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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 30, 2003
COLONIAL TRUST COMPANY
(Exact name of registrant as specified in its charter)
Commission File No.
000-18887
Arizona 75-2294862
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5336 N. 19TH Avenue, Phoenix, Arizona 85015
(Address of principal executive offices) (Zip code)
602-242-5507
(Registrant's telephone number, including area code)
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Item 5. Other Events and Required FD Disclosure.
On March 26, 2004, Colonial Trust Company ("Colonial" or the "Corporation")
entered into a Purchase and Assumption Agreement with Heartland Financial USA,
Inc. ("Heartland") and its subsidiary, Dubuque Bank and Trust Company ("DB&T"),
as amended by that Addendum to Purchase and Assumption Agreement dated as of
April 26, 2004 between Heartland, DB&T, Arizona Bank and Trust, a subsidiary of
Heartland, and Colonial (collectively, the "Agreement"). Pursuant to the
Agreement, Colonial agreed, subject to the satisfaction of certain conditions
described in the Agreement, to transfer to AB&T substantially all of the assets
of its Wealth Management group ("Wealth Management"), including without
limitation (a) certain accrued fees, receivables, prepaid expenses and rights
under fiduciary and agency accounts and agreements ("Contracts") of Wealth
Management, (b) all equipment and personal property used in the conduct of the
business of Wealth Management, (c) all customer lists, customer leads, and other
confidential and proprietary information relating to Wealth Management, and (d)
the goodwill related to Wealth Management. DB&T also agreed to assume certain
liabilities associated with Wealth Management, including without limitation (i)
Wealth Management's accrued expenses during the calendar month in which the
Closing occurs, (ii) all liabilities relating to servicing the fiduciary or
agency accounts after the Closing, (iii) a prorated portion of the personal
property and other taxes related to the Wealth Management Assets being
purchased, and (iv) liabilities under a software maintenance agreement utilized
by Colonial in the Wealth Management business.
The parties further agreed that at the Closing under the Agreement, AB&T
would be the substitute fiduciary for Colonial on each of Colonial's fiduciary
and agency accounts that can be assigned to AB&T at the Closing, and that,
effective as of such Closing, Colonial would be released from all fiduciary
duties with respect to such accounts. Additionally, the parties agreed that, as
to fiduciary or agency accounts that have not been transferred as of the Closing
Date ("Incomplete Accounts"), (i) AB&T will assume the administrative functions
as to all Incomplete Accounts as of the Closing Date, (ii) upon receipt of all
necessary approvals to the transfer of an Incomplete Account, such Incomplete
Account will be transferred to AB&T, (iii) all fees relating to Incomplete
Accounts will be paid to AB&T beginning on the Closing Date of the Agreement,
(iv) DB&T will pay to Colonial on the last day of each month the purchase price
applicable to all Incomplete Accounts which are transferred to AB&T during the
previous month, and (v) in the event that all Incomplete Accounts are not
transferred to AB&T within 120 days of the Closing Date under the Agreement,
Colonial may, at any time thereafter, terminate the arrangement described above
as to Incomplete Accounts and transfer the applicable Incomplete Accounts to
another party. It is anticipated that AB&T would operate Wealth Management from
the portion of Colonial's current headquarters located in Phoenix, Arizona
currently utilized by Wealth Management for a period not to exceed one year
following the Closing under the Agreement.
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The purchase price to be paid by DB&T at the Closing will be paid in cash
and will equal the sum of (i) 1.88 times the amount of the annual recurring fees
during the last 12 months ending on the last day of the month immediately
preceding the month in which the Closing occurs that are attributable to the
fiduciary and agency accounts in existence on January 20, 2004 for which AB&T
succeeds Colonial at the Closing; (ii) 1.0 times the amount of the estimated
annual recurring fees from the fiduciary and agency accounts that come into
existence after January 20, 2004 for which AB&T succeeds Colonial; and (iii) the
book value of the equipment and personal property, prepaid expenses and other
tangible assets being purchased; provided, however, that the estimated annual
recurring fees referenced in "i" and "ii" immediately above will be prorated for
accounts that have been in existence for less than 12 months as of the Closing
under the Agreement.
AB&T is expected to offer employment, effective as of the Closing, to
substantially all of the current employees of Wealth Management, including Bruce
Mitchell, Colonial's Vice President and Manager - Wealth Management, and
Patricia Heitter, a Vice President of Colonial. Mr. Mitchell and Ms. Heitter
also executed employment and non-competition agreements to be effective at the
Closing.
The Agreement is subject to the approval of the shareholders of Colonial,
receipt of all required regulatory approvals, Colonial's receipt of a fairness
opinion from its investment banker, Bank Advisory Group, Colonial's transfer at
the Closing of fiduciary and agency accounts representing at least 67% of all
the recurring fees received by Colonial for such services, and certain other
customary closing conditions. If such approvals are received and all Closing
conditions are satisfied, it is expected that Closing under the Agreement would
occur in the third quarter of 2004.
Item 7. Financial Statements and Exhibits.
(a) Inapplicable
(b) Inapplicable
(c) Exhibits:
99(a) Purchase and Assumption Agreement between Heartland Financial
USA, Inc., Dubuque Bank and Trust Company, and Colonial Trust
Company
99(b) Addendum to Purchase and Assumption Agreement between
Heartland Financial USA, Inc., Dubuque Bank and Trust Company,
Arizona Bank and Trust Company, and Colonial Trust Company.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLONIAL TRUST COMPANY
(Registrant)
Date: April 27, 2004. By: /s/ John K. Johnson
John K. Johnson
President and
Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Description of Exhibit
99(a) Purchase and Assumption Agreement between Heartland
Financial USA, Inc., Dubuque Bank and Trust Company
and Colonial Trust Company.
99(b) Addendum to Purchase and Assumption Agreement between
Heartland Financial USA, Inc., Dubuque Bank and Trust
Company, Arizona Bank and Trust Company, and Colonial
Trust Company.