not involving action in
his official capacity.
A corporation may, additionally, before final disposition of a
proceeding, advance funds to pay for or reimburse the reasonable
expenses incurred by the director or officer who is a party to a
proceeding under certain circumstances.
II-1
ITEM 21.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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EXHIBIT |
|
|
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NO. |
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DESCRIPTION |
|
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2 |
|
|
Agreement and Plan of Reorganization and First Amendment |
|
** |
|
3 |
.1 |
|
Articles of Incorporation of Trustmark Corporation |
|
* |
|
3 |
.2 |
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Bylaws of Trustmark Corporation |
|
* |
|
5 |
.1 |
|
Opinion of Brunini, Grantham, Grower, & Hewes, PLLC |
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8 |
.1 |
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Tax Opinion of Brunini, Grantham, Grower, & Hewes, PLLC |
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|
8 |
.2 |
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Tax Opinion of Bracewell & Giuliani LLP |
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10 |
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Material Contracts |
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* |
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23 |
.1 |
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Consent of KPMG LLP |
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23 |
.2 |
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Consent of Brunini, Grantham, Grower, & Hewes, PLLC |
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23 |
.3 |
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Consent of Bracewell & Giuliani LLP |
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Consent included in Opinion found at Exhibit 8.2 and
incorporated herein by reference |
|
99 |
.1 |
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Form of Proxy for Special Meeting of Shareholders of Republic |
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99 |
.2 |
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Forms of Election |
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99 |
.3 |
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Consent of Keefe, Bruyette and Woods, Inc. |
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(*) |
Included in documents incorporated by reference |
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(**) |
Included as Appendix A to Proxy Statement/ Prospectus |
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the Registrants 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 plans 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 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.
The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the Proxy Statement pursuant to Items 4, 10(b), 11 or 13 of
the Form S-4,
within one business day of receipt of such request, and to send
the incorporated documents by first class mail or 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.
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.
The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by
II-2
any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by
the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is
filed pursuant to the immediately preceding paragraph, or
(ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and
that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement; and
(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 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.
(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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Trustmark pursuant to
Trustmarks bylaws, or otherwise, Trustmark 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 Trustmark of expenses incurred or
paid by a director, officer or controlling person of Trustmark
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, Trustmark 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.
II-3
Pursuant to the requirements of the Securities Act, the
Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Jackson, State of Mississippi on
June 23, 2006.
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BY: |
/S/ Richard G. Hickson |
Richard G. Hickson
Chairman, President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature |
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Title |
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Date |
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/S/ Zach L. Wasson
Zach
L. Wasson |
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Treasurer and Chief Financial Officer
(Principal Financial Officer) |
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June 23, 2006 |
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/S/ Louis E. Greer
Louis
E. Greer |
|
Chief Accounting Officer |
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June 23, 2006 |
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/S/ Richard G. Hickson
Richard
G. Hickson |
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Chairman, President & CEO |
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June 23, 2006 |
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/S/ J. Kelly Allgood
J.
Kelly Allgood |
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Director |
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June 23, 2006 |
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/S/ Reuben V. Anderson
Reuben
V. Anderson |
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Director |
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June 23, 2006 |
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/S/ William C. Deviney, Jr.
William
C. Deviney, Jr. |
|
Director |
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June 23, 2006 |
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/S/ C. Gerald Garnett
C.
Gerald Garnett |
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Director |
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June 23, 2006 |
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/S/ Matthew L. Holleman, III
Matthew
L. Holleman, III |
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Director |
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June 23, 2006 |
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/S/ John M. McCullouch
John
M. McCullouch |
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Director |
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June 23, 2006 |
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/S/ Richard H. Puckett
Richard
H. Puckett |
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Director |
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June 23, 2006 |
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/S/ R. Michael Summerford
R. Michael
Summerford |
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Director |
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June 23, 2006 |
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/S/ Kenneth W. Williams
Kenneth
W. Williams |
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Director |
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June 23, 2006 |
|
/S/ William G. Yates
William
G. Yates |
|
Director |
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June 23, 2006 |
II-4
INDEX TO THE EXHIBITS
EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
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EXHIBIT |
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NO. |
|
DESCRIPTION |
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2 |
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Agreement and Plan of |
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** |
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|
|
Reorganization and First Amendment |
|
|
|
3 |
.1 |
|
Articles of Incorporation of Trustmark Corporation |
|
* |
|
3 |
.2 |
|
Bylaws of Trustmark Corporation |
|
* |
|
5 |
.1 |
|
Opinion of Brunini, Grantham, Grower, & Hewes, PLLC |
|
|
|
8 |
.1 |
|
Tax Opinion of Brunini, Grantham, Grower, & Hewes, PLLC |
|
|
|
8 |
.2 |
|
Tax Opinion of Bracewell & Giuliani LLP |
|
|
|
10 |
|
|
Material Contracts |
|
* |
|
23 |
.1 |
|
Consent of KPMG LLP |
|
|
|
23 |
.2 |
|
Consent of Brunini, Grantham, Grower, & Hewes, PLLC |
|
|
|
23 |
.3 |
|
Consent of Bracewell & Giuliani LLP |
|
Consent included in Opinion found at Exhibit 8.2 and
incorporated herein by reference |
|
99 |
.1 |
|
Form of Proxy for Special Meeting of Shareholders of Republic |
|
|
|
99 |
.2 |
|
Forms of Election |
|
|
|
99 |
.3 |
|
Consent of Keefe, Bruyette and Woods, Inc. |
|
|
|
|
(*) |
Included in documents incorporated by reference |
|
|
(**) |
Included as Appendix A to Proxy Statement/ Prospectus |
II-5