As filed with the Securities and Exchange Commission on _______________, 2001
Registration Number: 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
HANCOCK HOLDING COMPANY
(Exact name of Registrant as specified in its charter)
MISSISSIPPI 6022 64-0693170
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification Number)
of incorporation or organization) Classification Code Number)
ONE HANCOCK PLAZA, 2510 14TH STREET
GULFPORT, MISSISSIPPI 39501
(228) 868-4000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
CARL J. CHANEY
ONE HANCOCK PLAZA, 2510 14TH STREET
GULFPORT, MISSISSIPPI 39501
(228) 868-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
L. KEITH PARSONS, ESQ.
WATKINS LUDLAM WINTER & STENNIS, P.A.
POST OFFICE BOX 427
633 NORTH STATE STREET
JACKSON, MISSISSIPPI 39202
(601) 949-4900
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED OFFERING: As soon as
practicable after the effective date of this Registration Statement.
If securities being registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
- -------------------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Securities to be Registered Amount to be Registered Amount of Registration Fee
Series A 8% Convertible Preferred Stock, $20.00 par value $32,820,918(1) $8,205.23
Common Stock underlying Series A, $3.33 par value $32,820,918(1) $0(2)
- -------------------------------------------------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(o) under the Securities Act solely for the
purpose of calculating the registration fee.
(2) No filing fee is due pursuant to Rule 457(i).
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.
LAMAR CAPITAL CORPORATION
401 Shelby Speights Drive
Purvis, Mississippi 39475
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
_________________, 2001
Dear Shareholders:
You are cordially invited to a Special Meeting of Shareholders of Lamar
Capital Corporation ("Lamar") to be held at the Wilson Room located in the
Purvis branch office of the Company, #4 Highway 589, Purvis, Mississippi 39475
on ___________, 2001 at ___:___ a.m.
The Board of Directors of Lamar has agreed to merge Lamar into Hancock
Holding Company ("Hancock"). If the merger is completed, Lamar shareholders will
be entitled to elect to receive either (1) $11.00 in cash for each share of
Lamar common stock, or (2) .55 shares of Hancock Series A Preferred Stock for
each share of Lamar common stock. You may elect to receive all cash, all Hancock
Series A Preferred Stock or any combination of cash and preferred stock. Because
the Merger Agreement places limits on the total amount of cash which may be paid
to Lamar shareholders, any election is subject to adjustment and no guarantee
can be given that an election will be fully honored.
We cannot complete the merger unless the shareholders of Lamar approve it.
We have scheduled a special meeting for the shareholders of Lamar to approve the
merger.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the meeting,
please take the time to vote by completing and promptly mailing the enclosed
proxy card to us. If you sign, date and mail your proxy card without indicating
how you want to vote, your proxy will be counted as a vote in favor of the
merger. If you do not return your card, the effect will be a vote against the
merger.
This Proxy Statement-Prospectus provides you with detailed information
about the proposed merger. You can also obtain information about the companies
from documents filed with the Securities and Exchange Commission. We encourage
you to read this entire document carefully.
Your Board of Directors unanimously recommends that you vote in favor of
the merger.
Very truly yours,
Robert W. Roseberry
Chairman of the Board
- ---------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAVE APPROVED THE HANCOCK PREFERRED STOCK TO BE ISSUED UNDER
THIS PROXY STATEMENT-PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT-
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ---------------------------------------------------------------------------
Proxy Statement-Prospectus dated ______________, 2001, and first mailed to
shareholders on ___________, 2001.
LAMAR CAPITAL CORPORATION
401 Shelby Speights Drive
Purvis, Mississippi 39475
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Lamar Capital Corporation:
Notice is hereby given that a Special Meeting of Shareholders of Lamar
Capital Corporation ("Lamar") will be held at the Wilson Room located in the
Purvis branch office of the Company, #4 Highway 589, Purvis, Mississippi 39475,
on ____________, 2001, at ____ __.m. for the following purposes:
1. Approval of the Agreement and Plan of Merger dated February 21, 2001,
pursuant to which Lamar will be merged into Hancock Holding Company.
2. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only those shareholders of record at the close of business on
_____________, 2001, are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting. To ensure
your representation at the meeting, please complete and promptly mail your proxy
in the return envelope enclosed. This will not prevent you from voting in
person, but will help to secure a quorum and avoid added solicitation costs.
Your proxy may be revoked at any time before it is voted. Please review the
Proxy Statement-Prospectus accompanying this notice for more complete
information regarding the merger and the meeting.
If you are a Lamar stockholder and you dissent from the merger by following
the requirements of the Mississippi law concerning dissenters' appraisal rights,
Lamar will pay you for the fair value of your shares. Please see the section
entitled "THE MERGER - Dissenters' Appraisal Rights" in the attached Proxy
Statement-Prospectus for a summary of Mississippi law regarding dissenters'
rights.
BY ORDER OF THE BOARD OF DIRECTORS
Jane P. Roberts, Secretary
Purvis, Mississippi
_____________, 2001
Please mark, sign, date and return your proxy promptly, whether or not
you plan to attend the meeting.
The Board of Directors of Lamar unanimously recommends that shareholders vote
FOR approval of the Agreement and Plan of Merger.
---
PROXY STATEMENT - PROSPECTUS
LAMAR CAPITAL CORPORATION
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
__________________, 2001
Nasdaq National Market Symbol: LCCO
________________________
HANCOCK HOLDING COMPANY
PROSPECTUS
______ SHARES OF SERIES A 8% CONVERTIBLE PREFERRED STOCK
Nasdaq National Market Symbol: HBHC
This document constitutes a proxy statement of Lamar Capital Corporation
("Lamar") in connection with the solicitation of proxies by the Board of
Directors of Lamar for use at the special meeting of shareholders to be held at
the Wilson Room located in the Purvis branch office of the Company, #4 Highway
589, Purvis, Mississippi 39475, on ____________, 2001, at _____ __.m., local
time.
This document also constitutes a prospectus of Hancock Holding Company
("Hancock") filed as part of a registration statement filed with the Securities
and Exchange Commission relating to up to _____ shares of Hancock Series A 8%
Convertible Preferred Stock and the Hancock common stock underlying Series A
being registered for this transaction. This document does not cover any resale
of the Hancock stock being registered for this transaction by any shareholders
deemed to be affiliates of Hancock or Lamar. Lamar and Hancock have not
authorized any person to make use of this document in connection with any such
resale.
Lamar and Hancock provided all information related to their respective
companies. You should rely only on the information contained in this document or
to which this document has referred you. Lamar and Hancock have not authorized
anyone to provide you with information that is different. You should not assume
that the information in this document is accurate as of any date other than the
date on the front of the document.
The document incorporates important business and financial information
about Hancock and Lamar that is not included in or delivered with the document.
This information is available without charge to security holders upon written or
oral request to the following persons at either Lamar or Hancock:
Hancock: Lamar:
------- -----
George A. Schloegel, Robert W. Roseberry, Chairman and
Chief Executive Officer Chief Executive Officer
Hancock Holding Company Lamar Capital Corporation
Post Office Box 4019 401 Shelby Speights Drive
Gulfport, MS 39502-4019 Purvis, MS 39475
(228) 868-4706 (601) 794-6047
To obtain timely delivery of requested documents, you must request the
information no later than five (5) business days before the meeting.
THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS
OF ANY BANK OR NONBANK SUBSIDIARY OF ANY OF THE PARTIES, AND THEY ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY.
QUESTIONS AND ANSWERS
Q(1): Why is Lamar merging with Hancock?
A: Lamar's Board has approved the merger with Hancock based upon its
assessment of the
financial condition and prospects of Lamar in particular and the
competitive and regulatory environment for financial institutions
generally. Hancock is a Mississippi bank holding company for Hancock
Bank, a Mississippi chartered state bank which operates offices in
Mississippi and Hancock Bank of Louisiana, a Louisiana chartered state
bank which operates offices in Louisiana. Its common stock is traded
on the Nasdaq Stock Market under the symbol HBHC. The merger will
enable Lamar shareholders to hold stock in a larger and more
diversified entity whose shares are more widely held and more actively
traded. The merger will also enable us to better serve our customers
with more products and services. Based upon these and other factors we
believe that the merger is in the best interest of Lamar shareholders.
To review the background and reasons for the merger see page ___.
Q(2): As a Lamar shareholder, what will I receive in the merger?
A: You will have the right to elect to receive either: (1) $11.00 in cash
for each share of Lamar common stock you own, or (2) .55 shares of
Hancock Series A Preferred Stock for each share of Lamar common stock
you own.
Example: If you own 100 shares of Lamar common stock upon completion
of the merger, you will have the right to receive either a check for
$1,100 or 55 shares of Hancock Series A Preferred Stock, or some
combination of cash and Series A Preferred Stock.
Q(3): What are the key attributes of the Hancock Series A Preferred Stock?
A: If Hancock ever liquidates, each share of preferred stock will be
entitled to a $20 per share payment plus all accrued dividends before
any distribution to holders of Hancock common stock. Each share of
preferred stock will be entitled to a cumulative annual dividend of
$1.60 per share. A holder of Hancock Series A Preferred Stock will
have the right to convert each share of preferred stock into shares of
Hancock common stock at any time at a conversion price of $45 per
share, subject to certain adjustments. Hancock Series A Preferred
Stock will have the same voting rights as Hancock common stock and
each share of preferred stock shall have a number of votes equal to
the number of shares of Hancock common stock into which such preferred
stock could be converted. Hancock has certain rights and obligations
to redeem the preferred stock at a redemption price of $20 per share
plus accrued dividends.
Q(4): How will a Lamar shareholder elect cash or Hancock Series A Preferred
Stock?
A: Each Lamar shareholder will be mailed an election form. If you want to
receive any Hancock Series A Preferred Stock, you will need to
complete the form and return it to Lamar before the close of business
on _______, 2001. You may elect to receive all cash, all Hancock
Series A Preferred Stock or any combination of cash and Hancock Series
A Preferred Stock. Because the Merger Agreement places limits on the
total amount of cash which may be paid, any election is subject to
adjustment and no guarantee can be given that an election will be
fully honored. If you do not complete and return the form, you will be
treated as if you elected to receive all cash.
Q(5): Will I receive exactly what I elect?
A: Not necessarily. Under a formula set forth in the Merger Agreement, no
more than 49% or less than 30% of the Lamar common stock may be
exchanged for cash.
Q(6): What if less than 30% of the Lamar common stock elects to receive
cash?
A: If the total number of shares for which cash consideration has been
effectively elected (together with the shares of Lamar commonstock for
which dissenters' rights have been asserted) is less than 30% of the
total outstanding shares of Lamar common stock, then the amount of
preferred stock given to each Lamar shareholder electing to receive
preferred stock consideration will be reduced so that the amount of
cash consideration being paid is as nearly equal as possible to 30%.
All reductions will be proportional.
Example: You own 100 shares of Lamar common stock and elect to receive
no cash
and all Hancock Series A Preferred Stock. If holders of 80% of Lamar
common stock elect to receive preferred stock, instead of receiving 55
shares of Hancock Series A Preferred Stock, you will receive 47 shares
of preferred stock and $160.00 in cash.
Q(7): What if more than 49% of the Lamar common stock elects to receive
cash?
A: If the total number of shares for which cash consideration has been
effectively elected (together with the shares of Lamar common stock
for which dissenters rights have been asserted) is more than 49% of
the total outstanding shares of Lamar common stock, then the amount of
cash given to the shareholders electing to receive cash consideration
will be reduced so that the amount of cash consideration being paid is
as nearly equal as possible to 49% and preferred stock will be given
instead. All reductions will be proportional.
Example: You own 100 shares of Lamar common stock and elect to receive
no Hancock Series A Preferred Stock and all cash. If holders of 60% of
Lamar common stock either elect to receive all cash or exercise their
dissenter's rights, instead of receiving $1,100 in cash, you will
receive $920.00 in cash and 9 shares of preferred stock.
Q(8): What happens as the market price of Hancock common stock fluctuates?
A: The exchange ratio is based upon a formula that is not determined by
the market price of Hancock common stock and is not expected to
change. The market value of Hancock common stock and preferred stock
willfluctuate after the merger. No Hancock Series A Preferred Stock
has been issued and Hancock cannot predict the price at which it will
trade after the merger.
Q(9): What happens to my dividends in the future?
A: After the merger, Lamar shareholders who receive Hancock Series A
Preferred Stock will be entitled to receive annual dividends of $1.60
per share per year. The dividends will be cumulative, which means that
no dividends may be paid on Hancock common stock unless all dividends
accrued on the Hancock Series A Preferred Stock have been paid. The
Hancock board of directors will use its discretion to decide whether
and when to declare dividends and in what amount, and it will consider
all relevant factors in doing so.
Q(10): When do you expect the merger to be completed?
A: We hope to complete the merger by ________ following the approval of
Lamar shareholders.
Q(11): What are the tax consequences of the merger to me?
A: We expect that for U.S. federal income tax purposes, your receipt of
Hancock Series A Preferred Stock in exchange for your shares of Lamar
common stock in the merger generally will not cause you to recognize
any gain or loss. You will, however, have to recognize gain in
connection with any cash received or if you exercise dissenters'
appraisal rights under Mississippi law.
We provide a more detailed review of the U.S. federal income tax
consequences of the merger on page ___ of this document.
Q(12): As a Lamar shareholder, do I have to accept either Hancock Series A
Preferred Stock or the cash consideration of $11 per share in exchange
for my shares if the merger is approved?
A: If you follow the procedures prescribed by Mississippi law, you may
dissent from the merger and have the fair value of your stock
determined by a court. If you follow those procedures, you will not
receive Hancock Series A Preferred Stock. The fair value of your Lamar
common stock, determined in the manner prescribed by Mississippi law,
will be paid to you in cash.
For a more complete description of these dissenters' rights, see page
___ of this document.
Q(13): If my shares are held in "street name" by my broker, will my broker
vote my shares for me?
A: Only if you provide instructions on how your broker should vote. You
should instruct your broker how to vote your shares, following the
directions your broker provides. Without instruction from you to your
broker, your shares will not be voted and this will effectively be a
vote against the merger.
Q(14): What do I need to do now?
A: Just indicate on your proxy card how you want to vote, and sign and
mail the proxy card in the enclosed return envelope as soon as
possible so that your shares may be represented at the meeting. If you
sign and send in your proxy but don't indicate how you want to vote,
your proxy will be counted as a vote in favor of the merger. If you
don't return your proxy card or you abstain, the effect will be a vote
against the merger.
You also need to complete and return the enclosed Election Form,
indicating whether you want to elect cash, preferred stock or a
combination of cash and preferred stock. The election deadline is the
date of the meeting. Elections may not be changed after the election
deadline. If you fail to make an election, you will receive cash.
The meeting will take place on _____________, 2001. You are invited to
the meeting to vote your shares in person rather than signing and
mailing your proxy card. If you do sign your proxy card, you can take
back your proxy until and including the date of the meeting and either
change your vote or attend the meeting and vote in person. We provide
more detailed instructions about voting on page ___.
The Board of Directors of Lamar unanimously recommends voting in favor
of the proposed merger.
Q(15): Should I send in my stock certificates now?
A: No. No one should send their stock certificates in now. After the
merger is completed, Hancock will send you written instructions on how
to exchange your Lamar common stock for Hancock Series A Preferred
Stock (if you received any).
Q(16): Who can help answer my questions?
A: If you have more questions about the merger you should contact:
LAMAR CAPITAL CORPORATION
401 Shelby Speights Drive
Purvis, Mississippi 39475
Attention: Robert W. Roseberry, Chairman
Phone Number: (601) 794-6047
TABLE OF CONTENTS
SUMMARY................................................................... 1
THE MEETING............................................................... 11
THE MERGER................................................................ 12
INFORMATION ABOUT LAMAR................................................... 27
LAMAR FINANCIAL STATEMENTS................................................ 44
INFORMATION ABOUT HANCOCK................................................. 61
DESCRIPTION OF HANCOCK CAPITAL STOCK...................................... 62
COMPARISON OF RIGHTS OF SHAREHOLDERS...................................... 66
LEGAL MATTERS............................................................. 70
EXPERTS................................................................... 70
OTHER MATTERS............................................................. 70
SHAREHOLDER PROPOSALS..................................................... 70
WHERE YOU CAN FIND MORE INFORMATION....................................... 70
INFORMATION INCORPORATED BY REFERENCE..................................... 71
APPENDIX A
FAIRNESS OPINION OF MORGAN KEEGAN & COMPANY, INC..................... A-1
APPENDIX B
ARTICLE 13 OF THE MISSISSIPPI BUSINESS CORPORATION ACT............... B-1
APPENDIX C
AGREEMENT AND PLAN OF MERGER......................................... C-1
SUMMARY
This summary highlights selected information from this document. It does
not contain all of the information that is important to you. You should
carefully read this entire document and the documents to which we have
referred you in order to fully understand the merger and to obtain a more
complete description of the legal terms of the merger. See "WHERE YOU CAN
FIND MORE INFORMATION" (page ___). Each item in this summary includes a
page reference that directs you to a more complete description in this
document of the topic discussed.
The Companies
(Pages ___ and __)
Hancock Holding Company
One Hancock Plaza, 2510 14th Street
Gulfport, Mississippi 39501
(228) 868-4000
Hancock is incorporated in Mississippi and is a two-bank holding company.
Hancock provides commercial banking operations, credit card services,
insurance services, trust services and other related financial services in
Mississippi and Louisiana. As of December 31, 2000 Hancock's total assets
were approximately $3.0 billion, deposits were $2.5 billion and
shareholders' equity was $341.4 million.
Lamar Capital Corporation
401 Shelby Speights Drive
Purvis, Mississippi 39475
(601) 794-6047
Lamar Capital Corporation is a Mississippi corporation that owns Lamar
Bank. Lamar Bank provides traditional consumer and commercial deposit and
loan services to individuals, families and businesses in Lamar County,
Mississippi and in the Hattiesburg, Mississippi area, through a full
service main office and 8 branch offices. As of December 31, 2000, Lamar's
total assets were approximately $415 million, Lamar's deposits were
approximately $306 million and shareholders' equity was approximately $36
million.
Reasons for the Merger
(Page ___)
We believe that the financial terms of the merger agreement are attractive
based upon the recent earnings performance of Lamar, the current and
prospective economic and regulatory environment and the Board's belief that
Hancock is an attractive chioce as a long-term affiliation partner for
Lamar and Lamar Bank. The merger will offer liquidity to the Lamar
shareholders and more products and services to Lamar Bank's customers.
To review the background of and reasons for the merger in greater detail,
please see page ___.
The Shareholders' Meeting
(Page ___)
The special meeting will be held at the offices of Lamar Bank, at ___ a.m.
on _________, 2001. At the meeting Lamar shareholders will be asked to
approve the merger agreement.
Our Recommendations to Shareholders
(Page ___)
The Board of Directors of Lamar believes that the merger is fair to you and
in your best interest and unanimously recommends that you vote "FOR" the
proposal to approve the merger agreement.
Record Date; Voting Power
(Page __)
You can vote at the meeting if you owned Lamar common stock as of the close
of business on _________, 2001, the record date. On that date, 4,307,207
shares of Lamar common stock were outstanding and therefore are allowed to
vote at the meeting. You will be able to cast one vote for each share of
Lamar common stock you owned on ___________, 2001.
1
Votes Required
(Page ___)
In order for the merger to be approved, a majority of the outstanding
shares of Lamar common stock must vote in favor of the merger. The
directors and officers of Lamar can cast about 28.7% of the votes entitled
to be cast at the meeting. The directors of Lamar are obligated to vote all
of their shares in favor of the merger and we expect that the officers will
also vote all of their shares in favor of the merger.
The Merger
(Page ___)
We have summarized the terms of the merger agreement, a copy of which is
attached hereto as Appendix B. We encourage you to read the merger
agreement. It is the legal document that governs the merger.
The Exchange Ratio
(Page ___)
In the merger each shareholder will have the right to elect to receive
either (1) $11.00 in cash for each share of Lamar common stock, or (2) .55
shares of Hancock Series A Preferred Stock for each share of Lamar common
stock. No more than 49% or less than 30% of the Lamar common stock may be
exchanged for cash. Hancock will not issue any fractional shares. Instead,
Hancock will pay you cash for any fractional shares. The exchange ratio
will be adjusted if Hancock or Lamar increases its number of shares of
common stock outstanding from the figures disclosed in this Proxy
Statement-Prospectus.
Conditions to Completion of the Merger
(Page ___)
The completion of the merger depends on a number of conditions being met,
including the following:
1. Lamar shareholders approving the merger;
2. the absence of any governmental order blocking completion of the merger or
of any proceedings by a governmental body trying to block it;
3. receipt of opinions of Lamar's counsel that the U. S. federal income tax
treatment of Lamar's shareholders in the merger will generally be as we
have described it to you in this document; and
4. Hancock shareholders approving an amendment to Hancock's articles of
incorporation authorizing the preferred stock.
In cases where the law permits, a party to the merger agreement could elect
to waive a condition that has not been satisfied and complete the merger
although it is entitled not to. We cannot be certain whether or when any of
the conditions we have listed will be satisfied (or waived, where
permissible), or that the merger will be completed.
Termination of the Merger Agreement
(Page __)
We can agree at any time to terminate the merger agreement without
completing the merger, even if the shareholders of Lamar have already voted
to approve it.
Moreover, either of us can terminate the merger agreement in the following
circumstances:
1. if the merger isn't completed by September 30, 2001;
2. if the Lamar shareholders don't approve the merger;
3. if the Hancock shareholders don't approve an amendment to Hancock's
articles of incorporation authorizing the preferred stock; or
4. if the other party violates, in a significant way, any of its
representations, warranties or obligations under the merger agreement.
Generally, a party can only terminate the merger agreement in one of the
preceding three situations if that party isn't in violation of the merger
agreement or if its violations of the merger agreement aren't the cause of
the event permitting termination.
2
Federal Income Tax Consequences
(Page ___)
We have structured the merger with the intent that neither Lamar nor its
shareholders will recognize any gain or loss for U.S. federal income tax
purposes due to the merger, except in connection with cash received by
Lamar shareholders in exchange for their Lamar common stock. We have
conditioned the merger on the receipt of legal opinions that this will be
the case, but these opinions won't bind the Internal Revenue Service, which
could take a different view.
Shareholders who either effectively elect to receive cash or who receive
cash as a result of exercising their dissenters' appraisal rights under
Mississippi law will have to recognize any realized gain or loss.
Determining the actual tax consequences of the merger to you can be
complicated. They will depend on your Shareholders who either effectively
elect to receive cash or who receive cash as a result of exercising their
dissenters' appraisal rights under Mississippi law will have to recognize
any realized gain or loss. Determining the actual tax consequences of the
merger to you can be complicated. They will depend on your specific
situation and many variables not within our control. You should consult
your own tax advisor for a full understanding of the merger's tax
consequences.
Accounting Treatment
(Page ___)
We expect the merger to qualify for purchase accounting treatment, which
means that, for accounting and financial reporting purposes, we will
combine the earnings of Hancock and Lamar from and after the effective date
of the merger and any goodwill or other intangibles recorded in the
transaction will be amortized through charges to income in future periods.
In addition, assets and liabilities of Lamar will be recorded at fair value
on the date of the transaction.
Opinion of Financial Advisor
(Page ___)
In recommending approval of the merger, the Lamar Board considered the
opinion of its financial advisor, Morgan Keegan & Company, Inc., that as of
the date of the opinion, the exchange ratio was fair from a financial point
of view to Lamar's shareholders. We have attached this opinion as Appendix
A to this document. You should read it carefully.
Interests of Other Persons in the Merger That Are Different From Yours
(Page ___)
The directors and executive officers of Lamar own shares of Lamar common
stock, which will be converted into shares of Hancock Series A Preferred
Stock and cash pursuant to the merger on the same terms and conditions as
applied to all other shares of Lamar common stock.
Other than certain vesting rights under Executive Salary Continuation
Agreements as discussed on page ___ of this Proxy Statement-Prospectus,
none of these persons have agreements for additional compensation or any
other rights which become effective upon a change in control or which
relate to the merger.
Current retirement and benefit plans available to employees of Lamar and
Lamar Bank will terminate as of the effective time of the merger. Those
Lamar employees who are retained following the merger will be eligible to
participate in Hancock's employee plans, on substantially the same basis
and applying the same eligibility standards as other Hancock Bank
employees.
Hancock also has agreed to provide indemnification to Lamar's Board members
and its officers.
Dissenters' Appraisal Rights
(Page ___)
Mississippi law permits you to dissent from the merger and to have the fair
value of your Lamar common stock determined by a court. To do this, you
must follow certain procedures, including the filing of certain notices
with us and voting your shares against the merger. If you dissent from the
merger, your shares of Lamar common stock will not be exchanged for shares
of Hancock Series A Preferred Stock or the
3
cash payment of $11 per share in the merger, and your only right will be to
receive the fair value of your shares in cash.
To review in greater detail the procedures under Mississippi law to
exercise your dissenters rights, please see page ___.
Regulatory Approvals
(Page ___)
An application for the merger has been filed with the Board of Governors of
the Federal Reserve System. It is anticipated that the application will be
approved in the second quarter of 2001. No other regulatory approvals are
required for the merger of Hancock and Lamar.
Comparative Per Share Market Price Information
(Pages ___ and ___)
Shares of Hancock and Lamar are quoted on the Nasdaq Stock Market. On
January 30, 2001 the last full trading day prior to the public announcement
of the merger of Lamar into Hancock, Hancock common stock closed at $_____
per share and Lamar common stock closed at $_____ per share. On __________,
2001 Hancock common stock closed at $____ per share and Lamar common stock
closed at $____ per share. No Hancock Series A Preferred Stock has been
issued and Hancock cannot predict the price at which it will trade after
the merger.
4
Selected Financial Data
The following tables show summarized audited historical financial data for
each of our companies for the period ended December 31, 1996 through 2000.
The information in the following tables is based on the historical
financial information that has been incorporated into or included in this Proxy
Statement-Prospectus. All of the summary financial information provided in the
following tables should be read in connection with this historical financial
information. See "WHERE YOU CAN FIND MORE INFORMATION" on page _____ and Lamar
Financial Statements on page _____.
5
Lamar Capital Corporation
Selected Financial Data
As of and for the Years Ended December 31,
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(in thousands, except per share data)
Income Statement Data:
Interest income $ 32,005 $ 30,158 $ 23,916 $ 19,442 $ 16,190
Interest expense 18,352 16,809 13,903 10,536 8,429
Net interest income 13,653 13,349 10,013 8,906 7,761
Provision for loan losses 2,832 1,422 785 725 557
Noninterest income 3,728 3,527 3,558 2,689 2,325
Noninterest expense 11,101 9,788 8,732 7,677 6,890
Income before taxes 3,448 5,666 4,054 3,193 2,639
Net earnings 2,846 4,171 3,049 2,339 2,028
Balance Sheet Data:
Securities $148,691 $126,059 $ 90,828 $ 58,921 $ 41,562
Loans, net of unearned income 216,923 231,133 197,096 159,552 140,318
Allowance for loan losses 5,483 4,270 3,564 3,101 2,837
Total assets 415,495 412,750 330,516 247,022 207,330
Total deposits 306,431 308,464 278,272 211,498 185,404
Long-term bonds and notes - - - - -
Other borrowed funds 70,000 70,000 19,120 17,620 7,000
Total stockholders' equity 36,795 31,902 31,331 16,160 13,473
Per Share Data:
Net income per share--basic and diluted $ 0.66 $ 0.97 $ 1.09 $ 0.87 $ 0.75
Cash dividends per share 0.2000 0.1800 0.1167 0.1002 0.0923
Book value 8.54 7.39 7.58 5.88 4.97
Performance Ratios:
Return on average assets 0.69% 1.07% 1.03% 1.02% 1.06%
Return on average equity 8.47 12.51 17.65 15.69 15.88
Net interest margin 3.59 3.69 3.65 4.20 4.41
Efficiency ratio 64 58 65 66 68
Asset Quality Ratios:
Allowance for loan losses to nonperforming loans 176% 216% 323% 777% 360%
Allowance for loan losses to total loans 2.45 1.81 1.74 1.87 1.93
Nonperforming assets to total loans 1.83 1.06 0.90 0.49 1.06
Net loan charge-offs to average loans 0.70 0.32 0.18 0.30 0.19
Capital Ratios:
Leverage ratio 9.11% 9.23% 9.55% 6.87% 7.11%
Average stockholders' equity to average total assets 8.20 8.56 5.82 6.49 6.69
Tier 1 risk-based 15.50 14.38 14.65 9.84 9.67
Total risk-based 16.76 15.57 15.90 11.09 10.92
Dividend payout ratio 30 19 12 12 12
6
Hancock Holding Company
Selected Financial Data
At and For the Years Ended December 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
Income Statement Data: (in thousands, except per share data)
Interest income $ 216,947 $ 207,674 $ 193,659 $ 181,459 $ 169,404
Interest expense 94,251 83,961 81,742 71,698 64,804
Net interest income 122,696 123,713 111,917 109,761 104,600
Provision for loan losses 11,531 7,585 6,229 6,399 6,154
Non-interest income 52,451 45,612 32,332 32,169 28,422
Non-interest expense 109,896 115,442 93,782 87,554 80,095
Earnings before income taxes and cumulative
effect of accounting change 53,720 46,298 44,238 47,977 46,773
Net earnings 36,824 31,710 30,960 30,624 31,603
Net earnings excluding credit card gain
and securities transactions 34,383 31,666 30,851 30,443 31,583
Balance Sheet Data:
Securities $ 994,095 $1,148,722 $1,244,369 $1,079,995 $ 901,592
Loans, net of unearned income 1,699,841 1,541,521 1,305,555 1,220,629 1,173,967
Allowance for loan losses 28,604 25,713 21,800 21,000 19,800
Total assets 3,013,430 2,991,874 2,814,695 2,537,957 2,289,582
Total deposits 2,503,788 2,397,653 2,374,591 2,062,648 1,926,576
Long-term bonds and notes 2,177 2,714 - 1,279 1,050
Other borrowed funds 500 500 500 500 500
Total stockholders' equity 341,390 310,427 286,807 288,573 261,938
Per Share Data:
Earnings before cumulative effect
of accounting change:
Basic $ 3.39 $ 2.91 $ 2.79 $ 2.82 $ 3.08
Diluted 3.39 2.91 2.78 2.82 3.08
Net earnings:
Basic 3.39 2.91 2.90 2.82 3.08
Diluted 3.39 2.91 2.89 2.82 3.08
Cash dividends per share 1.25 1.00 1.00 1.00 0.88
Book value 31.79 28.55 27.29 26.44 24.42
Performance Ratios:
Return on average assets 1.23% 1.05% 1.15% 1.25% 1.38%
Return on average assets excluding
cumulative effect of accounting change 1.23% 1.05% 1.11% 1.25% 1.38%
Return on average equity 11.31% 10.27% 10.68% 11.29% 13.74%
Return on average equity excluding cumulative
effect of accounting change 11.31% 10.27% 10.28% 11.29% 13.74%
Net interest margin (TE) 4.70% 4.73% 4.67% 5.14% 5.20%
Efficiency ratio 57.32% 63.81% 61.55% 58.97% 56.74%
7
Asset Quality Ratios:
Allowance for loan losses to non-performing loans 281% 365% 367% 313% 435%
Allowance for loan losses to total loans 1.68% 1.67% 1.67% 1.72% 1.69%
Non-performing assets to total loans 0.69% 0.56% 0.63% 0.74% 0.55%
Net loan charge-offs to average loans 0.53% 0.51% 0.44% 0.50% 0.41%
Capital Ratios:
Leverage ratio 10.20% 9.61% 9.50% 10.41% 10.53%
Average stockholders' equity to average total assets 10.87% 10.27% 10.75% 11.11% 10.06%
Tier I risk-based 15.95% 15.60% 17.15% 19.08% 18.59%
Total risk-based 17.20% 16.85% 18.40% 20.33% 19.85%
Dividend Payout Ratio 36.87% 34.36% 35.84% 35.46% 28.57%
8
- --------------------------------------------------------------------------------
Hancock Holding Company
Selected Financial Data
(amounts in thousands, except per share data)
At and For the Years Ended December 31,
-------------------------------------------------------
2000 1999 1998 1997 1996
----------- ------ ------- ------- ------
Capital Ratios:
Average stockholders' equity to average assets 10.87% 10.27% 10.75% 11.11% 10.06%
Stockholders' equity to total assets 11.33% 10.38% 10.19% 11.37% 11.44%
Tier 1 leverage 10.20% 9.61% 9.50% 10.41% 10.53%
Tier 1 risk-based 15.95% 15.60% 17.15% 19.08% 18.59%
Total risk-based 17.20% 16.85% 18.40% 20.33% 19.85%
Income Data:
Interest income $216,947 $207,674 $193,659 $181,459 $169,404
Interest expense 94,251 83,961 81,742 71,698 64,804
Net interest income 122,696 123,713 111,917 109,761 104,600
Net interest income (TE) 128,981 129,375 116,125 112,425 108,626
Provision for loan losses 11,531 7,585 6,229 6,399 6,154
Non-interest income
(excluding securities transactions and gain on
sale of credit card portfolio) 48,695 45,545 32,164 31,889 28,391
Securities transactions 3 67 167 279 31
Gain on sale of credit card portfolio 3,753 - - - -
Non-interest expense 109,896 115,442 93,782 87,554 80,095
Earnings before income taxes and cumulative
effect of accounting change 53,720 46,298 44,237 47,976 46,773
Net earnings 36,824 31,710 30,960 30,624 31,603
Net earnings excluding credit card gain
and securities transactions 34,382 31,666 30,851 30,443 31,583
Per Share Data:
Earnings before cumulative effect
of accounting change:
Basic $ 3.39 $ 2.91 $ 2.79 $ 2.82 $ 3.08
Diluted 3.39 2.91 2.78 2.82 3.08
Cumulative effect of accounting change:
Basic - - .11 - -
Diluted - - .11 - -
Net earnings:
Basic 3.39 2.91 2.90 2.82 3.08
Diluted 3.39 2.91 2.89 2.82 3.08
Cash dividends paid 1.25 1.00 1.00 1.00 0.88
Book value 31.79 28.55 27.29 26.44 24.42
Weighted average number of shares outstanding:
Basic 10,860 10,887 10,693 10,870 10,277
Diluted 10,867 10,901 10,705 10,877 10,277
Number of shares outstanding (period end) 10,740 10,873 10,508 10,916 10,725
Actual and Pro Forma Comparative Unaudited Per Share Data
The following table shows information about our companies' net earnings per
common share, dividends per common share and book value per common share, and
similar information reflecting the merger, which is referred to as "pro forma"
information. The information listed as "equivalent pro forma" was obtained by
assuming that a share of Lamar common stock is exchanged for .55 shares of
Hancock Series A Preferred
9
- --------------------------------------------------------------------------------
Stock and that the .55 shares of Hancock Series A Preferred Stock is converted
into Hancock common stock at the initial conversion ratio of .4444.
In presenting the comparative pro forma information for certain time
periods, we have assumed that the merger is accounted for using the purchase
method of accounting. The unaudited pro forma consolidated data below are for
illustrative purposes only. The companies may have performed differently had
they been combined at the assumed date. Do not rely on this information as being
indicative of the historical results that would have been achieved had the
companies been combined at the assumed date or of the future results that
Hancock will experience after the merger.
For the year ended
December 31, 2000
Hancock historical per common share data:
Net earnings per common share (basic and diluted) 3.39
Book value per common share 31.79
Cash dividends paid per common share 1.25
Hancock pro forma consolidated per Hancock common
share data: (1)
Net earnings per common share (basic and diluted) 3.24
Book value per common share 31.79
Cash dividends paid per common share 1.25
Lamar historical per common share data:
Net earnings per common share (basic and diluted) 0.66
Book value per common share 8.54
Cash dividends paid per common share 0.20
Hancock pro forma consolidated per Lamar equivalent
common share data: (2)
Net earnings per common share (basic and diluted) 0.80
Book value per common share 7.77
Cash dividends declared per common share 0.31
(1) The Hancock pro forma consolidated per common share data assumes the
issuance of 1,658,274 shares of Series A Preferred Stock convertible into
Hancock common stock at the conversion ratio of .4444.
(2) The Hancock pro forma consolidated per Lamar equivalent per common share
data amounts are calculated by multiplying the Hancock pro forma
consolidated common share data by the exchange ratio of .55 and the
conversion ratio of .4444.
Comparative Per Share Market Price Information
The following table sets forth the closing prices per share of Hancock
common stock and Lamar common stock as reported on the Nasdaq National Market
System on (1) January 30, 2001 the last full trading day prior to the public
announcement of the merger, and (2) ________, the last full trading day for
which closing prices were available at the time of the printing of this Proxy
Statement-Prospectus.
Lamar Common Stock Hancock Common Stock
January 30, 2001
______________, 2001 8.56 37.50
Because the market price of Hancock common stock and Lamar common stock may
increase or decrease before the completion of the merger, you are urged to
obtain current market quotations.
10
In addition to historical information, this document contains statements
which constitute forward-looking statements and information which are based on
management of Hancock's and Lamar's beliefs, plans, expectations and assumptions
and on information currently available to management. The words "may," "should,"
"expect," "anticipate," "intend," "plan," "continue," "believe," "seek,"
"estimate," and similar expressions used in this document that do not relate to
historical facts are intended to identify forward-looking statements. These
statements appear in a number of places in this document, including, but not
limited to, statements found in "INFORMATION ABOUT LAMAR - Lines of Business" on
page ____ and in "INFORMATION ABOUT LAMAR - Management's Discussion and Analysis
of Financial Conditions and Results of Operations." All phases of Hancock's and
Lamar's operations are subject to a number of risks and uncertainties. Investors
are cautioned that any such forward-looking statements are not guarantees of
future performance and involve risks and uncertainties, and that actual results
may differ materially from those projections in the forward-looking statements.
Among the factors that could cause actual results to differ materially are the
risks and uncertainties discussed in this report, including, without limitation,
the portions referenced above, and the uncertainties set forth from time to time
in Hancock's and Lamar's other public reports and filings and public statements,
many of which are beyond the control of Hancock and Lamar, and any of which, or
a combination of which, could materially affect the results of Hancock's and
Lamar's operations and whether forward-looking statements made by Hancock and
Lamar ultimately prove to be accurate.
THE MEETING
Introduction
This Proxy Statement-Prospectus is first being mailed on or about
______________, 2001 to the shareholders of Lamar Capital Corporation ("Lamar")
in connection with the solicitation of proxies on behalf of the Board of
Directors of Lamar for use at a special meeting (the "Meeting") of shareholders
of Lamar to be held at the date, time and place set forth in the accompanying
notice, and at any adjournment thereof and is accompanied by the Notice of
Meeting and Form of Proxy.
Purpose of the Meeting
At the Meeting Lamar shareholders will be asked to consider and vote upon a
proposal to adopt an Agreement and Plan of Merger dated as of February 21, 2001
(the "Merger Agreement") by and between Lamar and Hancock Holding Company, a
Mississippi corporation ("Hancock"), and pursuant to which Lamar will be merged
into Hancock (the "Merger"). A copy of the Merger Agreement is attached hereto
as Appendix C.
Solicitation, Voting and Revocation of Proxies
When a proxy in the form accompanying this Proxy Statement-Prospectus is
properly executed and returned, the shares represented thereby will be voted in
the manner specified therein. ALL EXECUTED BUT UNMARKED PROXIES THAT ARE
RETURNED WILL BE VOTED "FOR" THE MERGER. An instruction to abstain from voting
on the Merger will be considered present for quorum purposes but will have the
same effect as a vote against the Merger. Failure to vote against the Merger
will constitute a waiver of a shareholder's statutory dissenters' appraisal
rights.
No matters are expected to be considered at the Meeting other than the
proposal to approve the Merger, but if any other matters should properly come
before the Meeting, it is intended that proxies will be voted on all such
matters in accordance with the judgment of the person(s) voting them.
Any proxy may be revoked at any time before it is voted. A shareholder may
revoke a proxy (1) by submitting a subsequently dated proxy, (2) by giving
written notice of revocation to the Secretary of Lamar or (3) upon request, if
such shareholder is present at the Meeting and elects to vote in person. Mere
attendance at the Meeting will not of itself revoke a previously submitted
proxy. Revocation of a proxy will not affect a vote on any matter taken before
receipt of the revocation.
11
The cost of soliciting proxies will be borne by Lamar. In addition to the
use of the mails, proxies may be solicited personally, by telephone, telecopier,
or telegram, by directors, officers and employees of Lamar who will not receive
any additional compensation for so doing.
Shares Entitled to Vote; Quorum
Only shareholders as of the close of business on _________, 2001, are
entitled to notice of and to vote at the Meeting (the "Record Date"). As of the
Record Date, there were 4,307,207 shares of Lamar common stock outstanding, each
of which is entitled to one vote on all matters to come before the Meeting. The
presence at the Meeting, in person or by proxy, of the holders of a majority of
the outstanding shares of Lamar common stock is necessary to constitute a
quorum. A quorum is based upon the total number of Lamar shares outstanding.
Therefore, not returning your proxy card would make it more difficult to obtain
a quorum because your shares would not be counted as present at the Meeting for
quorum purposes.
Vote Required
Approval of the Merger requires the affirmative vote of the holders of a
majority of the outstanding shares of Lamar common stock. As of the Record Date,
directors and executive officers of Lamar and their affiliates were the
beneficial owners of approximately 28.7% of the outstanding Lamar stock entitled
to vote at the Meeting. Pursuant to the terms and conditions of Voting
Agreements executed by each of the Directors of Lamar (at the time the Merger
Agreement was executed), the Directors of Lamar have agreed to vote all of their
shares in favor of the Merger. It is expected that all of the executive officers
of Lamar will also vote all of their shares in favor of the Merger. See
"INFORMATION ABOUT LAMAR - Security Ownership of Certain Beneficial Owners and
Management." Under Mississippi law, shareholders of Hancock are not required to
approve the Merger; however, shareholders of Hancock are required to authorize
the preferred stock and approval of the preferred stock is a condition to the
Merger.
THE MERGER
The following description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete Merger
Agreement itself, which is attached hereto as Appendix C.
Description of the Merger
Subject to the terms and conditions of the Merger Agreement, Lamar will be
merged into Hancock. As a result of the Merger, the separate corporate existence
of Lamar will cease and Hancock will be the surviving corporation (the
"Surviving Corporation") and will continue to exist as a Mississippi
corporation. Subject to the satisfaction or waiver of certain conditions set
forth in the Merger Agreement and described more fully in "--Regulatory
Approvals and Other Conditions," and "--Conditions of the Merger," the Merger
will become effective (the "Effective Date") upon the filing of articles of
merger in the office of the Secretary of State of the State of Mississippi in
accordance with the Mississippi Business Corporation Act ("MBCA").
The Merger will have the effects set forth in the MBCA. The charter and
bylaws of Hancock at the Effective Date shall be the charter and bylaws of
Hancock in effect immediately prior to the Effective Date. The directors of
Hancock immediately following the Merger shall be those directors of Hancock
immediately prior to the Merger without change.
As a result of the Merger, all shares of Lamar stock will cease to be
outstanding, and each holder of a certificate for shares of Lamar stock
("Certificate") will thereafter cease to have any rights with respect to such
shares. In exchange for each share of Lamar common stock, each Lamar shareholder
will have the right to elect to receive either (1) $11.00 in cash or (2) .55
shares of Hancock Series A Preferred Stock. No more than 49% of the total shares
of Lamar common stock or less than 30% of the total shares of Lamar common stock
may be exchanged for cash. If the total number of shares for which cash
consideration has been effectively elected (together with the shares of Lamar
common stock for which dissenters rights have been asserted) is more than 49% of
the total outstanding shares of Lamar common stock, then the amount of cash
given to the shareholders electing to receive
12
cash consideration will be reduced so that the amount of cash consideration
being paid is as nearly equal as possible to 49% and preferred stock will be
given instead. If the total number of shares for which cash consideration has
been effectively elected (together with the shares of Lamar common stock for
which dissenters rights have been asserted) is less than 30% of the total
outstanding shares of Lamar common stock, then the amount of preferred stock
given to each Lamar shareholder electing to receive preferred stock
consideration will be reduced so that the amount of cash consideration being
paid is as nearly equal as possible to 30%. All reductions will be proportional.
Hancock will not issue any fractional shares. Instead, Hancock will pay
cash for any fractional shares.
If before the Effective Date of the Merger, Lamar or Hancock changes its
number of outstanding shares as a result of a stock split, reverse stock split,
stock dividend, recapitalization or other similar transaction, the exchange
ratio will be appropriately adjusted.
It is expected that the market price of Hancock common stock will fluctuate
between the date of this Proxy Statement-Prospectus and the date on which the
Merger is consummated and thereafter. However, because the exchange ratio is
fixed, the fluctuation of the market price of Hancock common stock will not
affect the exchange ratio. No Hancock Series A Preferred Stock has been issued
and Hancock cannot predict the price at which it will trade after the Merger. No
assurance can be given concerning the market price of Hancock common stock or
preferred stock before or after the Effective Date.
The ultimate result of the transactions contemplated by the Merger
Agreement will be that the business and properties of Lamar will become
Hancock's business and properties, and Lamar shareholders will become preferred
shareholders of Hancock (except for Lamar shareholders who elect to receive cash
consideration only and dissenting shareholders, who will also receive cash).
Background of and Reasons for the Merger
During the last several years there have been significant developments in
the banking industry. These developments have included the increased emphasis
and dependence on automation, specialization of products and services, increased
competition from other financial institutions and financial service providers,
and a trend toward consolidation and geographic expansion. In January of 2000,
Lamar's Board began general discussions about the future of Lamar Bank and the
cost of necessary upgrades in plant equipment and products if it remained
independent. In February of 2000, Mr. George Schloegel contacted Lamar and
expressed interest about a possible merger of Lamar into Hancock. In March of
2000, Lamar's financial advisor, without knowledge of these initial discussions
between Lamar and Hancock, contacted Lamar to discuss the possibility of a
merger of Lamar Bank with a larger bank. At this time Morgan Keegan advised
Lamar that it felt there would be several banks which might be interested in a
possible merger with Lamar. Morgan Keegan was advised of the expression of
interest by Hancock.
In September of 2000, Morgan Keegan began preliminary discussions with two
other banks. Discussions with one of these banks ended near the end of 2000 and
the other bank met with representatives of Lamar to conduct initial discussions.
At the end of December of 2000 and in early January of 2001, the other bank as
well as Hancock continued preliminary discussions about the possibility of a
possible merger.
Management of Lamar reviewed the effect on its shareholders of the cost of
upgrades necessary to remain competitive if it remained independent and at the
same time reviewed financial information of the other bank and Hancock and
considered preliminary offers from the other bank and Hancock. Management of
Lamar felt that the offer received from Hancock was more attractive to its
Shareholders as compared to the other preliminary offer and remain independent
and also felt that the synergies between Lamar and Hancock would result in a
better combination due to market locations of both banks as well as a similar
philosophy between the banks.
Accordingly, in January 2001, representatives of Lamar and Hancock, with
the assistance of Lamar's financial advisor, Morgan Keegan & Company, Inc.
entered into extensive negotiations which led to the execution of a Letter of
Intent on January 31, 2001 and ultimately, on February 21, 2001 the Merger
Agreement was executed.
In deciding to enter into the Merger Agreement, Lamar's Board, after
considering various alternatives, concluded that the Merger Agreement was in the
best interest of Lamar and its shareholders because it would permit
13
shareholders to exchange on favorable terms their ownership interests in Lamar
for participation in the ownership of a regional banking organization operating
on a multi-state basis. Furthermore, the preferred stock provides Lamar
shareholders with favorable terms as it relates to dividend and conversion
features. The Lamar Board also concluded that those shareholders of Lamar would
benefit additionally in that they would attain greater liquidity in their
investment by obtaining shares of stock of a corporation whose securities are
more widely held and significantly more actively traded.
Throughout this process, Lamar's Board consulted with its financial and
other advisors, as well as with Lamar's management and considered a number of
factors, including, but not limited to, the following: (1) the parties'
respective earnings and dividend records, financial conditions, historical stock
prices and managements; (2) the market for Bank's services and the competitive
pressures existing in Bank's market area; (3) the outlook for Lamar and Bank in
the financial institutions industry; (4) the amount and type of consideration to
be received by Lamar shareholders; (5) the fact that Hancock stock is more
widely held and more actively traded and should provide Lamar shareholders with
more liquidity than is currently available to them; (6) recent changes in the
regulatory environment will result in Lamar and Bank facing additional
competitive pressures in Lamar Bank's market area from other financial
institutions with greater financial resources capable of offering a broad array
of financial services; (7) the opinion of Morgan Keegan & Company, Inc. as to
the fairness of the exchange ratio; and (8) the fact that the Merger is expected
to qualify as a tax-free reorganization so that neither Lamar nor Lamar's
shareholders (except to the extent that cash is received as (a) cash payment,
(b) in respect of fractional shares, or (c) in payment of statutory dissenters'
appraisal rights) will recognize any gain due to the Merger.
Lamar's Board did not assign any specific or relative weight to the
foregoing factors in its considerations. Lamar's Board believes that the Merger
will provide significant value to all Lamar shareholders and will enable them to
participate in opportunities for growth that Lamar's Board believes the Merger
makes possible.
Based on the foregoing, Lamar's Board has approved the Merger Agreement,
believes that it is in the best interest of Lamar shareholders, and recommends
that shareholders of Lamar vote "FOR" approval of the Merger Agreement.
There have been no other material contracts or other transactions between
Lamar and Hancock since signing the Merger Agreement, nor have there been any
material contracts, arrangements, relationships or transactions between Lamar
and Hancock during the past five years, other than in connection with the Merger
Agreement and as described in this document.
Opinion of Lamar's Financial Advisor
Lamar retained Morgan Keegan & Company, Inc. ("Morgan Keegan") as its
financial advisor to render an opinion to the Lamar Board of Directors
concerning the fairness, from a financial point of view, to Lamar stockholders
of the consideration offered pursuant to the Agreement (the "Opinion"). Morgan
Keegan was retained by Lamar on the basis of, among other things, its experience
and expertise in the bank and thrift industries.
On February 21, 2001, Morgan Keegan delivered its written Opinion to the
Board of Directors of Lamar to the effect that, as of February 21, 2001 and
based upon and subject to certain matters stated in such Opinion, the
consideration offered is fair, from a financial point of view, to Lamar
stockholders. That Opinion was reconfirmed in writing as of _________________,
2001.
The full text of the _________________, 2001 written Opinion of Morgan
Keegan, which sets forth the assumptions made, matters considered and
limitations on the review undertaken, is attached hereto as Appendix A and is
incorporated herein by reference. Lamar stockholders are urged to read the
Opinion carefully in its entirety. Morgan Keegan's Opinion is directed only to
the fairness to the Lamar stockholders, from a financial point of view, of the
consideration offered and does not address any other aspect of the Merger or
related transactions and does not constitute a recommendation to any stockholder
as to how such stockholder should vote at the Meeting. The summary of the
Opinion of Morgan Keegan set forth in this Proxy Statement-Prospectus is
qualified in its entirety by reference to the full text of such opinion.
14
In arriving at its Opinion, Morgan Keegan reviewed the Merger Agreement and
held discussions with certain senior officers, directors and other
representatives and advisors of Lamar and certain senior officers and other
representatives and advisors of Hancock concerning the businesses, operations
and prospects of Lamar and Hancock. Morgan Keegan examined certain publicly
available business and financial information relating to Lamar and Hancock as
well as certain financial forecasts, to the extent publicly available, and other
data for Lamar and Hancock which were provided to Morgan Keegan by or otherwise
discussed with the respective management teams of Lamar and Hancock, including
information relating to certain strategic implications and operational benefits
anticipated from the Merger. Morgan Keegan reviewed the financial terms of the
Merger as set forth in the Merger Agreement in relation to, among other things:
current and historical market prices and trading volumes of Lamar and Hancock
Common Stock; the historical and publicly available projected earnings and
operating data of Lamar and Hancock; and the capitalization, regulatory status
and financial condition of Lamar and Hancock. Morgan Keegan considered, to the
extent publicly available, the financial terms of certain other similar
transactions recently effected which Morgan Keegan considered relevant in
evaluating the Merger and analyzed certain financial, stock market and other
publicly available information relating to the businesses of other companies
whose businesses Morgan Keegan considered relevant in evaluating those of Lamar
and Hancock. Morgan Keegan also considered the relative contributions of Lamar
and Hancock to the combined company. In addition to the foregoing, Morgan Keegan
conducted such other analyses and examinations and considered such other
financial, economic and market criteria as Morgan Keegan deemed appropriate to
arrive at its Opinion. Morgan Keegan noted that its Opinion was necessarily
based upon information available, and financial, stock market and other
conditions and circumstances existing and disclosed, to Morgan Keegan as of the
date of its Opinion. Morgan Keegan assumed no responsibility to update or revise
its Opinion based upon circumstances or events occurring after the date of its
Opinion.
In conducting its review and rendering its Opinion, Morgan Keegan assumed
and relied, without independent verification, upon the accuracy and completeness
of all financial and other information publicly available or furnished to or
otherwise reviewed by or discussed with Morgan Keegan. With respect to
financial forecasts and other information provided to or otherwise reviewed by
or discussed with Morgan Keegan, the management teams of Lamar and Hancock
advised Morgan Keegan that such forecasts and other information were reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the respective management teams of Lamar and Hancock as to the
future financial performance of Lamar and Hancock and the strategic implications
and operational benefits anticipated from the Merger. Morgan Keegan assumed,
with the consent of the Board of Directors of Lamar, that the Merger will be
accounted for as a purchase transaction in accordance with generally accepted
accounting principles. Morgan Keegan did not express any opinion as to what the
value of Hancock common or preferred stock actually will be when issued pursuant
to the Merger or the price at which Hancock common or preferred stock will trade
subsequent to the Merger. In addition, Morgan Keegan did not make or obtain an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of Lamar or Hancock nor did Morgan Keegan make any physical
inspection of the properties or assets of Lamar or Hancock. Morgan Keegan was
not asked to consider, and its Opinion does not address, the relative merits of
the Merger as compared to any alternative business strategies that might exist
for Lamar or the effect of any other transaction in which Hancock might engage.
In addition, Morgan Keegan was asked to and did assist in recommending the
specific consideration payable in the Merger, along with Lamar and Hancock
through arms-length negotiations. No other limitations were imposed by Lamar on
Morgan Keegan with respect to the investigations made or procedures followed by
Morgan Keegan in rendering its Opinion.
The following is a summary of the principal analyses performed by Morgan
Keegan in connection with its Opinion.
Summary Transaction Analysis
Morgan Keegan reviewed the terms of the proposed transaction, including the
consideration to be received and the aggregate transaction value. Lamar
shareholders will be able to elect to receive $11.00 in cash or .55 shares of
convertible preferred stock or a combination of cash and convertible preferred
stock for each share of Lamar common stock, provided that in no event shall cash
be paid for more than 49% or less than 30% of the total outstanding shares of
Lamar common stock, resulting in an implied total transaction value of $47.4
million. This indicates an implied value of $11.00 per share of Lamar common
stock (assuming 4,307,207 shares outstanding). Morgan Keegan calculated that as
of February 21, 2001, the aggregate transaction value represented 11.4% of the
total assets of Lamar at December 31, 2000, 15.5% of the total deposits of Lamar
at December 31, 2000, 1.29x
15
Lamar's stated book value at December 31, 2000 and 16.65x Lamar's earnings for
the year ended December 31, 2000 and a premium of 63.0% over the closing price
of Lamar's common stock on December 29, 2000.
Contribution Analysis
Morgan Keegan reviewed certain historical financial and operating
information for Lamar, Hancock and the pro forma combined entity resulting from
the Merger based on financial data provided by Lamar and Hancock at December 31,
2000. Morgan Keegan analyzed the relative balance sheet contribution of Lamar
and Hancock for certain data to the combined company on a pro forma basis as of
December 31, 2000. This analysis indicated that Lamar would have contributed
12.12% to combined total assets, 11.49% to combined loans (net of allowances for
loan losses), 10.90% to deposits and 9.73% to tangible equity. Morgan Keegan
also analyzed the relative income statement contribution of Lamar and Hancock
for certain data to the combined company on a pro forma basis. This analysis
indicated that Lamar would have contributed 10.01% to combined net interest
income for the latest twelve months ("LTM") ended December 31, 2000, 6.46% to
combined pretax income and 7.17% to combined net income. At the consideration to
be received, and assuming 70% of Lamar's shares are converted into preferred
stock for the purpose of calculating the common equivalent shares at Hancock's
common stock exchange price of $45.00, the holders of outstanding Lamar common
stock would own approximately 6.24% of Hancock outstanding shares and
approximately $14.2 million in cash.
Comparable Company Analysis for Lamar
Morgan Keegan reviewed and compared certain financial information relating
to Lamar to corresponding financial information, public market multiples and
ratios for eleven publicly traded banks headquartered in the Southeast that it
deemed to be comparable to Lamar. The companies Morgan Keegan used for the
purposes of this analysis were Auburn National Bancorporation, Inc., Citizens
Holding Company, Colony Bankcorp, Inc., Community Financial Group, Inc.,
Community First Banking Company, GB&T Bancshares, Inc., Habersham Bancorp,
MidSouth Bancorp, Inc., Savannah Bancorp, Inc., SNB Bancshares, Inc. and United
Security Bancshares, Inc. (collectively, the "Lamar Comparable Companies").
Morgan Keegan calculated a range of market multiples for the Lamar Comparable
Companies by dividing market value per share as of February 16, 2001 by each
such company's LTM earnings per share ended September 30, 2000 and by dividing
market value by tangible book value reported September 30, 2000. For the LTM
results ended September 30, 2000, Morgan Keegan also compared certain ratios
(including, among other things, return on latest assets, return on latest
equity; loan loss reserve to total loans; total equity capital to total assets;
and total loans to total deposits) of the Lamar Comparable Companies to Lamar.
Market value multiples for Lamar are as of January 3, 2001.
LAMAR COMPARABLE COMPANY TABLE
------------------------------
Market Value
------------------
LTM Tangible Return on Return on LLR/Total Equity/Total Total Loans/
--- -------- --------- --------- --------- ------------ -----------
EPS Book Value Latest Assets Latest Equity Loans Assets Total Deposits
--- ---------- ------------- ------------- ----- ------ --------------
High 15.58x 2.06x 1.48% 18.20% 2.15% 12.39% 130.08%
Low 9.71x 0.88x 0.60% 7.92% 0.73% 5.59% 64.02%
Mean 12.89x 1.53x 1.10% 12.64% 1.34% 8.59% 92.83%
Median 12.99x 1.45x 1.14% 12.52% 1.32% 8.03% 89.74%
----- ---- ---- ----- ---- ---- -----
Lamar 10.60x 0.82x 0.69% 8.47% 2.47% 8.84% 72.58%
Comparable Company Analysis for Hancock
Morgan Keegan reviewed and compared certain financial information relating
to Hancock to corresponding financial information, public market multiples and
ratios for nine publicly traded banks that it deemed to be comparable to
Hancock. The companies Morgan Keegan used for the purposes of this analysis were
Alabama National BanCorporation, Area Bancshares Corporation, BancFirst
Corporation, Community Trust Bancorp, Inc.,
16
First Charter Corporation, Texas Regional Bancshares, Inc., Trustmark
Corporation, WesBanco, Inc. and Whitney Holding Corporation (collectively, the
"Hancock Comparable Companies"). Morgan Keegan calculated a range of market
multiples for the Hancock Comparable Companies by dividing market value per
share as of February 16, 2001 by each such company's LTM earnings per share
ended September 30, 2000 and by dividing market value by tangible book value
reported September 30, 2000. For the LTM results ended September 30, 2000,
Morgan Keegan also compared certain ratios (including, among other things,
return on latest assets, return on latest equity; loan loss reserve to total
loans; total equity capital to total assets; and total loans to total deposits)
of the Hancock Comparable Companies to Hancock.
HANCOCK COMPARABLE COMPANY TABLE
--------------------------------
Market Value
------------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Total Loans/
--- -------- --------- --------- --------- ------------- ------------
EPS Book Value Latest Assets Latest Equity Loans Assets Total Deposits
--- ---------- ------------- ------------- ----- ------ --------------
High 15.47x 2.88x 1.56% 17.43% 1.59% 10.32% 107.97%
Low 8.53x 1.52x 0.90% 8.29% 1.23% 5.55% 73.49%
Mean 13.10x 1.95x 1.22% 13.40% 1.38% 8.13% 89.19%
Median 13.97x 1.75x 1.18% 13.67% 1.32% 8.04% 87.17%
----- ---- ---- ----- ---- ---- -----
Hancock 11.02x 1.35x 1.23% 11.31% 1.68% 9.98% 67.89%
Stock Return Analysis
Morgan Keegan reviewed and analyzed the price performance and the historical
trading volume for Hancock's common stock and Lamar's common stock, as well as
the indices of the Comparable Companies for each and the Nasdaq Bank Index, S&P
Bank Index and S&P 500 Index.
Compound Annual Growth Rate - excluding dividends
(ending February 6, 2001)
1 Year 3 Year 5 Year Volume /(1)/
------ ------ ------ -----------
Hancock 0.6% -15.5% 3.4% 0.07%
Hancock comp index 21.7% -2.6% 10.7% 0.12%
Lamar* -37.1% -16.0% n/a 0.16%
Lamar comp index 0.4% -10.9% 6.9% 0.03%
Nasdaq Bank index 30.9% -1.6% 13.8% NM
S&P Bank index 30.1% 0.7% 13.4% NM
S&P 500 -6.2% 8.5% 15.0% NM
/(1)/ Average daily volume divided by average diluted shares outstanding for the
last 12 months
* 1 year return for Lamar represents 1/3/2000 to 1/3/2001. 3 year return for
Lamar is from IPO date in 12/98 to 1 /3/2001 (one month before announcement date
of merger)
17
Morgan Keegan considers the stock of Hancock to be liquid and marketable.
Analysis of Selected Comparable Mergers and Acquisitions
In order to assess market pricing for comparable mergers, Morgan Keegan
reviewed overall merger transactions in the banking industry using two different
sets of parameters. Morgan Keegan selected 25 transactions occurring between
January 1, 1999 and February 16, 2001 involving selling banks located within the
United States with total assets between $100 million and $750 million, reported
ROA between 0.60% and 1.10%, reported ROE less than 15.0%, and non-performing
assets to total assets greater than 0.50% and 18 transactions occurring between
January 1, 1999 and February 16, 2001 within the United States with selling
banks trading at less than 12 times latest twelve months earnings per share one
day prior to the deal announcement. We further reviewed each of these
transactions sets after eliminating those transactions not structured utilizing
the purchase method of accounting, resulting in subsets of 12 transactions of
banks with similar performance ratios and 6 transactions of banks with P/E
multiples less than 12.0x one day prior to announcement. Because no transaction
was considered identical to the Merger, the medians of the overall transaction
multiples were considered more relevant than the multiples for any specific
transaction.
Medians of Comparable Mergers
Banks with P/E Multiples Less than 12.0x
Banks with Similar Ratios One Day Prior to Announcement Hancock/Lamar
-------------------------- ----------------------------- -------------
All Purchase Accounting All Purchase Accounting Merger
--- ------------------- --- ------------------- ------
Price/EPS (x) 20.77 20.21 14.38 15.94 16.65
Price/Book (x) 2.02 1.97 1.91 1.83 1.29
Price/Assets (%) 18.79 18.51 17.09 14.32 11.4
Price/Deposits (%) 21.43 21.22 19.76 17.02 15.5
One Month Share
Premium (%) 40.99 57.58 31.55 65.14 62.96
No company or transaction used in the comparable companies and comparable
transactions analyses for comparative purposes is identical to Lamar or the
Merger. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations concerning differences in financial and
operating characteristics of the companies and other factors. Mathematical
analysis (such as determining the average or median) is not, in itself, a
meaningful method of using comparable company or transaction data.
Discounted Cash Flow Analysis
Morgan Keegan performed a discounted cash flow analysis of the projected
cash flow available for dividends of Lamar for fiscal years 2001 through 2005,
based on projections provided by Lamar management. Using this information,
Morgan Keegan calculated a range of equity values for Lamar based on the sum of
(a) the present value of the cash flow available for dividends to Lamar and (b)
the present value of the estimated terminal value for Lamar assuming that it was
sold at the end of fiscal year 2005. In performing its discounted cash flow
analysis, Morgan Keegan assumed, among other things, discount rates of 15.0% to
19.0% and terminal multiples of net income of 11.0x to 15.0x. Those discount
rates and terminal multiples reflect Morgan Keegan's qualitative judgments
concerning the specific risk associated with such an investment and the
historical and projected operating performance of Lamar. This analysis resulted
in a range of $7.83 to $11.44 per share (shares outstanding plus options
outstanding), with a median of $9.50 per share.
The summary of the Morgan Keegan opinion set forth above does not purport
to be a complete description of the analyses performed by Morgan Keegan. The
preparation of a fairness opinion is not necessarily susceptible to
18
partial analysis or summary description. Morgan Keegan believes that its
analyses and the summary set forth above must be considered as a whole and that
selecting portions of its analyses, without considering all analyses, or of the
above summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the Opinion.
In addition, Morgan Keegan may have deemed various assumptions more or less
probable than other assumptions, so that the ranges of valuations resulting from
any particular analysis described above should not be taken to represent the
actual value of Lamar or the combined company.
In performing its analyses, Morgan Keegan made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Lamar or Hancock. The
analyses performed by Morgan Keegan are not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely
as part of Morgan Keegan's analysis of the fairness, from a financial point of
view, of the consideration to be paid by Hancock. The analyses do not purport
to be appraisals or to reflect the prices at which a company might actually be
sold or the prices at which any securities may trade at the present time or at
any time in the future.
As part of its investment banking business, Morgan Keegan is regularly
engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for other various
purposes. In the ordinary course of our business, we serve as a market maker
for Lamar common stock and Hancock common stock and trade shares for our own
account and the accounts of our customers. Accordingly, we may, at any time,
hold long or short positions in Hancock common stock or Lamar common stock.
Lamar has agreed to pay Morgan Keegan a retainer fee of $15,000, payable in
advance upon the signing of its engagement letter, an opinion fee of $125,000,
payable in cash promptly upon delivery by Morgan Keegan of the Opinion, and a
transaction fee equal to 0.60% of the total transaction consideration, which
includes the retainer fee and opinion fee, payable in cash at the closing of the
transaction. Lamar has also agreed to reimburse Morgan Keegan for its
reasonable out-of-pocket expenses and to indemnify Morgan Keegan against certain
liabilities, including liabilities under the federal securities laws.
Closing
The closing of the Merger will take place on a date that is mutually agreed
to by Hancock and Lamar that is within thirty (30) days following the later of
the date of receipt of all applicable regulatory approvals, the expiration of
all applicable statutory and regulatory waiting periods, the date Hancock's
Registration Statement filed with the Securities and Exchange Commission is
declared effective, and the date Lamar shareholders approve the Merger
Agreement, or such later date as may be agreed to by Lamar and Hancock.
Immediately upon consummation of the closing, or on such other later date as the
parties may agree, the Merger Agreement will be filed with the Secretary of
State of Mississippi and will thereupon become effective.
Election Procedures
Enclosed with this Proxy Statement-Prospectus is an election form to be
used by Lamar shareholders to elect to receive either cash or Hancock preferred
stock, or a combination thereof, in exchange for Lamar common stock. The
election deadline is the date of the meeting. Elections may not be changed after
the election deadline. Any election to receive Hancock preferred stock will be
final and may not be changed thereafter even though the effective date of the
Merger may occur a significant amount of time after the date of the meeting, and
the market value of Hancock common stock into which the Hancock preferred stock
is convertible may have increased or decreased significantly. Any shareholder
who fails to make an election by the election deadline will be deemed to have
elected to receive cash for all of his shares. Because the Merger Agreement
places limits on the total amount of cash which may be paid, any election is
subject to adjustment, and no guarantee can be given that an election will be
fully honored.
19
Exchange of Certificates
Promptly after the Effective Date of the Merger, the Exchange Agent will
mail to each shareholder of Lamar a letter of transmittal and instructions for
use in effecting the exchange of Lamar Certificates for certificates for shares
of Hancock stock ("Hancock Certificates"), cash payments and cash in lieu of
fractional shares. Shareholders of Lamar are requested not to surrender their
Lamar stock certificates until they have received a letter of transmittal and
further written instructions.
Upon surrender of a Lamar Certificate to the Exchange Agent together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such certificate will be entitled to receive
the consideration effectively elected by such shareholder. Such consideration
will be either: (1) a Hancock Certificate for that number of whole shares of
Hancock Series A Preferred Stock into which his or her Lamar common stock were
converted and cash in lieu of fractional shares, if any, which such holder has
the right to receive, or (2) a check for the cash payment, after giving effect
to any required withholding tax. No interest will be paid or accrued on the
value of any Hancock stock or cash payable to holders of Lamar Certificates.
If a transfer of ownership of Lamar stock is not registered in Lamar's transfer
records but the Lamar Certificate is presented to the Exchange Agent,
accompanied by all documents required to evidence such transfer and evidence
that any applicable stock transfer taxes have been paid, the Exchange Agent will
send the transferee (depending on the Lamar shareholder's election) either a
check for the cash payment or a Hancock Certificate for the proper number of
shares of Hancock Series A Preferred Stock (together with a check for cash paid
in lieu of fractional shares, if any), as applicable.
No dividends on Hancock Series A Preferred Stock into which shares of Lamar
common stock were converted will be paid until the Lamar Certificate is
surrendered as described above. Subject to the effect of applicable laws,
following surrender of any such Lamar Certificate, there will be paid to the
holder of Lamar Certificates surrendered, (1) at the time of such surrender, the
amount of dividends or other distributions with a record date on or after the
Effective Date theretofore payable with respect thereto and not paid, less any
applicable withholding taxes, and (2) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Date but prior to surrender, less applicable withholding taxes. Lamar
Certificates surrendered for exchange by any "affiliate" of Lamar for purposes
of Rule 145(c) under the Securities Act will not be exchanged until Hancock has
received a written agreement from such person as provided in the Merger
Agreement.
If any Lamar Certificate has been lost, stolen or destroyed, upon the
making of an affidavit of that fact and, if required by Hancock, the posting of
a bond in such reasonable amount as Hancock may direct as indemnity against any
claim with respect to such Lamar Certificate, the Exchange Agent will either
send the transferee (depending on the Lamar shareholder's election) either a
check for the cash payment or a Hancock Certificate for the proper number of
shares of Hancock Series A Preferred Stock (together with a check for cash paid
in lieu of fractional shares, if any), and any unpaid dividends, and
distributions on shares of Hancock Series A Preferred Stock as provided in the
Merger Agreement.
Regulatory Approvals and Other Conditions
The Merger is subject to approval by the Federal Reserve Board ("FRB")
under the Bank Holding Company Act of 1956 (the "BHCA"), which requires the FRB,
when approving a transaction such as the Merger, to take into consideration the
financial and managerial resources (including the competence, experience and
integrity of the officers, directors and principal shareholders) and future
prospects of the existing and proposed institutions and the convenience and
needs of the communities to be served. In considering financial resources and
future prospects, the FRB will, among other things, evaluate the adequacy of the
capital levels of the parties to a proposed transaction.
The BHCA prohibits the FRB from approving a merger if it would result in a
monopoly or be in furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of the United
States, or if its effect in any section of the country would be substantially to
lessen competition or to tend to create a monopoly, or if it would in any other
manner result in a restraint of trade, unless the FRB finds that the anti-
competitive effects of a merger are clearly outweighed in the public interest by
the probable effect of the
20
transaction in meeting the convenience and needs of the communities to be
served. In addition, under the Community Reinvestment Act of 1977 the FRB must
take into account the record of performance of the existing institutions in
meeting the credit needs of the entire community, including low-and moderate-
income neighborhoods, served by such institutions.
Applicable U. S. federal law provides for the publication of notice and
public comment on applications or notices filed with the FRB and authorizes such
agency to permit interested parties to intervene in the proceedings. If an
interested party is permitted to intervene, such intervention could delay the
FRB approval required for consummation of the Merger.
The Merger generally may not be consummated until 30 days (which may be
shortened to 15 days with the consent of the U. S. Department of Justice)
following the date of applicable United States federal regulatory approval,
during which time the U. S. Department of Justice may challenge the Merger on
antitrust grounds. The commencement of an antitrust action by the U. S.
Department of Justice would stay the effectiveness of the regulatory agency's
approval unless a court specifically ordered otherwise.
On April 30, 2001, an application for the Merger was filed with the FRB.
It is anticipated that the application will be approved in the second quarter of
2001. No other regulatory approvals are required for consummation of the
Merger.
Hancock and Lamar are not aware of any governmental approvals or actions
that are required in order to consummate the Merger except as described herein.
Should such other approval or action be required, it is contemplated that
Hancock and Lamar would seek such approval or action. There can be no
assurance as to whether or when any such other approval or action, if required,
could be obtained.
Conditions of the Merger
In addition to the receipt of all necessary regulatory approvals, and the
approval of the Merger Agreement by the shareholders of Lamar, consummation of
the Merger Agreement is subject to the satisfaction of certain other conditions
on or before the Effective Date. Generally, such additional conditions include,
among others, the following: (1) the Proxy Statement-Prospectus must have been
filed with the Securities and Exchange Commission (the "SEC"), and the
Registration Statement of which it is a part must have been declared effective
by the SEC and not be the subject of any stop order or proceedings seeking a
stop order; (2) no action or proceeding shall have been threatened or instituted
before a court or other governmental body to restrain or prohibit the
transactions contem plated by the Merger Agreement; (3) Lamar must have
received from Watkins Ludlam Winter & Stennis, P.A., an opinion of counsel as to
certain tax aspects of the Merger; (4) Lamar shareholders must have approved the
Merger; and (5) Hancock shareholders must have approved an amendment to
Hancock's articles of incorporation authorizing the preferred stock.
The obligations of Lamar and Hancock to effect the Merger are also subject
to other conditions as set forth in the Merger Agreement to the effect, among
others, as follows: (1) each of the representations and warranties of the other
parties set forth in the Merger Agreement is true and correct in all material
respects on and as of the closing; (2) the other parties have in all material
respects performed all obligations required by the Merger Agreement to be
performed before the closing; (3) that there has not been a material adverse
change in the financial condition, results of operations or business of the
other parties; and (4) the receipt of customary legal opinion of the others'
counsel.
Conduct of Business Prior to the Effective Date
Pending consummation of the Merger Agreement, Lamar has agreed to conduct
its business in the ordinary course consistent with prudent business practices
and in compliance with all applicable laws; and without Hancock's prior consent,
with certain exceptions, Lamar will not, among other matters, (1) amend its
Articles of Incorporation or Bylaws, (2) sell, dispose of or encumber any
assets, issue or reacquire any stock, pay dividends (except as described below
under "INFORMATION ABOUT LAMAR - Dividends"), (3) authorize any capital
expenditure which individually or in the aggregate exceeds $20,000, (4) extend
any new or renew any existing loan which individually exceeds $250,000, (5)
adopt any type of compensation or benefit plan for Lamar or Bank
21
officers or employees, (6) grant any increase in compensation to any director,
officer, employee or representative of Lamar except in the ordinary course of
business consistent with past practice, (7) enter into, amend or terminate any
employment agreement, relationship or responsibilities with any director,
officer or key employee or representative of Lamar or Bank, or (8) enter into,
amend or terminate any employment agreement with any other person otherwise than
in the ordinary course of business, or take any action with respect to the grant
or payment of any severance or termination pay.
Waiver, Amendment and Termination
Lamar and Hancock may waive their respective rights under the Merger
Agreement if any such waiver is in writing. The Merger Agreement may be amended
or modified only upon written agreement of both Lamar and Hancock.
The Merger Agreement may be terminated at any time on or before the
Effective Date (a) by mutual consent; (b) by either party (1) if the Merger has
not become effective on or before September 30, 2001, (2) if the other party has
breached any covenant, representation or warranty that reflects a material and
adverse change in the financial condition of the other party, (3) if regulatory
approvals are not obtained and (4) if the Merger Agreement is not approved by
the required vote of Lamar's shareholders.
Except under certain circumstances specified in the Merger Agreement, upon
termination of the Merger Agreement, no liability will result on the part of
either party or their respective directors, officers, employees, agents or
shareholders unless there has been an intentional breach of the Merger Agreement
before the date of termination.
Interests of Certain Persons
On April 26, 2001 (with an effective date of June 1, 2001) Lamar, Hancock
and Kenneth Lott, President, Chief Operating Officer and Director, entered into
a Non-Compete Agreement (the "Non-Compete Agreement") which provides, among
other things, that Mr. Lott will receive a bonus of $10,416.66 payable one-half
on May 31, 2001 and one-half at the Closing of the Merger of Lamar Bank and
Hancock Bank. In connection with the execution of the Non-Compete Agreement,
Mr. Lott resigned from his positions as President, Chief Operating Officer and
Director of Lamar, effective May 31, 2001.
Lamar has entered into Executive Salary Continuation Agreements with Mr.
Roseberry, Ms. Roberts and Mr. Lott to provide incentives to these officers to
continue their employment with Lamar on a long-term basis. The agreements
provide for the continuation of annual salary payments upon retirement at age 65
or later for a period of 180 months (15 years) in the amounts of $50,500,
$44,900 and $57,200 in the case of Mr. Roseberry, Ms. Roberts and Mr. Lott,
respectively. The agreements also provide for continued salary payments if the
executive dies, becomes disabled or if the executive's employment is terminated
by Lamar. The agreement also provides for a lump sum payment to the executives
if Lamar terminates the executive prior to the executive reaching the age of 65.
The amount of this lump sum payment is determined on a sliding scale depending
on the number of years the employee has been employed with Lamar; however, in
the event of a change of control, the executive will be 100% vested in the
maximum lump sum amount, which is $468,202, $416,283 and $530,320, in the case
of Mr. Roseberry, Ms. Roberts and Mr. Lott, respectively. The Merger of Lamar
into Hancock would constitute a change of control for purposes of triggering the
automatic vesting of the maximum lump sum benefit for the executives. The Non-
Compete Agreement with Mr. Lott provides that his resignation will not affect
his rights under the Executive Compensation Agreement.
From and after the Effective Date, Hancock has agreed to indemnify and hold
harmless each person who is an officer or director of Lamar or Lamar Bank from
claims, based upon or arising from his capacity as an officer or director of
Lamar or Lamar Bank, as the case may be, to the same extent he would have been
indemnified under the Articles of Incorporation and Bylaws of Hancock as they
were in effect on the date of the Merger Agreement as if he were an officer or
director of Hancock at all relevant times.
It is anticipated that Mr. Roseberry, who is Chairman and Chief Executive
Officer of Lamar, will be appointed to the Board of Directors of Hancock and
Hancock Bank.
22
Employee Benefits
Lamar's and Bank's Employee Stock Ownership Plan and 401(k) Plan ("Employee
Plans") will remain operative and in effect through the Effective Date. The
Employee Plans will be terminated as of the Effective Date and distributed to
vested employees of Lamar and Bank in accordance with the terms of the Employee
Plans after the normal and customary contributions have been made consistent
with past practices. All retained employees will be eligible to enter the
Hancock Bank Profit Sharing Plan, Hancock Bank 401(k) Plan and Hancock Bank
Pension Plan based on the provisions set forth in the respective plans. All
retained employees will be granted full credit for all prior service for
vesting, eligibility and benefit purposes for the Hancock Bank Profit Sharing
Plan, for eligibility purposes for the Hancock Bank 401(k) Plan and for vesting
and eligibility purposes for the Hancock Bank Pension Plan. Bonuses may be paid
by Hancock to certain retained employees in accordance with Hancock's existing
policy for payment of bonuses.
All other Lamar and Bank benefit plans will continue through the Effective
Date. Thereafter, all retained employees will be eligible to participate in all
Hancock Bank employment benefit plans not set forth above based on the
provisions set forth in the plans with full credit for all prior service.
Expenses
Hancock and Lamar have each agreed to pay their respective expenses
incurred in connection with or incidental to the Merger Agreement. Hancock is
responsible for preparing the applications, regulatory filings and Registration
Statement necessary to obtain approval of the Merger and the issuance of the
Hancock stock. Lamar is responsible for the cost of its accountants and legal
counsel and will bear all costs related to conducting the meeting and obtaining
shareholder approval of the Merger Agreement.
Status Under Federal Securities Laws; Certain Restrictions on Resales of
Securities
The shares of Hancock Series A Preferred Stock to be issued pursuant to the
Merger Agreement have been registered under the Securities Act of 1933
("Securities Act"), thereby allowing such shares to be sold without restriction
by shareholders of Lamar who are not deemed to be "affiliates" (as that term is
defined in the rules under the Securities Act) of Lamar and who do not become
affiliates of Hancock. The shares of Hancock stock to be issued to affiliates
of Lamar may be resold only pursuant to an effective registration statement,
pursuant to Rule 145 under the Securities Act (which, among other things,
permits the resale of securities subject to certain volume limitations) or in
transactions otherwise exempt from registration under the Securities Act.
Hancock will not be obligated and does not intend to register its shares under
the Securities Act for resale by shareholders who are affiliates.
Before the Effective Date, each affiliate of Lamar will deliver to Hancock
affiliate agreements pertaining to the limitations on the transferability of
such affiliate's shares of Hancock stock acquired in the Merger. These
agreements will provide that the affiliate will not sell, pledge, transfer or
otherwise dispose of such shares of Hancock stock in violation of the Securities
Act.
Accounting Treatment
It is intended that the Merger will qualify for purchase accounting
treatment under accounting principles generally accepted in the United States.
Accordingly, the earnings of Lamar will be combined with the earnings of Hancock
from and after the Effective Date of the Merger and any goodwill or other
intangibles recorded in the transaction will be amortized through charges to
income in future periods. In addition, assets and liabilities of Lamar will be
recorded at fair value on the date of the transaction.
Material Federal Income Tax Consequences of the Merger
The following discussion of the principal federal income tax consequences
of the Merger is based on provisions of the Internal Revenue Code of 1986 (the
"Code"), the regulations thereunder, judicial authority, and administrative
rulings and practice as of the date hereof or before the Effective Date.
Consummation of the Merger
23
is conditioned on the receipt by Hancock and Lamar of an opinion of counsel to
the effect that the Merger will be treated, for federal income tax purposes, as
a reorganization under Section 368(a) of the Code.
Part Stock and Part Cash Received
If the consideration received by a Lamar shareholder consists of part cash
and part Hancock Series A Preferred Stock, a shareholder whose adjusted basis in
the shares of Lamar common stock surrendered in the transaction is less than the
value, as of the Effective Date, of the Hancock Series A Preferred Stock plus
the amount of cash received will realize a gain on the transaction. Such
shareholders will recognize gain equal to the lesser of (i) the excess, if any,
of the value, as of the Effective Date, of the Hancock Series A Preferred Stock
plus the amount of cash received, over the adjusted basis of the shares of Lamar
common stock surrendered in the transaction, or (ii) the amount of cash
received. The character of such recognized gain (i.e., as a dividend or capital
gain) will depend upon whether, on a shareholder-by-shareholder basis, the
exchange of Lamar common stock for Hancock Series A Preferred Stock and cash has
the effect of the distribution of a dividend. In this case, there are two
applicable tests for this determination: (i) a test to see if the hypothetical
redemption of Hancock common stock (discussed below) is "substantially
disproportionate" with respect to the shareholder, and (ii) a test to determine
whether the hypothetical redemption of Hancock Series A Preferred Stock is "not
essentially equivalent to a dividend," with both tests taking into account the
constructive stock ownership rules of Section 318(a) of the Code. If either one
of these tests is met, the Lamar shareholder will be entitled to capital gain
treatment.
Under the above two tests, each Lamar shareholder is treated first as
hypothetically receiving 100% Hancock Series A Preferred Stock in the Merger,
followed immediately by a hypothetical redemption for cash of a portion of those
shares assumed received. This hypothetical cash redemption is deemed to reduce
the shareholder's ownership interest in Hancock to the number of Hancock shares
which are actually received in the Merger by a Lamar shareholder. The
"substantially disproportionate" test is met if the number of shares of Hancock
Series A Preferred Stock actually received by a Lamar shareholder in the Merger
is less than 80% of the number of shares which would have been received had
solely stock been issued to him, thus entitling the shareholder to receive
capital gain treatment with respect to cash received by him, determined in the
manner discussed above.
If the "substantially disproportionate" test is not met, the gain will
nevertheless qualify for capital gain treatment if the "not essentially
equivalent to a dividend" test is met. Under analogous Internal Revenue Service
rulings and case law, this test will be met with respect to any shareholder (i)
who is a minority shareholder whose relative stock ownership in Hancock after
the Merger is minimal and who exercises no control over the affairs of Hancock,
and (ii) whose ownership interest in Hancock is substantially less (after
consideration of pre-existing ownership of Hancock stock either directly or
through attribution) than what would have resulted in an exchange solely for
stock. The application of these rules pertaining to capital gains treatment is
dependent upon each Lamar shareholder's particular facts and circumstances and
is affected by the above-mentioned attribution rules. Each Lamar shareholder
should consult his tax advisor as to the tax effects of the Merger, including
the receipt of cash.
Preferred stock received in a wholly or partly tax-free corporate
reorganization is Section 306 stock to the extent that either the effect of the
transaction is substantially the same as the receipt of a (nontaxable) stock
dividend or the stock was received in exchange for Section 306 stock. Upon the
disposition of Section 306 stock, the total amount received for the stock is
taxable as ordinary income. However, if no part of a distribution of money to
the Lamar shareholder in lieu of the Hancock preferred stock would be a
dividend, the Hancock preferred stock received by the Lamar shareholder will not
constitute Section 306 stock. Therefore, provided the Lamar shareholder's
shares of Lamar common stock were not Section 306 stock, if either the
"substantially disproportionate" test or the "not essentially equivalent to a
dividend" test is met, the Hancock preferred stock received by the Lamar
shareholder will not constitute Section 306 stock.
In the event a shareholder realizes a loss, under current tax laws, such
loss would not be currently allowed and would not be recognized for federal
income tax purposes. Such disallowed loss would be reflected in the adjusted
tax basis of the shares of Hancock Series A Preferred Stock received in the
Merger.
24
All Cash Received
If the consideration received by a Lamar shareholder consists entirely of
cash, gain or loss will be recognized by the shareholder to the extent of the
difference between the amount of cash received and the adjusted tax basis of the
shares of Lamar common stock surrendered in the transaction. Any such gain or
loss recognized will be treated as capital gain or loss if the Lamar common
stock surrendered in the transaction were held as capital assets and if after
the exchange such shareholder is not treated as constructively owning any
Hancock common stock. In determining constructive ownership, stock owned by a
shareholder's spouse, children, grandchildren and parent generally must be
attributed to that shareholder. Stock owned by partnerships, estates, trusts
and certain corporations is attributed to the partners, beneficiaries and
shareholders in applying these rules. If a shareholder's interest after
application of these attribution rules has not been completely terminated in the
transaction, that shareholder may nevertheless receive capital gain treatment
under the "substantially disproportionate" or "not essentially equivalent to a
dividend" tests discussed above.
All Stock Received
Any Lamar shareholder who, pursuant to the Merger, exchanges all of the
Lamar common stock that such holder owns solely for Hancock preferred stock will
not recognize any gain or loss upon such exchange. The aggregate tax basis of
Hancock preferred stock received by such a holder in exchange for Lamar common
stock will equal such holder's tax basis in the Lamar common stock surrendered.
If such shares of Lamar common stock are held as capital assets at the Effective
Date, the holding period of the Hancock preferred stock received will include
the holding period of the Lamar common stock surrendered therefor. Lamar's
shareholders should consult their tax advisors as to the determination of their
tax basis and holding period in any one share of Hancock preferred stock, as
several methods of determination may be available.
Fractional Shares
To avoid the expense and inconvenience to Hancock of issuing fractional
shares, no fractional shares of Hancock Series A Preferred Stock will be issued
pursuant to the Merger. Any Lamar shareholder who receives cash pursuant to the
Merger in lieu of a fractional share interest will be treated as having received
such fractional share pursuant to the Merger, and then as having exchanged such
fractional share for cash, at $11.00 per share of Hancock Series A Preferred
Stock, in a redemption by Hancock subject to the provisions and limitations of
Section 302(a) of the Code. If the Hancock Series A Preferred Stock represents
a capital asset in the hands of the shareholder, then the shareholder will
generally recognize capital gain or loss on such a deemed redemption of the
fractional share in an amount determined by the difference between the amount of
cash received for such fractional share and the shareholder's tax basis in the
fractional share.
Dissenters
Lamar's shareholders who perfect statutory appraisal rights will be treated
as having received the fair value of the Lamar common stock, as determined in
the dissenters' rights proceeding, in redemption of the Lamar common stock
subject to the proceeding. Such deemed redemption will be subject to the
provisions and limitations of Section 302(a) of the Code, with the result that a
holder who exercises statutory dissenters' rights will recognize gain or loss
equal to the difference between the amount realized and such holder's tax basis
in the Lamar common stock subject to the proceeding. Any such gain or loss
recognized on such redemption will be treated as capital gain or loss if the
Lamar common stock with respect to which statutory dissenters' rights were
exercised were held as capital assets and if after the deemed redemption, such
shareholder does not constructively own any Hancock Series A Preferred Stock.
Each Lamar shareholder who contemplates exercising statutory dissenters' rights
should consult his tax advisor as to the possibility that all or a portion of
the payment received pursuant to the exercise of such rights will be treated as
dividend income.
Backup Withholding
Unless an exemption applies under the applicable law and regulations,
Hancock Bank Trust Department as the Exchange Agent, will be required to
withhold 31% of any cash payments to which a shareholder or other payee is
entitled pursuant to the Merger unless the shareholder or other payee provides
his taxpayer identification number
25
(social security number or employer identification number) and certifies that
such number is correct. Each shareholder and, if applicable, each other payee
should complete and sign the substitute Form W-9 included as part of the
transmittal letter so as to provide the information and certification necessary
to avoid backup withholding, unless an applicable exemption exists and is
established in a manner satisfactory to Hancock and the Exchange Agent.
THE FOREGOING CONSTITUTES ONLY A GENERAL DESCRIPTION OF CERTAIN FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER WITHOUT REGARD TO THE PARTICULAR FACTS AND
CIRCUMSTANCES OF EACH LAMAR SHAREHOLDER. LAMAR SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
Dissenters' Appraisal Rights
Under Article 13, Section 79-4-13.01 et seq., of the MBCA, a copy of which
-- ---
is attached hereto as Appendix B, any holder of record of shares of Lamar common
stock who:
(1) files a written objection to the Merger prior to or at the meeting at
which the vote on the Merger is taken, and
(2) does not vote in favor of the Merger,
may demand in writing that Lamar pay to such shareholder the fair cash value of
such shares. A person who is a beneficial owner, but not a registered owner, of
shares of Lamar common stock who wishes to exercise the rights of a dissenting
shareholder under the MBCA must submit to Lamar the record shareholder's written
consent to the dissent not later than the time the beneficial owner asserts
dissenter's rights and he must do so with respect to all shares of which he is
the beneficial owner.
Any shareholder contemplating making a demand for appraisal is urged to
review carefully the provisions of Section 79-4-13.21 of the MBCA, particularly
the procedural steps required to perfect appraisal rights thereunder. Appraisal
rights will be lost if the procedural requirements of Section 79-4-13.21 are not
fully satisfied.
Set forth below is a summary of the procedures relating to the exercise of
appraisal rights. The following summary does not purport to be a complete
statement of the provisions of Article 13 of the MBCA and is qualified in its
entirety by reference to Appendix B hereto and to any amendments to such
sections as may be adopted after the date of this Proxy Statement-Prospectus.
Before the Lamar shareholders' vote is taken on the proposal to approve the
Merger, a shareholder of record who intends to exercise appraisal rights must:
(1) deliver to Lamar a written notice of his intent to demand payment for
his shares if the proposed merger is effectuated, and
(2) must not vote the shares of Lamar common stock held by such dissenter
in favor of the proposed merger.
Such written notice may be sent to Lamar at 401 Shelby Speights Drive,
Purvis, Mississippi 39475, telephone number (601) 794-6047, to the attention of
Robert W. Roseberry, Chief Executive Officer.
The return of a proxy by a dissenter with instructions to vote the shares
represented thereby against the Merger, or abstaining from voting, is not
sufficient to satisfy the requirement of delivering written objection to Lamar.
The submission of a signed blank proxy will serve to waive appraisal rights.
Within ten days after the Effective Date of the Merger, Lamar will notify
each dissenter who has purported to comply with the provisions of Section 79-4-
13.21 of the MBCA that the Merger has become effective.
Within the time specified in the notice of consummation, any dissenter must
file with Lamar a demand for payment for their shares as of the day prior to the
Effective Date of the Merger. The demand must comply with the
26
provisions of Article 13 of the MBCA and must specify the dissenter's name and
mailing address, the number of shares of Lamar common stock owned, and state
that the dissenter is demanding payment of his or her shares. The dissenter must
also certify that the dissenter had beneficial ownership of the shares before
the date set forth in the notice of consummation, which will be the date of the
first announcement of the proposed merger to the news media (January 31, 2001).
Simultaneously with the filing of the demand for payment, the dissenter shall
also deposit his stock certificates in accordance with the terms of the notice
of consummation. A dissenter who fails to satisfy any of the foregoing
conditions within the proper time periods will conclusively be presumed to have
acquiesced in the Merger and will lose his appraisal rights. The demand may be
sent to Lamar at 401 Shelby Speights Drive, Purvis, Mississippi 39475, telephone
number (601) 794-6047, to the attention of Robert W. Roseberry, Chief Executive
Officer.
Upon receipt of the demand, Lamar shall pay dissenters who complied with
Article 13 of the MBCA the amount Lamar estimates to be the fair value of the
dissenter's shares plus accrued interest. Certain financial information
concerning Lamar's estimate of the value of the shares, an explanation of how
interest was calculated, and a statement of rights to demand payment, along with
a copy of Article 13, must accompany such offer or payment.
If the dissenter disagrees with the value paid by Lamar, the dissenter may
notify Lamar in writing of his own estimate of the fair value of his shares and
amount of interest due and demand payment of his estimate. To be entitled to
such rights, the dissenter must notify Lamar of his demand in writing within
thirty days after Lamar made payment for the shares. If a dissenter has rejected
Lamar's payment and demanded payment of the fair value of the shares and
interest due and the demand for payment remains unsettled, Lamar shall commence
a judicial proceeding within sixty days after receiving the payment demand and
petition an appropriate court, as described in Article 13, to determine the fair
value of the shares and accrued interest. Lamar shall make all dissenters whose
demands remain unsettled parties to the proceeding and all parties must be
served with a copy of the petition. Each dissenter made a party to the
proceeding is entitled to judgment for the amount by which the court finds the
fair value of his shares, plus interest, exceeds the amount paid by Lamar.
If Lamar does not commence such action within the required 60-day period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.
Dissenters considering exercising appraisal rights should bear in mind that
the fair cash value of their shares determined under Section 79-4-13.30 of the
MBCA could be more than, the same as, or less than the consideration they would
otherwise receive pursuant to the Merger Agreement if they do not seek appraisal
of their shares.
The court in an appraisal proceeding shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. Additionally, the court may assess fees of legal counsel
and of experts for the respective parties. The court shall assess the costs
against Lamar except that the court may assess costs against all or some of the
dissenters to the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment under Article 13, or the
court may assess counsel fees against the dissenters who were benefitted.
Any Lamar shareholder who desires to exercise appraisal rights should
carefully review the Mississippi Business Corporation Act and is urged to
consult such shareholder's legal advisor before exercising or attempting to
exercise such rights.
INFORMATION ABOUT LAMAR
General
As permitted by the rules of the SEC, certain information relating to Lamar
that is not included in or delivered with this document is incorporated herein
by reference. See "WHERE YOU CAN FIND MORE INFORMATION" on page ______ and
"INFORMATION INCORPORATED BY REFERENCE" on page _____.
Lamar is a bank holding company headquartered in Purvis, Mississippi, with
locations in six southeastern Mississippi counties. Through its subsidiaries,
Lamar offers a broad line of banking and financial products and services with
the personalized focus of a community banking organization. The subsidiaries are
Lamar Bank, a
27
state chartered commercial bank with nine offices; Southern Financial Services,
Inc., a consumer finance company with six offices; and Lamar Data Solutions,
Inc., a company providing data processing, disaster recovery, and other
professional consulting services to community banks. Lamar Bank also provides
stock and other securities trading services through an arrangement with Raymond
James Financial Services, Inc.
Price Range of Lamar Common Stock
Lamar's common stock is traded on the Nasdaq National Market under the
symbol "LCCO." The following table presents the high and low sales prices of
Lamar's common stock for the periods indicated during the first quarter of 2001,
2000 and 1999, as reported by the Nasdaq National Market. Lamar completed its
initial public offering in the fourth quarter of 1998 at a price of $10.00 per
share.
Sales Price Per Share
-----------------------
High Low
----------- --------
2001
First Quarter $ 11.00 $ 7.00
2000
First Quarter $11.125 $ 8.00
Second Quarter 10.25 7.875
Third Quarter 8.563 7.188
Fourth Quarter 8.25 6.391
1999
First Quarter $ 10.25 $ 8.25
Second Quarter 10.125 9.00
Third Quarter 12.75 9.50
Fourth Quarter 11.75 10.25
On ______________________, 2001, the most recent practicable date prior to
the printing of this document, the high, low and last sales price of Lamar
common stock was as follows:
High Low Last Sales Price
---- --- ----------------
Lamar Common Stock ------- ------ ----------------
You should obtain current market quotations prior to making any decisions
as to the Merger.
Dividends
Lamar's dividend policy is for holders of common stock to be entitled to
receive dividends when, as and if declared by Lamar's Board of Directors out of
funds legally available therefore. During 2000 and 1999, Lamar declared and
paid cash dividends per share on its common stock as follows:
For Three Month Period Ended(1) Date Paid Dividends Per Share
---------------------------- --------- -------------------
March 31, 2001 April 13, 2001 $.0500
December 31, 2000 January 12, 2001 $.0500
September 30, 2000 October 13, 2000 $.0500
June 30, 2000 July 14, 2000 $.0500
March 31, 2000 April 14, 2000 $.0500
December 31, 1999 January 14, 2000 $.0500
September 30, 1999 October 15, 1999 $.0500
June 30, 1999 July 15, 1999 $.0400
March 31, 1999 April 15, 1999 $.0400
28
While historically Lamar has paid regular cash dividends, there is no
assurance that Lamar will pay dividends on the common stock in the future. The
declaration and payment of dividends on the common stock will depend upon the
earnings and financial condition of Lamar, its liquidity and capital
requirements, the general economic and regulatory climate, Lamar's ability to
service any equity or debt obligations senior to the common stock and other
factors deemed relevant by Lamar's Board of Directors. It is the policy of the
FRB that bank holding companies should pay cash dividends on common stock only
out of income available over the past year and only if prospective earnings
retention is consistent with the organization's expected future needs and
financial condition. The policy provides that bank holding companies should not
maintain a level of cash dividends that undermines the bank holding company's
ability to serve as a source of strength to its banking subsidiaries.
Lamar's principal source of funds to pay dividends will be cash dividends
that Lamar receives from Lamar Bank. The payment of dividends by Lamar Bank to
Lamar is subject to certain restrictions imposed by federal and state banking
laws, regulations and authorities. Dividends by Lamar Bank must be approved by
the Mississippi Department of Banking and Consumer Finance.
The federal banking statutes prohibit federally insured banks from making
any capital distributions (including a dividend payment) if, after making the
distribution, the institution would be "undercapitalized" as defined by statute.
In addition, the relevant federal regulatory agencies also have authority to
prohibit an insured bank from engaging in an unsafe or unsound practice, as
determined by the agency, in conducting an activity. The payment of dividends
could be deemed to constitute such an unsafe or unsound practice, depending on
the financial condition of Lamar Bank. Regulatory authorities could impose
stricter limitations on the ability of Lamar Bank to pay dividends to Lamar if
such limits were deemed appropriate to preserve certain capital adequacy
requirements.
Under the Merger Agreement between Lamar and Hancock, Lamar may only pay
normal quarterly dividends not in excess of $.05 per share for each quarter
completed prior to the Effective Date of the Merger, and at the same rate on a
prorated basis for each month completed or beginning at least fifteen days prior
to the Effective Date of the Merger. Otherwise, Lamar is not permitted to pay
dividends without Hancock's consent.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of Lamar's common stock as of April 30, 2001 held by each director and
each executive officer named in the Summary Compensation Table, by all directors
and executive officers as a group, and by each person who is known by Lamar to
own beneficially more than 5% of each such class (who is not an executive
officer or director of Lamar). Except as otherwise indicated, no person named in
the table shares voting or investment power with respect to his or her
beneficially owned shares, and the address of each shareholder is the same as
the address of Lamar.
Amount and
Name of Beneficial Owner Nature of
- ------------------------ Beneficial Percent of
Ownership Class(1)
--------- -------
Executive Officers and Directors
Robert W. Roseberry 388,271(2) 9.0%
Jane P. Roberts 90,000(3) 2.1
Kenneth M. Lott 58,940(4) 1.4
O. B. Black, Jr. 223,746(5) 5.2
William H. Jordan 185,340 4.3
James R. Pylant 163,440(6) 3.8
Monty C. Roseberry 100,210 2.3
All Executive Officers and Directors as a Group 1,237,750 28.7
(9 persons)
29
Other 5% Shareholders
Donna R. Byrd 227,400(7) 5.3
James E. Roseberry 288,060(8) 6.7
(1) The percentages are calculated based on 4,307,207 shares issued and
outstanding at April 30, 2001.
(2) Includes 56,711 shares held by Mr. Roseberry's spouse with respect to which
Mr. Roseberry shares voting and investment power.
(3) Includes 69,120 shares held by Ms. Roberts spouse with respect to which Ms.
Roberts shares voting and investment power.
(4) Includes 2,340 shares held by Mr. Lott's spouse and 4,800 shares held by a
parent of Mr. Lott with respect to which Mr. Lott shares voting and
investment power. Effective May 31, 2001, Mr. Lott has resigned as
President, Chief Operating Officer and Director; however, pursuant to the
terms and conditions of a Voting Agreement entered into by and between Mr.
Lott, Hancock and Lamar, Mr. Lott has agreed to vote all of the shares for
which he has voting power in favor of the merger.
(5) Includes 69,963 shares held by Mr. Black's spouse as trustee of a trust
with respect to which Mr. Black shares voting and investment power and
103,872 shares held by a family trust with respect to which Mr. Black's
adult daughter is the trustee and Mr. Black shares voting and investment
power.
(6) Includes 42,900 shares held by Mr. Pylant's spouse with respect to which
Mr. Pylant shares voting and investment power.
(7) Ms. Byrd is not a director or executive officer of Lamar. Her address is
1072 Talowah Road, Purvis, Mississippi 39475.
(8) Mr. Roseberry is not an executive officer or director of Lamar. His address
is 122 Dean Rhyne Road, Purvis, Mississippi 39475.
Management's Discussion & Analysis of Financial Conditions and Results of
Operations For the Years Ended December 31, 2000, 1999 and 1998
Overview
Net income declined 31.8% from $4.2 million in 1999 to $2.8 million in
2000. Net income increased 36.8% from $3.0 million in 1998 to $4.2 million in
1999. The decline in net income for 2000 has been caused primarily by increases
in the provision for loan losses resulting from increased loan growth and
customers in cyclical industries adversely affected by the slowing economy. The
net interest margin has declined from 3.65% for 1998 to 3.59% for 2000 as a
result of decreases in yields on interest-earning assets that have not been
offset by similar decreases in cost of interest-bearing liabilities.
Results of Operations
Net Interest Income. The principal source of Lamar's revenue is net
interest income. Net interest income is the difference between interest income
on interest-earning assets, principally loans and investment securities, and the
interest expense on interest-bearing deposits and borrowings used to fund those
assets. Net interest income is affected by both changes in the amount and
composition of interest-earning assets and interest-bearing liabilities and the
level of interest rates. The change in net interest income is typically measured
by net interest spread and net interest margin. Net interest spread is the
difference between the average yield on interest-earning assets and the average
cost of interest-bearing liabilities. Net interest margin is determined by
dividing net interest income by average interest-earning assets.
Net interest income increased 2.3% in 2000 compared with 1999,
following a 33.3% increase in 1999 compared with 1998. The increase in 2000 and
1999 is attributable to an increase in Lamar's average interest-earning assets
of 5.0% and 31.9%, respectively, principally in the loan and investment
securities portfolios.
During 2000, average interest-bearing liabilities increased $17.5
million to $338.8 million, an increase of 5.4% over 1999. This was primarily
from increases in other borrowed funds and time deposits. In 1999, average
interest-bearing liabilities increased 27.7% to $321.3 million. This increase of
$69.7 million was primarily in other borrowed funds, time deposits and
transaction accounts.
Lamar's net interest margin was 3.59% in 2000, 3.69% in 1999, and
3.65% in 1998. The decrease in net interest margin in 2000 from 1999 resulted
from yield on interest-earning assets increasing only .07% while
30
Lamar's cost of interest-bearing liabilities increased .19%. The increase in net
interest margin in 1999 compared with 1998 resulted from a decrease in yield on
interest-earning assets of .42% and a decrease in cost of interest-bearing
liabilities of .30%.
The net interest margin may be negatively affected by the interest
rate environment and changes in the earning asset mix and deposit funding mix.
Increased rates may have a negative impact on Lamar's borrowing and deposit
funding costs.
Table 1 provides detailed information as to average balances, interest
income/expense, and rates by major balance sheet category for years ended
December 31, 2000, 1999 and 1998.
31
Table 1--Average Balance Sheets and Rates for December 31, 2000, 1999 and 1998
2000 1999 1998
---------------------------- ----------------------------- ----------------------------
Average Average Average Average Average Average
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ------- ------- -------- -------- -------- -------- -------
(in thousands)
ASSETS
Earning assets:
U.S. Treasury securities and
obligations of U.S. agencies $ 50,303 $ 3,394 6.75% $ 39,755 $ 2,590 6.51% $ 32,753 $ 2,171 6.63%
Obligations of state and political
subdivisions (1) 37,922 2,779 7.33 39,029 2,852 7.31 32,903 2,433 7.39
Mortgage-backed securities 47,306 3,184 6.73 49,556 3,204 6.47 14,868 794 5.34
Federal Home Loan Bank stock 3,708 304 8.20 3,152 181 5.74 822 50 6.08
Corporate bonds 558 36 6.45
Preferred stock 3,202 217 6.78
Federal funds sold 7,082 418 5.90 8,478 422 4.98 10,721 589 5.49
Total loan and fees 230,059 22,618 9.83 222,148 21,879 9.85 182,395 18,706 10.26
-------- ------- -------- ------- -------- -------
Total earning assets (1) 380,140 32,950 8.67 362,118 31,128 8.60 274,462 24,743 9.02
Less: Allowance for loan losses (4,566) (3,805) (3,416)
Nonearning assets
Cash and due from banks 13,216 14,686 11,598
Premises and equipment, net 11,216 9,566 8,004
Other assets 9,645 7,079 6,298
-------- -------- --------
Total assets $409,651 $389,644 $296,946
======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Transaction accounts $ 82,358 3,909 4.75 $ 85,955 4,185 4.87 $ 74,973 3,581 4.78
Savings accounts 10,136 268 2.64 9,909 262 2.64 9,214 243 2.64
Time deposits 176,249 10,610 6.02 165,251 9,297 5.63 149,435 8,861 5.93
Other borrowed funds 70,032 3,565 5.09 60,153 3,065 5.10 17,985 1,218 6.77
-------- ------- -------- ------- -------- -------
Total interest-bearing liabilities 338,775 18,352 5.42 321,268 16,809 5.23 251,607 13,903 5.53
------- ---- ------- ---- ------- -----
Noninterest-bearing liabilities:
Noninterest-bearing deposits 34,713 33,660 25,938
Other liabilities 2,569 1,378 2,127
Stockholders' equity 33,594 33,338 17,274
-------- -------- --------
Total liabilities and
stockholders' equity $409,651 $389,644 $296,946
======== ======== ========
Net interest income (1) $14,598 $14,319 $10,840
======= ======= =======
Net interest spread (1) 3.25% 3.37% 3.49%
==== ==== =====
Net interest margin (1) 3.84% 3.95% 3.95%
==== ==== =====
Note: Calculations include non-accruing loans in the average loan amounts
outstanding.
(1) The interest earned on non-taxable securities is reflected on a tax
equivalent basis assuming a federal income tax rate of 34% for all years
presented.
Table 2 presents the extent to which changes in interest rates and changes
in the volume of interest-earning assets and interest-bearing liabilities
affected lamar's interest income and interest expense during the years
indicated. Information is provided in each category with respect to: (1) changes
attributable to changes in volume; (2) changes attributable to changes in rate;
and (3) net change.
32
Table 2--Volume/Rate Variance Analysis
Year Ended December 31, 2000 Year Ended December 31, 1999
Compared with Compared with
Year Ended December 31, 1999 Year Ended December 31, 1998
INCREASE/(DECREASE) INCREASE/(DECREASE)
Due to Due to
Total Net Total Net
--------- ---------
Change Volume Rate Change Volume Rate
------ ------ ---- ------ ------ ----
(in thousands)
Interest income(1):
U.S. Treasury securities and obligations of U. S. $ 804 $ 712 $ 92 $ 419 $ 456 $ (37)
agencies
Obligations of state and political subdivisions (48) (53) 5 419 448 (29)
Corporate bonds 36 36 -- -- -- --
Mortgage-backed securities (20) (151) 131 2,410 2,244 166
Federal Home Loan Bank stock 123 45 78 131 134 (3)
Preferred stock 217 217 -- -- -- --
Federal funds sold (4) (82) 78 (167) (112) (55)
Total loans and fees 739 778 (39) 3,173 3,915 (742)
------ ------ ----- ------ ------ -----
Total increase (decrease) in interest income 1,847 1,502 345 6,385 7,085 (700)
Interest expense:
Interest-bearing liabilities:
Transaction accounts (276) (170) (106) 604 535 69
Saving accounts 6 6 -- 19 19 --
Time deposits 1,313 662 651 436 889 (453)
Other borrowed funds 500 484 16 1,847 2,149 (302)
------ ------ ----- ------ ------ -----
Total increase (decrease) in interest expense 1,543 982 561 2,906 3,592 (686)
------ ------ ----- ------ ------ -----
Increase (decrease) in net interest income $ 304 $ 520 $(216) $3,479 $3,493 $ (14)
====== ====== ===== ====== ====== =====
(1) Interest income for loans on non-accrual status has been excluded from
interest income.
Noninterest Income. Table 3 illustrates Lamar's primary sources of
noninterest income. Noninterest income increased 5.7% to $3.7 million in 2000
from $3.5 million in 1999. This increase was principally due to increases in
service charges on deposit accounts and other operating income. The noninterest
income for 1999 decreased 0.9% to $3.5 million from $3.6 million in 1998.
Table 3--Analysis of Noninterest Income
Percent
Increase
Year Ended December 31, (Decrease)
-----------------------
2000 1999 1998 2000/99 1999/98
------ ------ ------ ------- -------
(in thousands)
Service charges on deposit accounts $2,295 $2,116 $1,777 8.5% 19.1%
Mortgage loan fees 310 544 639 (43.0) (14.9)
Commissions on credit life insurance 324 369 439 (12.2) (15.9)
Other operating income 799 498 703 60.4 (29.2)
------ ------ ------
Total $3,728 $3,527 $3,558 5.7 (0.9)
====== ====== ====== ======= =======
33
Service charges on deposit accounts increased in 2000 compared with 1999
and in 1999 compared with 1998 from an increase in the number of transaction
accounts and in the fee structure.
Mortgage loan fees declined in 2000 compared with 1999. The increase in
mortgage loan rates during 2000 resulted in fewer secondary market residential
loan originations and a decrease in mortgage loan fees. Mortgage loan fees in
1999 were also negatively influenced by higher mortgage loan rates as compared
to 1998.
Decreases in commissions on credit life insurance in 2000 compared with
1999 were due to decreased loan originations. Decreases in 1999 compared with
1998 were due to a slight decrease in the insurance commission structure.
Other operating income increased from 1999 to 2000 as a result of increases
in commissions earned by the investment department.
Noninterest Expense. As shown in Table 4, total noninterest expense
increased by 13.4% to $11.1 million in 2000, compared with $9.8 million in 1999.
The noninterest expense in 1999 increased $1.1 million or 12.1% from $8.7
million in 1998.
Noninterest expense levels are often measured using an efficiency ratio
(noninterest expense divided by the sum of net interest income and noninterest
income). The efficiency ratio measures the level of expense required to generate
one dollar of revenue. Improvement in the ratio is measured by a reduction in
the percentage reported. Lamar's efficiency ratios for 2000, 1999 and 1998 were
63.9%, 58.0% and 64.3%, respectively.
Table 4--Analysis of Noninterest Expense
Percent
Increase
Year Ended December 31, (Decrease)
2000 1999 1998 2000/99 1999/98
---- ---- ---- ------- -------
(in thousands)
Salaries and employee benefits $ 5,925 $5,342 $4,906 10.9% 8.9%
Occupancy expense 898 720 653 24.7 10.3
Furniture and equipment expense 1,222 1,159 1,007 5.4 15.1
Other operating expenses 3,056 2,567 2,166 19.0 18.5
------- ------ ------
Total $11,101 $9,788 $8,732 13.4 12.1
======= ====== ====== ====== ======
Salary and employee benefits expense increased $583,000, or 10.9%, in 2000
compared with 1999. Salary and employee benefit expense increased $436,000, or
8.9%, in 1999 compared with 1998. These increases were related primarily to
staffing requirements at the new Lincoln Road and Hardy Street banking branches.
In addition, these increases also reflected annual cost of living and merit
increases for all employees.
Occupancy expenses increased $178,000 or 24.7% in 2000 compared with 1999
and $67,000, or 10.3%, in 1999 compared with 1998. These increases were
primarily due to additional depreciation and building maintenance expenses
attributable to the two new banking branches in Hattiesburg.
Furniture and equipment expense increased $63,000, or 5.4%, for 2000 from
$1.2 million in 1999. The increase was primarily due to depreciation and
equipment maintenance expenses related to additional furniture and equipment for
the two new banking branches in Hattiesburg.
34
Income Tax Expense. Lamar's effective income tax rates were 17.5% in 2000,
26.4% in 1999 and 24.8% in 1998. The fluctuations in the effective income tax
rate from 1998 through 2000 are primarily attributable to the change in non-
taxable income as a percentage of pretax income.
Financial Condition
Loan Portfolio. Lamar experienced loan growth throughout its markets in
1999 and 1998, but that growth deteriorated as the economy began slowing in
Lamar's markets in the second half of 2000. Total loans decreased 5.8% to $223.7
million at December 31, 2000, compared with $237.5 million at December 31, 1999.
The increase in loans in 1999 was $33.0 million, or 16.1%, compared with 1998.
Lamar's real estate loan portfolio decreased 4.6% to $113.0 million at
December 31, 2000, from $118.4 million at December 31, 1999. In 1999, the real
estate portfolio increased $15.1 million, or 14.6%, from December 31, 1998.
Residential loans decreased $1.8 million from December 31, 1999 to December 31,
2000, and increased $11.4 million from December 31, 1998 to December 31, 1999.
Lamar's commercial loans increased by 7.6% to $53.3 million at December 31,
2000, from $49.6 million at December 31, 1999. The increase in commercial loans
was $10.1 million, or 25.5% at December 31, 1999, compared with December 31,
1998. The increases in commercial loans have been principally due to increased
economic activities in Lamar's market areas.
Lamar's consumer loans decreased to $57.4 million, including $5.2 million
from SFSI, at December 31, 2000, from $69.5 million, including $5.9 million from
SFSI at December 31, 1999. The increase in consumer loans was $7.9 million, or
12.7%, from 1998 to 1999. The decreases in 2000 were due to weaker demand
caused by the slowing economy in Lamar's markets in the second half of 2000.
The increases in 1999 were attributable to increased customer demands and
Lamar's marketing efforts to increase the number of consumer loan customers.
Substantially all of the consumer loan portfolio consists of secured loans, the
majority of which are collateralized by automobiles and personal property.
Table 5--Loans by Type
December 31,
------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(in thousands)
Real estate:
Residential $ 70,915 $ 72,695 $ 61,280 $ 55,406 $ 48,062
Mortgage loans held for sale 778 426 1,053 421 361
Construction 5,350 10,743 9,095 4,226 4,680
Commercial 35,978 34,559 31,915 28,591 26,125
Consumer 57,361 69,542 61,686 51,965 45,555
Commercial 53,321 49,554 39,493 25,556 21,992
-------- -------- -------- -------- --------
Total loans $223,703 $237,519 $204,522 $166,165 $146,775
======== ======== ======== ======== ========
The table below illustrates Lamar's fixed rate maturities and repricing
frequency for the loan portfolio:
35
Table 6--Selected Loan Distribution
December 31, 2000
-----------------
Over One
One Year Through Over Five
Total or Less Five Years Years
----- ------- ---------- -----
(in thousands)
Fixed rate maturities $210,473 $69,619 $128,483 $12,371
Variable rate repricing frequency 13,230 2,304 10,705 221
-------- ------- -------- -------
Total $223,703 $71,923 $139,188 $12,592
======== ======= ======== =======
At December 31, 2000 94.1% of Lamar's loans had fixed rate maturities. Of
the fixed rate portfolio, 33.1% of those loans have maturities of one year or
less when originated or renewed. Such maturities allow Lamar to reprice its
portfolio frequently.
Allowance and Provision for Loan Losses. The allowance for loan losses is
regularly evaluated by management and approved by the Board of Directors and is
maintained at a level believed to be adequate to absorb probable loan losses in
Lamar's portfolio. The provision for loan losses is determined in part using an
internal watch list developed by a review of essentially all loans by
management. Loans are assigned a rating based on credit quality as determined by
the borrower's payment history, the financial strength of the borrower or
guarantor as measured by the balance sheet, earnings and cash flow quality,
collateral values, and the liquidity and quality of the collateral and assets of
the borrower. Loans with a deterioration of credit quality are placed on the
watch list. The provision for loan losses pertaining to the rated loans is
determined by the amount of loans on the watch list and an allocation for loans
that are not on the watch list based on Lamar's historical charge-off
percentage. In addition, management considers the potential adverse impact of
the economic trends in Lamar's trade area on certain borrowers that are in
cyclical businesses and the loan growth resulting from new loan customers.
Management believes that the allowance for loan losses at December 31, 2000 was
adequate. Although management believes it uses the best information available to
make allowance provisions, future adjustments which could be material may be
necessary if management's assumptions differ from the loan portfolio's actual
future performance.
The allowance for loan losses increased $1,213,000 to $5,483,000 from
December 31, 1999 to December 31, 2000. The provision for loan losses increased
by $1,116,000 in the fourth quarter of 2000 as compared to the fourth quarter of
1999. The increase was primarily due to loan growth and customers in cyclical
industries adversely affected by the slowing economy. Lamar's allowance for
loan losses to total loan ratio increased from 1.74% at December 31, 1998 to
1.81% at December 31, 1999, and to 2.45% at December 31, 2000.
Net charge-offs were $1,619,000 during 2000 compared with $716,000 and
$322,000 for 1999 and 1998, respectively. Of these net charge-offs for the same
years, $468,000, $324,000 and $182,000, respectively, pertained to SFSI. Lamar's
consumer loan portfolio accounted for the majority of net loan charge-offs for
the years ended December 31, 2000, 1999 and 1998, respectively.
36
Table 7--Summary of Loan Loss Experience
As of and for the Year Ended December 31,
-----------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------ ------ ------
(in thousands)
Allowance for loan losses at beginning of year $ 4,270 $ 3,564 $3,101 $2,837 $2,529
Charge-offs:
Real estate (91) (72) ---- ---- (50)
Consumer (1,430) (841) (475) (400) (270)
Commercial (397) (145) (51) (238) (168)
------- ------- ------ ------ ------
Total (1,918) (1,058) (526) (638) (488)
Recoveries:
Real estate 68 --- 24 10 ---
Consumer 27 323 142 127 229
Commercial 204 19 38 40 10
------- ------- ------ ------ ------
Total 299 342 204 177 239
------- ------- ------ ------ ------
Net loan charge-offs (1,619) (716) (322) (461) (249)
Provision for loan losses 2,832 1,422 785 725 557
------- ------- ------ ------ ------
Allowance for loan losses at end of year $ 5,483 $ 4,270 $3,564 $3,101 $2,837
======= ======= ====== ====== ======
Ratios:
Allowance for loan losses to total loans 2.45% 1.81% 1.74% 1.87% 1.93%
Net loan charge-offs to average loans
outstanding for the year 0.70 0.32 0.18 0.30 0.19
Allowance for loan losses to non- 176 216 323 777 360
performing loans
The following table is management's allocation of the allowance for loan
losses by loan type. Allowance allocation is based on management's assessment of
economic conditions, past loss experience, loan volume, loan quality, past due
history and other factors. Since these factors are subject to change, the
allocation is not necessarily predictive of future portfolio performance.
37
Table 8--Management's Allocation of the Allowance for Loan Losses
December 31,
------------
2000 1999 1998 1997 1996
------ ----- ---- ----- ----
Percent Percent Percent Percent Percent
of Loans Of Loans of Loans of Loans Of Loans
Allocated to Total Allocated To Total Allocated to Total Allocated to Total Allocated To Total
Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
(in thousands)
Real Estate $ 1,257 50.6% $ 1,058 49.8% $ 997 50.5% $ 936 53.3% $ 881 54.0%
Consumer 2,901 25.6 1,980 29.3 1,577 30.2 1,355 31.3 1,293 31.0
Commercial 1,090 23.8 975 20.9 705 19.3 546 15.4 357 15.0
Unallocated 235 -- 257 -- 285 -- 264 -- 306 --
--------- ----- ------ ----- ------ ----- ------ ----- ------ -----
Total $ 5,483 100.0% $4,270 100.0% $3,564 100.0% $3,101 100.0% $2,837 100.0%
========= ===== ====== ===== ====== ===== ====== ===== ====== =====
Asset Quality. Loans (including any impaired loans under SFAS 114 and 118)
are placed on non-accrual status when they become past due 90 days or more as to
principal or interest, unless they are adequately secured and in the process of
collection. When loans are placed on non-accrual status, all unpaid accrued
interest is reversed. These loans remain on non-accrual status until the
borrower demonstrates the ability to remain current or the loan is deemed
uncollectible and is charged off. SFSI consumer loans are charged off when they
reach 120 days past due.
Table 9 provides information related to non-performing assets and loans 90
days or more past due. Accruing loans contractually 90 days or more past due
increased from $450,000 at December 31, 1999 to $857,000 at December 31, 2000.
Should the underlying collateral be determined to be insufficient to satisfy the
obligation, the loan is classified and Lamar's allowance is increased
accordingly. Historically, Lamar's security in residential loans has been
adequate and has acted to limit Lamar's exposure to loss. Loans on non-accrual
status decreased from $1.5 million to $1.3 million from December 31, 1999 to
December 31, 2000.
Table 9--Non-Performing Assets
December 31,
------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(in thousands)
Loans on non-accrual status(1)(2) $2,258 $1,525 $ 931 $ 147 $ 400
Loans past due 90 days or more 857 450 172 252 387
------ ------ ------ ----- ------
Total non-performing loans 3,115 1,975 1,103 399 787
Other real estate owned 976 541 742 411 767
------ ------ ------ ----- ------
Total non-performing assets $4,091 $2,516 $1,845 $ 810 $1,554
====== ====== ====== ===== ======
Percentage of non-performing loans to total loans 1.39% 0.83% 0.54% 0.24% 0.54%
Percentage of non-performing assets to total loans 1.83 1.06 0.90 0.49 1.06
(1) There were no impaired loans for the years indicated.
(2) The interest income that would have been earned and received on non-
accrual loans was not material.
38
Investment Securities. The investment securities portfolio consists of U.S.
Treasury securities, obligations of U.S. government agencies, obligations of
states and political subdivisions and mortgage-backed securities (MBS). MBS
consist of 15-year and 30-year fixed and 7-year balloon mortgage securities,
underwritten and guaranteed by FNMA, FHLMC and GNMA, government-sponsored
agencies.
Securities, including those classified as held to maturity and available
for sale, increased from $90.8 million at December 31, 1998 to $126.1 million at
December 31, 1999 to $148.7 million at December 31, 2000.
Table 10--Securities Available For Sale
December 31, 2000
-----------------
Estimated Average Weighted
Carrying Fair Maturity Average
Value Value in Years Yield
----- ----- -------- -----
(in thousands)
U. S. Treasury securities and obligations of U.S. government agencies:
Within one year $ 12,525 $ 12,525 0.2 5.81%
Over one through five years 4,463 4,463 2.1 6.02
Over five through ten years 15,804 15,804 7.3 6.52
Over ten years 15,241 15,241 12.5 7.19
-------- --------
Total 48,033 48,033 6.43
Obligations of states and political subdivision:
Within one year 200 200 0.9 6.36(1)
Over one through five years 5,718 5,718 2.7 8.03(1)
Over five through ten years 3,515 3,515 7.3 7.91(1)
Over ten years 477 477 11.6 8.44(1)
-------- --------
Total 9,910 9,910 7.97(1)
Corporate bonds - over ten years 1,000 1,000 18.26 6.928
Mortgage-backed securities 46,640 46,640 6.43
Equity securities 3,699 3,699
-------- --------
Total securities available for sale $109,282 $109,282
======== ========
39
Table 11-- Securities Held to Maturity
December 31, 2000
-----------------
Estimated Average Weighted
Carrying Fair Maturity Average
Value Value in Years Yield
----- ----- -------- -----
(in thousands)
U. S. Treasury securities and obligations of U.S. government agencies:
Within one year $ 4,349 $ 4,342 .2 5.20%
Over one through five years 6,637 6,713 1.3 5.69
------- -------
Total 10,986 11,055
Obligations of states and political subdivisions:
Within one year 2,140 2,147 0.5 6.89(1)
Over one through five years 5,884 5,867 2.6 7.17(1)
Over five through ten years 11,308 11,273 7.5 7.33(1)
Over ten years 8,436 8,275 12.7 7.18(1)
------- -------
Total 27,768 27,562 7.23(1)
Mortgage-backed securities 655 650 7.49
------- -------
Total securities held to maturity $39,409 $39,267
======= =======
(1) The weighted average yield on non-taxable securities is reflected on a tax
equivalent basis assuming a federal income tax rate of 34% for all periods
presented.
Table 11A--Analysis of Securities
December 31,
------------
2000 1999 1998
---- ---- ----
(in thousands)
U.S. Treasury securities and obligations of U.S. government agencies $ 48,033 $32,116 $28,094
Obligations of states and political subdivisions 9,910 9,731 10,485
Corporate bonds 1,000 --- ---
Mortgage-backed securities 46,640 46,608 19,235
Equity securities 3,699 3,393 ---
-------- ------- -------
Total securities available for sale $109,282 $91,848 $57,814
======== ======= =======
December 31,
------------
2000 1999 1998
---- ---- ----
(in thousands)
U.S. Treasury securities and obligations of U.S. government agencies $ 10,986 $ 4,047 $ 4,076
Obligations of states and political subdivisions 27,768 29,271 27,520
Mortgage-backed securities 655 893 1,418
-------- ------- -------
Total securities held to maturity $ 39,409 $34,211 $33,014
======== ======= =======
Deposits. Total deposits decreased from $308.5 million at December 31, 1999
to $306.4 million at December 31, 2000. Of that decrease, demand accounts
decreased by $8.0 million from 1999 to 2000. Management continues to seek retail
and commercial deposits through its marketing initiatives for transaction and
savings accounts and competitive rates for time deposits. As of December 31,
2000 public funds deposits totaled $41.9 million or 13.7% of total deposits.
These deposits are considered to be a stable source of funds and are targeted in
Lamar's deposit marketing initiatives.
40
Table 12--Deposits
December 31,
------------
2000 1999
---- ----
(in thousands)
Demand (NOW, SuperNOW and money market) $ 76,843 $ 84,875
Savings 9,780 9,448
Individual retirement accounts 16,880 16,279
Time deposits, $100,000 and over 63,773 65,389
Other time deposits 100,468 98,836
-------- --------
Total interest-bearing deposits 267,744 274,827
Total noninterest-bearing deposits 38,687 33,637
-------- --------
Total $306,431 $308,464
======== ========
Table 13--Maturity of Time Deposits $100,000 and over
As of
December 31, 2000
------------------
(in thousands)
Three months or less $11,126
Over three months through six months 18,252
Over six months through twelve months 11,077
Over twelve months 23,318
-------
Total $63,773
=======
Other Borrowed Funds. Other borrowed funds increased from $19.1 million at
December 31, 1998 to $70.0 million at December 31, 1999 and 2000. In 1999, Lamar
borrowed $40.0 million from the FHLB to purchase debt securities resulting in a
favorable interest rate spread. An additional $20 million was borrowed from the
FHLB to fund Lamar Bank's loan growth and liquidity needs. The $5.0 million
revolving line of credit ($4.1 million outstanding at December 31, 1998) with
Bank of America matured in 1999. SFSI's funding has been provided by Lamar Bank
since the maturity of the line of credit. Additional borrowings by Lamar Bank
above current levels will be evaluated by management, with consideration given
to the growth of Lamar Bank's loan portfolio, liquidity needs, cost of retail
deposits, market conditions and other factors.
Liquidity. Lamar maintains sufficient liquidity to fund loan demand,
deposit withdrawals and debt repayments. Liquidity is managed by retaining
sufficient liquid assets in the form of cash and cash equivalents and core
deposits to meet such demand. Funding and cash flows can also be realized from
the investment securities portfolio and pay downs from the loan portfolio. Lamar
Bank also provides access to the retail deposit market. In addition, Lamar has
funds available under Lamar Bank's federal funds lines and additional FHLB
borrowings to address liquidity needs.
Lamar's objectives include preserving an adequate liquidity position.
Asset/liability management is designed to ensure safety and soundness, maintain
liquidity and regulatory capital standards, and achieve an acceptable net
interest margin. Lamar continues to experience strong loan demand and management
continues to monitor interest rate and liquidity risks while implementing
appropriate funding and balance sheet strategies.
Net cash provided by operating activities and deposits from customers have
historically been primary sources of liquidity for Lamar. Net cash provided by
operating activities totaled $4.7 million, $6.8 million and $6.8 million in
2000, 1999 and 1998, respectively. In 2000, loans decreased $10,509 as deposits
decreased $2,033. The net cash provided by increases in deposits was $30.2
million and $66.8 million in 1999 and 1998, respectively. Net cash used in
investing activities has been primarily
41
for funding the net increase in loans of $36.2 million and $38.1 million in 1999
and 1998, respectively, and in securities of $17.5 million, $42.6 million and
$35.2 million in 2000, 1999 and 1998, respectively. Lamar also had net bank
borrowings of $55.0 million in 1999 and $1.4 million in 1998.
Capital. Regulatory agencies measure capital adequacy within a framework
that makes capital requirements, in part, dependent on the individual risk
profiles of financial institutions. Lamar raised $12.2 million in 1998 and $1.7
million in 1999 in connection with its initial public offering. Lamar's capital
to average assets ratio was 9.0% at December 31, 2000 compared with 8.2% at
December 31, 1999. At December 31, 2000 Lamar exceeded the FRB's regulatory
definition of a "well capitalized" institution. See Note 11 to the Consolidated
Financial Statements.
Asset/Liability Management and Market Risk. Asset/liability management
control is designed to ensure safety and soundness, maintain liquidity and
regulatory capital standards, and achieve acceptable net interest margin.
Management considers interest rate risk to be Lamar's most significant market
risk. Interest rate risk is the exposure to adverse changes in the net interest
income as a result of market fluctuations in interest rates.
Management regularly monitors interest rate risk in relation to prospective
market and business conditions. Lamar's Board of Directors sets policy
guidelines establishing maximum limits on Lamar's interest rate risk exposure.
Management monitors and adjusts exposure to interest rate fluctuations as
influenced by Lamar's loan, investment and deposit portfolios.
Lamar uses an earnings simulation model to analyze net interest income
sensitivity. Potential changes in market interest rates and their subsequent
effect on interest income are then evaluated. The model projects the effect of
instantaneous movements in interest rates of 200-basis points. Assumptions based
on the historical behavior of Lamar's deposit rates and balances in relation to
changes in interest rates are also incorporated into the model. These
assumptions are inherently uncertain, and as a result, the model cannot
precisely measure net interest income or precisely predict the impact of
fluctuations in market interest rates on net interest income. Actual results
will differ from the model's simulated results due to timing, magnitude and
frequency of interest rate changes, as well as changes in market conditions and
the application of various management strategies.
Interest rate risk management focuses on maintaining acceptable net
interest income within policy limits approved by the Board of Directors. Lamar's
Board of Directors monitors and manages interest rate risk to maintain an
acceptable level of change to net interest income resulting from market interest
rate changes. Lamar's interest rate risk policy, as approved by the Board of
Directors, is stated in terms of the change in net interest income given a 200-
basis point immediate and sustained increase or decrease in market interest
rates. The current limits approved by the Board of Directors are plus or minus
10% of net interest income for a 200-basis point movement.
The following table illustrates Lamar's estimated annualized earnings
sensitivity profile as of December 31, 2000:
42
Table 14--Interest Rate Sensitivity
Decrease Increase
In Rates-- In Rates--
200 Basis Points BASE 200 Basis Points
---------------- ---- ----------------
(in thousands)
Projected interest income:
Loans $20,711 $22,430 $23,996
Investment securities 8,000 9,098 9,496
Federal funds sold 500 751 1,001
------- ------- -------
Total interest income 29,211 32,279 34,493
Projected interest expense:
Deposits 13,961 15,514 17,065
Other borrowed funds 3,525 3,525 3,525
------- ------- -------
Total interest expense 17,486 19,039 20,590
------- ------- -------
Net interest income $11,725 $13,240 $13,903
======= ======= =======
Change from base $(1,515) $ 663
% Change from base (11.44)% 5.01%
Given an immediate, sustained 200-basis point increase to the yield curve
used in the simulation model, it is estimated net interest income would increase
5.01%. A 200-basis point immediate, sustained decrease to the yield curve would
decrease net interest income by an estimated 11.44%.
These interest rate sensitivity profiles of Lamar at any point in time will
be affected by a number of factors. These factors include the mix of interest
sensitive assets and liabilities and may not be a precise measurement of the
effect of changing interest rates on Lamar in the future.
Table 15 - Quarterly Results of Operations (Unaudited)
Quarter
In thousands, except per share amounts First Second Third Fourth
---------- ---------- ---------- ------------
2000:
Interest income $7,982 $8,001 $7,990 $8,032
Interest expense 4,480 4,470 4,645 4,757
------ ------ ------ ------
Net interest income 3,502 3,531 3,345 3,275
Provision for loan losses 391 276 431 1,734
Other income 785 966 1,016 961
Other expenses 2,623 2,817 2,829 2,832
------ ------ ------ ------
Income (loss) before income taxes 1,273 1,404 1,101 (330)
Income tax expense (benefit) 336 371 244 (349)
------ ------ ------ ------
Net income $ 937 $1,033 $ 857 $ 19
====== ====== ====== ======
Net income per common share:
Basic and diluted $0.22 $0.24 $0.20 $0.00
====== ====== ====== ======
1999:
Interest income $6,994 $7,453 $7,773 $7,938
Interest expense 4,113 4,328
------ ------ ------ ------
Net interest income 3,053 3,340 3,445 3,511
Provision for loan losses 172 217 415 618
Other income 736 943 941 901
Securities gains 2 4 __ __
Other expenses 2,112 2,650 2,632 2,394
------ ------ ------ ------
Income before income taxes 1,507 1,420 1,339 1,400
Income taxes 399 376 355 365
------ ------ ------ ------
Net income $1,108 $1,044 $ 984 $1,035
====== ====== ====== ======
Net income per common share:
Basic and diluted $0.26 $0.24 $0.23 $0.24
====== ====== ====== ======
43
LAMAR FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Lamar Capital Corporation
We have audited the accompanying consolidated balance sheets of Lamar
Capital Corporation and Subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income and comprehensive income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Lamar Capital
Corporation and Subsidiaries at December 31, 2000 and 1999, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.
Ernst & Young LLP
Jackson, Mississippi
January 25, 2001, except for Note 15,
as to which the date is February 21, 2001
44
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31,
------------
2000 1999
---- ----
ASSETS
Cash and due from banks $ 13,170 $ 14,195
Federal funds sold 12,510 17,680
-------- --------
Cash and cash equivalents 25,680 31,875
Securities available for sale (amortized cost--$111,125 in 2000 and
$98,438 in 1999) 109,282 91,848
Securities held to maturity (fair value--$39,267 in 2000 and
$32,861 in 1999) 39,409 34,211
Loans (less allowance for loan losses of $5,483 in 2000 and
$4,270 in 1999) 216,923 231,133
Accrued interest receivable 3,898 3,901
Premises and equipment, net 11,116 10,450
Other real estate 976 541
Federal Home Loan Bank stock 3,893 3,596
Cash surrender value of life insurance 1,430 1,362
Deferred income taxes 2,143 3,666
Other assets 745 167
-------- --------
Total assets $415,495 $412,750
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest bearing $ 38,687 $ 33,637
Interest bearing 267,744 274,827
-------- --------
Total deposits 306,431 308,464
Interest payable 1,041 947
Dividends payable 215 216
Other liabilities 1,013 1,221
Other borrowed funds 70,000 70,000
-------- --------
Total liabilities 378,700 380,848
Stockholders' equity
Common Stock, $.50 par value, 50,000,000 shares authorized;
4,315,707 shares issued and outstanding 2,158 2,158
Paid-in capital 17,513 17,513
Retained earnings 18,347 16,364
Treasury stock, 8,500 shares and none at December 31, 2000 and
December 31, 1999, respectively (68) ---
Accumulated other comprehensive loss (1,155) (4,133)
-------- --------
Total stockholders' equity 36,795 31,902
-------- --------
Total liabilities and stockholders' equity $415,495 $412,750
======== ========
See accompanying notes.
45
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Year ended December 31,
--------------------------
2000 1999 1998
------- ------- -------
Interest income
Loans, including fees $22,618 $21,879 $18,706
Federal funds sold 418 422 589
Interest on securities:
Taxable 7,270 6,107 3,039
Non-taxable 1,699 1,750 1,582
------- ------- -------
8,969 7,857 4,621
------- ------- -------
Total interest income 32,005 30,158 23,916
Interest expense
Deposits 14,787 13,744 12,685
Other borrowed funds 3,565 3,065 1,218
------- ------- -------
Total interest expense 18,352 16,809 13,903
------- ------- -------
Net interest income 13,653 13,349 10,013
Provision for loan losses 2,832 1,422 785
------- ------- -------
Net interest income after provision for loan losses 10,821 11,927 9,228
Other income
Service charges on deposit accounts 2,295 2,116 1,777
Mortgage loan fees 310 544 639
Commissions on credit life insurance 324 369 439
Gain on sale of securities available for sale --- 6 191
Trading account gains --- --- 123
Other operating income 799 492 389
------- ------- -------
Total other income 3,728 3,527 3,558
Other expense
Salaries and employee benefits 5,925 5,342 4,906
Occupancy expense 898 720 653
Furniture and equipment expense 1,222 1,159 1,007
Other operating expense 3,056 2,567 2,166
------- ------- -------
Total other expense 11,101 9,788 8,732
------- ------- -------
Income before income taxes 3,448 5,666 4,054
Income tax expense 602 1,495 1,005
------- ------- -------
Net income 2,846 4,171 3,049
Other comprehensive income (loss), net of income taxes
Change in unrealized gain (loss) on securities available for
sale 2,978 (4,544) 132
Reclassification of realized amount --- (4) (120)
------- ------- -------
Net unrealized gain (loss) recognized in comprehensive
income (loss) 2,978 (4,548) 12
------- ------- -------
Comprehensive income (loss) $ 5,824 $ (377) $ 3,061
======= ======= =======
Earnings per share--basic and diluted $ .66 $ .97 $ 1.09
======= ======= =======
Weighted average shares outstanding - basic and diluted 4,314 4,310 2,793
======= ======= =======
See accompanying notes.
46
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands, except for share and per share amounts)
Accumulated
Common Stock Other Treasury Stock Total
------------------- Paid-in Retained Comprehensive ---------------- Stockholders'
Shares Amount Capital Earnings Income (Loss) Shares Amount Equity
------------ ------ ----------- ------------ -------------- -------- ------ ----------
Balance at January 1, 1998 46,569.44 $ 466 $ 5,374 $10,283 $ 279 763.44 $(242) $16,160
Net income for 1998 3,049 3,049
Stock Split (60-for-1) 2,747,596.96 931 (931) 56,842.96 --
Dividend ($.12 per share) (362) (362)
Purchase of treasury stock 200.00 (72) (72)
Sale of treasury stock 51 (30,711.00) 174 225
Retirement of treasury
stock (27,095.40) (14) (126) (27,095.40) 140 --
Sale of Common Stock 1,363,636 682 11,517 12,199
Change in unrealized gain
(loss), net of income
taxes, on securities
available for sale 132 132
------------ ------ ------- ------- ------- ---------- ----- -------
Balance at December 31, 1998 4,130,707 2,065 15,885 12,970 411 -- -- 31,331
Net income for 1999 4,171 4,171
Dividend ($.18 per share) (777) (777)
Sale of Common Stock 185,000 93 1,628 1,721
Change in unrealized gain
(loss), net of income
taxes, on securities
available for sale (4,544) (4,544)
------------ ------ ------- ------- ------- ---------- ----- -------
Balance at December 31,
1999 4,315,707 2,158 17,513 16,364 (4,133) -- -- 31,902
Net income for 2000 2,846 2,846
Dividend ($.20 per share) (863) (863)
Purchase of treasury stock 8,500 (68) (68)
Change in unrealized gain
(loss), net of income
taxes, on securities
available for sale 2,978 2,978
------------ ------ ------- ------- ------- ---------- ----- -------
Balance at December 31, 2000 4,315,707 $2,158 $17,513 $18,347 $(1,155) 8,500 $ (68) $36,795
============ ====== ======= ======= ======= ========== ===== =======
See accompanying notes.
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year ended December 31,
------------------------------
2000 1999 1998
-------- -------- --------
Operating activities
Net income $ 2,846 $ 4,171 $ 3,049
Adjustments to reconcile net income to net cash
Provided by operating activities:
Provision for loan losses 2,832 1,422 785
Provision for losses on other real estate 32 16 11
Deferred income tax benefit (247) (204) (149)
Depreciation and amortization expense 987 955 836
Amortization of securities premiums 151 203 254
Accretion of securities discounts (514) (48) (34)
Increase in cash surrender value of life (68) (64) (65)
insurance
Federal Home Loan Bank dividend (297) (173) (48)
Gain on sales of securities available
for sale --- (6) (191)
Trading account gains --- --- (123)
Proceeds from sales of trading securities --- --- 3,619
(Gain) loss on sales of other real estate 14 6 (7)
Mortgage loan originations (11,284) (17,142) (20,730)
Proceeds from sales of mortgage loans 10,932 17,769 20,099
Gain on sale of premises and equipment (1) (10) ---
(Increase) decrease in interest receivable 3 (645) (865)
Increase (decrease) in interest payable 94 332 (197)
(Increase) decrease in other assets (578) 32 288
Increase (decrease) in other liabilities (208) 167 272
-------- -------- --------
Net cash provided by operating activities 4,694 6,781 6,804
Investing activities
Securities held to maturity:
Proceeds from calls, maturities, and
principal reductions 17,298 1,963 4,672
Purchases of securities (26,034) (2,465) (18,480)
Securities available for sale:
Proceeds from calls, maturities, and
principal reductions 19,935 4,274 14,725
Proceeds from sales of securities 1,500 10,498 9,966
Purchases of securities (30,220) (56,896) (46,105)
(Purchases) sales of Federal Home Loan Bank stock ---- (2,635) 223
Net (increase) decrease in loans 10,509 (36,220) (38,058)
Proceeds from sales of other real estate 740 313 25
Proceeds from sales of premises and equipment 1 53 ---
Purchases of premises and equipment (1,653) (2,337) (3,309)
-------- -------- --------
Net cash used in investing activities (7,924) (83,452) (76,341)
Financing activities
Net increase (decrease) in deposits (2,033) 30,192 66,774
Net increase (decrease) in revolving line of credit ---- (4,120) 100
Borrowings from banks ---- 70,000 5,000
Payments on notes payable to banks ---- (15,000) (3,600)
Proceeds from sales of Common Stock ---- 1,721 12,199
Purchases of treasury stock (68) ---- (72)
Proceeds from sales of treasury stock ---- ---- 225
Dividends paid (864) (685) (388)
-------- -------- --------
Net cash provided by (used in) financing activities (2,965) 82,108 80,238
-------- -------- --------
Net increase (decrease) in cash and cash equivalents (6,195) 5,437 10,701
Cash and cash equivalents at beginning of year 31,875 26,438 15,737
-------- -------- --------
Cash and cash equivalents at end of year $ 25,680 $ 31,875 $ 26,438
======== ======== ========
See accompanying notes.
LAMAR CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Years ended December 31, 2000, 1999 and 1998
1. Summary of Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of Lamar Capital
Corporation (the "Company") and its wholly-owned subsidiaries, The Mortgage
Shop, Inc. ("MSI"), Lamar Bank, Southern Financial Services, Inc. ("SFSI") and
Lamar Data Solutions, Inc. ("LDSI"). All significant intercompany balances and
transactions have been eliminated in consolidation.
Business
The Company is a one-bank holding company headquartered in Purvis,
Mississippi. The Company operates nine full service banking locations in retail
banking predominantly in Lamar and Forrest counties in southeastern Mississippi.
SFSI operates a finance company in six locations in southeastern Mississippi to
provide consumer loans to customers who may not be eligible to obtain financing
from Lamar Bank. The Company's consolidated results of operations are dependent
upon net interest income, which is the difference between the interest income on
interest-earning assets and the interest expense on interest-bearing
liabilities. Principal interest-earning assets are securities, real estate and
consumer and commercial loans. Interest-bearing liabilities consist of interest-
bearing deposit accounts and other borrowed funds.
Other sources of income include fees charged to customers for a variety of
banking services such as deposit account fees and commissions on credit life
insurance. The Company also generates fees in its mortgage banking activities
from the origination and sale of loans and servicing rights of 15-year and 30-
year fixed rate loans in the secondary market.
The Company's operating expenses consist primarily of salaries and employee
benefits, occupancy, furniture and equipment expenses, communications costs and
other general and administrative operating expenses. The Company's results of
operations are significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, government policies
and actions of regulatory agencies.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Cash and Cash Equivalents
Cash and cash equivalents are stated at cost. Federal funds sold have
maturities generally of one day. Lamar Bank is required to maintain average
balances with the Federal Reserve Bank. The required reserve balance at December
31, 2000 was $350. Cash paid for interest during the years ended December 31,
2000, 1999 and 1998, was $18,258, $16,477 and $14,100, respectively.
Securities
Securities available for sale are carried at estimated fair value in
accordance with Statement of Financial Accounting Standards (SFAS) No. 115
"Accounting for Certain Investment in Debt and Equity Securities." The amortized
cost of securities classified as available for sale is adjusted for amortization
of premiums and accretion of discounts to maturity. Unrealized gains or losses
on these securities are included in stockholders' equity net of income taxes.
Securities which Lamar Bank has the ability and the intent to hold until
maturity are stated at cost, adjusted for amortization of premiums and accretion
of discounts. The adjusted cost of the specific securities sold is used to
compute gains or losses on the sale of securities. Premiums and discounts are
recognized in interest income using the interest method over the period to
maturity. Trading account securities consist of securities held for resale in
anticipation of short-term market movements and are carried at estimated fair
value. Trading account
49
gains include the effects of adjustments to fair values. The adjusted cost of
the specific securities sold is used to compute gains or losses on the sale of
securities.
Federal Home Loan Bank stock is not considered a marketable equity security
under SFAS No. 115 and, therefore, is carried at cost.
Mortgage Banking Activities
The Company originates first mortgage loans (traditional 15-year and 30-
year fixed and variable rate loans) for sale, with the servicing rights, in the
secondary market. The Company limits its interest rate risk on such loans
originated by selling individual loans immediately after the customers lock into
their rate. Origination fees and any gains or losses on the sale of the mortgage
loans and servicing rights, which are not material to the consolidated
operations for the years presented, are included in mortgage loan fees. Mortgage
loans originated and intended for sale in the secondary market are carried at
the lower of aggregate cost or market value, based on the subsequent sales
prices of such loans.
The Company accounts for the mortgage loan sales in accordance with SFAS
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," which requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has incurred
and to cease to recognize them as financial assets when control has been
surrendered in accordance with the criteria provided in SFAS No. 125.
In July 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," which
replaces SFAS No. 125. SFAS No. 140 requires that all assets or liabilities
retained from the transfer of financial assets accounted for as a sale be
initially recorded at their fair value and periodically reviewed and adjusted
for any impairment. SFAS 140 is effective April 1, 2001. Management does not
anticipate that the adoption of SFAS 140 will have a significant effect on the
Company's consolidated financial position or operations.
Loans
Loans, other than mortgage loans held for sale, are stated at the principal
amounts outstanding, less unearned income and the allowance for possible loan
losses. Interest on loans and accretion of unearned income are computed by
methods which approximate a level rate of return on recorded principal. Loan
origination fees and certain direct loan origination costs are deferred and
recognized over the average lives of the loans as an adjustment to yield.
Commercial and real estate loans are placed on non-accrual status when they
become past due 90 days or more as to principal or interest unless they are
adequately secured and in the process of collection. All commercial and real
estate nonaccrual loans are considered to be impaired in accordance with SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan." Consumer loans
generally are not placed on nonaccrual status but are reviewed periodically and
charged off when deemed uncollectible or any payment of principal or interest is
more than 120 days delinquent. Interest payments received on nonaccrual loans
are applied to principal if in management's opinion there is doubt as to the
collectibility of the principal; otherwise, these receipts are recorded as
interest income. A loan remains on nonaccrual status until it is current as to
principal and interest and the borrower demonstrates the ability to fulfill the
contractual obligation.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level considered adequate
by management and approved by the Board of Directors to provide for probable
loan losses. Management's determination of the adequacy is based on an
evaluation of the portfolio, past loan loss experience, growth and composition
of the loan portfolio, economic conditions and other relevant factors; actual
losses may vary from the current estimate. The allowance is increased by
provisions for loan losses charged against income. Actual loan losses are
deducted from and subsequent recoveries are added to the allowance.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed by the modified accelerated cost recovery method for
financial reporting purposes based upon the estimated useful lives of the
assets. Expenditures for major renewals and betterments are capitalized, and
those for maintenance and repairs are charged to expense when incurred.
50
Other Real Estate
Other real estate is stated at the lower of fair value, based on current
market appraisals, or the recorded investment in the related loan.
Long-Lived Assets
The Company accounts for impairment losses on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount in accordance with SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and Assets to be Disposed Of." The Company also accounts
for long-lived assets that are expected to be disposed of in accordance with
SFAS No. 121.
Income Taxes
The Company and its subsidiaries file a consolidated federal and state
income tax return. The Company accounts for income taxes using the liability
method. Temporary differences occur between the financial reporting and tax
bases of assets and liabilities. Deferred tax assets and liabilities are
recorded for these differences based on enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Comprehensive Income
SFAS No. 130 requires the presentation of comprehensive income and
establishes standards for reporting its components (revenue, expenses, gains and
losses) in a full set of general purpose financial statements.
Derivatives and Hedging Activities
Effective October 1, 1998, the Company adopted the provisions of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 requires the Company to recognize all derivatives on the balance sheet at
fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives are either offset against the
change in fair value of assets, liabilities, or firm commitments through income
or recognized in other comprehensive income until the hedged item is recognized
in income. The ineffective portion of a derivative's change in fair value will
be immediately recognized in income. The fair value of the derivatives held at
October 1, 1998, was not material to the Company's consolidated financial
position.
SFAS No. 133 also allowed, upon adoption, the reclassification of held-to-
maturity securities to the available-for-sale or trading portfolios without
tainting the remaining securities in the held-to-maturity portfolio. The
Company reclassified $3,497 of held-to-maturity securities to trading account
securities as of October 1, 1998. The unrealized gain of the transferred
securities was not material to the Company's consolidated financial position or
operations, thus the adoption of SFAS No. 133 did not result in a cumulative
effect adjustment.
Net Income per Common Share
Basic and diluted earnings per share is computed by dividing net income by
the weighted-average number of shares outstanding for the year. There were no
dilutive options, warrants or convertible securities outstanding for the years
presented.
2. Initial Public Offering
In December 1998, the Company sold 1,363,636 shares of its Common Stock at
$10 per share in an underwritten initial public offering (the "Offering"). Net
proceeds from the Offering were $12,199. In January 1999 the underwriters
exercised their overallotment option, and the Company sold 185,000 shares at $10
per share. Net proceeds from the sale of these shares were $1,721.
51
3. Securities
The aggregate carrying amounts and estimated fair value of securities were
as follows:
December 31, 2000
---------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
Securities available for sale:
U.S. Treasury securities and obligations of U.S. government agencies $ 48,450 $ 30 $ (447) $ 48,033
Obligations of states and political subdivisions 9,794 120 (4) 9,910
Corporate bonds 1,000 --- --- 1,000
Mortgage-backed securities 47,515 21 (896) 46,640
--------- ---------- ---------- ---------
Total debt securities 106,759 171 (1,347) 105,583
Equity securities 4,366 --- (667) 3,699
--------- ---------- ---------- ---------
Total securities available for sale $ 111,125 $ 171 $ (2,014) $ 109,282
========= ========== ========== =========
Securities held to maturity:
U.S. Treasury securities and obligations of U.S. government agencies $ 10,986 $ 75 $ (6) $ 11,055
Obligations of states and political subdivisions 27,768 126 (332) 27,562
Mortgage-backed securities 655 --- (5) 650
--------- ---------- ---------- ---------
Total securities held to maturity $ 39,409 $ 201 $ (343) $ 39,267
========= ========== ========== =========
December 31, 1999
---------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ----------- ---------
Securities available for sale:
U.S. Treasury securities and obligations of U.S. government agencies $ 34,415 $ --- $ (2,299) $ 32,116
Obligations of states and political subdivisions 9,770 29 (68) 9,731
Mortgage-backed securities 49,891 5 (3,288) 46,608
--------- ---------- ----------- ---------
Total debt securities 94,076 34 (5,655) 88,455
Equity securities 4,362 --- (969) 3,393
--------- ---------- ----------- ---------
Total securities available for sale $ 98,438 $ 34 $ (6,624) $ 91,848
========= ========== =========== =========
Securities held to maturity:
U.S. Treasury securities and obligations of U.S. government agencies $ 4,047 $ --- $ (36) $ 4,011
Obligations of states and political subdivisions 29,271 32 (1,355) 27,948
Mortgage-backed securities 893 15 (6) 902
--------- ---------- ----------- ---------
Total securities held to maturity $ 34,211 $ 47 $ (1,397) $ 32,861
========= ========== =========== =========
During the years ended December 31, 2000, 1999 and 1998, available-for-sale
securities with a fair value at the date of sale of $1,500, $10,498 and $9,966,
respectively, were sold. The gross realized gains or losses on such sales
totaled $0, $6 and $191, respectively. The amortized cost and estimated fair
value of securities as of December 31, 2000, by contractual maturity, are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay certain obligations with or
without call or prepayment penalties.
52
Estimated
Amortized Fair
Cost Value
--------- ---------
Securities available for sale:
Due in one year or less $ 12,748 $ 12,725
Due after one year through five
years 10,159 10,181
Due after five years through ten
years 19,394 19,319
Due after ten years 16,943 16,718
Mortgage-backed securities 47,515 46,640
Equity securities 4,366 3,699
-------- --------
$111,125 $109,282
======== ========
Securities held to maturity:
Due in one year or less $ 6,489 $ 6,489
Due after one year through five
years 12,521 12,580
Due after five years through ten
years 11,308 11,273
Due after ten years 8,436 8,275
Mortgage-backed securities 655 650
-------- --------
$ 39,409 $ 39,267
======== ========
Securities having carrying amounts of $97,491 and $97,894 at December 31,
2000 and 1999, respectively, were pledged to secure public deposits and for
other purposes required or permitted by law.
4. Loans
Loans consisted of the following:
December 31,
---------------------
2000 1999
---- ----
Real estate:
Residential $ 70,915 $ 72,695
Mortgage loans held for
sale 778 426
Construction 5,350 10,743
Commercial 35,978 34,559
Consumer 57,361 69,542
Commercial 53,321 49,554
-------- --------
223,703 237,519
Unearned income (1,297) (2,116)
Allowance for loan losses (5,483) (4,270)
-------- --------
Net loans $216,923 $231,133
======== ========
Loans are made principally to customers in the Company's trade area. The
economy in this trade area is primarily retail, service and medical based. The
Company's loan portfolio is primarily centered in consumer loans and real
estate; therefore, the collections of such loans are dependent on the trade area
economy. The Company's lending policy provides that loans collateralized by real
estate are normally made with loan-to-value ratios of 80% or less. Commercial
loans are typically collateralized by property, equipment, inventories and/or
receivables with loan-to-value ratios from 50% to 80%. Consumer loans are
typically collateralized by automobiles and personal property.
53
Transactions in the allowance for loan losses are summarized as follows:
As of and for the year ended
December 31,
------------
2000 1999 1998
---- ---- ----
Balance at beginning of year $ 4,270 $ 3,564 $3,101
Provision for loan losses 2,832 1,422 785
Loans charged off (1,918) (1,058) (526)
Recoveries of loans previously charged
off 299 342 204
------- ------- ------
Balance at end of year $ 5,483 $ 4,270 $3,564
======= ======= ======
Non-accrual loans at December 31, 2000 and 1999 were $2,258 and $1,525,
respectively.
Certain directors, executive officers, principal shareholders, their
immediate family members and entities in which they or their immediate family
members have principal ownership interests, are customers of and have
transactions with the Company in the ordinary course of business. Loans to these
parties are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable third-party
transactions and do not involve more than normal risks of collectibility or
present other unfavorable features.
These related-party loan transactions are summarized as follows:
Year ended
December 31,
----------------
2000 1999
---- ----
Balance at beginning of year $1,455 $ 1,468
New loans 273 1,170
Repayments (341) (1,183)
------ -------
Balance at end of year $1,387 $ 1,455
====== =======
5. Premises and Equipment
Premises and equipment consisted of the following at:
December 31,
---------------------
2000 1999
---- ----
Land $ 2,920 $ 2,915
Bank premises 8,200 7,046
Furniture, fixtures and equipment 5,811 5,339
Computer software 1,049 1,039
Accumulated depreciation (6,864) (5,889)
------- -------
$11,116 $10,450
======= =======
54
6. Other Real Estate
Other real estate transactions consisted of the following:
As of and for the year ended
December 31,
------------
2000 1999 1998
---- ---- ----
Beginning balance $ 541 $ 742 $ 411
Transfers of loans 1,221 134 360
Sales (754) (319) (18)
Provision for losses (32) (16) (11)
------ ----- -----
Ending balance $ 976 $ 541 $ 742
====== ===== =====
7. Interest-Bearing Deposits
Interest-bearing deposits consisted of the following:
December 31,
------------
2000 1999
---- ----
Demand (Now, SuperNow and money market) $ 76,843 $ 84,875
Savings 9,780 9,448
Individual retirement accounts 16,880 16,279
Time deposits, $100,000 and over 63,773 65,389
Other time deposits 100,468 98,836
-------- --------
$267,744 $274,827
======== ========
Scheduled maturities of time deposits, including individual retirement
accounts, outstanding at December 31, 2000, are as follows:
2001 $115,999
2002 52,781
2003 7,792
2004 1,232
2005 3,317
--------
$181,121
========
In the normal course of business, the Company has accepted deposits from
certain directors, executive officers, principal shareholders and other related
parties on substantially the same terms, including interest rates, as those
prevailing at the time of comparable transactions with third-party customers.
Such deposits were $889 and $791 at December 31, 2000 and 1999, respectively.
8. Other Borrowed Funds
Other borrowed funds include advances of $70,000 at December 31, 2000 and
1999, from Federal Home Loan Bank ("FHLB"). The advances include $30,000 which
accrue interest at fixed rates varying from 4.75% through 6.29% with interest
paid monthly and maturities through November 2008. Lamar Bank has a $40,000
55
advance from the FHLB at a 4.49% interest rate (fixed through January 21, 2002)
that matures January 21, 2009. Interest is due monthly and the note is callable
quarterly beginning April 22, 2002. The proceeds from this advance were used by
the Company to purchase securities, which have been classified as available for
sale. The advances are collateralized by Lamar Bank's investment in FHLB stock,
which totaled $3,893 and $3,596 at December 31, 2000 and 1999, respectively, and
by a blanket pledge of Lamar Bank's eligible real estate loans. Lamar Bank had
available collateral to borrow an additional $59,000 from the FHLB at December
31, 2000.
9. Income Taxes
Income tax expense (benefit) consisted of the following:
Year ended December 31,
--------------------------
2000 1999 1998
---- ---- ----
Current:
Federal $ 869 $1,470 $ 999
State (20) 229 155
----- ------ ------
849 1,699 1,154
Deferred (247) (204) (149)
----- ------ ------
$ 602 $1,495 $1,005
===== ====== ======
The differences between Lamar Bank's actual income tax expense and amounts
computed at the statutory rates are summarized as follows:
Year ended December 31,
--------------------------
2000 1999 1998
---- ---- ----
Amount computed at statutory rate on income before
income taxes $1,172 $1,926 $1,379
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit (35) 133 89
Income from non-taxable securities (467) (517) (447)
Other (68) (47) (16)
------ ------ ------
$ 602 $1,495 $1,005
====== ====== ======
The Company made income tax payments of $1,458, $1,495 and $1,113 during
the years ended December 31, 2000, 1999 and 1998, respectively.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets consisted of the following:
December 31,
-----------------
2000 1999
---- ----
Allowance for loan losses $1,568 $1,117
Other real estate 29 32
Deferred compensation 190 160
Net unrealized (gain) loss on securities available for sale 687 2,458
Other (331) (101)
------ ------
Total net deferred tax assets $2,143 $3,666
====== ======
56
10. Employment Benefit Plans
The Company has a defined contribution 401(k) plan with a profit
sharing feature that covers substantially all employees. Participants in the
401(k) plan may contribute up to the maximum allowed by Internal Revenue Service
regulations. The Company matches participants' contributions to the 401(k) plan
up to 3% of each participant's annual salary. The Company may make a profit
sharing contribution as determined by the Company's Board of Directors. The
Company's matching and profit sharing contributions vest 20% annually beginning
with the participant's third year of service. The Company's contributions to the
401(k) plan were $104, $144 and $88 for the years ended December 31, 2000, 1999
and 1998, respectively.
The Company has an employee stock ownership plan ("ESOP") which covers
substantially all employees. The Company may make contributions to the ESOP at
the discretion of its Board of Directors and may be made in cash or common
stock. The contributions vest 20% annually beginning with the participant's
third year of service. The Company's contributions to the ESOP were $11, $60 and
$165 for the years ended December 31, 2000, 1999 and 1998, respectively.
In August of 1998, the Company adopted a stock incentive plan under
which it plans to grant stock options for selected employees. As of December 31,
2000, no stock options had been granted under the plan.
The Company maintains a self-insured medical plan. Under this plan,
the Company self-insures, in part, coverage for substantially all full-time
employees with coverage by insurance carriers for certain stop-loss provisions
for losses greater than $30 for each occurrence up to a maximum benefit of
$1,000. The Company's expenses pertaining to the self-insured medical plan,
including accruals for incurred but not reported claims, were $509, $405 and
$436 for the years ended December 31, 2000, 1999 and 1998, respectively.
The Company has deferred compensation agreements with certain officers
for payments to be made over specified periods beginning when the officers reach
age 65. Amounts accrued for these agreements are based upon deferred
compensation earned, discounted over the estimated remaining service life of
each officer. Deferred compensation expense totaled $82, $76 and $71 for the
years ended December 31, 2000, 1999 and 1998, respectively.
11. Regulatory Matters
The Federal Reserve Board has adopted a system using risk-based
capital guidelines to evaluate the capital adequacy of bank holding companies.
These guidelines require a minimum total risk-based capital ratio of 8.0% (of
which at least 4.0% is required to consist of Tier 1 capital elements). The
Federal Reserve Board also utilizes a leverage ratio (Tier 1 capital divided by
average total consolidated assets) to evaluate the capital adequacy of bank
holding companies. Management believes, as of December 31, 2000, that the
company exceeds all capital adequacy requirements to which it is subject. At
December 31, 2000, the most recent regulatory notification categorized Lamar
Bank as well capitalized.
The Company's actual capital amounts and applicable ratios are as
follows:
December 31,
------------
2000 1999
---- ----
Capital:
Stockholders' equity $36,795 $31,902
Unrealized loss on securities, net of
income taxes 1,155 4,133
57
Unrealized gain on equity securities, net
income taxes (417) ---
Intangible asset (79) (87)
------- -------
Tier 1 capital 37,454 35,948
Qualifying allowance for loan losses 3,046 3,138
------- -------
Total capital $40,500 $39,086
======= =======
Ratios:
Total capital to risk-weighted assets 16.76% 15.57%
Tier 1 capital to risk-weighted assets 15.50 14.38
Tier 1 capital to total average assets
(leverage ratio) 9.11 9.23
State banking regulations require the Mississippi Department of Banking
and Consumer Finance to approve the payment of any dividends.
12. Off-Balance Sheet Risks, Commitments and Contingent Liabilities
Loan commitments are made to accommodate the financial needs of the
Company's customers. Standby letters of credit commit the Company to make
payments on behalf of customers when certain specified future events occur. They
primarily are issued to support customers' trade transactions. Both arrangements
have credit risk essentially the same as that involved in extending loans to
customers and are subject to the Company's normal credit policies. Collateral is
obtained based on management's credit assessment of the customer. The Company's
maximum exposure to credit losses for loan commitments (unused lines of credit)
outstanding at December 31, 2000 and expiring during 2001 is $12,800.
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Although the ultimate outcome of these other
actions and claims cannot be ascertained at this time, it is the opinion of
management (based on advice of legal counsel) that such litigation and claims
should be resolved without material effect on the Company's consolidated
financial position or operating results.
13. Parent Company Condensed Financial Information
Balance Sheets
December 31,
------------
2000 1999
---- ----
Assets:
Cash and cash equivalents $ 1,733 $ 1,878
Investment in subsidiaries 34,033 28,984
Due from subsidiaries 74 76
Premises and equipment 1,151 1,161
Other 19 19
------- -------
Total assets $37,010 $32,118
======= =======
Liabilities $ 215 $ 216
Stockholders' equity:
Common stock 2,158 2,158
Paid-in capital 17,513 17,513
Retained earnings 18,347 16,364
Treasury stock (68) ---
------- -------
Accumulated other comprehensive loss (1,155) (4,133)
------- -------
Total stockholders' equity 36,795 31,902
------- -------
Total liabilities and stockholders' equity $37,010 $32,118
======= =======
58
Statements of Income Year ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Income:
Dividends from subsidiaries $ 850 $ ---- $ 750
Other 21 22 22
------ ------ ------
Total income 871 22 772
Expenses:
Interest expense ---- ---- 342
Other 219 204 55
------ ------ ------
Total expenses 219 204 397
------ ------ ------
Income (loss) before income taxes 652 (182) 375
Income tax expense (benefit) 74 (54) 146
------ ------ ------
Income (loss) before equity in undistributed net income of 726 (128) 521
Subsidiaries
Equity in undistributed net income of subsidiaries 2,120 4,299 2,528
------ ------ ------
Net income $2,846 $4,171 $3,049
====== ====== ======
Year ended December 31,
-----------------------
Statements of Cash Flows
2000 1999 1998
---- ---- ----
Operating activities:
Net income $ 2,846 $ 4,171 $ 3,049
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Undistributed net income of subsidiaries (2,120) (4,299) (2,528)
Depreciation expense 10 9 9
(Increase) decrease in due from subsidiaries 2 88 (514)
Increase (decrease) in other liabilities --- (127) 126
------- ------- -------
Net cash provided by (used in) operating activities 738 (158) 142
Investment activities:
Capital contribution to subsidiary (150) (7,500) ----
Return of capital from subsidiary 199 ---- ----
Purchases of premises and equipment ---- ---- (6)
------- ------- -------
Net cash provided by (used in) investing activities 49 (7,500) (6)
Financing activities:
Dividends paid (864) (685) (388)
Payments on note payable to a bank ---- ---- (3,600)
Proceeds from sale of common stock ---- 1,721 12,199
Purchases of treasury stock (68) ---- (72)
Proceeds from sales of treasury stock ---- ---- 225
------- ------- -------
Net cash provided by (used in) financing activities (932) 1,036 8,364
------- ------- -------
Net increase (decrease) in cash and cash equivalents (145) (6,622) 8,500
Cash and cash equivalents at beginning of year 1,878 8,500 ----
------- ------- -------
Cash and cash equivalents at end of year $ 1,733 $ 1,878 $ 8,500
======= ======= =======
59
14. Fair Values of Financial Instruments
Accounting principles generally accepted in the United States require
disclosure of fair value information about financial instruments for which it is
practicable to estimate fair value, whether or not the financial instruments are
recognized in the financial statements. When quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. The derived fair value estimates cannot be substantiated through
comparison to independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. Certain financial instruments and all
non-financial instruments are excluded from these disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company. The use of different market assumptions and
estimation methodologies may have a material effect on the estimated fair value
amounts.
The carrying amount of cash and cash equivalents, non-interest bearing
deposits, other borrowed funds and interest rate floors approximates the
estimated fair value of these financial instruments. The estimated fair value of
securities is based on quoted market prices, dealer quotes and prices obtained
from independent pricing services. The estimated fair value of loans and
interest-bearing deposits is based on present values using applicable risk-
adjusted spreads to the appropriate yield curve to approximate current interest
rates applicable to each category of these financial instruments. The fair value
of the loan commitments to extend credit is based on the difference between the
interest rate at which the Company's committed to make the loans and the current
rates at which similar loans would be made to borrowers with similar credit
ratings and the same maturities. The fair value is not material.
Variances between the carrying amount and the estimated fair value of
loans reflect both credit risk and interest rate risk. The Company is protected
against changes in credit risk by the allowance for loan losses.
The fair value estimates presented are based on information available to
management as of December 31, 2000 and 1999. Although management is not aware of
any factors that would significantly affect the estimated fair value amounts,
these amounts have not been revalued for purposes of these financial statements
since those dates. Therefore, current estimates of fair value may differ
significantly from the amounts presented.
December 31,
------------
2000 1999
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
Securities available for sale $109,282 $109,282 $ 91,848 $ 91,848
Securities held to maturity 39,409 39,267 34,211 32,861
Loans 216,923 215,520 231,133 231,460
Interest-bearing deposits 267,744 269,456 274,827 276,584
15. Subsequent Events
On February 21, 2001, the Company signed a definitive agreement and plan
of merger with Hancock Holding Company ("Hancock"). Under the terms of the
agreement, each shareholder will have the right to elect to receive either (1)
$11.00 in cash for each share of the Company's Common Stock, or (2) .55 shares
of Hancock Series A Preferred Stock for each share of the Company's Common
Stock. Under a formula set forth in the agreement, in the aggregate no more than
49% or less than 30% of the Company's Common Stock may be exchanged for cash.
The Series A Preferred Stock will pay cumulative annual dividends of $1.60 per
share and will be convertible into Hancock common stock at $45.00 per share.
Subject to certain conditions, including the approval of the Company's
shareholders and regulatory authorities, the merger is anticipated to be
consummated in the late second or early third quarter of 2001.
60
INFORMATION ABOUT HANCOCK
General
As permitted by the rules of the SEC, financial and other information
relating to Hancock that is not included in or delivered with this document,
including information relating to Hancock's directors and executive officers, is
incorporated herein by reference. See "WHERE YOU CAN FIND MORE INFORMATION" on
page ______ and "INFORMATION INCORPORATED BY REFERENCE" on page _____.
Hancock is a multi-bank holding company headquartered in Gulfport,
Mississippi with total consolidated assets of approximately $3.0 billion at
December 31, 2000. Hancock operates a total of 91 banking offices and 130
automated teller machines in the States of Mississippi and Louisiana through two
wholly-owned bank subsidiaries: Hancock Bank, Gulfport, Mississippi ("Hancock
Bank MS") and Hancock Bank of Louisiana, Baton Rouge, Louisiana ("HBLA").
Both Hancock Bank MS and HBLA are community oriented and focus primarily on
offering commercial, consumer and mortgage loans and deposit services to
individuals and small to middle market businesses in their respective market
areas. Hancock Bank MS and HBLA's operating strategy is to provide their
customers with the financial sophistication and breadth of products of a
regional bank while successfully retaining the local appeal and level of service
of a community bank.
Market Information
Hancock's common stock trades on the Nasdaq Stock Market under the symbol
"HBHC" and is quoted in publications under "HancHd". The following table sets
forth the high and low sale prices of Hancock's common stock as reported on the
Nasdaq Stock Market. These prices do not reflect retail mark-ups, mark-downs
or commissions.
Cash
High Low Dividends
Sale Sale Paid
-------- ------- ---------
2001
1st quarter $43.4375 $35.25 $0.28
2000
1st quarter $ 40.00 $30.88 $0.25
2nd quarter 34.63 31.00 0.25
3rd quarter 32.50 29.63 0.25
4th quarter 39.63 29.00 0.50
1999
1st quarter $ 48.00 $41.00 $0.25
2nd quarter 47.00 42.00 0.25
3rd quarter 45.00 37.75 0.25
4th quarter 41.50 37.13 0.25
There were 5,549 holders of record of common stock of Hancock at January 3,
2001 and 11,072,770 shares issued.
On ______________________, 2001, the most recent practicable date prior to
the printing of this document, the high, low and last sales price of Hancock
common stock was as follows:
61
High Low Last Sales Price
---- --- ----------------
Hancock Common Stock
These prices will fluctuate between now and the closing of the merger. No
Hancock Series A Preferred Stock has been issued and no prediction can be made
regarding the price it will trade after the merger. You should obtain current
market quotations prior to making any decisions as to the merger.
DESCRIPTION OF HANCOCK CAPITAL STOCK
Authorized and Outstanding Stock
Hancock is authorized to issue up to 75,000,000 shares of common stock, par
value $3.33 per share and pursuant to the Merger Agreement has agreed to amend
the Hancock Articles to authorize 50,000,000 shares of preferred stock, par
value $20.00 per share. The amendment to the Hancock Articles will provide that
the board of directors is authorized to issue the preferred stock in one or more
series and, subject to certain restrictions by state and federal law, to fix the
number and designation of shares, rates of dividends, redemption terms,
conversion rights, liquidation amounts, voting rights and any other lawful
rights, preferences and limitations of each such series.
Hancock Series A Preferred Stock
Pursuant to the Merger Agreement, Hancock has agreed to designate up to
________ shares of preferred stock to be issued in the Merger as the 8%
Cumulative Convertible Preferred Stock, Series A.
Dividends
Dividends on the Hancock Series A Preferred Stock accrue at an annual rate
of $1.60 per share. Dividends are cumulative and payable quarterly if, as and
when declared by the Board of Directors from funds legally available therefor on
the last day of each calendar quarter, commencing on the last day of the
calendar quarter in which Lamar and Hancock merge.
No dividends may be declared or paid upon, or any sum set apart for the
payment of dividends upon any shares of Hancock stock ranking equal to the
Hancock Series A Preferred Stock for any dividend period unless the same
dividend shall have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend, upon all of the Hancock Series A
Preferred Stock being issued in the Merger.
Unless dividends accrued on all outstanding shares of each series of
preferred stock for all past dividend periods have been declared and paid, or
declared and a sum sufficient for the payment thereof set apart, and full
dividends (to the extent that the amount has become determinable) on all
outstanding shares of such stock due on the respective following payment dates
have been declared and a sum sufficient for payment set apart, then, (i) no
dividend (other than a dividend payable solely in common stock) may be declared
or paid upon, or any sum set apart for the payment of dividends on any shares of
Hancock stock ranking junior to the Hancock Series A Preferred Stock; (ii) no
other distribution may be made on any shares of Hancock junior stock; (iii) no
shares of Hancock junior stock may be purchased, redeemed or otherwise acquired
for value by Hancock or any of its subsidiaries; and (iv) no monies may be paid
into or set apart or made available for a sinking or other like fund for the
purchase, redemption or other acquisition for value of any shares of Hancock
junior stock by Hancock or any of its subsidiaries.
Conversion to Common Stock
Each share of preferred stock will be convertible, at the option of the
holder, at any time, into shares of Hancock common stock. The number of shares
of Hancock common stock into which each share of preferred stock will be
convertible shall be equal to the number arrived at by dividing $20, without any
payment or adjustment for dividends accrued, by the conversion price per share
of the common stock. The conversion price shall initially be
62
$45 per share, which means that each share of preferred stock initially will be
convertible into .4444 shares of Hancock common stock. If any fractional
interest in a share of Hancock common stock would be deliverable upon
conversion, the number of shares of common stock deliverable will be rounded up
to the nearest full share.
The conversion rate is subject to adjustment in certain events, including
the issuance of Hancock capital stock as a stock dividend; combinations and
subdivisions of the common stock; the issuance after the date hereof securities
convertible into or exchangeable for common stock or warrants, rights or options
to acquire common stock (except pursuant to employee benefit plans) at less than
the then current market price of the common stock; and certain distributions of
debt securities or assets (other than cash dividends) of Hancock. Upon
conversion of any preferred stock, a payment shall be made for all dividends
declared and unpaid on such shares up to the dividend date immediately preceding
surrender of the shares for conversion. No payment or adjustment will be made
for any dividends accrued but undeclared as of such date.
In case of any consolidation or merger to which Hancock is a party but not
the surviving corporation, or in case of any sale or conveyance to another
corporation of the property of Hancock as an entirety or substantially as an
entirety, each holder of shares of preferred stock will thereafter have the
right to convert the shares into (and any successor corporation shall expressly
assume the obligation to deliver) the kind and amount of shares of stock and
other securities and property receivable upon such consolidation, merger, sale
or conveyance by a holder of the number of shares of common stock into which the
preferred stock was convertible immediately prior to such consolidation, merger,
sale or conveyance.
The election to convert shares of preferred stock into common stock can be
made by delivering written notice of election to convert to Hancock, accompanied
by the certificates for any preferred stock being converted.
If, for 20 consecutive trading days beginning on or after the end of the
30th calendar month following the Effective Date of the Merger of Hancock and
Lamar and ending on or before the 60th calendar month following the Effective
Date of the Merger of Hancock and Lamar, the last sale price of Hancock common
stock as reported by Nasdaq or its successor exceeds $56.25, then effective on
the last day in such 20 day period, Hancock shall have the option to require
that each share of Hancock Series A Preferred Stock automatically convert into
Hancock common stock. If Hancock shall elect to require automatic conversion,
written notice must be given to the owners of the Hancock Series A Preferred
Stock.
Liquidation Preference. In the event of a liquidation, dissolution or
winding-up of Hancock, the holders of the Hancock Series A Preferred Stock will
be entitled to receive, before any distribution or payment is made upon any
shares of stock of Hancock ranking junior to the preferred stock, $20 per share
in cash, together with an amount in cash equal to all accrued and unpaid
dividends thereon on the date of distribution or payment. If, upon any
liquidation, dissolution or winding-up, the assets of Hancock distributable
among the holders of the Hancock Series A Preferred Stock and any other stock
ranking equal to the Hancock Series A Preferred Stock in respect of the
liquidation, are insufficient to permit payment in full to such holders of the
amounts to which they are respectively entitled, the assets will then be
distributed among such holders on a pro rata basis.
A voluntary sale, lease, exchange or transfer of all or any part of Hancock
property or assets, the consolidation or merger of Hancock into or with one or
more corporations, or a redemption of Hancock capital stock shall not, without
further corporate action, be deemed a liquidation, dissolution or winding-up of
Hancock.
Redemption. If, (i) for 20 consecutive trading days beginning on or after
the end of the 30th calendar month following the Effective Date of the Merger of
Hancock and Lamar and ending on or before the 60th calendar month following the
Effective Date of the Merger of Hancock and Lamar, the last sale price of
Hancock common stock as reported by Nasdaq or its successor exceeds $56.25, or
(ii) at any time after the end of the 60th calendar month following the
Effective Date of the Merger of Hancock and Lamar, then Hancock shall have the
option to redeem all or any portion of the Hancock Series A Preferred Stock.
If less than all of the outstanding shares of Hancock Series A Preferred
Stock are to be redeemed, not more than 60 days prior to the date fixed for such
redemptions, Hancock shall select those shares of Hancock Series A
63
Preferred Stock to be redeemed on a pro rata basis, by lot or in such other
equitable manner as the board of directors may determine. There is no mandatory
redemption or sinking fund obligation with respect to the preferred stock.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Hancock Series A
Preferred Stock to be redeemed at the address shown on Hancock books. On and
after the earlier of the date that the redemption price is paid or the date that
such price is deposited in trust for the benefit of the holders of the shares to
be redeemed, all rights of the holders of such preferred stock shall terminate
except the right to convert or to receive the redemption price. The right of
conversion with respect to such shares shall cease and terminate at the close of
business five days prior to the date fixed for such redemption.
Hancock shall be obligated to redeem all of the outstanding shares of
Hancock Series A Preferred Stock at the redemption price of $20 per share plus
accrued dividends 30 years from the date of issuance thereof.
Hancock shall have the option to redeem all or any portion of the
outstanding shares of Hancock Series A Preferred Stock at the redemption price
of $20 per share plus accrued dividends if there is a change in the Federal
Reserve capital adequacy guidelines that result in the Hancock Series A
Preferred Stock not qualifying as Tier 1 capital.
Voting Rights. In addition to any voting rights afforded by the MBCA, the
holders of Hancock Series A Preferred Stock shall be entitled to receive notice
of, to participate in, and to vote on any matter presented to the holders of
Hancock common stock at any meeting of the holders of Hancock common stock.
Each holder of Hancock Series A Preferred Stock shall have a number of votes
equal to the number of shares of Hancock common stock into which the shares of
Hancock Series A Preferred Stock held by such holder could be converted at the
then current conversion price.
Hancock Common Stock
Holders of Hancock common stock are entitled to one vote for each share
held of record on all matters voted on by shareholders. Hancock stockholders do
not have cumulative voting rights in the election of directors. Subject to the
prior rights of the holders of Hancock Series A Preferred Stock and any class or
series of stock of Hancock ranking on a parity with the Hancock Series A
Preferred Stock in respect of payment of dividends, holders of Hancock common
stock are entitled to receive dividends when, as and if declared by the board of
directors out of funds legally available for the payment of dividends. Upon any
liquidation, dissolution or winding-up of the affairs of Hancock, holders of
common stock are entitled to receive pro rata all of the assets of Hancock
available for distribution to shareholders after payment of the liquidation
preference of any preferred stock and any class or series of stock of Hancock
ranking on a parity with the preferred stock in respect of liquidation
outstanding at the time. Holders of common stock have no subscription,
redemption, sinking fund, conversion or preemptive rights. The outstanding
shares of common stock are fully paid and nonassessable.
Change of Control
Certain provisions of the Hancock Articles of Incorporation and Bylaws may
have the effect of preventing, discouraging or delaying any change in control of
Hancock which may (or may not) be in the best interest of the majority of the
shareholders.
Supermajority Vote
The Hancock Articles of Incorporation ("Hancock Articles") contain
provisions regarding the vote required to approve certain business combinations
or other significant corporate transactions involving Hancock and a substantial
shareholder. Mississippi law generally requires the affirmative vote of the
holders of a majority of the shares entitled to vote at the meeting to approve a
merger, consolidation or dissolution of Hancock or a disposition of all or
substantially all of its assets. Hancock's Articles raise the required
affirmative vote to 80% of the total number of votes entitled to be cast to
approve these and other significant transactions ("business combinations") if a
"Substantial Shareholder" (as defined) is a party to the transaction or its
percentage equity interest in Hancock will
64
be increased by the transaction. Two-thirds of the whole Board of Directors
("Hancock Board") may, in all such cases, determine not to require such 80%
vote, but only if a majority of the directors making such determination are
"Continuing Directors" (as defined). Such determination may only be made before
the Substantial Shareholder in question achieves such status.
A "Substantial Shareholder" generally is defined as the "beneficial owner"
of more than 10% of the outstanding shares of stock of Hancock entitled to vote
in the election of directors. "Beneficial ownership" generally is defined in
accordance with Rule 13d-3 under the Exchange Act, and a Substantial Shareholder
is also deemed to beneficially own shares owned, directly or indirectly, by an
"affiliate" or "associate" of the Substantial Shareholder, as well as (i) shares
which it or any such "affiliate" or "associate" has a right to acquire, (ii)
shares issuable upon the exercise of options or rights, or upon conversion of
convertible securities held by the Substantial Shareholder and (iii) shares
beneficially owned by any other person with whom the Substantial Shareholder or
any of his "affiliates" or "associates" acts as a partnership, syndicate or
other group pursuant to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of shares of capital stock of
Hancock.
A "business combination" includes, but is not limited to, a merger or
consolidation involving Hancock or any of its subsidiaries and a Substantial
Shareholder; a sale, lease or other disposition of a "substantial part" of the
assets of Hancock or any of its subsidiaries (i.e., assets constituting in
excess of 10% of the book value of the total consolidated assets of Hancock) to
a Substantial Shareholder; an issuance of equity securities of Hancock or any of
its subsidiaries to a Substantial Shareholder for consideration aggregating $5
million or more; a liquidation or dissolution of Hancock; and a reclassification
or recapitalization of securities of Hancock or any of its subsidiaries or a
reorganization, in any case having the effect, directly or indirectly, of
increasing the percentage interest of a Substantial Shareholder in any class of
equity securities of Hancock or such subsidiary.
The foregoing provisions may not be amended or repealed without the
affirmative vote of 80% or more of the votes entitled to be cast by all holders
of voting shares (which 80% vote must also include the affirmative vote of a
majority of the votes entitled to be cast by all holders of voting shares not
beneficially owned by any Substantial Shareholder).
The supermajority voting provisions may have the effect of discouraging any
takeover or change in control of Hancock. If the holders of a majority of
Hancock's outstanding common stock desire a takeover or change in control, and
if such takeover or change in control is opposed by Hancock management, the
above provisions could be used to thwart the desires of such majority.
Directors
The Hancock Articles provide that: (i) the number of Hancock directors
shall be fixed from time to time by Bylaw adopted by a majority of the Hancock
Board (but in not event less than nine); (ii) vacancies on the Hancock Board may
be filled only by the remaining directors; (iii) directors may be removed only
for cause; (iv) a majority of the number of directors that constitutes the whole
Hancock Board constitutes a quorum for the transaction of business; (v) if a
quorum is present when a vote is taken, then except as provided otherwise in the
Hancock Articles, the affirmative vote of a majority of the directors present
will be the act of the Hancock Board; (vi) regular meetings of the Hancock Board
may be held without notice; and (vii) special meetings of the Hancock Board may
be preceded by at least two days notice. Under the MBCA, the shareholders must
approve any proposal by the Hancock Board to increase or decrease by more than
30% the number of directors last approved by the shareholders. These provisions
may not be amended or repealed without the approval of the holders of two-thirds
of the outstanding Hancock stock.
The Hancock Board may consist of not less than nine persons, as set from
time to time by the Hancock Board, and currently consists of nine members. The
Hancock Board is divided into three classes, as nearly equal in number as
possible, with members of each class to serve for three years and with one class
being elected each year.
65
These provisions may have the effect of making it more difficult for
shareholders to replace or add directors, or to otherwise influence actions
taken by directors, which may discourage attempts to acquire control of Hancock
which may (or may not) be in the best interest of the majority of the
shareholders.
Shareholder Stock Purchase Rights
On February 21, 1997 the Hancock Board declared a dividend of one common
stock purchase right (a "Right") for each outstanding share of Hancock's common
stock. In addition, all shares of Hancock common stock issued since this date
have been or will be accompanied by a Right. The Hancock Preferred Stock to be
issued in connection with the merger will not be accompanied by a Right unless
the preferred stock is converted into Hancock common stock. Each Right entitles
the registered holder, subject to the terms of the Rights Agreement, to purchase
from Hancock one share of stock.
The Rights are not currently exercisable, but will become exercisable at an
exercise price of 50% of the current market price of the Hancock stock upon the
public announcement that a person or group of persons has acquired 10% or more
of the outstanding Hancock stock (the "Stock Acquisition Date"), or upon the
announcement or commencement of a tender or exchange offer, without the prior
approval of Hancock's Board if at any time following the Stock Acquisition Date
(i) Hancock is acquired in a merger of other business combination and Hancock is
not the surviving corporation, (ii) any person or group effects a share exchange
or merger with Hancock and all or part of Hancock's stock is converted or
exchanged for securities, cash or property of any other person or group, (iii)
50% or more of Hancock's assets or earning power is sold or transferred, then,
in each such case, each holder of a Right shall have the right to receive, upon
exercise, that number of shares of common stock of the acquiring person
purchasable for the purchase price at a price of 50% of the current market value
of such shares. The Rights are generally designed to deter coercive takeover
tactics and to encourage all persons interested in potentially acquiring control
of Hancock to treat each shareholder on a fair and equal basis.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Hancock on
terms not approved by Hancock's Board. The Rights should not interfere with any
merger of other business combination approved by the Hancock Board prior to the
time that a person or group has acquired, or obtained the right to acquire,
beneficial ownership of 10% or more of the Hancock stock, or has been determined
to be an adverse person, because until such time the Rights may be redeemed by
Hancock at $0.01 per Right.
COMPARISON OF RIGHTS OF SHAREHOLDERS
If the Merger Agreement is consummated, shareholders of Lamar, other than
those exercising dissenter's rights, will become shareholders of Hancock, and
their rights as shareholders will be governed by the Hancock Articles and
Bylaws, rather than the Articles of Incorporation ("Lamar Articles") and Bylaws
of Lamar. The rights of Hancock's shareholders are governed by the Hancock
Articles and Bylaws and the laws of Mississippi. The rights of Lamar's
shareholders are governed by the Lamar Articles and Bylaws and the laws of
Mississippi, including the MBCA. The following is a brief summary of the
principal differences between the rights of shareholders of Hancock and the
shareholders of Lamar. This summary is qualified in its entirety by reference to
the Hancock Articles and Bylaws, the Lamar Articles and Bylaws, and the MBCA.
Authorized Capital
Lamar has 50,000,000 shares of authorized common stock. Hancock has
75,000,000 shares of authorized common stock and pursuant to the Merger
Agreement and as a condition of the merger, Hancock has agreed to authorize
50,000,000 shares of preferred stock.
Board of Directors
The Lamar Board of Directors is composed of not less than 3 and not more
than 25 persons, the exact number to be established by the shareholders at each
annual meeting of the Lamar shareholders. The Lamar Board
66
of Directors currently consists of 7 members. Directors are elected for one year
terms of office each year or until their successors are chosen and qualified.
The Hancock Board of Directors may consist of not less than nine persons,
as set from time to time by the Hancock Board, and currently consists of nine
members. The Hancock Board is divided into three classes, as nearly equal in
number as possible, with members of each class to serve for three years and with
one class being elected each year.
Removal of Directors
Under the MBCA, at any meeting of shareholders called expressly for that
purpose any director or the entire Lamar Board may be removed, with or without
cause, by a vote of the holders of a majority of the shares then entitled to
vote in the election of directors. A director of Lamar may only be removed from
office if the votes cast for removal would be sufficient to elect him if
cumulatively voted at an election of the entire board of directors. The entire
Lamar Board of Directors may only be removed, with or without cause, at a
meeting called expressly for that purpose, by a vote of the holders of 80% of
the shares then entitled to vote at an election of directors.
A director of Hancock may be removed from office only for cause, by the
affirmative vote of a majority of directors present.
Amendment of the Articles of Incorporation
The Hancock Articles and the Lamar Articles both may be amended by the
affirmative vote of the holders of a majority of votes entitled to be cast at a
shareholders meeting unless the amendment would amend provisions relating to
certain changes in control, in which case 80% or more of the votes entitled to
be cast is required, or unless the amendment would amend the Articles relating
to size, composition and removal of the Board, in which case the approval of the
holders of not less than two-thirds of the outstanding stock is required.
Meetings of Shareholders
Under Lamar's Bylaws, a special meeting of the shareholders may be called,
for any purpose or purposes, unless otherwise prescribed by statute, by the
Chairman of the Board of Directors, the President or by a majority of the Board
of Directors, and shall be called by the President at the request of the holders
of not less than one-tenth of all the votes entitled to be cast on any issue
proposed to be considered at the meeting. A request for a special meeting must
state the purpose of the meeting, and business transacted at a special meeting
of the shareholders shall be confined to the purpose(s) stated in the notice.
Under Hancock's Bylaws, a special meeting of the shareholders may be
called, for any purpose or purposes, unless otherwise prescribed by statute, by
the President or by the Board of Directors, and shall be called by the President
at the request of the holders of not less than one-tenth of all the votes
entitled to be cast on any issue proposed to be considered at the meeting. A
request for a special meeting must be signed and dated by the shareholder(s)
requesting the special meeting and must state the purpose of the meeting, and be
delivered to the corporation's Secretary. Business transacted at a special
meeting of the shareholders is confined to the purpose(s) stated in the notice.
Reports to Shareholders
Both the Hancock and Lamar stock is registered under the Exchange Act, and,
therefore, both Hancock and Lamar are required to provide annual reports
containing audited financial statements to shareholders and to file such other
reports with the SEC and solicit proxies in accordance with the rules of the
SEC. Hancock and Lamar also provide reports to their shareholders on an interim
basis containing unaudited financial information.
67
Dividends
The sources of funds for payments of dividends by Lamar and Hancock are
their subsidiaries. Because the primary subsidiaries of Lamar and Hancock are
financial institutions, payments made by such subsidiaries of Lamar and Hancock
to their shareholders are limited by law and regulations of the bank regulatory
authorities.
The MBCA provides that a board of directors may declare dividends in cash,
property or shares out of surplus (except earned surplus reserved by the board)
except: (1) when the corporation is insolvent or would thereby become insolvent,
or (2) when such would be contrary to restrictions in the corporation's Articles
of Incorporation. If no surplus is available, dividends may be paid out of net
profits for current or preceding fiscal years, under certain restrictions. The
MBCA provides that no distribution, including dividend distributions, may be
made if, after giving it effect the corporation would not be able to pay its
debts as they become due in the usual course of business, or the corporation's
total assets would be less than the sum of its total liabilities plus the amount
that would be needed if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
shareholders who have superior preferential rights upon dissolution.
Redemption and Retirement of Shares
Under Mississippi law, a corporation is permitted to purchase or redeem
shares of its own stock except where upon doing so, the corporation would not be
able to pay its debts as they become due in the usual course of business. This
prohibition also applies to where the corporation's total assets would be less
than the sum of the corporation's total liabilities, plus, unless the articles
permit otherwise, the amount that would be needed to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are superior
to those whose shares are purchased or redeemed, if the corporation were to be
dissolved at the time of such purchase or redemption. Mississippi law permits a
Board of Directors to base its determination as to whether such purchase or
redemption is prohibited either on financial statements prepared on the basis of
accounting practices and principles that are reasonable in the circumstances or
on a fair valuation or other method that is reasonable under the circumstances.
Both Lamar and Hancock are Mississippi corporations and are governed by these
provisions.
Shareholders Inspection Rights
Under the MBCA, any shareholder may inspect the shareholders' list if the
demand is made in good faith and for a proper purpose. Such shareholder must
describe his purpose and establish that the list is directly connected to his
purpose. Moreover, the shareholders' list must be available for inspection by
any shareholder beginning two days after notice of a shareholder's meeting is
given and continuing until the meeting takes place. Both Lamar and Hancock are
Mississippi corporations and subject to these provisions of the MBCA.
Limitation of Liability of Directors
Both the Lamar Articles and the Hancock Articles provide that a director
shall not be liable to the company or its shareholders for money damages for any
action taken, or any failure to take any action, as a director, except liability
for: (i) the amount of financial benefit received by a director to which he is
not entitled; (ii) an intentional infliction of harm on the company or its
shareholders; (iii) a violation of Mississippi Code Annotated Section 79-4-8.33
(1972), as amended; or (iv) an intentional violation of criminal law.
Indemnification
Both the Hancock Articles and the Lamar Articles provide for
indemnification to the fullest extent permitted by the MBCA and specifically
provide for the further indemnity authorized by the MBCA. Both the Hancock
Articles and the Lamar Articles provide for indemnification of any person who
was or is a party to, or is threatened to be made a party to, any threatened
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise, formal or informal (a "Proceeding"),
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation against any obligation to pay a judgment,
settlement, penalty, fine or reasonable expenses (including legal fees) incurred
with respect to the
68
Proceeding: (A) to the fullest extent permitted by the MBCA and (B) despite the
fact that such person has failed to meet the standard of conduct set forth in
the MBCA, or would be disqualified for indemnification under the Act for any
reason, if a determination is made by (i) the corporation's Board or a committee
duly designated by it, consisting of two or more directors not at the time
parties to the Proceeding, (ii) by special legal counsel, (iii) by the
shareholders or (iv) by a court, that the acts or omissions of the director,
officer, employee or agent did not constitute gross negligence or willful
misconduct. Both the Hancock Articles and the Lamar Articles provide that a
person may not be indemnified for: (i) an intentional infliction of harm on the
company or its shareholders; (ii) a violation of Mississippi Code Annotated
Section 79-4-8.33 (1972), as amended; or for (iii) an intentional violation of
criminal law, nor may it indemnify a person for receipt of a financial benefit
to which he is not entitled unless ordered by a court under Mississippi Code
Annotated, Section 79-4-8.54(9)(3). Both the Hancock Articles and the Lamar
Articles further provide that a person shall be indemnified in connection with a
Proceeding by or in the right of the corporation for reasonable expenses
incurred in connection with the Proceeding if such acts or omissions do not
constitute gross negligence or willful misconduct, and shall make further
indemnification in connection with the Proceeding if so ordered by a court under
Mississippi Code Annotated, Section 79-4-8.54(9)(3).
Pursuant to the Hancock Articles and the Lamar Articles, both Hancock and
Lamar, upon request, are required to pay or reimburse any indemnified person for
his reasonable expenses (including legal fees) in advance of final disposition
of the Proceeding as long as: (i) such person furnishes the corporation a
written undertaking, executed personally or on his behalf, to repay the advance
if he is not entitled to mandatory indemnification under Mississippi Code
Annotated, Section 79-4-8.52 and it is ultimately determined by a judgment or
other final adjudication that his acts or omissions did constitute gross
negligence or willful misconduct, which undertaking must be an unlimited general
obligation of such person, and which shall be accepted by the corporation
without reference to the financial ability of the person to make repayment or to
collateral; (ii) such person furnishes a written affirmation of his good faith
that his acts or omissions did not constitute gross negligence or willful
misconduct; and (iii) a determination is made by any of the determining bodies
that the facts then known to those making the determination would not preclude
indemnification under the corporation's Articles.
Under the MBCA, a corporation may pay, prior to final disposition, the
expenses (including attorneys' fees) incurred by a director or officer in
defending a proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Hancock pursuant
to the foregoing provisions, Hancock has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Supermajority Voting Requirements; Business Combinations
Both Hancock's Articles and Lamar's Articles contain substantially similar
provisions requiring a two-thirds or 80% vote to approve certain business
combinations or other significant corporate transactions involving the
corporation and a substantial shareholder.
Dissenters' Appraisal Rights
Both Hancock and Lamar are governed by the provisions of the MBCA regarding
appraisal rights to shareholders. See "THE MERGER - Dissenters' Appraisal
Rights" on page __________.
Shareholder Rights Plan
Both Hancock and Lamar have adopted substantially similar Shareholder
Rights Plans pursuant to which rights attached to each share of Hancock and
Lamar common stock held by a registered holder and which entitle the registered
holder, subject to the terms of the rights agreement, to purchase from the
corporation one share of common stock in the event of a change in control.
69
LEGAL MATTERS
Allen Vaughn Cobb & Hood, counsel to Hancock, will issue an opinion
regarding the validity of the Hancock preferred stock issued in the Merger.
Watkins Ludlam Winter & Stennis, P.A. has acted as counsel to Lamar in
connection with the Merger and will issue an opinion regarding certain federal
income tax consequences of the Merger.
EXPERTS
The consolidated financial statements of Hancock Holding Company at
December 31, 2000 and 1999 and for each of the three years in the period ended
December 31, 2000 incorporated in this prospectus/proxy statement by reference
from Hancock Holding Company's Annual Report on Form 10-K for the year ended
December 31, 2000 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and has been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited Lamar's consolidated
financial statements included in this Proxy Statement-Prospectus at December 31,
2000 and 1999 and for each of the three years in the period ended December 31,
2000, as set forth in their report appearing elsewhere herein. Lamar's
consolidated financial statements are included elsewhere herein in reliance on
their report, given on Ernst & Young LLP's authority as experts in accounting
and auditing.
OTHER MATTERS
At the time of the preparation of this Proxy Statement-Prospectus, Lamar
has not been informed of any matters to be presented by or on behalf of Lamar or
its management for action at the meeting other than those listed in the Notice
of Meeting of Shareholders and referred to herein. If any other matters come
before the meeting or any adjournment thereof, the persons named in the enclosed
proxy will vote on such matters according to their best judgment. Shareholders
are urged to sign the enclosed proxy, which is solicited on behalf of the Lamar
Board of Directors and return it at once in the enclosed envelope.
SHAREHOLDER PROPOSALS
Because Lamar and Hancock anticipate that the Merger will be completed late
in the second quarter or early in the third quarter of 2001, Lamar does not
intend to hold a 2001 annual meeting of Lamar shareholders. In the event the
Merger is not completed and such a meeting is held, to be eligible for inclusion
in Lamar' proxy statement related to such a meeting, shareholder proposals must
be received by Lamar within a reasonable time after Lamar publicly announces the
date of the meeting and within a reasonable time before Lamar mails its proxy
statement to shareholders.
WHERE YOU CAN FIND MORE INFORMATION
Hancock has filed with the SEC a Registration Statement under the
Securities Act that registers the distribution to Lamar shareholders of the
shares of Hancock Series A Preferred Stock to be issued in connection with the
Merger (the "Registration Statement"). The Registration Statement including the
attached exhibits and schedules, contain additional relevant information about
Hancock and the Hancock Series A Preferred Stock. The rules and regulations of
the SEC allow us to omit certain information included in the Registration
Statement from this Proxy Statement-Prospectus.
In addition, Hancock and Lamar file reports, proxy statements and other
information with the SEC under the Exchange Act. You may read and copy this
information at the following locations of the SEC:
70
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about companies, like Hancock,
who file electronically with the SEC. The address of that site is
http://www.sec.gov. You can view and download a copy of the Registration
Statement (including exhibits) at this web site.
You can also inspect reports, proxy statements and other information about
Hancock and Lamar at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows Hancock and Lamar to "incorporate by reference" information
into this Proxy Statement-Prospectus. This means that Hancock and Lamar can
disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is
considered to be a part of this Proxy Statement-Prospectus, except for any
information that is superseded by other information that is set forth directly
in this document.
This Proxy Statement-Prospectus incorporates by reference the documents set
forth below that Hancock and Lamar have previously filed with the SEC. They
contain important information about Hancock and Lamar and their financial
condition.
Hancock SEC Filings
- -------------------
(1) Hancock's Annual Report on Form 10-K for the fiscal year ended December 31,
2000
(2) The description of capital stock contained in Hancock's Registration
Statement on Form 8-K12G3 filed on December 31, 1984, and Form 8-K filed on
May 2, 2001
Lamar SEC Filings
- -----------------
(1) Lamar's Annual Report on Form 10-K for the fiscal year ended December 31,
2000
Hancock and Lamar incorporate by reference additional documents that they
may have filed with the SEC between the date of this Proxy Statement-Prospectus
and the date of the meeting. These documents 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.
Hancock has supplied all information contained or incorporated by reference
in the Proxy Statement-Prospectus relating to Hancock, as well as all pro forma
financial information, and Lamar has supplied all such information relating to
Lamar.
You can obtain any of the documents incorporated by reference in this
document through Hancock, Lamar or from the SEC through the SEC's Internet world
wide web site at the address described above. Documents incorporated by
reference are available from the companies without charge, excluding any
exhibits to those documents unless the exhibit is specifically incorporated by
reference as an exhibit in this Proxy Statement-Prospectus. You can obtain
documents incorporated by reference in this Proxy Statement-Prospectus by
requesting them in writing or by telephone from:
71
Hancock: Lamar:
------- -----
George A. Schloegel, Robert W. Roseberry, Chairman and
Chief Executive Officer Chief Executive Officer
Hancock Holding Company Lamar Capital Corporation
Post Office Box 4019 401 Shelby Speights Drive
Gulfport, MS 39502-4019 Purvis, MS 39475
(228) 868-4706 (601) 794-1145
If you would like to request documents from Hancock or Lamar, please do so
by ___________, 2001 to receive them before the Lamar shareholder's meeting. If
you request any incorporated documents, they will be mailed to you by first
class mail, or another equally prompt means, within one business day after we
receive your request.
You should rely only on the information contained in or incorporated by
reference in this Proxy Statement-Prospectus in considering how to vote your
shares at the meeting. Neither Hancock nor Lamar has authorized anyone to
provide you with information that is different from the information in this
document. This Proxy Statement-Prospectus is dated _____________, 2001. You
should not assume that the information contained in this document is accurate as
of any date other than that date. Neither the mailing of the Proxy Statement-
Prospectus nor the issuance of Hancock Series A Preferred Stock in the Merger
shall create any implication to the contrary.
72
APPENDIX A
FAIRNESS OPINION OF MORGAN KEEGAN & COMPANY, INC.
February 20, 2001
Board of Directors
Lamar Capital Corporation
401 Shelby Speights Drive
Purvis, MS 39475
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of Lamar Capital Corporation (the "Company") of the
consideration offered in connection with its proposed merger with Hancock
Holding Company ("Hancock") (the "Transaction") pursuant to and in accordance
with the terms of the Agreement and Plan of Merger (the "Agreement") entered
into by and between Hancock and the Company. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Agreement.
You have advised us that, pursuant to the Agreement, the Company will merge with
and into Hancock (the "Merger") and that the Company's banking subsidiary will
become a wholly owned bank subsidiary of Hancock. Each share of the Company's
Common Stock (excluding shares held by Company shareholders who have perfected
their dissenters' rights of appraisal) issued and outstanding at the Effective
Date shall be converted into either $11.00 in cash or 1.1 shares of Series A
Preferred Stock with a yield of 8.0% and convertible into Hancock Common Stock
at $45.00 per share, subject to no less than 30.0% and no more than 49.0% of the
total consideration being in cash. The Series A Preferred Stock will have a par
value of $10.00 per share and carry voting rights on the same basis as Hancock
Common Stock.
Morgan Keegan & Company, Inc. ("Morgan Keegan"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various purposes. We have been retained by the Board of
Directors of the Company to serve as its financial advisor. Morgan Keegan will
receive a fee for serving as financial advisor and for rendering this opinion.
In addition, the Company has agreed to indemnify Morgan Keegan for certain
potential liabilities arising out of the rendering of this opinion. We have not
advised any party in connection with the Transaction other than the Company and
we make no recommendation to the shareholders of the Company.
In connection with our opinion, we have (1) reviewed the Agreement; (2) held
discussions with various members of management and representatives of the
Company and Hancock concerning each company's historical and current operations,
financial condition and prospects; (3) reviewed historical consolidated
financial and operating data that was publicly available or furnished to us by
the Company and Hancock; (4) reviewed internal financial analyses, financial and
operating forecasts, to the extent publicly available, reports and other
information prepared by officers and representatives of the Company; (5)
reviewed certain publicly available information with respect to certain other
companies that we believe to be comparable to the Company and Hancock and the
trading markets for such other companies' securities; (6) reviewed certain
publicly available information concerning the terms of certain other
transactions that we deemed relevant to our inquiry; (7) considered the relative
contributions of the Company and Hancock to the combined company; and (8)
conducted such other financial studies, analyses and investigations as we deemed
appropriate for the purpose of this opinion.
A-1
In our review and analysis and in arriving at our opinion, we have assumed and
relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have assumed and relied upon
the representations and warranties of the Company and Hancock contained in the
Agreement. We have not been engaged to, and have not independently attempted
to, verify any of such information. We have also relied upon the managements of
the Company and Hancock as to the reasonableness and achievabililty of the
financial and operating projections and the assumptions and bases therefor
provided to us and, with your consent, we have assumed that such projections
reflect the best currently available estimates and judgments of such respective
managements of the Company and Hancock and that such projections and forecasts
will be realized in the amounts and time periods currently estimated by the
managements of the Company and Hancock. We have not been engaged to assess the
achievability of such projections or the assumptions on which they were based
and express no view as to such projections or assumptions. In addition, we have
not conducted a physical inspection or appraisal of any of the assets,
properties or facilities of either the Company or Hancock nor have we been
furnished with any such evaluation or appraisal. We have also assumed that the
conditions to the Transaction would be consummated on a timely basis in the
manner contemplated in the Agreement. Our opinion is based upon analyses of the
foregoing factors in light of our assessment of general economic, financial and
market conditions as they exist and can be evaluated by us as of the date
hereof. We express no opinion as to the price or trading range at which shares
of Hancock Common Stock or Series A Preferred Stock will trade following the
date hereof, or the price or trading range at which Hancock Common Stock or
Series A Preferred Stock will trade upon completion of the Transaction.
Morgan Keegan has previously provided investment banking and fixed income
services to the Company. In the ordinary course of our business, we serve as a
market maker for Hancock Common Stock and trade shares for our own account and
the accounts of our customers. Accordingly, we may at any time hold long or
short positions in Hancock Common Stock.
It is understood that this opinion is not to be quoted or referred to, in whole
or in part (including excerpts or summaries), in any filing, report, document,
release or other communication used in connection with the Transaction (unless
required to be quoted or referred to by applicable regulatory requirements), nor
shall this opinion be used for any other purposes, without our prior written
consent, which consent shall not be unreasonably withheld. Furthermore, our
opinion is directed to the Board of Directors of the Company and does not
constitute a recommendation to any shareholder of the Company as to how such
shareholder should vote at the shareholders' meeting to be held in connection
with the Transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that, as of the date hereof, the
consideration offered is fair, from a financial point of view, to the Company's
shareholders.
Yours very truly,
MORGAN KEEGAN & COMPANY, INC.
A-2
APPENDIX B
ARTICLE 13 OF THE
MISSISSIPPI BUSINESS CORPORATION ACT
(S) 79-4-13.01. Definitions
In this article:
(1) "Affiliate" means a person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with another person or is a senior executive thereof. For purposes of Section
79-4-13.02(b)(4), a person is deemed to be an affiliate of its senior
executives.
(2) "Beneficial shareholder" means a person who is the beneficial
owner of shares held in a voting trust or by a nominee on the beneficial owner's
behalf.
(3) "Corporation" means the issuer of the shares held by a shareholder
demanding appraisal and, for matters covered in Sections 79-4-13.22 through 79-
4-13.31, includes the surviving entity in a merger.
(4) "Fair value" means the value of the corporation's shares
determined:
(i) Immediately before the effectuation of the corporate
action to which the shareholder objects;
(ii) Using customary and current valuation concepts and
techniques generally employed for similar businesses in
the context of the transaction requiring appraisal; and
(iii) Without discounting for lack of marketability or minority
status except, if appropriate, for amendments to the
articles pursuant to Section 79-4-13.02(a)(5).
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the rate of interest on judgements in this
state on the effective date of the corporate action.
(6) "Preferred shares" means a class or series of shares whose holders
have preference over any other class or series with respect to distributions.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of the corporation or the beneficial owner of shares
to the extent of the rights granted by a nominee certificate on file with the
corporation.
(8) "Senior executive" means the chief executive officer, chief
operating officer, chief financial officer, and anyone in charge of a principal
business unit or function.
(9) "Shareholder" means both a record shareholder and a beneficial
shareholder.
(S) 79-4-13.02. Appraisal rights availability
(a) A shareholder is entitled to appraisal rights, and to obtain
payment of the fair value of that shareholder's shares, in the event of any of
the following corporate actions:
(1) Consummation of a merger to which the corporation is a party (i)
if shareholder approval is required for the merger by Section 79-4-11.04 and the
shareholder is entitled to vote on the merger, except that appraisal rights
shall not be available to any shareholder of the corporation with respect to
shares of any class or series that remain outstanding after consummation of the
merger, or (ii) if the corporation is a subsidiary and the merger is governed by
Section 79-4-11.05;
B-1
(2) Consummation of a share exchange to which the corporation is a
party as the corporation whose shares will be acquired if the shareholder is
entitled to vote on the exchange, except that appraisal rights shall not be
available to any shareholder of the corporation with respect to any class or
series of shares of the corporation that is not exchanged;
(3) Consummation of a disposition of assets pursuant to Section 79-4-
12.02 if the shareholder is entitled to vote on the disposition;
(4) An amendment of the articles of incorporation with respect to a
class or series of shares that reduces the number of shares of a class or series
owned by the shareholder to a fraction of a share if the corporation has the
obligation or right to repurchase the fractional share so created; or
(5) Any other amendment to the articles of incorporation, merger,
share exchange or disposition of assets to the extent provided by the articles
of incorporation, bylaws or a resolution of the board of directors.
(b) Notwithstanding subsection (a), the availability of appraisal
rights under subsections (a)(1), (2), (3) and (4) shall be limited in accordance
with the following provisions:
(1) Appraisal rights shall not be available for the holders of shares
of any class or series of shares which is:
(i) Listed on the New York Stock Exchange or the American Stock
Exchange or designated as a national market system security on an
interdealer quotation system by the National Association of
Securities Dealers, Inc.; or
(ii) Not so listed or designated, but has at least Two Thousand
(2,000) shareholders and the outstanding shares of such class or
series has a market value of at least Twenty Million Dollars
($20,000,000.00) (exclusive of the value of such shares held by
its subsidiaries, senior executives, directors and beneficial
shareholders owning more than 10% of such shares).
(2) The applicability of subsection (b)(1) shall be determined as of:
(i) The record date fixed to determine the shareholders entitled
to receive notice of, and to vote at, the meeting of shareholders
to act upon the corporate action requiring appraisal rights; or
(ii) The day before the effective date of such corporate action
if there is no meeting of shareholders.
(3) Subsection (b)(1) shall not be applicable and appraisal rights
shall be available pursuant to subsection (a) for the holders of any class or
series of shares who are required by the terms of the corporate action requiring
appraisal rights to accept for such shares anything other than cash or shares of
any class or any series of shares of any corporation, or any other proprietary
interest of any other entity, that satisfies the standards set forth in
subsection (b)(1) at the time the corporate action becomes effective.
(4) Subsection (b)(1) shall not be applicable and appraisal rights
shall be available pursuant to subsection (a) for the holders of any class or
series of shares where:
(i) Any of the shares or assets of the corporation are being
acquired or converted, whether by merger, share exchange or
otherwise, pursuant to the corporate action by a person, or by an
affiliate of a person, who:
(A) Is, or at any time in the one-year period immediately
preceding approval by the board of directors of the
corporate action requiring appraisal rights was, the
beneficial owner of 20% or more of the voting power of
the corporation, excluding any shares acquired pursuant
to an offer for all shares having voting power if such
offer was made within one (1) year prior to the corporate
action requiring appraisal rights for
B-2
consideration of the same kind and of a value equal to or
less than that paid in connection with the corporate
action; or
(B) Directly or indirectly has, or at any time in the
one-year period immediately preceding approval by the
board of directors of the corporation of the corporate
action requiring appraisal rights had, the power,
contractually or otherwise, to cause the appointment or
election of 25% or more of the directors to the board of
directors of the corporation; or
(ii) Any of the shares or assets of the corporation are being
acquired or converted, whether by merger, share exchange or
otherwise, pursuant to such corporate action by a person, or by an
affiliate of a person, who is, or at any time in the one-year
period immediately preceding approval by the board of directors of
the corporate action requiring appraisal rights was, a senior
executive or director of the corporation or a senior executive of
any affiliate thereof, and that senior executive or director will
receive, as a result of the corporate action, a financial benefit
not generally available to other shareholders as such, other than:
(A) Employment, consulting, retirement or similar
benefiTs established separately and not as part of or in
contemplation of the corporate action; or
(B) Employment, consulting, retirement or similar
benefits established in contemplation of, or as part of,
the corporate action that are not more favorable than
those existing before the corporate action or, if more
favorable, that have been approved on behalf of the
corporation in the same manner as is provided in Section
79-4-8.62; or
(C) In the case of a director of the corporation who
will, in the corporate action, become a director of the
acquiring entity in the corporate action or one (1) of
its affiliates, rights and benefits as a director that
are provided on the same basis as those afforded by the
acquiring entity generally to other directors of such
entity or such affiliate.
(5) For the purposes of paragraph (4) only, the term "beneficial
owner" means any person who, directly or indirectly, through any contract,
arrangement, or understanding, other than a revocable proxy, has or shares the
power to vote, or to direct the voting of, shares, provided that a member of a
national securities exchange shall not be deemed to be a beneficial owner of
securities held directly or indirectly by it on behalf of another person solely
because such member is the record holder of such securities if the member is
precluded by the rules of such exchange from voting without instruction on
contested matters or matters that may affect substantially the rights or
privileges of the holders of the securities to be voted. When two (2) or more
persons agree to act together for the purpose of voting their shares of the
corporation, each member of the group formed thereby shall be deemed to have
acquired beneficial ownership, as of the date of such agreement, of all voting
shares of the corporation beneficially owned by any member of the group.
(c) Notwithstanding any other provision of Section 79-4-13.02, the
articles of incorporation as originally filed or any amendment thereto may limit
or eliminate appraisal rights for any class or series of preferred shares, but
any such limitation or elimination contained in an amendment to the articles of
incorporation that limits or eliminates appraisal rights for any of such shares
that are outstanding immediately prior to the effective date of such amendment
or that the corporation is or may be required to issue or sell thereafter
pursuant to any conversion, exchange or to other right existing immediately
before the effective date of such amendment shall not apply to any corporate
action that becomes effective within one (1) year of that date if such action
would otherwise afford appraisal rights.
(d) A shareholder entitled to appraisal rights under this article may
not challenge a completed corporate action for which appraisal rights are
available unless such corporate action:
(1) Was not effectuated in accordance with the applicable provisions
of articles 10, 11 or 12 or the corporation's articles of incorporation, bylaws
or board of directors' resolution authorizing the corporate action; or
B-3
(2) Was procured as a result of fraud or material misrepresentation.
(S) 79-4-13.03. Partial assertion of appraisal rights; beneficial shareholders
(a) A record shareholder may assert appraisal rights as to fewer than
all the shares registered in the record shareholder's name but owned by a
beneficial shareholder only if the record shareholder objects with respect to
all shares of the class or series owned by the beneficial shareholder and
notifies the corporation in writing of the name and address of each beneficial
shareholder on whose behalf appraisal rights are being asserted The rights of a
record shareholder who asserts appraisal rights for only part of the shares held
of record in the record shareholder's name under this subsection shall be
determined as if the shares as to which the record shareholder objects and the
record shareholder's other shares were registered in the names of different
record shareholders.
(b) A beneficial shareholder may assert appraisal rights as to shares
of any class or series held on behalf of the shareholder only if such
shareholder:
(1) Submits to the corporation the record shareholder's written
consent to the assertion of such rights no later than the date referred to in
Section 79-4-13.22(b)(2)(ii); and
(2) Does so with respect to all shares of the class or series that
are beneficially owned by the beneficial shareholder.
(S) 79-4-13.20. Notice to shareholders of rights
(a) If proposed corporate action described in Section 79-4-13.02(a)
is to be submitted to a vote at a shareholders' meeting, the meeting notice must
state that the corporation has concluded that shareholders are, are not or may
be entitled to assert appraisal rights under this article. If the corporation
concludes that appraisal rights are or may be available, a copy of this article
must accompany the meeting notice sent to those record shareholders entitled to
exercise appraisal rights.
(b) In a merger pursuant to Section 79-4-11.05, the parent
corporation must notify in writing all record shareholders of the subsidiary who
are entitled to assert appraisal rights that the corporate action became
effective. Such notice must be sent within ten (10) days after the corporate
action became effective and include the materials described in Section 79-4-
13.22.
(S) 79-4-13.21. Eligibility for payment
(a) If proposed corporate action requiring appraisal rights under
Section 79-4-13.02 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert appraisal rights with respect to any class or
series of shares:
(1) Must deliver to the corporation before the vote is taken written
notice of the shareholder's intent to demand payment if the proposed action is
effectuated; and
(2) Must not vote, or cause or permit to be voted, any shares of such
class or series in favor of the proposed action.
(b) A shareholder who does not satisfy the requirement of subsection
(a) is not entitled to payment under this article.
(S) 79-4-13.22. Appraisal notice and form
(a) If proposed corporate action requiring appraisal rights under
Section 79-4-13.02(a) becomes effective, the corporation must deliver a written
appraisal notice and form required by subsection (b)(1) to all shareholders who
satisfied the requirements of Section 79-4-13.21. In the case of a merger under
Section 79-4-11.05, the parent
B-4
must deliver a written appraisal notice and form to all record shareholders who
may be entitled to assert appraisal rights.
(b) The appraisal notice must be sent no earlier than the date the
corporate action became effective and no later than ten (10) days after such
date and must:
(1) Supply a form that specifies the date of the first announcement
to shareholders of the principal terms of the proposed corporate action and
requires the shareholder asserting appraisal rights to certify (i) whether or
not beneficial ownership of those shares for which appraisal rights are asserted
was acquired before that date, and (ii) that the shareholder did not vote for
the transaction;
(2) State:
(i) Where the form must be sent and where certificates
for certificated shares must be deposited and the date by
which those certificates must be deposited, which date may
not be earlier that the date for receiving the required
form under subsection (2)(ii);
(ii) A date by which the corporation must receive the
form, which date may not be fewer than forty (40) nor more
that sixty (60) days after the date the subsection (a)
appraisal notice and form are sent, and state that the
shareholder shall have waived the right to demand appraisal
with respect to the shares unless the form is received by
the corporation by such specified date;
(iii) The corporation's estimate of the fair value of the
shares; (iv) That, if requested in writing, the corporation
will provide, to the shareholder so requesting, within ten
(10) days after the date specified in subsection (2)(ii)
the number of shareholders who return the forms by the
specified date and the total number of shares owned by
them; and
(v) The date by which the notice to withdraw under Section
79-4-13.23 must be received, which date must be within
twenty (20) days after the date specified in subsection
(2)(ii); and
(3) Be accompanied by a copy of this article.
(S) 79-4-13.23. Certification, withdrawal and certificated share deposits
(a) A shareholder who receives notice pursuant to Section 79-4-13.22
and who wishes to exercise appraisal rights must certify on the form sent by the
corporation whether the beneficial owner of such shares acquired beneficial
ownership of the shares before the date required to be set forth in the notice
pursuant to Section 79-4-13.22(b)(1). If a shareholder fails to make this
certification, the corporation may elect to treat the shareholder's shares as
after-acquired shares under Section 79-4-13.25. In addition, a shareholder who
wishes to exercise appraisal rights must execute and return the form and, in the
case of certificated shares, deposit the shareholder's certificates in
accordance with the terms of the notice by the date referred to in the notice
pursuant to Section 7 9-4-13.22(b)(2)(ii). Once a shareholder deposits that
shareholder's certificates or, in the case of uncertificated shares, returns the
executed forms, that shareholder loses all rights as a shareholder, unless the
shareholder withdraws pursuant to subsection (b).
(b) A shareholder who has complied with subsection (a) may
nevertheless decline to exercise appraisal rights and withdraw from the
appraisal process by so notifying the corporation in writing by the date set
forth in the appraisal notice pursuant to Section 79-4-13.22(b)(2)(v). A
shareholder who fails to so withdraw from the appraisal process may not
thereafter withdraw without the corporation's written consent.
(c) A shareholder who does not execute and return the form and, in
the case of certificated shares, deposit that shareholder's share certificates
where required, each by the date set forth in the notice described in Section
79-4-13.22(b), shall not be entitled to payment under this article.
B-5
(S) 79-4-13.24. Payment of fair value and required statements
(a) Except as provided in Section 79-4-13.25, within thirty (30) days
after the form required by Section 79-4-13.22(b)(2)(ii) is due, the corporation
shall pay in cash to those shareholders who complied with Section 79-4-13.23(a)
the amount the corporation estimates to be the fair value of their shares, plus
interest.
(b) The payment to each shareholder pursuant to subsection (a) must
be accompanied by:
(1) Financial statements of the corporation that issued the shares to
be appraised, consisting of a balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for that
year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of
the shares, which estimate must equal or exceed the corporation's estimate given
pursuant to Section 79-4-13.22(b)(2)(iii); and
(3) A statement that shareholders described in subsection (a) have
the right to demand further payment under Section 79-4-13.26 and that if any
such shareholder does not do so within the time period specified therein, such
shareholder shall be deemed to have accepted such payment in full satisfaction
of the corporation's obligations under this chapter.
(S) 79-4-13.25. Withholding payment for certification deficiencies; notice;
payments
(a) A corporation may elect to withhold payment required by Section
79-4-13.24 from any shareholder who did not certify that beneficial ownership of
all of the shareholder's shares for which appraisal rights are asserted was
acquired before the date set forth in the appraisal notice sent pursuant to
Section 79-4-13.22(b)(1).
(b) If the corporation elected to withhold payment under subsection
(a), it must, within thirty (30) days after the form required by Section 79-4-
13.22(b)(2)(ii) is due, notify all shareholders who are described in subsection
(a):
(1) Of the information required by Section 79-4-13.24(b)(1),
(2) Of the corporation's estimate of fair value pursuant to Section
79-4-13.24(b)(2);
(3) That they may accept the corporation's estimate of fair value,
plus interest, in full satisfaction of their demands or demand appraisal under
Section 79-4-13.26;
(4) That those shareholders who wish to accept such offer must so
notify the corporation of their acceptance of the corporation's offer within
thirty (30) days after receiving the offer, and
(5) That those shareholders who do not satisfy the requirements for
demanding appraisal under Section 79-4-13.26 shall be deemed to have accepted
the corporation's offer.
(c) Within ten (10) days after receiving the shareholder's acceptance
pursuant to subsection (b), the corporation must pay in cash the amount it
offered under subsection (b)(2) to each shareholder who agreed to accept the
corporation's offer in full satisfaction of the shareholder's demand.
(d) Within forty (40) days after sending the notice described in
subsection (b), the corporation must pay in cash the amount it offered to pay
under subsection (b)(2) to each shareholder described in subsection (b)(5).
B-6
(S) 79-4-13.26. Shareholder notice of dissatisfaction; waiver
(a) A shareholder paid pursuant to Section 79-4-13.24 who is dissatisfied
with the amount of the payment must notify the corporation in writing of that
shareholder's estimate of the fair value of the shares and demand payment of
that estimate plus interest (less any payment under Section 79-4-13.24). A
shareholder offered payment under Section 79-4-13.25 who is dissatisfied with
that offer must reject the offer and demand payment of the shareholder's stated
estimate of the fair value of the shares plus interest.
(b) A shareholder who fails to notify the corporation in writing of that
shareholder's demand to be paid the shareholder's stated estimate of the fair
value plus interest under subsection (a) within thirty (30) days after receiving
the corporation's payment or offer of payment under Section 79-4-13.24 or
Section 79-4-13.25, respectively, waives the right to demand payment under this
section and shall be entitled only to the payment made or offered pursuant to
those respective sections.
(S) 79-4-13.27. Withholding payment, shares acquired afterwards
(a) A corporation may elect to withhold payment required by Section 79-4-
13.25 from a dissenter unless he was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated and
a statement of the dissenter's right to demand payment under Section 79-4-13.28.
(S) 79-4-13.28. Dissenter's remedies
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate (less any payment under Section 79-4-13.25), or reject the
corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under Section 79-4-13.25 or
offered under Section 79-4-13.27 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section 79-4-13.25 within
sixty (60) days after the date set for demanding payment; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within sixty (60) days after the date set for demanding
payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
within thirty (30) days after the corporation made or offered payment for his
shares.
(S) 79-4-13.30. Time; venue; parties; proceedings
(a) If a shareholder makes demand for payment under Section 79-4-13.26
which remains unsettled, the corporation shall commence a proceeding within
sixty (60) days after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the 60-day period, it shall pay in cash
to each shareholder the amount the shareholder demanded pursuant to Section
79-4-13.26 plus interest.
B-7
(b) The corporation shall commence the proceeding in the appropriate court
of the county where the corporation's principal office (or if none, its
registered office) in this state is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the county in this state where the principal office or registered
office of the domestic corporation merged with the foreign corporation was
located at the time of the transaction.
(c) The corporation shall make all shareholders (whether or not residents
of this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares, and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers shall have the powers described in the
order appointing them, or in any amendment to it. The shareholders demanding
appraisal rights are entitled to the same discovery rights as parties in other
civil proceedings. There shall be no right to a jury trial.
(e) Each shareholder made a party to the proceeding is entitled to judgment
(i) for the amount, if any, by which the court finds the fair value of the
shareholder's shares, plus interest, exceeds the amount paid by the corporation
to the shareholder for such shares or (ii) for the fair value, plus interest, of
the shareholder's shares for which the corporation elected to withhold payment
under Section 79-4-13.25.
(S) 79-4-13.31. Costs, fees and expenses
(a) The court in an appraisal proceeding commenced under Section 79-4-13.30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the shareholders demanding appraisal, in amounts the
court finds equitable, to the extent the court finds such shareholders acted
arbitrarily, vexatiously or not in good faith with respect to the rights
provided by this article.
(b) The court in an appraisal proceeding may also assess the fees and
expenses of counsel and experts for the respective parties, in amounts the court
finds equitable:
(1) Against the corporation and in favor of any or all shareholders
demanding appraisal if the court finds the corporation did not substantially
comply with the requirements of Sections 79-4-13.20, 79-4-13 .22, 79-4-13.24 or
79-4-13.25; or
(2) Against either the corporation or a shareholder demanding appraisal, in
favor of any other party, if the court finds that the party against whom the
fees and expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to the rights provided by this article.
(c) If the court in an appraisal proceeding finds that the services of
counsel for any shareholder were of substantial benefit to other shareholders
similarly situated, and that the fees for those services should not be assessed
against the corporation, the court may award to such counsel reasonable fees to
be paid out of the amounts awarded the shareholders who were benefited.
(d) To the extent the corporation fails to make a required payment pursuant
to Section 79-4-13.24, 79-4-13.25 or 79-4-13.26, the shareholder may sue
directly for the amount owed and, to the extent successful, shall be entitled to
recover from the corporation all costs and expenses of the suit, including
counsel fees.
B-8
APPENDIX C
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
HANCOCK HOLDING COMPANY
AND
LAMAR CAPITAL CORPORATION
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of the 21/st/
day of February, 2001, is made by and between LAMAR CAPITAL CORPORATION, Purvis,
Mississippi, a Mississippi corporation ("Lamar"), and HANCOCK HOLDING COMPANY,
Gulfport, Mississippi, a Mississippi corporation ("Hancock").
In consideration of their mutual promises and obligations, the parties
agree as follows:
ARTICLE 1
DEFINITIONS
-----------
Certain Defined Terms. As used in this Agreement, the following terms
---------------------
shall have the following meanings (such meaning to be equally applicable to both
the singular and plural forms of the terms defined):
1.1 "Agreement" shall mean this Agreement and Plan of Merger by and
---------
between Lamar and Hancock and any amendments thereto. References to Articles,
Sections, Schedules and the like refer to the Articles, Sections, Schedules and
the like of this Agreement unless otherwise indicated.
1.2 "Business Day" shall mean a day on which Hancock's subsidiary, Hancock
------------
Bank, is open for business and which is not a Saturday, Sunday or legal bank
holiday.
1.3 "Closing" means the closing of the transactions contemplated herein,
-------
which will take place at a place and on a date that is mutually agreed to by the
parties ("Closing Date") that is within thirty (30) days following the later of
the date of receipt of all applicable regulatory approvals relating to the
transactions contemplated herein, the expiration of all applicable statutory and
regulatory waiting periods relative thereto, and the date Lamar shareholders
approve the Agreement, or such earlier or later date as may be agreed to by the
parties. At the Closing the parties shall each deliver to the other such
evidence of the satisfaction of the conditions to the Merger (as defined in
Section 2.1 hereof) as may reasonably be required (including material required
to be delivered under this Agreement).
1.4 "Effective Date" means the date on which Articles of Merger with
--------------
respect to the Company shall be filed with the Secretary of State of the State
of Mississippi pursuant to and in accordance with the provisions of Article 11
of the Mississippi Business Corporation Act (the "MBCA").
1.5 "FDIC" means that agency of the United States of America known as the
----
Federal Deposit Insurance Corporation, or any successor United States
governmental agency which insures deposits of commercial banks.
1.6 "FRB" means that agency of the United States of America which acts in
---
the capacity of a governmental central bank known as the Federal Reserve System
represented by actions of its Board of Governors, having regulatory authority
over bank holding companies, or any successor United States governmental agency
performing the function of exercising such regulatory authority.
1.7 "Hancock" means Hancock Holding Company, a corporation duly chartered,
-------
organized and existing under and pursuant to the laws of the State of
Mississippi, which maintains its principal place of business at One Hancock
Plaza, in Gulfport, Harrison County, Mississippi and is a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as amended.
1.8 "Hancock Bank" means Hancock Bank, a Mississippi banking corporation,
------------
duly chartered, organized and existing under and pursuant to the laws of the
State of Mississippi and maintaining its principal place of business at One
Hancock Plaza in Gulfport, Harrison County, Mississippi.
1.9 "Lamar" means Lamar Capital Corporation, a corporation duly chartered
-----
on August 4, 1986, organized, and existing under and pursuant to the laws of the
State of Mississippi, which maintains its principal
C-1
place of business at 401 Shelby Speights Drive, Purvis, Lamar County,
Mississippi and is a bank holding company within the meaning of the Bank Holding
Company Act of 1956, as amended.
1.1 "Lamar Bank" means Lamar Bank, a Mississippi banking corporation duly
----------
chartered on February 23, 1904 organized and existing under and pursuant to the
laws of the State of Mississippi and maintaining its principal place of business
and registered address at 401 Shelby Speights Drive, Purvis, Lamar County,
Mississippi 39475.
1.10 "Party" shall mean Hancock or Lamar and "Parties" shall mean Hancock
-----
and Lamar.
1.11 "Person" shall mean any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
1.12 "SEC" means that agency of the United States of America known as the
---
Securities and Exchange Commission.
1.13 "Series A Preferred Stock" means a share of the 8% Convertible
------------------------
Preferred Stock, Series A of Hancock, par value $20.00 per share, which shall
have the rights and preferences set forth in the form of articles of amendment
to the articles of incorporation of Hancock that are set forth in Exhibit C
hereto.
ARTICLE 2
THE MERGER AND RELATED MATTERS
------------------------------
2.1 Merger. On the Effective Date, Lamar shall be merged with and into
------
Hancock under the Articles of Incorporation of Hancock, pursuant to the
provisions of this Agreement, the provisions of and with the effect provided in,
Article 11 of the MBCA (the "Merger") and the Merger Agreement in substantially
the form of Exhibit A hereto (the "Merger Agreement").
2.2 Effect of Merger. Upon consummation of the Merger, the separate
----------------
corporate existence of Lamar shall cease and Hancock shall continue as the
surviving corporation. The name of Hancock, as the surviving corporation, shall
by virtue of the Merger remain unchanged. On the Effective Date, as hereinabove
provided, all of the assets and property of every kind and character, real,
personal and mixed, tangible and intangible, choses in action, rights, and
credits then owned by Lamar, or which would inure to it, shall immediately by
operation of law and without any conveyance or transfer or without any further
action or deed, be vested in and become the property of Hancock, which shall
have, hold, and enjoy the same in its own right as fully and to the same extent
as the same were possessed, held, and enjoyed by Lamar prior to the Merger, and
Hancock shall be deemed to be and shall be a continuation of the original
entities and all of the rights and obligations of Lamar shall remain unimpaired,
and Hancock, on the Effective Date of the Merger shall succeed to all such
rights, obligations, duties and liabilities connected therewith.
ARTICLE 3
CONVERSION OF STOCK
-------------------
3.1 Conversion of Lamar Stock. (a) At the Effective Date, by virtue of
-------------------------
the Merger and without any action on the part of the holders thereof, each share
of common stock, par value $.50 per share, of Lamar ("Lamar Common Stock")
issued and outstanding immediately prior to the Effective Date shall cease to be
outstanding and (other than dissenting shares) shall be converted into and
exchanged either for $11.00 in cash or .55 shares of Series A Preferred Stock
and cash for fractional shares. Each holder of shares of Lamar Common Stock
shall thereafter cease to have any rights with respect to such Lamar Common
Stock, except the right to receive the consideration described in Sections 3.1
and 3.3 upon the surrender of such certificate in accordance with Section 3.2.
The form of consideration into which each individual shareholder's shares of
Lamar Common Stock will be converted will be determined in the manner described
in Sections 3.1(b) and 3.1(c).
(b) By written notice to Hancock in the manner described below, each Lamar
shareholder may elect the form of consideration (shares of Series A Preferred
Stock or cash) into which his or her shares of Lamar Common Stock will be
converted on the Effective Date; provided that despite such elections,
C-2
shareholders of Lamar may be required to receive a different amount of cash or
shares of Series A Preferred Stock in the event of a proration pursuant to
Section 3.1(c). At the time the Proxy Statement is mailed to Lamar's
shareholders, Lamar will mail written instructions to each of its shareholders
for making the election, together with a form (a "Notice of Election") which
each shareholder shall be required to use to make such election. The
shareholder's election must be made by the date of the shareholder's meeting
(the "Election Date"). The instructions and Notice of Election distributed to
Lamar's shareholders shall be provided by and in a form satisfactory to Hancock
and Lamar.
In order to make an effective election, a shareholder must deliver to Lamar
a properly completed Notice of Election on or before the close of its business
on the Election Date in accordance with Hancock's instructions. Each shareholder
may elect any combination of cash and Series A Preferred Stock. Any shareholder
who does not make an election or whose Notice of Election is not timely received
by Hancock or otherwise is not made in accordance with Hancock's instructions
will be deemed to have elected that each share of the shareholder's Lamar Common
Stock be converted into the right to receive $11.00 in cash.
(c) Notwithstanding anything contained herein to the contrary, in no event
shall cash be paid (whether pursuant to shareholders' elections to receive cash,
proration, exercise of dissenters' rights, or in payment for fractional shares)
for more than 49% or less than 30% of the total outstanding shares of Lamar
Common Stock.
(i) If the aggregate number of shares of Lamar Common Stock held by
the Lamar shareholders who dissent and by Lamar shareholders who
effectively elect (and who are deemed to have elected) as provided
above to receive cash is more than 49% of the total outstanding
shares of Lamar Common Stock then, in the case of each
shareholder who has effectively elected to receive cash for any or
all of his or her shares of Lamar Common Stock, Hancock will reduce
(by the same percentage for each such shareholder and by rounding to
the nearest full share) the number of shares of Lamar Common Stock
held by such shareholders for which cash will be paid, such that the
aggregate number of shares of Lamar Common Stock for which cash will
be paid is as nearly equal as possible to 49% of the total outstanding
shares of Lamar Common Stock and each share held by each such
shareholder for which cash will not be paid will be converted
into .55 shares of Series A Preferred Stock.
(ii) If the aggregate number of shares of Lamar Common Stock held by
the Lamar shareholders who dissent and by Lamar shareholders who
effectively elect (and who are deemed to have elected) as provided
above to receive cash is less than 30% of the total outstanding shares
of Lamar Common Stock, then, in the case of each shareholder who
effectively has elected to receive Series A Preferred Stock for any or
all of his or her shares of Lamar Common Stock, Hancock will reduce
(by the same percentage for each such shareholder and by rounding to
the nearest full share) the number of shares of Lamar Common Stock
that will be converted into Series A Preferred Stock, such that the
aggregate number of shares of Lamar Common Stock for which cash will
be paid is as nearly equal as possible to 30% of the total outstanding
shares of Lamar Common Stock and each share held by each such
shareholder which will not be converted into Series A Preferred Stock
will be converted into $11.00 in cash.
(iii) A shareholder who beneficially owns Lamar Common Stock in more
than one account or capacity may direct how cash and shares of Series
A Preferred Stock will be allocated among such accounts.
3.2 Exchange and Payment Procedures. Following the Effective Date,
-------------------------------
certificates representing shares of Lamar Common Stock outstanding on the
Effective Date (herein sometimes referred to as "Old Certificates") shall
evidence only the right of the registered holder thereof to receive, and may be
exchanged for, the form of consideration into which each individual
shareholder's shares of Lamar Common Stock have been converted as determined by
and based on the shareholder's election in the manner described in Sections
3.1(b) and 3.1(c).
C-3
As promptly as practicable following the Effective Date, Hancock shall send
or cause to be sent to each former shareholder of Lamar of record immediately
prior to the Effective Date written instructions and transmittal materials (a
"Transmittal Letter") for use in surrendering Old Certificates to Hancock Bank
(the "Transfer Agent"). Upon the proper surrender and delivery to the Transfer
Agent (in accordance with Hancock's instructions, and accompanied by a
properly completed Transmittal Letter) by a former shareholder of Lamar of his
or her Old Certificate(s), and in exchange therefor, the Transfer Agent shall,
(i) in the case of a shareholder whose Lamar Common Stock has been converted
into Series A Preferred Stock, issue, register and deliver to the shareholder a
certificate evidencing the number of shares of Series A Preferred Stock to which
the shareholder is entitled and/or (ii) in the case of a shareholder whose Lamar
Common Stock has been converted into the right to receive cash, issue and
deliver to the shareholder a check in the amount of cash to which the
shareholder is entitled.
Following the Effective Date there shall be no further transfers of Lamar
Common Stock on the stock transfer books of Lamar or the registration of any
transfer of an Old Certificate by any holder thereof, and the surrender of each
Old Certificate as provided herein must be made by or on behalf of its holder of
record at the Effective Date.
In the event any Old Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such Old
Certificate to be lost, stolen or destroyed, and the posting of a bond in such
amount as Hancock shall direct as indemnity against any claim that may be made
against it with respect to such Old Certificate, the Transfer Agent will pay to
the holder of such Old Certificate the consideration to which such shareholder
is entitled to receive.
3.3 No Fractional Shares. No certificates or scrip for fractional shares
---------------------
of Series A Preferred Stock will be issued. In lieu thereof, Hancock will pay
the value of such fractional shares in cash on the basis of $20.00 per share of
Series A Preferred Stock.
3.4 Dividends. No dividend or other distribution payable to the holders
---------
of record of Series A Preferred Stock at or as of any time after the Effective
Date shall be paid to the holder of any certificate representing shares of
Lamar Common Stock issued and outstanding at the Effective Date until such
holder physically surrenders such certificate for exchange as provided in
Section 3.2 of this Agreement, promptly after which time all such dividends or
distributions shall be paid (without interest).
ARTICLE 4
ACCOUNTING AND TAX MATTERS
--------------------------
4.1 Accounting Treatment. It is intended by the Parties hereto, that the
--------------------
Merger will qualify for purchase accounting treatment under generally accepted
accounting principles.
4.2 Tax Consequences. It is the intention of the Parties hereto, that the
----------------
Merger shall constitute reorganizations within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a "plan of merger" for purposes of Section 368 of the
Code.
4.3 Accounting and Tax Representations. Each Party hereto represents and
----------------------------------
warrants that the statements made with respect to it in the Statement of
Representations attached hereto on Schedule 4.3 and made a part hereof, are true
and correct as of the date hereof and will be true and correct on the Effective
Date.
ARTICLE 5
LAMAR'S COVENANTS AND AGREEMENTS
--------------------------------
5.1 Operation of Business. Between the date hereof and the Effective
---------------------
Date, or until the termination of this Agreement, Lamar covenants and agrees
that it will operate its business solely in the ordinary course consistent with
prudent business practices and in compliance with all applicable laws,
regulations and rules; and, Lamar will cause Lamar Bank to operate its business
solely in the ordinary course consistent with prudent business practices and in
compliance with all applicable laws, regulations and rules; and without prior
written consent of Hancock, Lamar will not, and Lamar will cause Lamar Bank not
to:
C-4
5.1.1 Amend or otherwise change its respective articles of
incorporation or bylaws (except to the extent required in order to effect
the Merger as contemplated herein), as each such document is in effect on
the date hereof;
5.1.2 Issue or sell, or authorize for issuance or sale, the shares of
Lamar or Lamar Bank or any additional shares of any class of capital stock
of Lamar or Lamar Bank (except to the extent required to effect the Merger
as contemplated herein);
5.1.3 Issue, grant, or enter into any subscription, option, warrant,
right, convertible security, or other agreement or commitment of any
character obligating Lamar or Lamar Bank to issue securities;
5.1.4 Declare, set aside, make, or pay any dividend or other
distribution with respect to its capital stock except normal quarterly
dividends to Lamar shareholders not in excess of $.05 per share for each
quarter completed prior to the Effective Date, and at the same rate on a
prorated basis for each month completed or beginning at least fifteen days
prior to the Effective Date;
5.1.5 Redeem, purchase, or otherwise acquire, directly or indirectly,
any of its capital stock respectively;
5.1.6 Authorize any capital expenditure(s) which, individually or in
the aggregate, exceed $20,000;
5.1.7 Extend any new, or renew any existing, loan, credit, lease, or
other type of financing which individually exceeds $250,000;
5.1.8 Except in the ordinary course of business, sell, pledge,
dispose of, or encumber, or agree to sell, pledge, dispose of, or encumber,
any assets of Lamar or Lamar Bank;
5.1.9 Excluding normal and customary banking transactions, incur any
indebtedness for borrowed money, issue any debt securities, or enter into
or modify any contract, agreement, commitment, or arrangement with respect
thereto;
5.1.10 Impose or suffer the imposition, on any share of stock held by
Lamar in Lamar Bank, of any material lien, charge, or encumbrance, or
permit any such lien to exist;
5.1.11 Establish or add any automated teller machines or branch or
other banking offices other than as set forth on any of the Schedules to
this Agreement;
5.1.12 Acquire (by merger, consolidation, lease or other acquisition
of stock, ownership interests or assets) any corporation, partnership, or
other business organization or division thereof, or enter into any
contract, agreement, commitment, or arrangement with respect to any of the
foregoing, except to the extent required in order to effect the Merger as
contemplated herein and except in the ordinary course of business in
connection with foreclosures or similar actions;
5.1.13 Enter into, extend, or renew any lease for office or other
space other than as contemplated in the Schedules to this Agreement;
5.1.14 Except as required by law, enter into, adopt or amend any
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment, or other employee benefit plan,
agreement, trust, fund, or arrangement for the benefit or welfare of any
officer, employee or representative of Lamar or Lamar Bank, other than as
contemplated in the Schedules to this Agreement;
5.1.15 Grant any increase in compensation to any director or officer,
or, except in the ordinary course of business consistent with past
practice, any other employee of Lamar or Lamar Bank;
C-5
5.1.16 Enter into, amend, or terminate any employment agreement,
relationship or responsibilities with any director, officer, or key
employee or representative of Lamar or Lamar Bank, or enter into, amend, or
terminate any employment agreement with any other person otherwise than in
the ordinary course of business, or take any action with respect to the
grant or payment of any severance or termination pay except as expressly
consented to in writing by Hancock;
5.1.17 Take any action or omit to take any action which would cause
any of Lamar's or Lamar Bank's representations or warranties to be untrue
or misleading in any material respect (within the meaning of the first
paragraph of Article 6) or any material covenant of Lamar or Lamar Bank
under this Agreement incapable of being performed;
5.1.18 Take any action that would materially and adversely affect the
ability of any Party hereto to obtain the approvals necessary for
consummation of the transactions contemplated hereby or that would
materially and adversely affect Lamar's ability to perform its material
covenants and agreements hereunder; or
5.1.19 Agree in writing or otherwise to do any of the foregoing.
5.2 Preservation of Business. Between the date hereof and the Effective
------------------------
Date, Lamar will, and will cause Lamar Bank to, use its best efforts to preserve
its existing business and to keep its business organization intact, including
its present relationships with its employees and customers and others having
business relations with it.
5.3 Insurance. Pending the Closing, Lamar shall cause the real property
---------
owned by Lamar and Lamar Bank to be insured reasonably against all insurable
risks under policies with reasonable deductibles and in full compliance with any
co-insurance provision.
5.4 Stockholders' Meeting. Lamar will (i) take all steps necessary to
---------------------
call, give notice of, convene and hold a special meeting of its shareholders as
soon as practicable for the purpose of approving this Agreement, and the
transactions contemplated hereby and for such other purposes as may be necessary
or desirable, and (ii) cooperate and consult with Hancock with respect to each
of the foregoing matters. Said notice shall include notice of dissenter's
rights, if any, and shall solicit stockholders' proxies in favor of this
Agreement, and all notices shall be given in accordance with all applicable
laws, regulations, and rules. Except as may be required by fiduciary
obligations, Lamar and the present directors of Lamar and Lamar Bank will
support and vote in favor of approval of this Agreement.
5.5 Property Transfers. From time to time, as and when requested by
------------------
Hancock and to the extent permitted by Mississippi law, the officers and
directors of Lamar and Lamar Bank last in office shall be authorized to execute
and deliver such deeds and other instruments and shall take or cause to be taken
such further or other actions as shall be necessary in order to vest or perfect
in or to confirm of record or otherwise to Hancock from and after the Effective
Date title to, and possession of, all the property, interests, assets, rights,
privileges, immunities, powers, franchises, and authorities of Lamar and Lamar
Bank, and otherwise to carry out the purposes of this Agreement.
5.6 Lamar Financial Statements. Lamar shall make available to Hancock the
--------------------------
following statements and other reports and documents:
5.6.1 Lamar's Consolidated Balance Sheets as of December 31, 2000,
1999 and 1998; Consolidated Statements of Income and Changes in
Stockholders' Equity and Consolidated Statements of Cash Flows for the
years ended December 31, 2000, 1999 and 1998 ("Lamar Financial
Statements"); and
5.6.2 Such additional financial or other information as may be
required for preparation of the regulatory applications and the
Registration Statement in connection with the consummation of the Merger
(subject to any legal limitations).
C-6
5.7 Due Diligence. In order to afford Hancock access to such
-------------
information as it may reasonably deem necessary to perform any due diligence
review with respect to the assets of Lamar and Lamar Bank to be acquired as a
result of the Merger, Lamar shall (and shall cause Lamar Bank to), upon
reasonable notice, afford Hancock and its officers, employees, counsel,
accountants, and other authorized representatives access, during normal business
hours throughout the period prior to the Effective Date, to all of its and Lamar
Bank's properties; books, contracts, commitments, loan files, litigation files
and records (including, but not limited to, the minutes of the Boards of
Directors of Lamar and Lamar Bank and all committees thereof), and it shall (and
shall cause Lamar Bank to), upon reasonable notice and to the extent consistent
with applicable law, furnish promptly to Hancock such information as Hancock may
reasonably request to perform such review. All information obtained by Hancock
shall be subject to the Confidentiality Agreement between Hancock and Lamar
dated March 14, 2000.
5.8 No Solicitation. Prior to the Effective Date, neither Lamar nor
---------------
Lamar Bank shall authorize or knowingly permit any of their officers, directors,
employees, representatives, agents or other persons controlled by Lamar or Lamar
Bank to directly or indirectly, encourage or solicit or, hold any discussions or
negotiations with, or provide any information to, any persons, entity or group
concerning any merger, consolidation, sale of substantial assets, sale of shares
of capital stock or similar transactions involving, directly or indirectly,
Lamar or Lamar Bank except as contemplated by this Agreement or as required by
fiduciary obligations. Lamar and Lamar Bank shall promptly communicate to
Hancock the identity and terms of any proposal which they may receive with
respect to any such transaction.
5.9 Affiliates. Lamar, Lamar Bank and Hancock shall cooperate and use
----------
their best efforts to identify those persons who may be deemed to be
"affiliates" of Lamar or Lamar Bank within the meaning of Rule 145(c) or Rule
144 (as applicable) under the Securities Act of 1933 (the "Securities Act").
Lamar and Lamar Bank shall use its best efforts to cause each person so
identified to deliver to Hancock, not later than twenty (20) days after
execution of this Agreement, a written agreement in substantially the form set
forth in Exhibit B attached hereto. Hancock shall be entitled to place
appropriate legends on the certificates evidencing shares of Hancock Common
Stock to be received pursuant to this Agreement by such affiliates and to issue
appropriate stop transfer instructions to the Transfer Agent for Hancock Common
Stock.
5.1 Interim Financial Statements. As soon as reasonably available,
----------------------------
Lamar will deliver to Hancock copies of their monthly financial statements.
ARTICLE 6
LAMAR'S REPRESENTATIONS AND WARRANTIES
--------------------------------------
Lamar represents and warrants to Hancock as follows: for purposes of this
Agreement, except where the context requires otherwise, any reference to Lamar
in this Article 6 shall be deemed to include Lamar and Lamar Bank and any
reference to "material," "material adverse effect" or a similar standard shall
refer to the financial condition, operations or other aspects of Lamar and Lamar
Bank taken as a whole.
6.1 Organization and Authority. Each of Lamar and Lamar Bank is a
--------------------------
corporation or bank duly organized, validly existing and in good standing under
the laws of the State of Mississippi and each of Lamar and Lamar Bank has the
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted.
6.2 Authorization. The execution, delivery and performance of this
-------------
Agreement by Lamar and Lamar Bank and the consummation of the transactions
contemplated hereby have been duly authorized by the Boards of Directors of
Lamar and Lamar Bank, subject to regulatory approval. No other corporate
proceedings on the part of Lamar or Lamar Bank are necessary to authorize
consummation of this Agreement, except for the approval of the transaction by
Lamar's and Lamar Bank's stockholders, and the performance by Lamar and Lamar
Bank of the terms hereof. This Agreement is a valid and binding obligation of
Lamar and Lamar Bank enforceable against Lamar and Lamar Bank in accordance with
its terms except as may be limited by applicable bankruptcy, insolvency,
reorganization or moratorium or other similar laws affecting creditors' rights
generally and except that the availability of equitable remedies is within the
discretion of the appropriate court and except that it is subject to approval by
its stockholders and applicable regulatory agencies.
C-7
Neither the execution, delivery or performance of this Agreement by Lamar,
nor the consummation of the transactions contemplated hereby, nor compliance by
Lamar with any of the provisions hereof, will (a) in any material respect
violate, conflict with, or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration, or
the creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of Lamar or Lamar Bank under any terms, conditions or
provisions of (i) Lamar's or Lamar Bank's Charter or Bylaws or other charter
documents of Lamar or Lamar Bank or (ii) any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Lamar or Lamar Bank is a party or by which Lamar or Lamar
Bank may be bound, or to which Lamar or Lamar Bank or the properties or assets
of it may be subject, or (b) violate in any material respect any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation applicable
to Lamar or Lamar Bank or any of its properties or assets.
6.3 Capital Structure of Lamar. As of the date hereof, the authorized
--------------------------
capital of Lamar consists solely of 50,000,000 shares of common stock, par value
of $.50 each and no preferred stock. As of the date hereof 4,307,207 shares of
such authorized common stock were issued and outstanding. The outstanding shares
of capital stock of Lamar are validly issued and outstanding, fully paid and
nonassessable. There are no outstanding options, conversion rights, warrants,
calls, rights, commitments or agreements to issue any form of stock or other
security of Lamar. There are no outstanding obligations or commitments to
purchase, redeem or otherwise acquire any outstanding shares of common stock of
Lamar.
6.4 Ownership of Other Organizations. Lamar does not own, directly or
--------------------------------
indirectly, 5% or more of the outstanding capital stock or other voting
securities of any corporation, bank, or other organization except as follows:
Lamar owns 100% of the outstanding stock of Lamar Bank, Lamar Data Solutions,
Inc. and The Mortgage Shop, Inc. Lamar Bank owns 100% of the outstanding stock
of Southern Financial Services, Inc. The presently authorized capital of Lamar
Bank consists solely of 50,000 shares of common stock, par value of $10.00 each
and no preferred stock. As of the date hereof, 50,000 shares of common stock
were issued and outstanding. The outstanding shares of capital stock of Lamar
Bank are validly issued and outstanding, fully paid and nonassessable and, all
of such shares are owned by Lamar, free and clear of all liens, claims and
encumbrances.
6.5 Lamar Financial Statements. Lamar has made available to Hancock true
--------------------------
and correct copies of the Lamar Financial Statements. The Lamar Financial
Statements (i) have been prepared in accordance with generally accepted
accounting principles, consistently applied, and (ii) present fairly the
consolidated results of operations of Lamar for the periods covered thereby and
the consolidated financial condition of Lamar as of the dates thereof. The
December 31, 2000 balance sheet forming part of the Lamar Financial Statements
is referred to herein as the "Lamar Latest Balance Sheet."
6.6 No Material Adverse Change. Since the date of the Lamar Latest
--------------------------
Balance Sheet, there has been no event or condition of any character (whether
actual, or to the knowledge of Lamar, threatened or contemplated) that has had
or can reasonably be anticipated to have, a material adverse effect on the
financial condition, results of operations, or business of Lamar, taken as a
whole, excluding changes in laws or regulations that affect banking institutions
generally.
6.7 Tax Liability. The amounts set up as liabilities for taxes in the
-------------
Lamar Financial Statements are sufficient for the payment of all respective
taxes which in its aggregate are material (including, without limitation,
federal, state, local, and foreign excise, franchise, property, payroll, income,
capital stock, and sales and use taxes) accrued in accordance with GAAP and
unpaid at the respective dates thereof.
6.8 Tax Returns: Payment of Taxes. All federal, state, local, and
-----------------------------
foreign tax returns (including, without limitation, estimated tax returns,
withholding tax returns with respect to employees, and FICA and FUTA returns)
required to be filed by or on behalf of Lamar or Lamar Bank have been timely
filed or requests for extensions have been timely filed and granted and have not
expired for periods ending on or before the date of the Lamar Latest Balance
Sheet, and all returns filed are complete and accurate to the best information
and belief of their respective managements and all taxes shown on filed returns
have been paid other than those returns or taxes that are not material. As of
the date hereof, there is no audit, examination, deficiency or refund litigation
or matter in controversy with respect to any taxes that might result in a
determination materially adverse to Lamar or Lamar
C-8
Bank except as reserved against in the Lamar Financial Statements. All taxes,
interest, additions and penalties due with respect to completed and settled
examinations or concluded litigation have been paid.
6.9 Litigation and Proceedings. Except as set forth on Schedule 6.9
--------------------------
hereto, no litigation, proceeding or controversy before any court or
governmental agency is pending against Lamar that in the opinion of its
management is likely to have a material and adverse effect on the business,
results of operations or financial condition of Lamar and Lamar Bank taken as a
whole, and, to the best of its knowledge, no such litigation, proceeding or
controversy has been threatened or is contemplated.
6.10 Brokers' or Finders' Fees. Except for the engagement of Morgan
-------------------------
Keegan & Company, Inc. pursuant to the engagement letter dated as of October 23,
2000, a copy of which has been provided to Hancock, no agent, broker, investment
banker, investment or financial advisor or other person acting on behalf of
Lamar or under their authority is entitled to any commission, broker's or
finder's fee from any of the Parties hereto in connection with any of the
transactions contemplated by this Agreement. The aggregate amount of
consideration to be paid Morgan Keegan & Company, Inc. in connection with the
transactions contemplated by this Agreement shall not exceed $284,276.
6.11 Contingent Liabilities. Except as reflected in the Lamar Financial
----------------------
Statements and except in the case of Lamar Bank for unfunded loan commitments
made in the ordinary course of business consistent with past practices, since
the date of the Lamar Latest Balance Sheet neither Lamar nor Lamar Bank has any
obligation or liability (contingent or otherwise) that was material, or that
when combined with all similar obligations or liabilities would have been
material, to Lamar and Lamar Bank taken as a whole and there does not exist a
set of circumstances resulting from transactions effected or events occurring
prior to the date hereof, to the knowledge of Lamar, that could reasonably be
expected to result in any such material obligation or liability.
6.12 Title to Assets; Adequate Insurance Coverage.
--------------------------------------------
6.12.1 As of the date of the Lamar Latest Balance Sheet, Lamar and
Lamar Bank had, and except with respect to assets disposed of for adequate
consideration in the ordinary course of business since such date, now have,
good and merchantable title to all real property and good and merchantable
title to all other material properties and assets reflected in the Lamar
Latest Balance Sheet, free and clear of all mortgages, liens, pledges,
restrictions, security interests, charges and encumbrances of any nature
except for (i) mortgages and encumbrances which secure indebtedness which
is properly reflected in the Lamar Financial Statements or which secure
deposits of public funds as required by law; (ii) liens for taxes accrued
by not yet payable; (iii) liens arising as a matter of law in the ordinary
course of business with respect to obligations incurred after the date of
the Lamar Latest Balance Sheet, provided that the obligations secured by
such liens are not delinquent or are being contested in good faith; (iv)
such imperfections of title and encumbrances, if any, as do not materially
detract from the value or materially interfere with the present use of any
of such properties or assets or the potential sale of any such owned
properties or assets; and (v) capital leases and leases, if any, to third
parties for fair and adequate consideration. Lamar and Lamar Bank own, or
have valid leasehold interests in, all material properties and assets,
tangible or intangible, used in the conduct of its business. Any real
property and other material assets held under lease by Lamar or Lamar Bank
are held under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made or
proposed to be made by Hancock in such lease of such property.
6.12.2 With respect to each lease of any real property or a
material amount of personal property to which Lamar or Lamar Bank is a
party, except for financing leases in which Lamar or Lamar Bank is lessor,
(i) such lease is in full force and effect in accordance with its terms;
(ii) all rents and other monetary amounts that have been due and payable
thereunder have been paid; (iii) there exists no default or event,
occurrence, condition or act which with the giving of notice, the lapse of
time or the happening of any further event, occurrence, condition or act
would become a default under such lease; and (iv) the Merger will not
constitute a default or a cause for termination or modification of such
lease.
6.12.3 Neither Lamar nor Lamar Bank has any legal obligation,
absolute or contingent, to any other person to sell or otherwise dispose of
any substantial part of its assets or to sell or dispose of any of its
assets except in the ordinary course of business consistent with past
practices.
C-9
6.12.4 To the knowledge and belief of its management, the policies
of fire, theft, liability and other insurance maintained with respect to
the assets or businesses of Lamar and Lamar Bank provide adequate coverage
against loss and the fidelity bonds in effect as to which Lamar or Lamar
Bank is named insured meet the applicable standards of the American Bankers
Association.
6.13 Liabilities. To the best knowledge and belief of its management, all
-----------
liabilities of Lamar and Lamar Bank were, and will be created, for good,
valuable and adequate consideration in accordance with prudent business
standards and in substantial compliance with all laws, regulations and rules and
the accounts or evidence of ownership of accounts are and will be genuine, true,
valid and enforceable in accordance with their written terms. Neither Lamar nor
Lamar Bank has agreed to any modification or extension of accounts or account
terms or otherwise made any agreements regarding such accounts except as
disclosed in writing on the books and records of Lamar or Lamar Bank or which
are not material; and Lamar and Lamar Bank have no knowledge of any claim of
ownership to any account other than as shown on the written ownership records of
Lamar and Lamar Bank for each account, and Lamar and Lamar Bank have no
knowledge of any alleged improper or wrongful withdrawal or payment of any such
account.
6.14 Loans. To the best knowledge and belief of its management, each
-----
material loan reflected as an asset of Lamar in the Lamar Latest Balance Sheet,
or acquired since that date, is the legal, valid, and binding obligation of the
obligor named therein, enforceable in accordance with its terms, and no loan is
subject to any asserted defense, offset or counterclaim known to Lamar.
6.15 Allowance for Loan Losses. The allowances for possible loan losses
-------------------------
shown on the Lamar Latest Balance Sheet are adequate in all material respects
under the requirements of GAAP to provide for possible losses, net of
recoveries, relating to loans previously charged off, on loans outstanding
(including accrued interest receivable) as of the date of the Lamar Latest
Balance Sheet and each such allowance has been established in accordance with
GAAP.
6.16 Investments. Except for investments classified as held-to-maturity
-----------
as prescribed under the Financial Accounting Standards Board Statement Number
115, and pledges to secure public or trust deposits, none of the investments
reflected in the Lamar Financial Statements under the heading "Investment
Securities," and none of the investments made by Lamar or Lamar Bank since the
date of the Lamar Latest Balance Sheet, and none of the assets reflected in the
Lamar Financial Statements under the heading "Cash and Due From Banks," is
subject to any restriction, whether contractual or statutory, that materially
impairs the ability of Lamar or Lamar Bank freely to dispose of such investment
at any time. With respect to all repurchase agreements to which Lamar or Lamar
Bank is a party, Lamar or Lamar Bank, as the case may be, has a valid, perfected
first lien or security interest in the government securities or other collateral
securing each such repurchase agreement which equals or exceeds the amount of
debt secured by such collateral under such agreement.
6.17 Information for Registration and Proxy Statements. None of the
-------------------------------------------------
information supplied or to be supplied by Lamar for inclusion in (a) the
Registration Statement to be filed by Hancock with the SEC, (b) the Notice of
Meeting and Proxy Statement to be mailed by Lamar to its stockholders in
connection with the meeting referred to in Section 5.4 hereof (the "Proxy
Statement") and (c) any other documents to be filed with the SEC or any
regulatory agency in connection with the transactions contemplated hereby will,
as amended or supplemented at the time the Registration Statement is filed with
the SEC or at the time it becomes effective, at the time the Proxy Statement is
mailed to holders of Lamar's stock, as may be amended at the time of the Lamar
Stockholders' Meeting, and at the time of filing of such other documents,
respectively, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All documents, financial statements, or other information or
materials which Lamar and Lamar Bank shall provide for filing with the SEC and
any regulatory agency in connection with the Merger will comply with generally
accepted accounting principles.
6.18 Commitments and Contracts. Neither Lamar nor Lamar Bank is a party
-------------------------
or subject to any of the following (whether written or oral, express or
implied):
6.18.1 Except as listed on Schedule 6.18 attached hereto, any
employment contract (including any obligations with respect to severance or
termination pay liabilities or fringe benefits) with any present
C-10
or former officer, director, employee or consultant (other than those which
are terminable at will by Lamar or Lamar Bank);
6.18.2 Except as listed on Schedule 6.18 attached hereto and with a
complete copy provided to Hancock, any plan or contract providing for any
bonus, pension, option, deferred compensation, retirement payment, profit
sharing or similar arrangement with respect to any present or former
officer, director, employee or consultant; or
6.18.3 Any contract not made in the ordinary course of business
containing covenants which limit the ability of Lamar or Lamar Bank to
compete in any line of business or with any person or which involves any
restriction of the geographical area in which, or method by which, Lamar or
Lamar Bank may carry on its respective business (other than as may be
required by law or applicable regulatory authorities).
6.19 Employee Plans. To the best of Lamar's knowledge and belief, it,
--------------
Lamar Bank, and all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that
cover one or more employees employed by Lamar or Lamar Bank:
6.19.1 is in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to its business or to such
plan or any of its employees (because of such employee's activities on
behalf of it), the breach or violation of which could have a material and
adverse effect on such business; and
6.19.2 has received no notification from any agency or department
of federal, state or local government or the staff thereof asserting that
any such entity is not in compliance with any of the statutes, regulations
or ordinances that such governmental authority enforces, or threatening to
revoke any license, franchise, permit or governmental authorization, and is
subject to no agreement with any such governmental authority with respect
to its assets or business.
6.20 Vote Required. The affirmative vote of the holders of at least a
-------------
majority of the outstanding shares of Lamar Common Stock is the only vote of
the stockholders of Lamar necessary to approve the Merger.
6.21 Environmental Matters. Neither Lamar nor Lamar Bank nor, to the best
---------------------
knowledge of its management, any previous owner or operator of any properties at
any time owned, (including any properties owned or subsequently resold) leased
or occupied by Lamar or Lamar Bank or used by Lamar or Lamar Bank in their
respective business ("Lamar Properties") used, generated, treated, stored, or
disposed of any hazardous waste, toxic substance, or similar materials on,
under, or about Lamar Properties except in compliance with all applicable
federal, state, and local laws, rules and regulations pertaining to air and
water quality, hazardous waste, waste disposal, air omissions, and other
environmental matters ("Environmental Laws"). Neither Lamar nor Lamar Bank has
received any notice of noncompliance with Environmental Laws, applicable laws,
orders, or regulations of any governmental authorities relating to waste
generated by any such party or otherwise or notice that any such party is liable
or responsible for the remediation, removal, or clean-up of any site relating to
Lamar Properties.
6.22 Accuracy of Information. To the best of Lamar's and its officers'
-----------------------
and directors' knowledge, all information furnished by Lamar or Lamar Bank to
Hancock and Hancock Bank relating to the assets, liabilities, and this Agreement
is accurate, and Lamar has not omitted to disclose any information which is or
would be material to this Agreement.
6.23 Compliance with Laws and Contracts. To the best of Lamar's and its
----------------------------------
officers' and directors' knowledge, neither Lamar nor Lamar Bank is in violation
of any laws, regulations, or agreements to which it is a party and neither have
failed to file any material reports required by any governmental or other
regulatory body, in which violations or failure to file would have a material
adverse effect on Lamar and Lamar Bank as a whole.
C-11
ARTICLE 7
HANCOCK'S REPRESENTATIONS AND WARRANTIES
----------------------------------------
Hancock represents and warrants to Lamar as follows: for purposes of this
Agreement, except where the context requires otherwise, any reference to Hancock
in this Article 7 shall be deemed to include Hancock and Hancock Bank and any
reference to "material," "material adverse effect" or a similar standard shall
refer to the financial condition, operations or other aspects of Hancock and its
subsidiaries including Hancock Bank taken as a whole.
7.1 Organization and Authority. Each of Hancock and Hancock Bank is a
--------------------------
corporation or bank duly incorporated, validly existing and in good standing
under the laws of the State of Mississippi, and has the corporate power and
authority to own its properties and assets and to carry on its business as it is
now being conducted.
7.2 Shares Fully Paid and Non Assessable. The outstanding shares of
------------------------------------
capital stock of Hancock are validly issued and outstanding, fully paid and
nonassessable and all of such shares of Hancock Bank are owned directly or
indirectly by Hancock free and clear of all liens, claims, and encumbrances. The
shares of Hancock Series A Preferred Stock to be issued in connection with the
Merger pursuant to this Agreement, when issued in accordance with the terms of
this Agreement, will be legally authorized, validly issued, fully paid and
nonassessable.
7.3 Authorization. The execution, delivery and performance of this
-------------
Agreement by Hancock and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of Hancock and
Hancock Bank, subject to regulatory approval. Except for approval of the
Amendment to the Articles of Incorporation attached hereto as Exhibit C by the
shareholders of Hancock, no other corporate proceedings on the part of Hancock
are necessary to authorize the execution and delivery of this Agreement and the
performance by Hancock of the terms hereof. This Agreement is a valid and
binding obligation of Hancock enforceable against Hancock in accordance with its
terms except as may be limited by applicable bankruptcy, insolvency,
reorganization or moratorium or other similar laws affecting creditors' rights
generally and except that the availability of equitable remedies is within the
discretion of the appropriate court and except that it is subject to approval of
applicable regulatory agencies.
7.4 No Material Adverse Change. Since December 31, 2000, there has been
--------------------------
no event or condition of any character (whether actual, or to the knowledge of
Hancock or Hancock Bank, threatened or contemplated) that has had or can
reasonably be anticipated to have, or that, if concluded or sustained adversely
to Hancock would reasonably be anticipated to have, a material adverse effect on
the financial condition, results of operations or business of Hancock or Hancock
Bank excluding changes in laws or regulations that affect banking institutions
generally.
7.5 Loans. To the best knowledge and belief of Hancock's management, and
-----
management of Hancock Bank, each material loan reflected as an asset of Hancock
in the December 31, 2000 consolidated balance sheet contained in Hancock's
annual report to shareholders, or acquired since that date, is the legal, valid
and binding obligation of the obligor named therein, enforceable in accordance
with its terms, and no loan is subject to any asserted defense, offset, or
counterclaim known to Hancock, except as set forth on Schedule 7.5 hereto.
7.6 Litigation and Proceedings. Except as disclosed on Schedule 7.6
--------------------------
hereto, no litigation, proceeding or controversy before any court or
governmental agency is pending against Hancock that in the opinion of its
management is likely to have a material and adverse effect on the business,
results of operations or financial condition of Hancock and its subsidiaries
taken as a whole, and, to the best of its knowledge, no such litigation,
proceeding or controversy has been threatened or is contemplated.
7.7 Contingent Liabilities. Except as reflected in the Hancock reports
----------------------
filed with the SEC and except in the case of Hancock's subsidiaries for unfunded
loan commitments made in the ordinary course of business consistent with past
practices, as of December 31, 2000, neither Hancock nor any of its subsidiaries
had any obligation or liability (contingent or otherwise) that was material, or
that when combined with all similar
C-12
obligations or liabilities would have been material, to Hancock and its
subsidiaries taken as a whole, and there does not exist a set of circumstances
resulting from transactions effected or events occurring prior to the date
hereof, to the knowledge of Hancock, could reasonably be expected to result in
any such material obligation or liability.
7.8 Allowances for Possible Loan Losses. The allowances for possible
-----------------------------------
loan losses shown on the balance sheet of Hancock contained in the Hancock
reports filed or to be filed with the SEC are adequate in all material respects
under the requirements of GAAP to provide for possible losses, net of
recoveries, relating to loans previously charged off, on loans outstanding
(including accrued interest receivable) as of the date of such balance sheet and
each such allowance has been established in accordance with GAAP.
7.9 Benefit Plans. To the knowledge and belief of Hancock's senior
-------------
management, Hancock, each of its subsidiaries and all "employee benefit plans,"
as defined in Section 3(3) of ERISA, that cover one or more employees employed
by Hancock or any of its subsidiaries:
7.9.1 is in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to its business or to such
plan or any of its employees (because such employee's activities on behalf
of it), the breach or violation of which could have a material and adverse
effect on such business; and
7.9.2 has received no notification from any agency or department
of federal, state or local government or the staff thereof asserting that
any such entity is not in compliance with any of the statutes; regulations
or ordinances that such governmental authority enforces, or threatening to
revoke any license, franchise or permit or governmental authorization, and
is subject to no agreement or written understanding with any such
governmental authorities with respect to its assets or business.
7.10 Vote Required. The affirmative vote of the holders of at least a
-------------
majority of the outstanding shares of Hancock Common Stock is the only vote of
the stockholders of Hancock necessary to approve the Articles of Amendment to
the Articles of Incorporation attached as Exhibit C.
7.11 Information for Registration and Proxy Statements. None of the
-------------------------------------------------
information supplied or to be supplied by Hancock for inclusion in (a) the
Registration Statement to be filed by Hancock with the SEC, (b) the Notice of
Meeting and Proxy Statement to be mailed by Lamar to its stockholders in
connection with the meeting referred to in Section 5.4 hereof (the "Proxy
Statement") and (c) any other documents to be filed with the SEC or any
regulatory agency in connection with the transactions contemplated hereby will,
as amended or supplemented at the time the Registration Statement is filed with
the SEC or at the time it becomes effective, at the time the Proxy Statement is
mailed to holders of Lamar's stock, as may be amended at the time of the Lamar
Stockholders' Meeting, and at the time of filing of such other documents,
respectively, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All documents, financial statements, or other information or
materials which Hancock shall provide for filing with the SEC and any regulatory
agency in connection with the Merger will comply with generally accepted
accounting principles.
ARTICLE 8
HANCOCK'S COVENANTS AND AGREEMENTS
----------------------------------
Hancock covenants and agrees as follows:
8.1 Conduct of Business. Hancock agrees to operate its business solely
-------------------
in the ordinary course consistent with prudent business practices and in
compliance with all applicable laws, regulations, and rules; but nothing herein
shall be construed as limiting or restricting Hancock in its assets, liability,
or capital structure or limiting any action of Hancock or its affiliates, nor
shall anything in this Agreement be construed as limiting the future number and
amount of outstanding shares of Hancock stock pending consummation of the
transactions contemplated hereby; provided however, that Hancock and Hancock
Bank shall not, and shall instruct their executive officers, directors, and
control persons and any affiliates of any of the foregoing not to, effect any
C-13
transactions in Hancock Common Stock in violation of Regulation M of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise
for the purpose, or with the effect, of manipulating the trading price of
Hancock Common Stock.
8.2 Due Diligence. In order to afford Lamar access to such information
-------------
as it may reasonably deem necessary to perform any due diligence review with
respect to Hancock and Hancock Bank , Hancock shall (and shall cause Hancock
Bank to), upon reasonable notice, afford Lamar and its officers, employees,
counsel, accountants, and other authorized representatives access, during normal
business hours throughout the period prior to the Effective Date, to all of its
and Hancock Bank's properties; books, contracts, commitments, loan files,
litigation files and records (including, but not limited to, the minutes of the
Boards of Directors of Hancock and Hancock Bank and all committees thereof), and
it shall (and shall cause Hancock Bank to), upon reasonable notice and to the
extent consistent with applicable law, furnish promptly to Lamar such
information as Lamar may reasonably request to perform such review. All
information obtained by Lamar shall be subject to the Confidentiality Agreement
between Hancock and Lamar dated March 14, 2000.
8.3 Registration Statement. (a) Hancock will prepare and file on Form S-
----------------------
4 a Registration Statement under the Securities Act (which will include the
Proxy Statement) complying with all the requirements of the Securities Act
applicable thereto, for the purpose, among other things, of registering the
Series A Preferred Stock which will be issued to the holders of Lamar Common
Stock pursuant to the Merger. Hancock shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable, to qualify
the Series A Preferred Stock under the securities or blue sky laws of such
jurisdictions as may be required and to keep the Registration Statement and such
qualifications current and in effect for so long as is necessary to consummate
the transactions contemplated hereby.
(b) Lamar shall cooperate in preparing the Registration Statement and
the Proxy Statement, and will promptly furnish all such data and information
relating to it as Hancock may reasonably request for the purpose of including
such data and information in the Registration Statement.
(c) Hancock will indemnify and hold harmless each member of Lamar's
consolidated group and each of their respective directors, officers, agents and
other persons, if any, who control Lamar within the meaning of the Securities
Act from and against any losses, claims, damages, liabilities or judgments,
joint or several, to which they or any of them may become subject under the
Securities Act or any state securities or blue sky laws or otherwise, insofar as
such losses, claims, damages, liabilities, or judgments (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or in any
amendment or supplement thereto, or in any state application for qualification,
permit, exemption or registration as a broker/dealer, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such person for any legal or other expenses reasonably incurred by such person
in connection with investigating or defending any such action or claim;
provided, however, that Hancock shall not be liable, in any such case, to the
extent that any such loss, claim, damage, liability, or judgment (or action in
respect thereof) arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement, or any such amendment or supplement thereto, or in any such state
application, or in any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to Hancock by Lamar.
8.4 Application to Regulatory Authorities. Hancock shall prepare, as
-------------------------------------
promptly as practicable, all regulatory applications and filings which are
required to be made with respect to the Merger and provide copies thereof to
Lamar and its counsel.
8.5 Indemnification of Directors and Officers of Lamar and Lamar Bank.
-----------------------------------------------------------------
(a) From and after the Effective Date of the Merger, Hancock agrees to indemnify
and hold harmless each person who is an officer or director of Lamar or Lamar
Bank on the day of this Agreement or hereafter from and against all losses,
claims, damages, liabilities and judgments (and related expenses including, but
not limited to, attorney's fees and amounts paid in investigating or defending
any action in respect thereof or in settlement of any such action) based upon or
C-14
arising from his capacity as an officer or director of Lamar or Lamar Bank, as
the case may be, to the same extent he would have been indemnified under the
Articles of Incorporation and Bylaws of Hancock as such documents were in effect
on the date of this Agreement as if he were an officer or director of Hancock at
all relevant times. Any indemnification to which subparagraph (c) of Section 8.3
applies shall be paid pursuant thereto and shall not be payable under this
Section 8.5. The persons entitled to indemnification hereunder and their
respective heirs, executors, estates and assigns are hereinafter referred to as
"Indemnified Persons."
(b) The rights granted to the Indemnified Persons hereby shall be
contractual rights inuring to the benefit of all Indemnified Persons and shall
survive the Merger, and any merger, consolidation or reorganization of Hancock.
(c) An Indemnified Person shall give Hancock prompt notice of any matter
as to which indemnification is provided, shall employ counsel that is reasonably
acceptable to Hancock (and no more than one counsel for all Indemnified Persons
shall be employed in any one matter or series of related matters except to the
extent that actual conflicts of interest require otherwise) and shall not settle
any such matter unless Hancock shall first consent thereto.
(d) Hancock agrees to an extension of the existing directors' and
officers' liability insurance policy of Lamar and Lamar Bank, respectively,
covering persons who are currently covered by such insurance for a "discovery"
period of three (3) years after the Effective Date on terms generally no less
favorable than those in effect on the date of this Agreement.
8.6 Stockholders' Meeting. Hancock will take all steps necessary to
---------------------
call, give notice of, convene and hold a special meeting of its shareholders as
soon as practicable for the purpose of approving the Articles of Amendment to
the Articles of Incorporation of Hancock attached as Exhibit C to this
Agreement, and for such other purposes as may be necessary or desirable, and
shall take all other action required to authorize the Series A Preferred Stock.
8.7 Listing Application. Hancock shall promptly prepare and submit to
-------------------
Nasdaq a listing application covering the shares of Series A Preferred Stock
issuable in the Merger and shall use its best efforts to obtain, prior to the
Effective Date, approval for the listing of such Series A Preferred Stock for
trading on Nasdaq upon official notice of issuance.
ARTICLE 9
CONDITIONS TO CLOSING
---------------------
The obligations of Lamar, Lamar Bank, Hancock and Hancock Bank under this
Agreement, except as otherwise provided herein, shall be subject to the
satisfaction or waiver of the following conditions on or prior to the Closing of
the Merger:
9.1 Conditions to Each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligation of each Party to effect the Merger shall be subject to the
following conditions:
9.1.1 Stockholder Approval. The Merger shall have been approved by
--------------------
the requisite vote of the holders of the outstanding shares of Lamar Common
Stock at Lamar's Stockholders' Meeting.
9.1.2 Regulatory Approvals. The transactions contemplated by this
--------------------
Agreement, with respect to the Merger, shall have been approved by all
governing regulatory authorities, without any condition or requirement that
either Hancock or Lamar reasonably deem burdensome, or which otherwise
would have a material adverse effect on the business, operations,
properties, assets or financial condition of Hancock, Hancock Bank, Lamar
or Lamar Bank after the Effective Date, all conditions required to be
satisfied shall have been satisfied, and all waiting periods relating to
such approvals shall have expired.
C-15
9.1.3 Registration Statement. The Registration Statement shall
----------------------
have been declared effective and shall not be subject to a stop order or
any threatened stop order, and all state securities and blue sky permits or
approvals required to consummate the transactions contemplated by this
Agreement shall have been received.
9.1.4 No Restraining Action. No action or proceeding shall have
---------------------
been threatened or instituted before a court or other governmental body to
restrain or prohibit the transactions contemplated by the Merger Agreement
or this Agreement or to obtain damages or other relief in connection with
the execution of such agreements or the consummation of the transactions
contemplated hereby or thereby other than as described on the Schedules
hereto; and no governmental agency shall have given notice to any party
hereto to the effect that consummation of the transactions contemplated by
the Merger Agreement or this Agreement would constitute a violation of any
law or that it intends to commence proceedings to restrain consummation of
the Merger.
9.1.5 Series A Preferred Stock. The Articles of Amendment to the
------------------------
Articles of Incorporation of Hancock attached as Exhibit C hereto shall
have been approved by the requisite vote of the shareholders of Hancock and
filed with the Secretary of State, and all other action required to
authorize the Series A Preferred Stock shall have been taken by Hancock.
9.2 Conditions to Obligations of Lamar to Effect the Merger. The
-------------------------------------------------------
obligations of Lamar to effect the Merger shall be subject to the following
additional conditions:
9.2.1 Representations and Warranties. The representations and
------------------------------
warranties of Hancock set forth in this Agreement shall be true and correct
in all material respects (except to the extent such representation or
warranty is qualified by materiality in which case such representation or
warranty shall be true and correct) as of the date of this Agreement and as
of the Closing as though made at and as of the Closing, except as otherwise
contemplated by this Agreement or consented to in writing by Lamar.
9.2.2 Performance of Obligations. Hancock shall have performed in
--------------------------
all material respects all obligations and complied with all covenants
required by it under this Agreement prior to the Closing and Hancock shall
deliver at Closing appropriate certificates setting forth such.
9.2.3 No Material Adverse Change. There shall not have occurred
--------------------------
any material adverse change from the date of this Agreement to the Closing
Date in the financial condition, results of operations or business of
Hancock and its subsidiaries taken as a whole.
9.2.4 Tax Opinion. Lamar shall have received from Watkins Ludlam
-----------
Winter & Stennis, P.A. an opinion of counsel, dated the Closing Date, as to
certain federal income tax aspects of the Merger, including an opinion that
the Merger will constitute a tax-free reorganization and shareholders of
Lamar who receive Hancock Series A Preferred Stock and cash in the Merger
will not recognize gain with respect to the Hancock Series A Preferred
Stock.
9.2.5 Fairness Opinion. Lamar shall have received a letter from
----------------
Morgan Keegan & Company, Inc., or another financial advisor selected by
Lamar, dated within ten (10) business days prior to the date of the mailing
of the Proxy Statement to its shareholders to the effect that the terms of
the Merger are fair to its shareholders from a financial point of view.
9.2.6 Transaction Value. The total value of the Hancock Series A
-----------------
Preferred Stock to be issued pursuant to the Merger shall be not less than
51% of the total value of all consideration issued or deliverable by
Hancock pursuant to this Agreement, all as determined under applicable
provisions of the Code and regulations.
C-16
9.3 Conditions to Obligations of Hancock to Effect the Merger. The
---------------------------------------------------------
obligations of Hancock to effect the Merger shall be subject to the following
additional conditions:
9.3.1 Representations and Warranties. The representations and
------------------------------
warranties of Lamar and Lamar Bank set forth in this Agreement shall be
true and correct in all material respects (except to the extent such
representation or warranty is qualified by materiality in which case such
representation or warranty shall be true and correct) as of the date of
this Agreement and as of the Closing as though made at and as of the
Closing, except as otherwise contemplated by this Agreement or consented to
in writing by Hancock, and except that no inaccuracy shall give rise to a
termination right unless it and all the other inaccuracies together result
in a material and adverse change in Lamar.
9.3.2 Performance of Obligations. Lamar shall have performed in
--------------------------
all material respects all obligations and complied with all covenants
required by it under this Agreement prior to the Closing and Lamar shall
deliver at Closing appropriate certificates setting forth such.
9.3.3 No Material Adverse Change. There shall not have occurred
--------------------------
any material adverse change from the date of this Agreement to the Closing
Date in the financial condition, results of operations or business of Lamar
and its subsidiaries taken as a whole.
9.3.4 Affiliate Agreement. An Affiliate Agreement substantially
-------------------
in the form specified on Exhibit B hereto (as contemplated by Section 5.9
hereof) shall have been executed by each person who serves as an executive
officer or director of Lamar.
ARTICLE 10
EMPLOYMENT MATTERS
------------------
10.1 Employees. All employees of Lamar at the Effective Date shall become
---------
employees of Hancock. Hancock will make reasonable efforts to maintain duties
and compensation levels for any retained personnel commensurate with the
employees' experience and qualifications, and in accordance with Hancock's
employment and salary administration programs. With regard to any retained
employee, Hancock shall be free of any obligation to honor any past agreement of
Lamar to such person other than agreements scheduled on Schedule 6.18 and as set
forth in this Article 10.
10.2 Benefits. Any Lamar employee who, immediately prior to the Effective
--------
Date, is covered by or is a participant in a Lamar employee benefit plan shall
as soon as practical after the Effective Date be covered by or participate in
the comparable Hancock employee benefit plan if a comparable plan otherwise is
maintained by Hancock and if the eligibility requirements of the Hancock plan
are met. All prior years of service of retained Lamar employees will be counted
for eligibility purposes under all applicable Hancock plans to the extent
permitted by applicable law.
ARTICLE 11
TERMINATION
-----------
11.1 Termination. This Agreement may be terminated, either before or after
-----------
approval by the stockholders of Lamar and Lamar Bank as follows:
11.1.1 Mutual Consent. At any time on or prior to the Effective
--------------
Date of the Merger, by the mutual consent in writing of a majority of the
members of each of the Board of Directors of the Parties hereto;
11.1.2 Expiration of Time. By the Board of Directors of Hancock in
------------------
writing or by the Board of Directors of Lamar in writing, if the Merger
shall have not become effective on or before September 30, 2001, unless the
Merger has not occurred due to the failure of the Party seeking to
terminate this Agreement to perform its obligations under this Agreement;
C-17
11.1.3 Breach of Representation, Warranty or Covenant. By either
----------------------------------------------
Party hereto, in the event of a breach by the other Party (a) of any
covenant or agreement contained herein or (b) of any representation or
warranty herein, if the facts constituting such breach of a covenant,
agreement, representation or warranty reflect a material and adverse change
in the financial condition, results of operations or business taken as a
whole, of the breaching Party, which in either case cannot be or is not
cured within sixty (60) days after written notice of such breach is given
to the Party committing such breach.
11.1.4 Regulatory Approval. By either Party hereto, at any time
-------------------
after the FRB has denied any application for any approval or clearance
required to be obtained as a condition to the consummation of the Merger
and the time-period for all appeals or requests for reconsideration thereof
has run.
11.1.5 Lamar Shareholder Approval. By either Party hereto, if the
--------------------------
Merger is not approved by the required vote of the shareholders of Lamar.
11.1.6 Hancock Shareholder Approval of Articles of Amendment. By
------------------------------------------------------
either Party hereto, if the Amendment to the Articles of Hancock attached
as Exhibit C is not approved by the required vote of the shareholders of
Lamar.
ARTICLE 12
APPRAISAL RIGHTS
----------------
12.1 Appraisal Rights of Lamar. Notwithstanding any other provision of
-------------------------
this Agreement to the contrary, dissenting stockholders of Lamar who comply with
the procedural requirements of Article 13 of the MBCA will be entitled to
receive payment of the fair cash value of their shares in accordance with the
provisions of Article 13 of the MBCA.
ARTICLE 13
MISCELLANEOUS
-------------
13.1 Entire Agreement. This Agreement embodies the entire understanding of
----------------
the Parties in relation to the subject matter herein and supersedes all prior
understandings or agreements, oral or written, between the Parties hereto other
than the Confidentiality Agreement heretofore executed by the Parties.
13.2 Effect of Termination or Consummation; Survival. (a) Upon termination
-----------------------------------------------
of this Agreement pursuant to Article 11, the Merger Agreement shall also
terminate, and this Agreement and the Merger Agreement shall be void and of no
effect, and there shall be no liability by reason of this Agreement or the
Merger Agreement, or the termination thereof, on the part of any Party or their
respective directors, officers, employees, agents or shareholders.
(b) None of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective Date. Each
Party hereby agrees that its sole right and remedy with respect to any breach of
a representation or warranty or covenant by the other Party prior to the Closing
Date shall be not to close the transactions described herein if such breach
results in the nonsatisfaction of a condition set forth in Article 9 hereof;
provided, however, that the foregoing shall not be deemed to be a waiver of any
claim for an intentional breach of a representation, warranty or covenant or for
fraud except if such breach is required by law or by any bank or bank holding
company regulatory authority. Each covenant of the Parties to be performed
after the Effective Date shall survive the Effective Date and may be enforced by
the person or persons in whose favor it runs.
C-18
13.3 Headings. The headings and subheadings in this Agreement, except the
--------
terms identified for definition in Article 1 and elsewhere in this Agreement,
are inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or any provision hereof.
13.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts all of which shall be deemed one and the same agreement and each of
which shall be deemed an original.
13.5 Governing Law. This Agreement and the rights and obligations
-------------
hereunder shall be governed and construed by the laws of the State of
Mississippi.
13.6 Successors: No Third Party Beneficiaries. All terms and conditions of
----------------------------------------
this Agreement shall be binding on the successors and assigns of Lamar and
Hancock. Except as otherwise specifically provided in this Agreement, nothing
expressed or referred to in this Agreement is intended or shall be construed to
give any person other than Lamar and Hancock any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provisions
contained herein, it being the intention of the Parties hereto that this
Agreement, the obligations and statements of responsibilities hereunder, and all
other conditions and provisions hereof are for the sole and exclusive benefit of
Lamar and Hancock and for the benefit of no other person.
13.7 Modification; Assignment. No amendment or other modification of any
------------------------
part of this Agreement shall be effective except pursuant to a written agreement
subscribed by the duly authorized representatives of all of the Parties hereto.
This Agreement may not be assigned without the express written consent of both
Parties.
13.8 Notice. Any notice, request, demand, consent, approval or other
------
communication to any Party hereof shall be effective when received and shall be
given in writing, and delivered in person against receipt thereof, or sent by
certified mail, postage prepaid, facsimile or overnight courier service at its
address set forth below or at such other address as it shall hereafter furnish
in writing to the others. All such notices and other communications shall be
deemed given on the date received by the addressee or its agent.
Lamar
-----
Lamar Capital Corporation
401 Shelby Speights Drive
Purvis, Mississippi 39475
Attn: Mr. Robert W. Roseberry, CEO
Hancock
-------
Hancock Holding Company
Post Office Box 4019
Gulfport, MS 39502
Attn: Mr. Carl J. Chaney, Chief Financial Officer
13.9 Waiver. Lamar and Hancock may waive their respective rights, powers
------
or privileges under this Agreement; provided that such waiver shall be in
writing; and further provided that no failure or delay on the part of Lamar or
Hancock to exercise any right, power or privilege under this Agreement will
operate as a waiver thereof, nor will any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power or privilege by Lamar
or Hancock under the terms of this Agreement, nor will any such waiver operate
or be construed as a future waiver of such right, power or privilege under this
Agreement.
13.10 Costs, Fees and Expenses. Each Party hereto agrees to pay all costs,
------------------------
fees and expenses which it has incurred in connection with or incidental to the
matters contained in this Agreement, including without limitation any fees and
disbursements to its accountants, financial advisors and counsel. Lamar will be
responsible for preparing the applications, regulatory filings and Registration
Statement necessary to obtain approval of the Merger. Each Party will be
responsible for the cost of its accountants and legal counsel and will bear all
costs related to conducting its stockholders' meetings and obtaining
stockholders' approval of the Merger.
C-19
13.11 Press Releases. Lamar and Hancock shall consult with each other as
--------------
to the form and substance of any press release related to this Agreement or the
transactions contemplated hereby, and shall consult each other as to the form
and substance of other public disclosures related thereto, provided, however,
that nothing contained herein shall prohibit Hancock, following notification to
Lamar, from making any disclosures which its counsel deems necessary to conform
with requirements of law or the rules of the National Association of Securities
Dealers Automated Quotation System.
13.12 Severability. If any provision of this Agreement is invalid or
------------
unenforceable then, to the extent possible, all of the remaining provisions of
this Agreement shall remain in full force and effect and shall be binding upon
the Parties hereto.
13.13 Mutual Covenant of Best Efforts and Good Faith. The Parties mutually
----------------------------------------------
covenant and agree with each other that they will use their best efforts to
consummate the transactions herein contemplated and that they will act and deal
with each other in good faith as to this Agreement and all matters arising from
or related to it.
C-20
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
LAMAR CAPITAL CORPORATION
By: /s/ Robert W. Roseberry
-------------------------------------
Name: ROBERT W. ROSEBERRY
Title: CHIEF EXECUTIVE OFFICER
Attest:
/s/ Jane P. Roberts
- -------------------------------------
JANE P. ROBERTS, SECRETARY
HANCOCK HOLDING COMPANY
By: /s/ George A. Schloegel
-------------------------------------
Name: GEORGE A. SCHLOEGEL
Title: CHIEF EXECUTIVE OFFICER
Attest:
/s/ Carl J. Chaney
- -------------------------------------
CARL J. CHANEY, CHIEF FINANCIAL
OFFICER
C-21
EXHIBIT A
MERGER AGREEMENT
----------------
This Merger Agreement is made and entered into as of the 21/st/ day of
February, 2001, between Hancock Holding Company, Gulfport, Mississippi, a
Mississippi corporation ("Hancock") and Lamar Capital Corporation, Purvis,
Mississippi, a Mississippi corporation ("Lamar") (the "Merger Agreement").
W I T N E S S E T H:
WHEREAS, Hancock and Lamar (collectively, the "Constituent Corporations")
and their respective Boards of Directors deem it advisable that Lamar be merged
into Hancock (the "Merger") pursuant to the provisions of the Mississippi
Business Corporation Act ("MBCA") and upon the terms and conditions hereinafter
set forth and in the Plan (as hereinafter defined); and
WHEREAS, the Constituent Corporations have entered into an Agreement and
Plan of Merger dated as of the date hereof (the "Plan") (the defined terms in
which are used herein as defined therein) setting forth certain representations,
warranties, covenants and conditions relating to the Merger;
NOW THEREFORE, the Constituent Corporations hereby make, adopt and approve
this Merger Agreement and prescribe the terms and conditions of the Merger and
the mode of carrying the Merger into effect as follows:
ARTICLE ONE
The Merger
----------
Upon the terms and subject to the conditions hereinafter set forth, on the
Effective Date (as defined in Article Two hereof) Lamar shall be merged into
Hancock and the separate existence of Lamar shall cease.
ARTICLE TWO
Effective Date
--------------
The Merger shall be effective as of the date and time when this Merger
Agreement, having been certified, signed and acknowledged in the manner required
by law, is filed in the office of the Secretary of State of Mississippi (such
time and date being herein referred to as the "Effective Date").
ARTICLE THREE
Conversion and Cancellation of Shares
-------------------------------------
a. On the Effective Date of the Merger, each share of the Common Stock,
$3.33 par value, of Hancock ("Hancock Common Stock") issued and outstanding
immediately prior to the Effective Date shall remain outstanding and shall
represent one share of Common Stock, $3.33 par value, of Hancock.
b. On the Effective Date of the Merger, each share of Lamar Common Stock
outstanding immediately following the Merger shall be converted into (i) shares
of Hancock Series A Preferred Stock or (ii) the right to receive cash as set
forth in the Plan.
C-22
ARTICLE FOUR
Effects of Merger
-----------------
The Merger shall have the effects set forth in Miss. Code Ann. (S)79-4-
11.06.
ARTICLE SIX
Miscellaneous
-------------
The obligations of the Constituent Corporations to effect the Merger shall
be subject to all of the terms and conditions of the Plan. At any time prior to
the Effective Date, this Merger Agreement may be terminated (a) by the mutual
agreement of the Boards of Directors of the Constituent Corporations or (b)
pursuant to the terms and provisions of the Plan.
C-23
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
LAMAR CAPITAL CORPORATION
By: /s/ Robert W. Roseberry
-------------------------------------
Name: ROBERT W. ROSEBERRY
Title: CHIEF EXECUTIVE OFFICER
Attest:
/s/ Jane P. Roberts
- ------------------------------------
JANE P. ROBERTS, SECRETARY
HANCOCK HOLDING COMPANY
By: /s/ George A. Schloegel
-------------------------------------
Name: GEORGE A. SCHLOEGEL
Title: CHIEF EXECUTIVE OFFICER
Attest:
/s/ Carl J. Chaney
- ------------------------------------
CARL J. CHANEY, CHIEF FINANCIAL
OFFICER
C-24
EXHIBIT B
FORM OF AFFILIATE AGREEMENT
Hancock Holding Company
One Hancock Plaza
Gulfport, Mississippi 39502
Gentlemen:
I, the undersigned director, executive officer or significant stockholder
of Lamar Capital Corporation ("Lamar"), Purvis, Mississippi, acknowledge and
understand that, as an affiliate of Lamar, Rule 145 promulgated under the
Securities Act of 1933, as amended (the "Act"), restricts my ability to sell,
pledge, transfer or otherwise dispose of the shares of Hancock Holding Company
("Hancock") common stock to be issued to me in the Agreement and Plan of Merger
("Merger") between Hancock and Lamar, unless the requirements of Rule 145(d) are
satisfied or the sale, transfer or disposition is otherwise in compliance with
the Act.
On the basis of the foregoing, and in consideration of the delivery to me
of the Hancock Series A Preferred Stock into which my Lamar common stock will be
converted, I agree that:
1. I will not sell, transfer, pledge, encumber or otherwise dispose of
said securities in violation of the Act or rules and regulations
promulgated thereunder.
2. I expressly agree to the placement of a restrictive legend on any and
all certificates for shares of Hancock Common Stock received pursuant
to the Merger, to the effect that the shares were received in a
transaction to which Rule 145 applies, as follows:
"The shares represented by this certificate have been issued or
transferred to the registered holder as a result of a transaction
to which Rule 145 under the Securities Act of 1933, as amended
(the "Act"), applies. The shares represented by this certificate
may not be sold, transferred, pledged or assigned, and the issuer
shall not be required to give effect to any attempted sale,
transfer or assignment, except in accordance with the
requirements of the Act and the other conditions specified in
that certain Affiliates Agreement dated as of
_________________________, 2001 between the issuer and the
shareholder, a copy of which Agreement will be furnished, without
charge, by Hancock Holding Company to the holder of this
certificate upon written request therefor."
3. I agree to be bound by the terms of this letter until the expiration
of the time period set forth in Rule 145(d)(2) or (3), whichever may
apply.
Sincerely,
_____________________________________
Title:_______________________________
Accepted and agreed to:
HANCOCK HOLDING COMPANY Date:_____________________________________
By:______________________________
Title:___________________________ Number of Lamar Shares owned:_____________
C-25
Exhibit C
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
The aggregate number of shares which the Corporation is authorized to issue
is 125,000,000 divided into two classes. The designation of each class, the
number of shares of each class and the par value, if any, of each class are as
follows:
Number of Shares Class Par Value, if any
75,000,000 Common $ 3.33
50,000,000 Preferred $20.00
The preferences and relative rights in respect of the shares of each class
and the variations in the relative rights and preferences as between the series
of any preferred class in the series are as follows:
Each share of Common Stock shall entitle the holder thereof to full voting
rights. Except as may be determined by the Board of Directors at the time a
series is created, holders of Preferred Stock shall have no voting rights as a
holder of such stock, except as specifically required by law.
The holders of Preferred Stock shall be entitled to receive dividends,
subject to statutory restrictions, when and as declared by the Board of
Directors. Such dividends shall be payable at such periods as shall be fixed by
the Board of Directors at the rate specified in the resolution of the Board of
Directors authorizing the issuance of the particular series of Preferred Stock,
and no more, before any dividend shall be paid or set apart for payment upon the
Common Stock.
Dividends on the Preferred Stock shall be cumulative, so that if for any
period the same shall not be paid, the right thereto shall accumulate as against
the Common Stock, and all arrears so accumulated shall be paid before any
dividend shall be paid upon the Common Stock.
Whenever all accumulated dividends on the outstanding Preferred Stock for
all previous periods shall have been declared and shall have become payable, and
the Corporation shall have paid such accumulated dividends for such previous
periods, or shall have set aside from its legally available funds a sum
sufficient therefor, the Board of Directors may declare dividends on the Common
Stock, payable then or thereafter out of any remaining legally available funds.
Each class of Preferred Stock shall be divided into and issued from time to
time by resolution of the Board of Directors in one or more series, each series
being so designated as to distinguish the shares thereof from the shares of all
other series and classes. All or any of the series of any such class and the
variations and the relative rights and preferences as between different series
may be fixed and determined by resolution of the Board of Directors, but all
shares of the same class shall be identical except as to the following relative
rights and preferences, as to which there may be variations between different
series:
(a) the rate of dividend;
(b) whether shares may be redeemed and, if so, the redemption price and
terms and conditions of redemption;
(c) the amount payable upon shares in the event of voluntary and
involuntary liquidation;
C-26
(d) sinking fund provisions, if any, for the redemption or purchase of
shares;
(e) the terms and conditions, if any, on which shares may be converted;
and
(f) the voting rights of the shares.
C-27
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
HANCOCK HOLDING COMPANY
A. The name of the Corporation is Hancock Holding Company.
B. The following resolution, setting forth the designation and the number
of shares of a series of Preferred Stock ($20.00 par value) of the Corporation
and the relative rights and preferences thereof, was duly adopted by the Board
of Directors of the Corporation at a meeting held on _______ __, 2001:
RESOLVED, that ___________ authorized but unissued shares of this
Corporation's Preferred Stock ($20.00 par value) are hereby designated as a
series of Preferred Stock called the 8% Cumulative Convertible Preferred Stock,
Series A with the following voting powers, rights and preferences:
1. Definitions.
For the purposes of this resolution, the following terms shall have the
following meanings:
"Capital Stock" means the Capital Stock of any class or series (however
designated) of the Corporation.
"Common Stock" means the Common Stock of the Corporation ($3.33 par value)
as constituted on the date of this Resolution, or shares of any other class of
Capital Stock into which such Common Stock is reclassified after such date.
"Corporation" means Hancock Holding Company.
"Dividends Accrued" means an amount equal to the sum of all dividends
required to be paid on the shares of Series A Preferred Stock from the date of
issue of the shares of Series A Preferred Stock to the date to which the
determination is to be made, whether or not such amount or any part thereof
shall have been declared as dividends and whether there shall be or have been
any funds out of which such dividends might legally be paid, less the amount of
dividends declared and paid and, if any dividends have been declared and set
apart for payment but not paid, the amount so set apart for the payment of such
dividends. Accrued Dividends for any period less than a full calendar quarter
shall be calculated on the basis of the actual number of days elapsed over a
360-day year.
"Junior Stock" means any Capital Stock ranking as to dividends and as to
rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to the Series A Preferred Stock.
"Parity Stock" means shares of any series of the Corporation's Preferred
Stock and any shares of Capital Stock ranking as to dividends and/or as to the
rights in liquidation, dissolution or winding up of the affairs of the
Corporation equally with the Series A Preferred Stock.
"Prior Stock" means any Capital Stock ranking as to dividends or as to
rights in liquidation, dissolution or winding up of the affairs of the
Corporation prior to the Series A Preferred Stock.
C-28
"Series A Preferred Stock" means the 8% Cumulative Convertible Preferred
Stock, Series A of the Corporation.
"Subsidiary" means any corporation, a majority of the outstanding voting
stock of which is owned, directly or indirectly, by the Corporation or by the
Corporation and one or more Subsidiaries.
2. Dividends.
(a) The holders of the outstanding shares of Series A Preferred Stock
shall be entitled to receive, if, when and as declared by the Board of
Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates
hereinafter set forth. The rate of dividends payable on Series A
Preferred Stock shall be $1.60 per share per annum and no more.
Dividends shall be payable, to the extent practical, in equal
quarterly installments on the last day of March, June, September and
December of each year, commencing on the last day of the calendar
quarter in which the merger of the Corporation and Lamar Capital
Corporation occurs. Dividends shall be cumulative and shall accrue on
the Series A Preferred Stock from and after the date of issuance
thereof. Dividends payable on the last day of the calendar quarter in
which the merger of the Corporation and Lamar Capital Corporation
occurs or on any other date which is not the last day of a full
calendar quarter shall be calculated on the basis of a three hundred
sixty (360) day year and the actual number of days elapsed.
(b) No dividend whatsoever shall be declared or paid upon, or any sum
set apart for the payment of dividends upon any shares of Parity Stock
for any dividend period unless the same dividend (payable in
proportion to the respective annual dividend rates per share set forth
in the Articles of Incorporation or the respective Articles of
Amendment) shall have been declared and paid upon, or declared and a
sufficient sum set apart for the payment of such dividend upon all
shares of Series A Preferred Stock outstanding.
(c) Unless Dividends Accrued on all outstanding shares of Series A
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared
and a sum sufficient for the payment thereof set apart, and full
dividends (to the extent that the amount thereof shall have become
determinable) on all outstanding shares of such stock due on the
respective next following payment dates shall have been declared and a
sum sufficient for the payment thereof set apart then (i) no dividend
(other than a dividend payable solely in "Common Stock") shall be
declared or paid upon, or any sum set apart for the payment of
dividends on any shares of Junior Stock; (ii) no other distribution
shall be made upon any shares of Junior Stock; (iii) no shares of
Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (iv) no monies
shall be paid into or set apart or made available for a sinking or
other like fund for the purchase, redemption or other acquisition for
value of any shares of Junior Stock by the Corporation or any
Subsidiary.
3. Voting Rights.
In addition to any voting rights afforded by the Mississippi Business
Corporation Act to the holders of a series or class of stock voting as a group,
the holders of the outstanding shares of Series A Preferred Stock shall be
entitled to receive notice of, to participate in, and vote on any matter
presented to the holders of Common Stock at any meeting of the holders of Common
Stock of the Corporation on the following basis: a holder of Series A Preferred
Stock shall have a number of votes equal to the number of shares of Common Stock
into which the Series A Preferred Stock held by such holder could be converted
at the then current Conversion Price.
C-29
4. Liquidation.
In the event of liquidation, dissolution or winding up of the affairs of
the Corporation, the holders of shares of Series A Preferred Stock then
outstanding shall be entitled to be paid in cash out of the net assets of the
Corporation, including its capital, a liquidation price of $20.00 per share,
plus Dividends Accrued to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior Stock
and after payment to the holders of the outstanding shares of Series A Preferred
Stock and to the holders of shares of other classes and series of Parity Stock
of the amounts to which they are respectively entitled, the balance of such
assets, if any, shall be paid to the holders of the Junior Stock according to
their respective rights. For the purposes of the preceding sentence, neither
the consolidation of the Corporation with nor the merger of the Corporation into
any other corporation nor the sale, lease or other disposition of all or
substantially all of the Corporation's properties and assets shall, without
further corporate action, be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation. In case the net assets of the Corporation are
insufficient to pay the holders of the outstanding shares of Series A Preferred
Stock and other series of Parity Stock the full preferential amounts to which
they are respectively entitled, the entire net assets of the Corporation shall
be distributed ratably to the holders of the outstanding shares of Series A
Preferred Stock and other series of Parity Stock in proportion to the full
preferential amounts to which they are respectively entitled.
5. Conversion.
(a) Each holder of any outstanding shares of Series A Preferred Stock
shall have the right, at any time, to convert any of such shares into
Common Stock of the Corporation. Furthermore, as to any shares of
Series A Preferred Stock called for redemption, each such holder shall
have the right at any time prior to the close of business on the fifth
full business day preceding the date fixed for redemption (unless
default shall be made by the Corporation in the payment of the
redemption price in which case such right of conversion shall continue
without interruption), to convert any of such shares into shares of
Common Stock of the Corporation. The number of shares of Common Stock
into which each share of Series A Preferred Stock shall be convertible
shall be equal to the number arrived at by dividing $20.00, without
any payment or adjustment for Dividends Accrued, by the conversion
price per share of the Common Stock fixed or determined as hereinafter
provided. Such conversion price shall initially be $45.00 per share,
subject to the adjustments hereinafter provided (such price as
adjusted at any time being hereinafter called the "Conversion Price").
(b) The holder of any outstanding shares of Series A Preferred Stock
may exercise the conversion right provided in Paragraph (a) above as
to all or any portion of the shares that he holds by delivering to the
Corporation during regular business hours, at the principal office of
the Corporation's transfer agent or such other place as may be
designated in writing by the Corporation, the certificate or
certificates for the shares to be converted, duly endorsed or assigned
in blank or endorsed or assigned to the Corporation (if required by
it), accompanied by written notice stating that the holder elects to
convert such shares and stating the name or names (with address and
applicable social security number or other tax identification number)
in which the certificate or certificates or shares of Common Stock are
to be issued. Conversion shall be deemed to have been effected on the
date (the "Conversion Date") when such delivery is made. As promptly
as practicable thereafter the Corporation shall issue and deliver to
or upon the written order of such holder, at such office or other
place designated by the Corporation, a certificate or certificates for
the number of full shares of Common Stock to which he is entitled and
a payment in cash of any dividends declared and unpaid with respect to
the shares of Series A Preferred Stock so surrendered up to the
dividend date that immediately precedes the Conversion Date. The
person in whose name the certificate or certificates for shares of
Common Stock are to be issued shall be deemed to have become a
stockholder of record on the Conversion Date, unless the transfer
books of the Corporation are closed on that date, in which event he
shall be deemed to have become a stockholder of record on the next
succeeding date on which the transfer books are open; but the
Conversion Price shall be that in effect on the Conversion Date,
unless the Conversion Date falls after the date that the Corporation
mails a notice of redemption under Section 5(c) and before the date
fixed for redemption, in which case the Conversion Price shall be that
in effect on the date that such notice of redemption is mailed.
C-30
(c) If, for twenty (20) consecutive trading days beginning on or
after the end of the thirtieth (30/th/) calendar month following the
effective date of the merger of the Corporation and Lamar Capital
Corporation and ending on or before the sixtieth (60/th/) calendar
month following the effective date of the merger of the Corporation
and Lamar Capital Corporation, the last sale price of the Common Stock
exceeds $56.25 (which price shall be subject to adjustment on the same
basis as the Conversion Price as set forth in Section 5(f) below),
then, effective at 5:00 p.m. on the last day in such twenty (20) day
period the Corporation shall have the option to require that all
outstanding shares of Series A Preferred Stock shall automatically
convert into and become shares of Common Stock, as if each holder of
Series A Preferred Stock exercised the conversion right provided in
Section 4(a) and all shares of Series A Preferred Stock, whether or
not the certificates therefore shall have been surrendered for
cancellation, shall be deemed no longer to be outstanding for any
purpose and all rights with respect to such shares shall thereupon
cease and determine, except the right to receive certificates for
shares of Common Stock upon surrender of certificates for shares of
Series A Preferred Stock the same manner described in Section 4(b). If
the Corporation elects to require conversion under this Section 4(c)
the Corporation shall give written notice of such conversion by first
class mail, postage prepaid to the holders of Series A Preferred Stock
at the last addresses shown by the Corporation's stock transfer
records. No delay or imperfection in such notice will affect the
conversion of Series A Preferred Stock into shares of Common Stock
pursuant to this Section 4(c). For purposes of this Section 4(c) and
Section 4(f), the last sale price of the Common Stock shall be deemed
to be the last sale price reported by NASDAQ or its successor, but if
the Common Stock is listed on a national stock exchange, the last sale
price on any date shall be deemed to be the last sale price on the
exchange on which it generally has the highest trading volume.
(d) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series A Preferred Stock. If more than one
share of the Series A Preferred Stock shall be surrendered for
conversion at any time by the same holder, the number of full shares
of Common Stock issuable upon conversion thereof shall be computed on
the basis of the total number of the shares of Series A Preferred
Stock so surrendered. If any fractional interest in a share of Common
Stock would be deliverable upon conversion, the number of shares of
Common Stock deliverable shall be rounded up to the nearest full
share.
(e) The issuance of Common Stock on conversion of outstanding shares
of Series A Preferred Stock shall be made by the Corporation without
charge for expenses or for any tax in respect of the issuance of such
Common Stock, but the Corporation shall not be required to pay any tax
or expense which may be payable in respect of any transfer involved in
the issuance and delivery of shares of Common Stock in any name other
than that of the holder of record on the books of the Corporation of
the outstanding shares of Series A Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate
for shares of Common Stock unless and until the person requesting the
issuance shall have paid to the Corporation the amount of such tax or
shall have established to the satisfaction of the Corporation that
such tax has been paid.
(f) The Conversion Price shall be subject to the following
adjustments:
(i) Whenever the Corporation shall (A) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock
or subdivide or otherwise split its outstanding shares of Common
Stock, or (B) combine its outstanding shares of Common Stock into
a smaller number of shares, the Conversion Price in effect at the
effective date of the happening of such event shall be adjusted
so that the holders of the Series A Preferred Stock, upon
conversion of all thereof immediately following such event, would
be entitled to receive the same aggregate number of shares of
Common Stock as they would have been
C-31
entitled to receive immediately following such event if such
shares of Series A Preferred Stock had been converted immediately
prior to such event, or if there is a record date in respect of
such event, immediately prior to such record date.
(ii) In case the Corporation, after the date of this resolution,
shall issue rights, warrants or options to subscribe for or
purchase shares of Common Stock, or securities convertible into
or exchangeable for shares of Common Stock, at a price per share
less than the lesser of the Conversion Price or Current Market
Value (as hereinafter defined) per share of Common Stock and if
such rights, warrants, options or securities are exercisable,
convertible or exchangeable for a period of more than thirty (30)
days after the date of their issuance, the Conversion Price shall
be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the issuance of such rights, warrants, options or securities by a
fraction, the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants, options or securities plus the
number of shares which the aggregate exercise price of the shares
of Common Stock called for by all such rights, warrants, options
or securities (excluding any theretofore exercised, converted or
exchanged) would purchase at such Current Market Value and the
denominator of which shall be the number of shares of Common
Stock outstanding at the close of business on the date of
issuance of such rights, warrants, options or securities plus the
number of additional shares of Common Stock called for by all
such rights, warrants, options or securities (excluding any
theretofore exercised, converted or exchanged). Such adjustment
shall be made on the date that such rights, warrants or options
are issued. For the purposes of this Section 4(f), the "Current
Market Value" per share of Common Stock on any date shall be
deemed to be the average of the last sale price on each of the
twenty (20) consecutive trading days commencing forty (40)
trading days before such date. A trading day, for the purpose of
this resolution, is a day on which securities are traded on the
NASDAQ Stock Market or, if the Common Stock is then listed on any
national stock exchange, on such exchange.
(iii) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or
assets (excluding dividends and distributions paid in cash out of
funds available for dividends in accordance with applicable law),
the Conversion Price immediately prior to such distribution shall
be adjusted by multiplying such Conversion Price by a fraction,
(i) the numerator of which shall be the denominator, hereinbelow
described, less the fair value (as conclusively determined in
good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness or assets distributed which is applicable to one
share of Common Stock, and (ii) the denominator of which shall be
the Current Market Value per share of Common Stock on the next
full business day after the record date fixed for the
determination of the holders of the Common Stock entitled to such
distribution. Such adjustment shall be retroactively effective as
of immediately after such record date.
(g) Notwithstanding any of the foregoing provisions of this Section
4, no adjustment of the Conversion Price shall be made if the
Corporation shall issue rights, warrants or options to purchase Common
Stock, or issue Common Stock, pursuant to one or more stock purchase
plans, stock option plans, stock purchase contracts, incentive
compensation plans, or other remuneration plans for employees
(including officers) or any shareholder rights plan of the Corporation
or its Subsidiaries adopted or approved by the Board of Directors of
the Corporation before or after the adoption of this resolution.
C-32
(h) In any case in which this Section 4 provides that an adjustment
of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Company may defer
until the occurrence of such event issuing to the holder of any shares
of Series A Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common
Stock issuable upon such conversion that shall be in addition to the
number of shares of Common Stock which were issuable upon such
conversion immediately before the adjustment in the Conversion Price
required in respect of such event.
(i) Anything in this Section 4 to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least $.25 in
such price; provided, however, that any adjustments which by reason of
this paragraph (i) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section 4 shall be made to the nearest cent.
(j) Whenever the Conversion Price and subsequent changes to be made
therein are adjusted pursuant to this Section 4, the Corporation shall
(i) promptly place on file at its principal office and at the office
of each transfer agent for the Series A Preferred Stock, if any, a
statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such
adjustment and a computation of the adjusted Conversion Price, and
shall make such statement available for inspection by all shareholders
of the Corporation, and (ii) cause a notice to be mailed to each
holder of record of the outstanding shares of Series A Preferred Stock
stating that such adjustment has been made and setting forth the
adjusted Conversion Price. Unless the change in the Conversion Price
is caused as a result of action described in subparagraph (i) of
paragraph (e) of this Section 4, it shall be accompanied by a letter
from the Corporation's independent public accountants stating that the
change has been made in accordance with the provisions of this
resolution.
(k) In the event of any merger, share exchange or similar transaction
to which the Corporation is a party, except (i) a merger in which the
Corporation is the surviving corporation or (ii) a share exchange in
which the Corporation's shares are issued to shareholders of another
corporation, the plan of merger, plan of share exchange or comparable
document shall provide that each share of Series A Preferred Stock
then outstanding shall be converted into or exchanged for the kind and
amount of stock, other securities and property receivable upon such
merger, share exchange or similar transaction by a holder of the
number of shares of Common Stock of the Corporation into which such
share of Series A Preferred Stock might have been converted
immediately prior thereto.
(l) Shares of Common Stock issued on conversion of shares of Series A
Preferred Stock shall be issued as fully paid shares and shall be
nonassessable by the Corporation. The Corporation shall, at all times,
reserve and keep available for the purpose of effecting the conversion
of the outstanding shares of Series A Preferred Stock such number of
its duly authorized shares of Common Stock as shall be sufficient to
effect the conversion of all outstanding shares of Series A Preferred
Stock.
6. Redemption.
(a) The Corporation may at its option redeem all or any portion of
the outstanding shares of Series A Preferred Stock at a redemption
price (the "Redemption Price") of $20.00 per share plus Dividends
Accrued to the date fixed for redemption: (i) if, for twenty (20)
consecutive trading days beginning on or after the end of the
thirtieth (30/th/) calendar month following the effective date of the
merger of the Corporation and Lamar Capital Corporation and ending on
or before the sixtieth (60/th/) calendar month following the effective
date of the merger of the Corporation and Lamar Capital Corporation,
the last sale price of the Common Stock exceeds $56.25 (which price
shall be subject to adjustment on the same basis as the Conversion
Price as set forth in Section 5(f) below) or (ii) at any time after
the end of the sixtieth (60/th/) calendar month following the
effective date of the merger of the Corporation and Lamar Capital
Corporation.
(b) In the event that the Corporation elects to redeem less than all
of the outstanding shares of Series A Preferred Stock, not more than
sixty (60) days prior to the date fixed for redemption the
C-33
Corporation shall select the shares to be redeemed by prorating the
total number of shares to be so redeemed among all holders thereof in
proportion, as nearly as may be, to the number of shares registered in
their respective names, by lot or in such other equitable manner as
the Board of Directors may determine. The Corporation in its
discretion may determine the particular certificates (if there are
more than one) representing shares registered in the name of a holder
which are to be redeemed.
(c) Not less than thirty (30) nor more than sixty (60) days prior to
the date fixed for any redemption pursuant to paragraph (a) of this
Section 5, notice of redemption shall be given by first class mail,
postage prepaid, to the holders of record of the outstanding shares of
Series A Preferred Stock to be redeemed at their last addresses as
shown by the Corporation's stock transfer records. The notice of
redemption shall set forth the number of shares to be redeemed, the
date fixed for redemption, the Redemption Price (including the amount
of Dividends Accrued to the date fixed for redemption), and the place
or places where certificates representing shares to be redeemed may be
surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be
redeemed, the number of shares represented by such certificate to be
redeemed.
(d) When a notice of redemption of any outstanding shares of Series A
Preferred Stock shall have been duly mailed as hereinabove provided,
on or before the date fixed for redemption the Corporation shall
deposit in cash funds sufficient to pay the Redemption Price
(including Dividends Accrued to the date fixed for redemption) of such
shares in trust for the benefit of the holders of the shares to be
redeemed with any bank or trust company, having capital and surplus
aggregating at least $25,000,000 as of the date of its most recent
report of financial condition and named in such notice, to be applied
to the redemption of the shares so called for redemption against
surrender of the certificates representing shares so redeemed for
cancellation. Except as set forth in Section 4(a), from and after the
time of such deposit all shares for the redemption of which such
deposits shall have been so made shall, whether or not the
certificates therefor shall have been surrendered for cancellation, be
deemed no longer to be outstanding for any purpose and all rights with
respect to such shares shall thereupon cease and determine except the
right to receive payment of the Redemption Price (including Dividends
Accrued to the date fixed for redemption), but without interest. Any
interest accrued on such funds shall be paid to the Corporation from
time to time.
(e) The Corporation shall redeem all of the outstanding shares of
Series A Preferred Stock at a redemption price (the "Redemption
Price") of $20.00 per share, plus Dividends Accrued thirty (30) years
from the date of the issuance thereof.
(f) The Corporation may at its option redeem all or any portion of
the outstanding shares of Series A Preferred Stock at a redemption
price (the "Redemption Price") of $20.00 per share plus Dividends
Accrued if there is change in the Federal Reserve capital adequacy
guidelines that results in the Series A Preferred Stock not qualifying
as Tier 1 capital.
C-34
(g) The Corporation shall also have the right to acquire outstanding
shares of Series A Preferred Stock otherwise than by redemption,
pursuant to this Section 5, from time to time, for such consideration
as may be acceptable to the holders thereof; provided, however, that
if all Dividends Accrued on all outstanding shares of Series A
Preferred Stock shall not have been declared and paid or declared and
a sum sufficient for the payment thereof set apart neither the
Corporation nor any Subsidiary shall so acquire any shares of such
series except in accordance with a purchase offer made on the same
terms to all the holders of the outstanding shares of Series A
Preferred Stock.
Hancock Holding Company
By:_____________________________________
President
By:_____________________________________
Secretary
C-35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS/JOINT PROXY STATEMENT
Item 20. Indemnification of Directors and Officers.
The Registrant's Articles of Incorporation provide for indemnification to
the fullest extent allowed by law. The Articles of the Registrant provide in
Article Six certain provisions regarding the extent to which the Registrant will
provide indemnification and advancement of expenses to its directors, officers,
employees and agents as well as persons serving at the request of the Registrant
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise (collectively
referred as "Eligible Persons").
The Mississippi Business Corporation Act (the "MBCA") provides that a
director, officer or agent of a corporation may be indemnified for such service
if he conducted himself in good faith, and he reasonably believed in the case of
conduct in his official capacity with the corporation, that his conduct was in
the corporation's best interests; and in all other cases that his conduct was at
least not opposed to the corporation's best interests. In the case of a criminal
proceeding, a director must show that he had no reasonable cause to believe his
conduct was unlawful. Indemnification permitted under this section in connection
with a derivative action is limited to reasonable expenses incurred in
connection with the proceeding.
The MBCA further authorizes a corporation to make further indemnity for
certain actions that do not constitute gross negligence or willful misconduct if
authorized by the corporation's Articles of Incorporation. The Hancock Articles
provide for indemnification to the fullest extent permitted by the MBCA and
specifically provide for the further indemnity authorized by the MBCA.
The Hancock Articles provide that Hancock shall indemnify any person who
was or is a party to, or is threatened to be made a party to, any threatened
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise, formal or informal (a "Proceeding"),
by reason of the fact that such person is or was a director, officer, employee
or agent of Hancock against any obligation to pay a judgment, settlement,
penalty, fine or reasonable expenses (including legal fees) incurred with
respect to the Proceeding: (A) to the fullest extent permitted by the
Mississippi Business Corporation Act in effect from time to time (the "Act") and
(B) despite the fact that such person has failed to meet the standard of conduct
set forth in the Act, or would be disqualified for indemnification under the Act
for any reason, if a determination is made by (i) the board of directors a
committee duly designated by the board of directors, consisting of two or more
directors not at the time parties to the Proceeding, (ii) by special legal
counsel, (iii) by the shareholders or (iv) by a court, that the acts or
omissions of the director, officer, employee or agent did not constitute gross
negligence or willful misconduct. However, Hancock shall not indemnify a person
for: (i) an intentional infliction of harm on the
II-1
Corporation or its shareholders; (ii) a violation of Mississippi Code Annotated
Section 79-4-8.33 (1972), as amended; or for (iii) an intentional violation of
criminal law, and Hancock shall not indemnify a person for receipt of a
financial benefit to which he is not entitled unless ordered by a court under
Mississippi Code Annotated, Section 79-4-8.54(9)(3). The Hancock Articles
further provide that Hancock shall indemnify a person in connection with a
proceeding by or in the right of Hancock for reasonable expenses incurred in
connection with the Proceeding if such acts or omissions do not constitute gross
negligence or willful misconduct, and shall make further indemnification in
connection with the Proceeding if so ordered by a court under Mississippi Code
Annotated, Section 79-4-8.54(9)(3). Hancock, upon request, shall pay or
reimburse such person for his reasonable expenses (including legal fees) in
advance of final disposition of the Proceeding as long as: (i) such person
furnishes Hancock a written undertaking, executed personally or on his behalf,
to repay the advance if he is not entitled to mandatory indemnification under
Mississippi Code Annotated, Section 79-4-8.52 and it is ultimately determined by
a judgment or other final adjudication that his acts or omissions did constitute
gross negligence or willful misconduct, which undertaking must be an unlimited
general obligation of such person, and which shall be accepted by Hancock
without reference to the financial ability of the person to make repayment or to
collateral; (ii) such person furnishes a written affirmation of his good faith
that his acts or omissions did not constitute gross negligence or willful
misconduct; and (iii) a determination is made by any of the determining bodies
that the facts then known to those making the determination would not preclude
indemnification under the Hancock Articles.
Article Six of the Articles further provides that no amendment or repeal of
its provisions may be applied retroactively with respect to any event that
occurred prior to such amendment or appeal. The effect of such provision is that
the protection of Article Six may not be taken away or diminished by an
amendment in the event of a change in control of the Registrant.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the successful
defense of any such action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
Item 21. Exhibits
2 Agreement and Plan of Merger - Included as Appendix C to the Proxy
Statement/Prospectus contained herein.
3.1 Amended and Restated Articles of Incorporation dated November 8, 1990 -
Filed as Exhibit 3.1 to the Registrant's Registration Statement on Form S-8
(No. 333-11831), and incorporated herein by reference.
3.2 Bylaws of Hancock Holding Company restated through November 8, 1990 - Filed
as Exhibit 3.2 to the Registrant's Registration Statement on Form S-8 (No.
333-11831), and
II-2
incorporated herein by reference.
3.3 Articles of Amendment to the Articles of Incorporation of Hancock Holding
Company, dated October 16, 1991 - Filed as Exhibit 4.1 to the
Registrant's Form 10-Q for the quarter ended September 30, 1991, and
incorporated herein by reference.
3.4 Articles of Correction, filed with Mississippi Secretary of State on
November 15, 1991 -Filed as Exhibit 4.2 to the Registrant's Form 10-Q for
the quarter ended September 30, 1991, and incorporated herein by
reference.
3.5 Articles of Amendment to the Articles of Incorporation of Hancock Holding
Company, adopted February 13, 1992 - Filed as Exhibit 3.5 to the
Registrant's Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference.
3.6 Articles of Correction, filed with the Mississippi Secretary of State on
March 2, 1992 -Filed as Exhibit 3.6 to the Registrant's Form 10-K for the
year ended December 31, 1992, and incorporated herein by reference.
3.7 Articles of Amendment to the Articles of Incorporation adopted February
20, 1997.
4.1 Specimen stock certificate - Filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8 (No. 333-11831), and incorporated
herein by reference.
4.2 Description of Common Stock Purchase Rights - Set forth in Item 1 of the
Registrants Registration Statement on Form 8-A (Commission file No. 000-
13089) and incorporated herein by reference.
5* Opinion of Allen Vaughn Cobb & Hood regarding legality of shares.
8* Opinion of Watkins Ludlam Winter & Stennis, P.A. regarding certain tax
matters.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
23.3* Consent of Watkins Ludlam Winter & Stennis, P.A. (to be included in
Exhibit 8).
23.4* Consent of Allen Vaughn Cobb & Hood (to be included in Exhibit 5).
23.5 Consent of Morgan Keegan & Company, Inc.
24 Power of Attorney - Included on the signature page of the Registration
Statement.
99.1 Form of Proxy of Lamar Capital Corporation.
99.2* Election Form
* To be filed by Amendment.
II-3
Item 22. Undertakings.
(a) 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 1993;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan or
distribution not previously disclosed in the Registration
Statement or any materia l 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 post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, when applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) (1) 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
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
II-4
applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, 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.
(d) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of 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.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gulfport, State of
Mississippi, this 2nd day of May, 2001.
HANCOCK HOLDING COMPANY
(Registrant)
By: /s/ George A. Schloegal
--------------------------------------
George A. Schloegel,
Chief Executive Officer
By: /s/ Carl J. Chaney
--------------------------------------
Carl J. Chaney
Chief Financial Officer
Know all men by these presents, that each individual whose signature
appears below constitutes and appoints George A. Schloegel and Carl J. Chaney,
and each or either one of them, his true and lawful attorney-in-fact and agent,
with power of substitution and resubstitution, for him and in his name, place
and stead in any and all capacities, to sign this Registration Statement on Form
S-4 and relating to the registration of shares of Hancock Holding Company
Series A 8% Convertible Preferred Stock, $20 par value per share and Hancock
Holding Company common stock underlying Series A, $3.33 par value per share, and
any and all amendments (including post-effective amendments) to such
Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, their, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
II-6
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Leo W. Seal, Jr. Director May 2, 2001
- ----------------------------- -----------
Leo W. Seal, Jr.
/s/ Joseph F. Boardman, Jr. Director May 2, 2001
- ----------------------------- -----------
Joseph F. Boardman, Jr.
/s/ George A. Schloegel Director May 2, 2001
- ----------------------------- -----------
George A. Schloegel
/s/ Homer C. Moody, Jr. Director May 2, 2001
- ----------------------------- -----------
Dr. Homer C. Moody, Jr.
/s/ Charles H. Johnson Director May 2, 2001
- ----------------------------- -----------
Charles H. Johnson
/s/ L. A. Koenenn, Jr. Director May 2, 2001
- ----------------------------- -----------
L. A. Koenenn, Jr.
/s/ Christine L. Smilek Director May 2, 2001
- ----------------------------- -----------
Christine L. Smilek
/s/ Carl J. Chaney Chief Financial Officer May 2, 2001
- ----------------------------- -----------
Carl J. Chaney
II-7
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
2 Agreement and Plan of Merger - Included as Appendix C to the
Proxy Statement/Prospectus contained herein.
3.1 Amended and Restated Articles of Incorporation dated November 8,
1990 -Filed as Exhibit 3.1 to the Registrant's Registration
Statement on Form S-8 (No. 333-11831), and incorporated herein by
reference.
3.2 Bylaws of Hancock Holding Company restated through November 8,
1990 -Filed as Exhibit 3.2 to the Registrant's Registration
Statement on Form S-8 (No. 333-11831), and incorporated herein by
reference.
3.3 Articles of Amendment to the Articles of Incorporation of Hancock
Holding Company, dated October 16, 1991 - Filed as Exhibit 4.1 to
the Registrant's Form 10-Q for the quarter ended September 30,
1991, and incorporated herein by reference.
3.4 Articles of Correction, filed with Mississippi Secretary of State
on November 15, 1991 - Filed as Exhibit 4.2 to the Registrant's
Form 10-Q for the quarter ended September 30, 1991, and
incorporated herein by reference.
3.5 Articles of Amendment to the Articles of Incorporation of Hancock
Holding Company, adopted February 13, 1992 - Filed as Exhibit 3.5
to the Registrant's Form 10-K for the year ended December 31,
1992, and incorporated herein by reference.
3.6 Articles of Correction, filed with the Mississippi Secretary of
State on March 2, 1992 - Filed as Exhibit 3.6 to the Registrant's
Form 10-K for the year ended December 31, 1992, and incorporated
herein by reference.
3.7 Articles of Amendment to the Articles of Incorporation adopted
February 20, 1997.
4.1 Specimen stock certificate - Filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8 (No. 333-11831),
and incorporated herein by reference.
4.2 Description of Common Stock Purchase Rights - Set forth in Item 1
of the Registrants Registration Statement on Form 8-A (Commission
file No. 000-13089) and incorporated herein by reference.
5* Opinion of Allen Vaughn Cobb & Hood regarding legality of shares.
8* Opinion of Watkins Ludlam Winter & Stennis, P.A. regarding
certain tax matters.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
23.3* Consent of Watkins Ludlam Winter & Stennis, P.A. (to be included
in Exhibit 8).
23.4* Consent of Allen Vaughn Cobb & Hood (to be included in Exhibit
5).
23.5 Consent of Morgan Keegan & Company, Inc.
24 Power of Attorney - Included on the signature page of the
Registration Statement.
99.1 Form of Proxy of Lamar Capital Corporation.
99.2* Election Form
* To be filed by Amendment.